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Good morning, and thank you, convener. The only matter that I wish to draw to colleagues’ attention is that I hold an honorary fellowship from the Chartered Institution of Highways and Transportation.

Thank you, convener. It is just a brief supplementary to follow up on Douglas Lumsden’s question about section 36 reports. If a section 36 report can only be made after a five-year carbon budget has been implemented, what happens in the intervening years if, for example, the annual figures that we receive each year demonstrate that insufficient progress has been made? Where is the legal lever to require the Government to take corrective action to get progress towards those targets back on track if there is no section 36 report until the end of the five-year period?

Okay. If the principle is that it is a continuing duty, why would you wait until the end of the five-year carbon budget period to introduce corrective action, in the way in which you would with a section 36 report?

You could.

I want to come on to the issue of five-year carbon budgeting, but before I do so, it would be helpful to get some clarification on the climate change plan. Is my understanding correct that the climate change plan that will be published by the Government will be the final climate change plan and that there will be no consultation or engagement? Or, after you have received advice from the CCC, will there be an external-to-Government engagement programme in order to develop a draft climate change plan that will be shared publicly?

I will turn to the written evidence that was provided by Catherine Higham and Alina Averchenkova in response to the question about carbon budgeting. In particular, you set out the advantages of a five-year carbon budgeting process, which can assist the short-term and long-term direction of travel in tackling climate change, and how such a process provides greater flexibility. You talk about the need for regular reporting to give transparency on, and accountability for, exactly what progress has been made in the five-year period. What would an annual or regular reporting mechanism look like in the course of a five-year carbon budgeting process? Although it is in Catherine’s and Alina’s written evidence, I am happy to hear from the other witnesses, too.

Picking up on your suggestion, given your international experience of instances in which carbon budgeting has been used—whether in other parts of the UK or in other countries beyond it—what processes have been used that have been effective in ensuring that there is on-going, regular reporting of progress that offers the level of transparency that you are looking for while also balancing that against avoiding “creating a culture of failure”—a term you used in your evidence—and avoiding creating undue concern about what progress is being made in a five-year carbon budgeting period?

Okay. Through the spending review 2022, we tried to set out an indication of budget for a three-year period. The problem is that we get only an annual budget, so we do not know what next year’s budget will be. The challenge is the way in which the UK fiscal environment operates—it works annually. It is very difficult to give a commitment on what will happen during the next financial year when we do not even know what our budget will be for that year.

However, I agree with you that if we could get into a cycle in which we were able to provide a much clearer indication, during a three-year period, to allow organisations to plan more effectively, that would probably be a much more efficient way to manage services. It would give them certainty. However, the principal challenge that we have is that we have an annual budget, so we do not know what our budget will be the following year, which makes it almost impossible for us to make commitments into the following financial year. I agree with the premise that if we could do that, we should. However, fiscal change at UK level would be required to give us certainty during a three-year period.

Boards have been expected to make recurring savings for some time now, so it is not new to them and they are well practised in it. It is key to ensure that there is a focus on efficiencies in boards. We discuss that with boards regularly, at executive and non-executive level, to ensure that they are looking at expenditure to achieve efficiencies where they can. That is no different during this financial year, and in some cases it is more important than ever, given the very tight financial environment in which we are operating.

Given the level of expenditure that boards have—more than £14 billion of taxpayers’ money—it is important that we apply targets to them to ensure that they are driving efficiencies in the system where they can. That is not money that is lost to the system; it is money that is used in healthcare, but it allows us to ensure that we are getting as much efficiency out of the investment that we are making as possible. It is important that boards are given that challenge.

It is probably fair to say that such co-operation is variable. Some boards jointly commission services on a planned basis where they think that it is in their mutual interest to do so. That is on a voluntary basis—the boards can choose to co-operate in that way if they wish to do so—and there is a mechanism in place that they need to go through if they want to provide backroom functions such as human resources functions on a shared commissioning basis. I am making that approach mandatory. A range of boards probably could do more in relation to sharing some of their backroom functions, and we have already indicated to the boards that they are required to take that approach.