The Chancellor Rishi Sunak has a chance to put the UK in pole position for clean growth revolution – but only if he finances and empowers our localities and regions to drive change – including in the area of green transport, writes Grace Newcombe – lead clean growth researcher, Localis.
Over the last two decades the UK has been afflicted by three crises: financial, coronavirus and climate. Holding the purse strings of the country, and as our recession deepens, the chancellor has the opportunity to learn from the economic mistakes of the past to rewrite the country’s narrative with a focus on clean growth, green jobs and climate leadership.
With the approaching Budget, the UK needs to invest more in businesses, workers and households hardest hit by the pandemic, encouraging public investment and restoring public services by focussing on the growth of sustainable, “future-proof” industries and jobs. This recovery must be green.
The outcome of the impact of Covid-19 on climate will be determined by the breath and ambition of green fiscal and stimulus policies. These can act to decouple economic growth from greenhouse gas emissions and, often with a higher jobs multiplier, can reduce unemployment and provide boosts in spending. Thus, existing welfare inequalities exacerbated by the pandemic in the short-term and climate change in the long-term can be alleviated.
So far, the urgent Covid rescue packages have been focused on preserving livelihoods, liquidity and solvency, but their climate impact is also unlikely to be positive. We can’t just go back to business as usual, to a system that prioritises today’s profits over those of a sustainable tomorrow – a green economic future is imperative.
In this context, the Treasury and wider government need to commit to more green investment, and should at the very least:
1) Provide green economy investment to create over one million low carbon jobs
The UK faces the biggest unemployment crisis in decades, devastating our working class and young people. A significant number of jobs are able to be generated immediately in the green economy, helping to simultaneously tackle unemployment and the climate crisis. Redirecting UK subsidies from fossil fuels to jobs-rich renewable energy projects would be a large step in this direction.
2) Extend and reform the furlough scheme to support the transition of workers to a low carbon economy
Figures suggest that ending the furlough scheme in April would leave 2.6 million people out of work by mid-2021. As long as there are public health restrictions in place, the furlough scheme should be extended to match. Thousands of jobs could be salvaged by transitioning the scheme into a new Job Support Scheme, subsidising part time work while supporting reskilling workers for the green economy.
3) Restore and amend, but don’t axe, the Green Homes Grant scheme
The government should restore the full funding allocation (£1.5bn) for the Green Homes Grant scheme. The short-term voucher scheme is struggling not because of lack of demand but because of poor administration. To reduce the funding for, or abandon the scheme, would hinder a green recovery, make reaching the government’s target of net zero emissions by 2050 significantly harder and damage the UK’s credibility at COP26. But only a long-term programme can provide the benefits of green homes, support the levelling-up agenda and work towards the net zero target.
4) Commit the levelling up fund to low carbon regeneration
While the details of the fund have yet to be announced, we know that the new fund will invest in local infrastructure projects of up to £20m. Committing the fund to low carbon projects would necessitate a green, holistic place-based approach to provide local economic, social, and environmental benefits alongside progress towards net zero.
5) Further commitments to a green transport revolution
Easily the biggest pro-climate action from a UK government is the promise to end the sale of new petrol and diesel cars and vans by 2030 which will make huge oscillations overseas, positioning the UK at the forefront of electric car manufacturing. Imperative to this transition is the provision of a comprehensive support package for local authorities and businesses to ensure the necessary retraining and building of skills electric vehicle assembly and supply chains. The government should also go further by banning plug-in hybrid vehicles by 2030.
Locally, there is a need for levelling up and strong leadership towards a holistic low carbon transition. What is needed from this Budget is an ambitious plan that gives local authorities the financial, political, and regulatory certainty to empower local leaders to lead the recovery out of Covid-19 towards a low carbon and high employment future.
Throughout austerity following the financial crisis, the UK government was adamant that positive reform at scale was unaffordable. And yet, the coronavirus crisis has demonstrated that governments can intervene decisively and find the finances once the scale of the emergency is clear. In the initial government response to the pandemic last year, it seemed like the UK might have learned from its failings in the global financial crisis that led to an insipid recovery and stagflation. But they must continue to act with fiscal force. And this force must be devolved to the increasingly squeezed local authorities whose capacity and expertise has been stripped out, resulting in minimal local economic development of any kind.
There are lessons to be learnt from the pandemic. The government’s decisiveness and ambition in a national vaccination program is leading to a clear first-mover advantage – as evident by the strengthening pound. There is hope that this decisiveness is symptomatic of new behaviours, and that old persistent flaws, like austerity and pusillanimous stimulus policies, are a thing of the past.
Rishi Sunak needs to learn from the defeats and successes of this government. Britain is in pole position to lead with green recovery and longer-term clean growth – where first mover advantages, similarly, await. Now is the opportunity for Britain to lead on the world stage by embracing a green recovery and empowering all regions and levels of government to take charge of their own clean growth in the fight against climate change.
Grace Newcombe is lead clean growth researcher, Localis – www.localis.org.uk