For the first time, over 100 UK public bodies have had to say in their annual reports whether climate change is a significant risk to their services and finances. Ruth Chambers, Green Alliance senior fellow, is joined by Catherine Barber, Director – Environment and Climate Change at the National Audit Office, to discuss what the NAO found in 31 of them.

They cover flooded NHS sites, prisons at risk of overheating, wildfire threats to army training and Defra’s surprise rating of climate change.

Ruth Chambers: Welcome to the Green Alliance Welcome to the Green Alliance podcast. We are the charity and think tank dedicated to achieving ambitious leadership for the environment. I’m Ruth Chambers, senior fellow at Green Alliance, and I’m delighted to be joined today by Kathryn Barber, director for Environment and Climate Change Insights at the National Audit Office.

The National Audit Office, or NAO for short, is the UK’s public spending watchdog. It is independent of government and the civil service and supports Parliament in holding the government to account. Today we’re going to talk about the NAO’s new report on how climate change could affect public services and infrastructure.

Resilience to climate risks and nature loss has rocketed up the agenda in government, parliament, and for all of us over the past year, so this report is very timely, and thank you to you and the team for the work on it. One of the headlines of the report, that climate change could have serious consequences for public services and national infrastructure, won’t surprise many people.

But that’s just the headline, and I know that there’s a lot more underpinning that. So perhaps you could start off by explaining how you put the report together and what information and data you analysed.

Catherine Barber: Thanks, Ruth, and thank you for the invitation. Well, at the National Audit Office, we review government bodies’ accounts and their annual reports. And let me start by acknowledging that probably not many people jump out of bed in the morning and think, “I must read an annual report. It’s going to be fascinating.”

But from this year, if you’re interested in climate change, they are getting interesting. And that’s because for the first time, government bodies have to explain whether climate change is a significant issue for them and if so, what risks they face and what that could mean for their services and their finances.

And they’re doing that because the Treasury has required it. Companies have had to do this since the early 2020s as part of the Companies Act and a few public bodies fell under that regime people like the BBC or Network Rail. But now, over 100 public bodies government departments, and large agencies also have to do this.

And as we read the annual reports, which we do each year as part of our regular work in the NAO, we saw that these climate risk reports were really interesting.

Ruth Chambers: Thank you. So how many reports that’s over 100 you say? That’s an awful lot of reading. What, what did you learn from, from that reading? And again, thank you to you and the team for doing that. That must have been many, many hours of work.

Catherine Barber: Well, there are 140 bodies that do this reporting now. They’re large enough to need to. We looked at 31 in detail and they were the central government departments and then some big agencies, people like the Environment Agency, Network Rail, National Highways and so forth. And we asked some basic questions.

First of all, was it clear whether the department was saying that climate change was a significant risk or not and that in itself, yielded some, interesting points. Then, what were the key impacts that they expected to feel from climate change? So flooding and overheating were the, unsurprisingly perhaps, the top risks that were mentioned.

But there were some quite specific examples there. The NHS reported nearly 400 incidents of flooding at its sites in England in the last year. Network Rail revealed that they’d spent over £300 million on insurance for weather-related disruption, which is exacerbated by climate change over the past decade.

So, there were some really interesting nuggets in there and then it was watching the bodies explain what it could mean in future. So, while they described the impacts today, of course, climate change is becoming more intense. So you had people like the Prison Service saying that 9 in 10 prisons are at risk of flooding, 7 in 10 are at risk of overheating, and predicting that violence in the prison estate could rise as temperatures go up.

Ruth Chambers: Wow. So that sounds like it gives you and Parliament and us all a really important baseline to monitor how government is assessing and responding to these risks going forward. Did you find anything that particularly surprised you when you were analysing, the reports that you looked at in detail?

Catherine Barber: Lots of things surprised us. First of all, some of the potential impacts are pretty striking. You had train operating companies saying that in the second half of this century, there could be coastal routes in the UK that become either physically inoperable or financially unviable and although that is some decades away, it is well within the lifetimes of many people living today.

So I think some of that really deserves to be headline news, of course, it depends how intense climate change is, that was under a four-degree warming scenario, but these risks are real. I think we were surprised by which departments described climate change as a significant risk for them and which didn’t.

Defra didn’t think that climate change was a principal risk or significant. I think that’s probably just because it’s the first year of reporting in this way and they may choose to consider that next year. But given that they are responsible for 29 of the actions in the National Adaptation program that was pretty surprising for us.

