Go further to show the impacts of fiscal events on net zero

128. It is important to measure the climate impacts of public spending. Public spending is just one lever to make progress on net zero, and effective regulation and private finance are also important. Given the significance of public spending, however, it is essential to ensure the climate impacts of all fiscal decisions are assessed and considered.

129. HMT has taken valuable steps forward in demonstrating the impact of fiscal events on net zero. In December 2022, the Government published analysis of the environmental impact of the 2021 Spending Review. This showed that 54% of spending they analysed directly or indirectly contributed to decreasing emissions, whereas 16% increased emissions.129

130. This was a really important step, and we encourage them to go further. Requiring information on emissions during the spending review process will have been an important tool for influencing individual departments to consider these impacts when bidding for money - and will have given ministers valuable data about the impact of spending decisions on the UK's climate goals. Making this public is a welcome and valuable signal that the Government is actively considering the impact its decisions have on emissions and is willing to open their net zero activity to scrutiny.

131. We recommend HMT builds on the recent reporting of Spending Review carbon implications by working with the Office for Budget Responsibility (OBR) and CCC to set out a process for how it will ensure the climate impacts of fiscal decision making are considered. It should commit to publishing the climate impacts of future spending reviews. This is not designed to capture all government policies, as many come forward outside of the spending review cycle and/or do not require public spending.

132. Government departments should prioritise supporting HMT in this process, including ensuring dedicated leads for understanding the environmental impacts of spending within each department.