A local funding formula can help address the UK’s net zero postcode lottery

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The views expressed are those of the author and do not necessarily reflect the position of FORESIGHT Climate & Energy

Coordinated and fair funding would empower local areas to deliver net zero

In moments of existential climate dread, we forget to look to local authorities as our saviours. Perhaps we should.

In the UK, there is a good chance you live in an area that has declared a “climate emergency”—83% have, according to CAPE, a database which tracks council climate action plans in the UK. But before that is dismissed simply as hot air, local authorities in the UK have power or influence over about a third of the country’s emissions.

This share will only increase as we confront the more difficult bottom-up and behavioural aspects of the energy transition, in contrast to progress to date from centrally-driven decarbonisation of our power system, unbeknownst to the general public.

Our energy structure is moving from a centralised system built around fossil fuel generation to a decentralised one powered by renewables and built around people. Therefore, we need place-based solutions for buildings, transport, waste and land use, alongside an increasing focus on adapting to the effects of climate change.

Trends towards place-based net zero delivery may well converge with a political trend in the UK, with both major political parties committed to further devolution. This should not mean local leaders going it alone, but having agency within a coordinated national strategy.

And local areas should take solace in the fact that, while their own challenges will vary, there are huge similarities and synergies too.

FUNDING FIX

However, there is one barrier above all that local authorities point to: funding. Public funding alone is not going to get us to net zero but is critical to, among other things, leverage significant private investment.

The distribution and operation of funding to local authorities is a mess of one-off dedicated grant schemes. In many cases, local authorities are competing with each other. While successfully supporting a cottage industry of consultants writing funding applications, the system is desperately failing to match the scale for the required transformational change spanning multiple decades.

The funding issue is not just one of coherent delivery but of fairness. There are significant regional variations in UK emissions and actions to cut them. Some of the hardest-hit local economies are not the areas reaping the benefits of net zero: green jobs, cheaper fuel and energy bills, and better air quality.

UNEVEN DISTRIBUTION

Our current approach to funding is creating a postcode lottery at best, and at worst making net zero the reserve of the affluent.

Take EV charging infrastructure. On the face of it, it is the start of a success story. In the past five years, total public charge points in the UK have gone from just over 10,000 to just over 37,000. But London has seen most of that growth—today there are about 750 Londoners for every public EV charge point; in the North West of England, this is about 3500 people per charge point, according to the UK’s Department for Transport.

For other essential local services—schools, nurseries, police—the UK has national funding formulae to allocate resources efficiently and fairly. A similar system should be in place for decarbonisation. A net zero funding formula would consolidate the myriad of fragmented grants into a coordinated funding stream which empowers local authorities to deliver lasting place-based policy.

To retrofit our homes—which are particularly reliant on local planning and supply chains—local leaders could consider innovative approaches which benefit from economies of scale and local marketing, rather than grants aimed at engaged individual households.

Local councils may be more able to pull their own levers to drive behaviour change, such as council tax rebates for households that maintain green spaces or that flex energy consumption to times when it is cleanest. They could also use funds to better mitigate the impact of regressive new taxes to support public acceptability—something which would help the contentious ultra-low emission zone in London gain wider support.

DIFFICULT CHOICES

A funding formula can be designed to target resources in line with challenges communities face, such as leaky housing stock or greater reliance on cars in rural areas. It can also respond to priorities of the day, whether that is developing post-industrial areas, targeting deprived areas or addressing regional grid congestion.

There will be hard distributional choices, as with other funding formulae. Politicians would be wary of a “black hole” of funds to local authorities, over which there is a legitimate fear of losing control and a less legitimate fear of losing credit. And it is a big administrative undertaking, including funding conditions, reporting and accountability.

But the fact is that local authorities are already delivering many aspects of the net zero transition, just inconsistently. •

If you have a thoughtful response to the opinions expressed here or if you have an idea for a thought leadership article regarding an aspect of the global energy transition, please send a short pitch of 200 words outlining your thoughts and credentials to: opinion@foresightdk.com.