Treasury in the dock: round 2

Treasury in the dock: round 2

Date: 13 January 2010

At the end of last year our unprecedented legal action against the Treasury was rejected by the High Court and we have now lodged an appeal against the decision taken, requesting that the Court of Appeal overturn it.

The Treasury’s decision not to take steps to ensure public money, via the Royal Bank of Scotland, is not invested in companies and/or projects which are harmful to the environment and human rights is unlawful, immoral and undemocratic.

Our appeal concerns two legal points in particular. Firstly, whether the Treasury’s decision that RBS should only act in the “commercial interest” of the company is lawful? The Treasury has stated that it would be unlawful for it to require RBS to consider the impact of their potential investments on climate change and human rights. They also state to prevent RBS from investing in, for example fossil fuel companies, would be a “handicap” and a “burden” to it. Neither is correct.

Indeed, according to our lawyers, it is unlawful for directors of a company not to take the impact of their business on the environment and the community into account. (If you’re into the law in a big way, we’re talking about Section 172 of the Companies Act 2006.)

And the recent report we commissioned along with People and Planet, PLATFORM, Friends of the Earth Scotland showed rather than being a “burden”, investments in “green” companies and projects make long term economic sense and are likely to result in greater profit for the bank.

Our second point concerns “The Green Book”. The “Green Book” is guidance which the Treasury itself publishes on how public money should be spent. It requires all government departments to complete a costs/benefit assessment, which includes an analysis of environmental and human rights issues, when deciding how to spend public money.

Shortly after the recapitalisation programme was announced, we wrote to the Treasury asking for their confirmation that such an assessment would be completed in relation to the billions of public money being invested into banks, so a costs/benefits assessment would take place about, for example whether RBS should continue to invest in, for example, fossil fuel companies.

At first, the Treasury refused to carry out such an assessment at all. However, after we issued proceedings, they agreed and completed one.

It was completely inadequate. While the assessment sets out in detail the potential “costs” of imposing restrictions on how public money can be spent, via RBS, it fails completely to calculate let alone consider the potential benefits of having a policy which ensures public money cannot be spent on projects which are harmful to the environment and human rights.

The judge in the High Court considered this superficial approach was sufficient. Indeed, he went onto state that it would be a very ‘onerous and difficult’ job to calculate RBS’ impact on climate change and human rights – i.e. because the job is so big, it is okay for the government not to do it. But this cannot be right.

The fact that it may take some time to assess the costs and benefits of ensuring public money is not spent on harmful projects is not a good enough reason not to do it – after all we are talking about hundreds of billions o pounds. It is important to make sure this money is not being used to cause suffering. The potential “cost” of not completing such an assessment is likely to be far greater, not only financially but also to the planet as a whole.

We have just received a decision from the Court of Appeal that we will be given an oral hearing in the New Year. We will keep you posted on the date as soon as we know when round 2 will be.