DWE0015

Written evidence submitted by UK100

Overview

This important inquiry must give sufficient weight and focus to considering what skills the UK workforce need to deliver a strong Net Zero economy in line with the Government's mandated target to reach Net Zero emissions by 2050. As highlighted by the Government’s Net Zero Strategy:

“The UK has long led the way in tackling climate change, and immediate action to reduce emissions brings enormous economic opportunities to revitalise our economy and deliver on our priority to level up the country. Across the globe, as governments, people and businesses rise to this challenge, a growing global green economy has the potential to create millions of new jobs.”[1]

All workforce development must factor in reaching Net Zero as well as growing the economy - the two must go hand in hand and this submission is framed in this context.

Moreover, as local authorities are central to both local skills development and Net Zero delivery. The Government was clear in the Net Zero Strategy that there was a need for a coordinated approach bringing national and local together. This response focuses on the local authority role in developing the skills the UK workforce needs to deliver a strong economy and the transition to Net Zero.

We identify two key barriers that are holding them back:

1. The government's focus on employer-led approaches to skills development does not account for or address the lag in employer demand for skills to deliver Net Zero

2. Competitive and short-term local authority funding does not support a long-term strategic approach to local skills development or Net Zero delivery

We identify three key recommendations for the government on developing the skills that will deliver a strong Net Zero economy:

1.      Develop a Skills for Net Zero framework for delivery incorporating local and national action

2.      Embed Skills for Net Zero funding into local authority settlements

3.      Introduce a national strategy, led by local authorities, for home energy efficiency

Introduction

Having the right skills in the right parts of the country are the most critical enablers to achieving the Government’s Net Zero targets and a strong economy.

But how the transition to Net Zero or the skills it will require will be delivered is not yet addressed coherently by government policy.

There is no agreed definition of the ‘green’ jobs or skills nearly two years after the government launched the ‘Green Jobs Task Force’[2] and its Ten Point Plan for a Green Industrial Revolution. Without this, it is challenging to identify where skills development can best be focused or deployed. But available analysis suggests there are significant skills for Net Zero shortages in every major economic sector across every region.[3]

Local authorities are ambitious and well placed to facilitate projects and collaborative partnerships with employers, education and skills providers, communities and other key stakeholders to develop the skills the UK workforce needs to deliver a strong Net Zero economy but current policies and funding mechanisms are inhibiting progress.

The defining feature of the government’s skills strategy is that it be employer-led but this approach alone will not deliver at the pace and scale required because the market moves too slowly to unlock employer demand for future skills.

There is no single organisation with overarching responsibility for skills development and coordination nationally or locally. In 2021 there were 49 separate national employment and skills services and schemes in England, overseen by nine government departments and agencies.[4] The National Audit Office (NAO) found the system to be disjointed, concluding that employers and training providers find it hard to navigate.[5]

Recent UK100’s research - Local Net Zero Delivery Progress Reports[6] identify the areas in which local Net Zero delivery has been signposted by Government policy and reflect on progress against these developments. Our research found that the ability of local authorities to transform places, establish long term programmes and build up a skilled local workforce are all being limited by a lack of detail on the Government’s strategic direction and a lack of resources to support local efforts.

Policies to deliver both skills development and Net Zero lack coherent frameworks, with each made up instead of a series of piecemeal policies. These two policy areas are not sufficiently integrated with each other. Whilst highlighted as centrally important in strategies, the important facilitation role played by local authorities is not sufficiently defined or supported in the policies to deliver either.

We welcome local authority representation on the Green Jobs Delivery Group, although how the recommendations of the group will be taken forward is an area where there is no detailed information at present. Similarly, the Government’s Local Net Zero Forum has identified capacity and capability as a priority issue to focus on, but it is not yet clear that skills development will be a central part of this piece of work. Whilst the initiatives are running in parallel and informing each other, how this is happening in practice and how skills development will feed more cohesively into Net Zero delivery and vice versa is still very unclear and must be addressed as a priority.

Building on our research, UK100 will soon publish new insight into the barriers facing local authorities in facilitating the development of local skills for Net Zero. Our recommendations are informed by this work and that of other organisations, including the NAO recommendation for the Department for Education to develop a skills strategy and supporting implementation plan that includes action to show “how central and local government will work together to support skills development in local places”.[7]

Key barriers

1. The government's focus on employer-led approaches to skills development does not account for or address the lag in employer demand for the skills required to deliver Net Zero

With regard to the employer-led system the NAO say, “from the evidence we have seen, it is unclear whether the conditions are in place for this to be implemented successfully, in particular whether employers are ready to engage to the extent that will be needed to achieve a step-change in performance.”[8]

Our members agree, telling us that the market moves too slowly to drive employer demand for the skills needed to deliver Net Zero. A framework for delivery of skills for Net Zero that incorporates local and national action would stimulate employer demand. Such a framework must include messaging, data to improve the understanding of current and future skills needs and payments that reward green procurement.