Ruth Chambers: Yeah, I mean, I have to say, I haven’t been through all of the reports and the level of detail that you have, but that was certainly a headline that stood out for me. I think it was picked up by some journalists in the ENS report as well. Yeah, I can’t really understand how DEFRA could declare reasonably that climate change isn’t a significant risk for the department given their given their day job and given that they are responsible across all of government for coordinating action on adaptation.

So that did seem quite the outlier to me. Did you come across examples of good practice where a government department or a public body had either identified risks in a particularly accessible or meaningful way, or where they were setting out the action that they were planning to take in response to those risks, for example?

Catherine Barber: Yes, we did. There were some nice descriptions of the possible impacts of climate change and also the impact on finances. I can think of the Nuclear Decommissioning Authority, again a body that one doesn’t automatically think about when thinking about climate impacts. But they described under different outcomes for climate change and warming, how significant the financial impacts could be.

And they said that later on in the century you could see impacts that were half a billion pounds and upwards from things like extreme rainfall, flooding, and sea level rise. And many of their sites, of course, are near the sea. So, um, that was one that struck us. The Environment Agency was interesting.

They said that they had used their analysis of different climate outcomes, to change the model that they have for responding to environmental incidents, so, uh, things like flooding and the, the way that they’ve previously done this is they’ve redeployed staff from elsewhere in the business, taking them off their day jobs and then responding to the emergency incidents.

But because climate change has been increasing the frequency of, of those, um, of those events, the Environment Agency did the calculations. They realized it was becoming costly to redeploy people and it was disruptive to the daily running of their business. And so in their annual report, they’ve explained that they’re going to move to having more permanent staff ready to respond to incidents and that should be less of a disruption to the rest of their work.

Ruth Chambers: So it sounds like that’s going to be better from an incident response point of view, but also more, more efficient and perhaps better value for money. So hitting, hitting a number of wins there perhaps.

Catherine Barber: Exactly. And it, I think it’s really worth stressing that this, reporting should not be a paper exercise that departments just think about at the end of the year. They’ve got to put something in their annual report, um, and, uh, and they, you know, get it together very quickly. What we liked about the Environment Agency’s return was you could see that they’d been thinking through the year about what the impacts of climate change, uh, could be in the future and what they already were for their organization, um, and then thinking about the, the practical management decisions that they had to take.

So the reporting at the end of the year then just becomes a way of explaining that to the public.

Ruth Chambers: So I think we’re all hoping to see that step change, and that step change, um, happen really quickly. And as we talked about, you know, with DEFRA really seizing upon the fact that, of course, this is a strategic risk for the department and maybe better consistency across that suite of public bodies. And perhaps even looking to the business community who, as you said, have been doing this for longer.

So perhaps there are lessons to learn from, from them as well. I’d like to move on to parliamentarians now, because one of the main audiences for this report is Parliament. I mean, I think it’s of much wider interest, and everyone should, should have a look at it. And the actual government and public body reports themselves are, are all publicly available, aren’t they?

So anyone can delve into the information and, and kind of read, uh, re-read that in detail. But you have a relationship with Parliament. As I mentioned at the beginning, part of your role is to support and assist parliamentary scrutiny. How would you expect the information and the analysis in the report that you’ve published on climate risk to be used by parliamentarians?

What are the sorts of things that you’d expect them to do with it?

Catherine Barber: So we were really pleased that the chairs of the public accounts and environmental audit committees issued statements, uh, s- saying that they appreciated the report, uh, and found it useful.

Ruth Chambers: They were, they were quick off the mark to do that, weren’t they? I saw those as well, so it’s well done to them.

Catherine Barber: Thank you. Yes, so, so that’s great that they’ve noticed it. I guess there, there are two ways that this could be used. I mean, it tells an overall story about how government, uh, across many departments and large bodies, um, is dealing with climate risk and then also for the individual organizations. I mean, if you work on the, um, Transport Select Committee or the Defense Select Committee, you can pick up the annual report and use that to ask questions.

So it, it’s both quite broad and then potentially deep, department by department.

Ruth Chambers: Thank you and I guess the Environmental Audit Committee has a big, new, shiny inquiry on adaptation. I expect we might, we might see some of them, some of the findings and analysis making their way in- into that forum, as you say, select committees, they scrutinize their kind of host department, don’t they?

