New parliamentary inquiry launched on Treasury influence over environmental policy

The Environmental Audit Committee (EAC) has launched a new inquiry examining the role of HM Treasury in shaping decisions on climate, nature and environmental policy across Government.

The inquiry, HM Treasury and the economics of climate and nature, will explore how fiscal rules, spending decisions and economic priorities influence the UK’s ability to meet its legal environmental obligations, including commitments on climate change and biodiversity. It will also assess how the Treasury accounts for long-term economic risks associated with climate change and nature loss, and whether environmental action is recognised as supporting sustainable economic growth.

MPs will consider a range of issues, including the impact of fiscal constraints on investment in environmental policy, the role of natural capital and sustainability metrics alongside traditional measures such as GDP, and progress in implementing recommendations from the Dasgupta Review on the Economics of Biodiversity.

Launching the inquiry, EAC Chair Toby Perkins MP said:

“Decisions made in the Treasury have an extraordinary influence on the environment. Without funding and support from the economic heart of government, major initiatives such as species protection, adaption to a changing climate, and the net zero transition will falter. Our new inquiry will explore how this department, so influential across government, is considering the environment in its overall approach and choices. For instance: how do fiscal rules and spending limits impact investment in tackling climate change? Do ministers recognise the contribution of environmental policy towards growing the UK economy, and appreciate the risks to our economic system if we fail to act? Are there cases where Treasury decisions might undermine its environmental aims? Our inquiry is a vital opportunity to ask these and many more questions, to hold Treasury ministers to account for their enormous influence on the future of our precious environment.”

This inquiry comes at a time of increasing scrutiny over the balance between economic growth and environmental protection. Government statements and policy developments over the past year have raised concerns about the growing emphasis on “growth” within environmental decision-making (including the role of regulators and the framing of environmental regulation as can be seen in the recent Strategic Policy Statements published for Natural England and the Environment Agency) and the view that nature is a “blocker” on development (rather than foundation underpinning the economy and society).

CIEEM recognises that a more strategic, integrated approach to environmental management and nature recovery is essential to delivering positive outcomes for both nature and society. However, the Institute has previously expressed concern about the increasing prioritisation of economic growth within environmental policy, and the risk that this may weaken the effectiveness of environmental safeguards.

Recent reports from both the National Audit Office and the Public Accounts Committee have also shown that Defra and its agencies do not have the capacity and resources to deliver their regulatory functions and new ambitions for change.

The Committee’s inquiry provides an important opportunity to examine whether current Treasury approaches fully reflect the economic value of nature and the costs of environmental degradation, and whether decision-making frameworks are aligned with the UK’s long-term environmental goals.

Specific questions the EAC may consider include:

• How fiscal rules and spending constraints affect investment in climate and environmental policy
• How measures such as sustainability and natural capital inform Treasury decisions, alongside traditional measures such as gross domestic product (GDP)
• To what extent environmental duties, such as the Environmental Principles Policy Statement, are applied in Treasury policy decisions
• What progress the Government has made in implementing recommendations from the Dasgupta Review on the Economics of Biodiversity

The call for evidence closes on Thursday 21 May 2026.