2.  Local authority funding is competitive and too short-term

Local authority funding is too often competitive and too short-term to deliver a local long-term strategic approach which means local authority work is not as impactful or cost effective as it could be. Many projects require that funds be spent each year which prevents them from taking a more strategic approach.

And with a nascent market which features hundreds of small and local businesses, local coordination and support is required to provide information and encourage investment in such skills development. Such programmes could have transformative impacts over the future of the workforce and should be prioritised with adequate funding for local authorities to deliver.

Recommendations for the government

Recommendation 1:  Develop a Skills for Net Zero framework for delivery incorporating local and national action

To unlock employer demand for skills the government should bring together the fragmented areas of policy relating to skills for Net Zero at the local level into a national framework incorporating local and national action.

Relevant policies should be consolidated at the local authority level where it makes sense to do, for example some sectors such as retrofit are well suited to a strategic place deal while other sectors, such as nuclear are more suited to a national sector deal. 

The framework needs a defined leadership structure which could take the form of a new Skills for Net Zero Commissioner to oversee and commission local skills development programmes. 

The framework should:

●        Define skills for Net Zero and develop meaningful positive messaging around potential careers for a diverse range of people

●        Define the role of employers including how they can sponsor training and reskilling

●        Define the local authority facilitation role in developing skills for Net Zero

●        Provide for better data collection and labour market analysis that identifies the current and future skills needs of each locality, clearly identifying the skills required in each geographic area will stimulate local employer demand

●        Identify the technologies the government plans to invest in and provide incentives, including additional funding, to unlock local employer demand for those technologies

●        Introduce systematic payments for local authorities to reward green procurement to drive behaviour change from local businesses and suppliers and correct the lag in supply chains.

Recommendation 2 - Embed funding for skills for Net Zero into local authority funding settlements

Local authority funding needs to be more long-term, strategic and coherent.

Local authorities should be able to access long-term devolved funding to strategically design local services but current funding for both Net Zero and skills delivery rely too much on short-term competitive bids. Funding the facilitation and development of skills for Net Zero should be embedded in local authority funding settlements to systematically build in a strategic approach.

Local authority funding settlements do not reward greener processes which would encourage behaviour changes by local employers.

As explained above a key challenge is a skills market that moves too slowly resulting in a lack of demand for them from local businesses. Government funding designed to stimulate the market, has been too piecemeal and too short term to create the certainty and confidence for businesses to change their practices and processes.

The strategy should:

●        Allocate a dedicated long-term budget to local authorities for skills for Net Zero delivery 

●        Change local authority tendering processes so that reduced carbon footprints become standard requirements 

●        Reward local authorities for greener practices and processes to stimulate skills demand across the local area

●        Introduce additional payments for local authorities to put in place strategies to incentivise businesses and suppliers to change their behaviour.

Recommendation 3 - Introduce a national strategy, led by local authorities, for home energy efficiency

Retrofitting existing buildings is arguably the most important infrastructure challenge for reaching Net Zero and will only be possible if policies and funding are put in place to develop local skills for delivery.

As outlined by UK100 in our recent Heat and Buildings progress report[9] and by the CCC[10] in its 2022 progress report to the Parliament this significant policy gap needs urgent attention. It will require significant investment and planning but has the potential to bring huge opportunities, offering the triple win of emissions reductions, lifting families out of fuel poverty, and creating new jobs.

Government should work with local authorities, the construction industry and skills providers to develop a nationally funded locally delivered strategy to deliver home efficiency and address the acute shortage of skills for delivery. This includes sufficient investment for further education providers to fund training programmes, including investing in expensive equipment such as heat pumps for trainees to practice on. 

Local authorities have already demonstrated that they are well-placed to act on this having successfully delivered on their part of the Green Homes Grant, the Public Sector Decarbonisation Scheme, the Social Housing Decarbonisation Fund and other schemes of the devolved governments. Many local authorities are doing what they can to ensure that all new and existing buildings and homes meet the highest efficiency standards, in particular the phasing out of gas boilers which is essential if our buildings are to contribute to rather than detract from Net Zero commitments. But tell us that the current lack of national policies to drive home energy efficiency has led to a decimated retrofit market. 

A locally based package of targeted public investment to decarbonise and retrofit social housing and public buildings will support the growth of local supply chains, give the market confidence and create a ready skills pipeline. Local authorities can play a vital role through retrofitting local social housing stock and other public buildings under their control. Social housing also typically consists of large numbers of similar properties and social landlords tend to own multiple dwellings, which help to reduce some of the barriers to retrofitting at scale. Unlocking this potential first for social housing can offer a robust platform from which wider energy efficiency transformation could take place. 

The strategy should:

●        Start with local authorities housing stock providing sufficient government investment to kickstart the market and develop the local skills for delivery 

●        Provide sufficient investment to enable further education providers to fund training programmes, including investing in expensive equipment such as heat pumps in for trainees to practice on

●        Be designed to overcome the fact that the return on investment is over a long period

●        Include incentive for homeowners to make their homes more energy efficient

●        Include measures to leverage further private investment

October 2022