So those accountability hearings that they hold with ministers, I’m, I’m sure and hopeful that, um, some of these, some of these findings and some of the challenges could be, could be, um, could be adopted in, in those sorts of places as well. And then we’ve got the… Sorry, go on.

Catherine Barber: Yes. And, oh, sorry, Rita. Uh, maybe just to say, I hope that it will also c-come out of being just in the climate change space and be used when questions are being asked about public finances, because that, that’s why the Treasury has introduced this requirement, that in the annual reports and accounts, there’s something about climate change and, and the risks it poses.

Um, and that’s because it, it can have a genuine impact on the running of these businesses and, uh, how much money they’ve got. And, you know, the, the financial decisions that they’re taking, the big investments that they’re making, um, which will last for decades, uh, they need to include climate change in their thinking ab-about those.

So, I hope that in, in conversations where MPs are asking about, um, the state of public finances and the finances of individual departments, they will draw on this material

Ruth Chambers: the Public

And the Public Accounts Committee you mentioned, that’s the part of Parliament that is– it’s, it’s almost, I don’t know what the right phrase is, but your, I don’t know, is it, you, you tell me what your relationship with that committee is, but it’s the part of Parliament that is really interested in government spending.

But is, is that where you would expect those value for money and efficiency considerations to be, to be taken when Parliament’s thinking about those?

Catherine Barber: That’s right. They often take NAO reports, um, and hold sessions about them. Um, I don’t think they will specifically on this report, but as I said, for, um, for future discussions, whether it’s about health or education or the transport system, um, they can draw on the information that we’ve pointed out, uh, for any of those conversations.

Ruth Chambers: And zooming out from Parliament, um, a little bit, I, I think it’s fair to say that resilience is much higher up the government’s agenda. So how we adapt, um, to our rapidly changing climate, um, and who needs to do what and by when. These are really important considerations, but in the last year it feels like, yes, they’ve, they’ve risen up government agenda.

We know that this is a strong priority for the Defra Secretary of State, despite what they said in their, in their annual report and return, and we know that the government as a whole, because of what the Prime Minister said at the recent wildfire summit and because of new cross-government task forces have been set up, is really taking this seriously.

Can you say a little bit about how your report might find its way into those sorts of task forces? So there’s certainly one that DESNZ, the Department of Energy Security and Net Zero and the Cabinet Office is running, looking at the national security implications of climate breakdown and nature loss.

And Defra itself has its own task force on, I think, environmental resilience. But are those places where your report is well-placed to inform discussion, do you think?

Catherine Barber: I hope so. Um, and we have shared it with members of some of those groups and task forces. Um, um, there are things in here which are to do with national security. The Ministry of Defence provides an informative report, and one of the things that struck me, particularly given the very hot summer that we’d experienced, was what they said about wildfire risk.

They noticed that there are, I think, about three months a year in which wildfire risk can affect army training schedules, and then if army training is disrupted, then that can have knock-on impacts on army readiness. And between now and the middle of this century, within a generation, um, that three months could stretch to six months or more in a higher warming scenario.

So that’s a really practical effect on security.

Ruth Chambers: And in terms of the public interest, because I think, you know, the, the findings that you’ve drawn out from your report this year and, and it sounds like as government’s own analysis and reporting improves, hopefully by next year, there’ll be even more of those to, to peruse and, and digest. Um, the report is really well written.

You have an executive summary. It’s on the website. You’ve done social media. We’re talking today. So there are lots of ways that the messages can get out. But do you feel that you’re reaching the kind of the more public and lay audiences? And if not, is there anything that we can think about doing to kind of help promote this to audiences beyond government and parliament?

Catherine Barber: Thanks, Ruth. Um, well, it’s great that we’ve got the chance to talk about it today. Um, I think this is likely to be most useful, um, where it is looking at particular subject areas, um, whether that is security, or justice, or transport. Um, although I said at the beginning I hope people will get excited about annual reports, I have to be realistic about this.

Um, uh, they are quite dry documents. Um, but my hope is that if people are interested, for example, in, um, you know, how did the healthcare system cope with the extreme heat, uh, in the last year and, and what’s it going to do about it in future, well, maybe they’ll go off and have a look at the Department of Health’s report, uh, or NHS England.

Um, so it… I think it’s really s- starting with the existing interest and then, and then looking at the underlying information.

