Archived press release

Brown kept DTI in dark over corporate reporting u-turn

8 March 2006

Internal memos released by the Treasury reveal that the Chancellor Gordon Brown pushed through his decision to abolish the Operating and Financial Review, knowing that it would be opposed by the DTI and other government departments.

The confidential memos, which came to light as a result of legal proceedings brought by Friends of the Earth, have now been passed to the Environmental Audit Committee and published on the Treasury website [1]. They reveal that DTI Secretary of State Alan Johnson, whose department has overall responsibility for the policy, was told of the Chancellor's plan just days before his announcement at the CBI annual conference on 28 November.

One memo from a senior Treasury official, sent in June 2005, states that "if we wanted a deregulatory win with appeal to big business, a radical symbolic stripping-down of the OFR would go down incredibly well." [2]. By the end of September, Treasury were secretly considering abolishing the OFR and memos reveal the Treasury expected Alan Johnson to "oppose the proposal" [3].

Friends of the Earth Executive Director Tony Juniper said:

"These documents clearly show the Treasury pushed through this decision, without consulting other ministers, because of the Chancellor's eagerness to be seen as pro-business. It is no wonder that when threatened with a High Court Challenge, the Treasury backed down.

"It is appalling to think that the Government's environmental policies are driven by the desire to appease business lobby groups - and that no consideration is given to the environmental effects."

Friends of the Earth launched High Court proceedings to challenge the Treasury decision to abolish the OFR, announced at the CBI annual conference in November last year. The OFR represented the only legal requirement on UK companies to report on their environmental and social impacts and had been introduced following seven years of consultation by the DTI.

Friends of the Earth argued that the Treasury had failed to properly consult on the abolition - a point reinforced by the documents revealed today. The documents also reveal the Treasury was fully aware of the need to consult on the decision (11 Nov 2005) [4] but failed to do so.

In February, Treasury solicitors reached an out-of-court settlement on the judicial review agreeing to pay Friends of the Earth's legal costs and to issue a new consultation [5].

The documents reveal how the Treasury made detailed preparations to persuade DTI Secretary of State Alan Johnson and Environment Secretary Margaret Beckett of the need to abolish the OFR. But the dates reveal that although officials told the Chancellor that there was an urgent need to tell the DTI (11 November) [6], the Chancellor only informed his cabinet colleagues some time on or after 23 November, just five days before the announcement was made at the CBI conference.

In contrast, the Treasury did speak to the CBI about the proposals, as revealed in a memo of 11 November [7].

Notes

[1] HM Treasury - Operating and Financial Review

[2] HM Treasury - Meeting notes released to FoE as part of pre-action response (PDF)

[3] HM Treasury - Memo, 11 November 2005, Operating and Financial Review Regulations: Proposal to Roll-Back to EU Minima, paragraph 25 (PDF†)

[4] HM Treasury - 11 November 2005 "The Government will consult on the deregulatory measure, to ensure …" (PDF†)

[5] Friends of the Earth forces Chancellor to cave in on environmental reporting

[6] HM Treasury - Memo, 11 November 2005, Operating and Financial Review Regulations: Proposal to Roll-Back to EU Minima, TIMING (PDF†)

[7] HM Treasury - Memo, 11 November 2005, Operating and Financial Review Regulations: Proposal to Roll-Back to EU Minima, Paragraph 18 (PDF†)

†To view PDF files you will need to download Adobe Acrobat Reader. Visually impaired users can get extra help with these documents from access.adobe.com.

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Published by Friends of the Earth Trust