Guidance on Costs and Benefits

Part of New clause 3 – in the House of Commons at 6:45 pm on 27th June 1995.

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Photo of Mr Robert Atkins Mr Robert Atkins , South Ribble 6:45 pm, 27th June 1995

We know that, in Committee, the hon. Lady quoted from briefs from various organisations, all respectable ones that had a great part to play in our proceedings, and made great play of their views. I shall deal with as many of the matters that she has raised as I can.

It is suggested that clause 38 is a Pandora's box, in that any action taken by the agencies could be challenged for the first time in the courts if they, the agencies, could not demonstrate in each instance that the most comprehensive cost-benefit analysis showed beyond reasonable doubt that the action was justified in monetary terms. No doubt we could have an interesting debate about the consequences of adopting such an approach, but it would not be relevant to our consideration of the clause. As was repeatedly made clear in another place and in earlier consideration in this place, there is not that form of duty under clause 38.

In essence, what clause 38 requires is simple. First, it imposes a duty on each agency to consider costs and benefits. Secondly, the clause is limited to those cases in which the agency properly has discretion. Thirdly, it requires the agency to use its discretion in a reasonable way.

The clause gives the agencies considerable and necessary discretion in determining how consideration is best undertaken in the prevailing circumstances. It does not require them to undertake cost-benefit analysis in each case, or to demonstrate a particular balance before they act. It does not place cost-benefit analysis above or in place of environmental assessments. The Government recognise the importance of longer-term and difficult-to-quantify environmental effects.

In short, far from weakening environmental protection, the new duty is an essential element in helping both the regulator and the regulated to focus on environmental priorities in the context of sustainable development, and to avoid misallocation of resources through inappropriate regulatory action.