Ruth Chambers: Thank you. And there was an excellent report published, um, last week by a group called Peers for the Planet, which is a parliamentarian’s guide to climate change and health. And I think that, um, that is a wonderfully, rich mix of experts coming together to talk about the different aspects of that.

So I’m sure that they will, they will touch on some of the issues that you’ve articulated as well.

Catherine Barber: I think we’ve had great feedback from people involved in climate change policy and resilience and adaptation. Um, I’d love to see this getting picked up as well by people who work on finance, who maybe, maybe haven’t thought about climate change so much, uh, in the past. And again, that, that’s the point of including this information in the annual reports and accounts which are fundamentally financial documents, um, that the chief finance officers, the finance directors of these very large public bodies start thinking about these issues.

A- and many of them are already, but it would be great to see that consistently across government.

Ruth Chambers: Well, that’s a clear enough message, isn’t it? If you are a chief financial officer or a, a, an accounting officer of a major public body, or you know someone who is, then do encourage them to look at the report and, uh, learn from its findings. Out of interest, does the National Audit Office have to do a report of this nature?

I mean, I’m sure that you do an annual report and accounts, but do you also have to report in the same way as the government departments that you’ve been looking at?

Catherine Barber: Yes, we do. Uh, we produced our own. Um, so hopefully it, it lives up to the standards, uh, that we’re describing, for best practice

Ruth Chambers: And, and who audits that if you can’t audit yourself, can you? Is there anyone else apart from all of us that would look at that?

Catherine Barber: Um, feel free to have a look. It’s on our website. Um, so there isn’t a requirement for these, um, these explanations, uh, to be audited or assured, uh, in terms of the quality of the data. This year we chose to do this report because it, because it was new practice, um, that, that these climate risk, uh, reports were being published.

Um, we have an obligation as the NAO, uh, to check that government departments have included material, um, and to say whether they have answered the key questions of, you know, is climate change a significant risk? If so, how? Um, but we don’t have a mandate to say whether the information is a- accurate. Um, so we will continue providing that feedback, um, but it goes to government departments in private, um, as we’re certifying the accounts.

Um, so whether we do another follow-up report in a year’s time, I think, honestly, my dream would be that so many other people hear about this material and are asking questions about it, that we don’t need to do a follow-up next year, um, because the scrutiny will be there already. But let’s see.

Ruth Chambers: Let’s see, and I guess that quality control question that you’ve, you’ve talked about there, if the reports aren’t meeting that kind of bar as a collective, then maybe that’s something that you and we would all need to come back to. You’ve only looked at England because England is your geographical remit.

Uh, you have counterpart audit bodies in the other home nations of the UK. Um, do you have a sense of whether they are planning to undertake similar analysis of their respective governments and public bodies?

Catherine Barber: Great question. So, um, we cover any bodies that are UK-wide, so the departments which are, are for the whole country and then any bodies that are just England, as you’ve said. The Treasury requirements are only for national level. The Scottish Government, I believe, recommends, uh, I’m going to quote now, they recommend that relative, relevant public b-bodies comply with the Treasury’s guidance.

Uh, so I don’t actually know how many Scottish departments are doing this exercise, um, but it’d be great if colleagues in Edinburgh, uh, went and had a look. Um, Northern Ireland, I think, is introducing similar reporting requirements for their public bodies, um, but it’s a year or two later, um, so that will be one to look out for.

And Wales has a slightly different setup. They’ve got their Wellbeing of Future Generations Act, um, with all of the requirements that that, uh, imposes on public bodies to have regard to sustainable development and so forth, um, but I’m not aware of them having this exact requirement.

Ruth Chambers: No. I mean, the Welsh Government is preparing a climate and nature action plan, so I guess we’ll see, uh, what comes out of that. But I, I don’t think that’s gonna be ready for a few months yet. Huge thanks, Kathryn, for joining me today. We’ve, we’ve really rummaged around, I feel, in those, uh, annual reports as well as the NAEO’s excellent report itself.

So thanks very much for your time.

Catherine Barber: It’s been a pleasure.

Ruth Chambers: So thanks for listening. Look out for more episodes from Green Alliance on your podcast feed. You can subscribe on your favourite podcast app, or you can follow us at Green Alliance on LinkedIn and Blue Sky. And please use the hashtag Green Alliance Podcast to join the conversation and share thoughts, questions, and ideas.

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