Why we cannot forget local places on the road to a greener economy

Over the next three decades the pursuit of net zero will transform local areas throughout the UK.

This change is set to bring opportunities for creating businesses and jobs in new green technologies like hydrogen, carbon capture, and renewables on land and at sea. The good news is that many of these projects are already underway, like the recent approval of major decarbonisation plans for six industrial clusters from South Wales to St. Fergus. 

But there will also be challenges to support workers in carbon-heavy industries, where jobs will be lost, to retrain and reskill for something new. And for many households, switching to an electric vehicle or replacing their gas boiler will be simply unaffordable. 

Local areas, each with their own economy, infrastructure, community and history will see very different transformations from net zero. The opportunities and challenges will not be the same in the South East as they will in Scotland. And even within regions, rural and urban communities will face different experiences despite being only a short drive apart. This is what our recent report Zeroing In finds – you can read the research in full and search for your own council with our interactive data tables and maps here. 

These differences between local communities mean that delivering effective policy for a just transition cannot be done entirely from the centre. The knowledge that local authorities, mayoral authorities, Local Enterprise Partnerships and businesses have about their areas means that they will play a key role in the transition – but they need to be empowered and supported to do so. Here are four ways that policy can help: 

1. Empower local authorities with new revenue and capital-raising abilities to support the transition to net zero 

As one of the most centralised countries in the developed world,  local government in the UK faces specific challenges with raising the funds needed to help local communities to decarbonise. While in Germany or Canada you may see a third or half of total tax revenue raised at a sub-national level, in the UK, we leverage just 5% from our mayoral and local authorities.  

Restrictive, short-term funding granted from the centre doesn’t allow councils to plan ahead and invest in green solutions for their communities. New revenue and capital-raising powers for local authorities would empower councils to take action on green skills, transport, local energy and homes. This may look like a devolved element of income tax or a broader range of local taxes, or even more innovative financing methods like local green bonds, which have already proved a success in Sweden. A handful of councils in the UK, like West Berkshire Council, have started to roll out similar green bonds to finance sustainability programmes, although still at a very small scale. 

2. Put green at the heart of Apprenticeship Levy reform to drive local green skills agendas 

In some sectors, many workers will need to reskill or upskill for new green jobs. The specific skillsets required for these jobs will differ across industries and geography, but local authorities and businesses are well-placed to know and plan for what is needed in their areas. Skills policy in England is a complex landscape with few devolved budgets (most recently the Adult Education Budget). Devolving Apprenticeship Levy funding to combined authorities would help to build a pipeline of skilled workers in line with local needs and timelines. Oversight from Local Enterprise Partnerships (LEPs) would also give local businesses a voice in how unspent Levy funds are allocated to ‘green work’.  

Currently, 25% of unspent funds can be transferred between businesses to avoid being recouped by the government. To help smaller businesses meet the training costs of net zero, larger businesses should be able to transfer them up to 50% of unspent funds for designated ‘green work’. 

3. Introduce a Rural Net Zero Strategy to ensure the countryside is not left behind 

Areas in the North and Midlands of England are set to see the greatest economic benefits from net zero, as found in our recent report Zeroing In. Many of these places are in industrial or urban areas, whereas rural areas will face a more disruptive transition. This is because of the distance from industrial centres of green work and unique transport challenges. Rural communities are much more reliant on cars to get around and face difficulties in installing electric vehicle charging points. 

 The Prime Minister has referred to net zero as a chance to level up the country. But levelling up within regions and communities will be as important as between regions. A Rural Net Zero Strategy would provide a clear roadmap for local authorities to support rural areas across homes, climate mitigation, grid capacity, transport and more. 

4. Provide tailored support to small-and-medium sized enterprises (SMEs) to help them decarbonise.  

SMEs need help from government and larger businesses to not only know how to decarbonise their business, but also to meet the cost of doing so. A Help to Green scheme, modeled off the Help to Grow programme, should provide industry-specific advice and subsidies on the costs of low-carbon technologies for SMEs. Businesses should also be encouraged to learn from each other on how to go green through ‘green mentor’ opportunities between larger firms and SMEs, coordinated through LEPs. 

The transition to net zero will be a golden opportunity for many areas of Britain, creating jobs and revitalizing local economies. But the transition is not without its challenges – jobs in some sectors will be lost along the way, and businesses and households will face at least some costs of decarbonising.  

To maximise the opportunities and minimise the disruption from net zero in local communities, we need new policies which empower local and mayoral authorities, and local business groups, to lead change. Whitehall cannot act alone here.  


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