Aldersgate Group of leading businesses sets out how Treasury can deliver on 'green recovery' promises through this autumn's Budget
The government must overhaul public procurement, fiscal and monetary policies to ensure a durable economic recovery that is aligned with the UK's climate goals, according to a comprehensive report published by the Aldersgate Group today.
The group - which represents a number of leading UK corporates including Aviva Investors, Tesco, Sky, and Siemens, among others - is calling for a cohesive policy platform to be finalised for this autumn's Budget, combining near-term public investments in green projects with initiatives to stimulate longer term investment in low-carbon infrastructure, including the establishment of a National Investment Bank. Its recommendations mark a clear break with what it labels "the unproductive 'cut spending' policies of the past that led to inequality, historically low productivity growth, and failed to support the UK's climate and long-term net zero objectives".
"The UK did not seize the opportunity to transform its economy for the better when it responded to the 2008 Global Financial Crisis," said Nick Molho, executive director at the Aldersgate Group. "Twelve years on, there is mounting economic evidence that a recovery plan based on investment in low carbon infrastructure and industries is one of the most effective ways of creating jobs in the near term and driving greater productivity, innovation and resilience in the long-term."
The report recommends state investment in a raft of green initiatives, particularly energy efficiency retrofits and natural improvement projects, such as tree planting and wetland restoration. It also urges the government to invest in rolling out the networks and smart connectivity that will be critical in future decades, including fast broadband, electric vehicle charging infrastructure, and expanded public transport connections for low-income regions.
Alongside funding specific projects, the report calls for the creation of new institutions to nurture the development of the green investment ecosystem, including the establishment of a National investment Bank. Funded with £20bn in paid capital, the proposed Bank could work closely with the National Infrastructure Commission to establish a clean infrastructure pipeline, the report argues, helping mobilise investment in complex low-carbon projects, such as CCS and green hydrogen plants. A cohesive industrial strategy could also ensure such investment is channelled towards regions in need of economic regeneration, it adds.
The report also argues that alongside increased state investment the government should introduce a new low carbon skills strategy, aimed at tackling unemployment in the aftermath of Covid-19 while reskilling workers for the low-carbon transition and "embedding sustainability across the educational curriculum".
"This could start with a review of apprenticeship standards and T levels and the setting up of sustainability standards, metrics and labels for tertiary level education courses," the report suggests.
Dimitri Zenghelis, Senior Visiting Fellow at the London School of Economics and co-author of the report, said the UK was facing "a rare moment in history where [there is] an opportunity to rebuild on a path of clean, resilient and inclusive growth, aligned with the UK's long term objectives while generating skilled jobs today".
"Sustainable investment creates durable competitive jobs where they are needed most, while also helping to achieve long term objectives around net zero, resilience, productivity and levelling up," he added.
The report calls for the Autumn Budget to build on the Chancellor Rishi Sunak's recent jobs package, outlined in last week's Summer Economic Update. Sunak confirmed plans for a new £3bn energy efficiency programme, encompassing £1bn to upgrade public buildings and a £2bn Green Homes Grant, alongside a number of new clean tech R&D and nature restoration programmes. But the moves were criticised by some environmental groups, which argued that while fresh support for energy efficiency was welcome the government is yet to deliver on its promise to deliver a wide-ranging green recovery package.
The Aldersgate Group report argues that the Autumn Budget must be more ambitious if it is to deliver on Ministers' promises to unleash a "green industrial revolution" and place it at the heart of its wider economic recovery plans.
It also calls for a number of specific policies, including setting up a rising carbon price starting at £40 per tonne, which would align a future UK Emissions Trading Scheme with the government's net emissions zero target, and introducing binding regulatory standards to drive emission cuts in areas such as buildings and vehicles.
"The government's strategy needs to expand beyond retrofitting to invest in clean innovation, the roll out of smart systems to manage energy demand, upgrade the electricity grid, replace gas, expand EV facilities, encourage pedestrianisation and cycling in cities as well as manage natural capital," Zenghelis concluded.
Minister's comments came as the Low Carbon Vehicle Partnership announced name change to reflect shift in focus to zero carbon road transport
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