Department for Business, Energy and Industrial Strategy              MPZ0049

Written evidence submitted by the Department for Business,

Energy and Industrial Strategy

Introduction

1.                Government welcomes the recent National Audit Office report into Local Government and Net Zero and recognises that local authorities can, and do, play an essential role in driving local climate action, with significant influence in many of the national priorities across energy, housing, and transport, which will be needed to achieve net zero. Across the UK, our local areas have already made great strides towards our net zero future and throughout the UK there are brilliant examples of local action, innovation, and excellence. The Government works closely with local actors and will set out further plans for Local Government in the Net Zero Strategy which is currently under development and due to be published prior to COP26.  

2.                The Department for Business, Energy & Industrial Strategy (BEIS) has overall responsibility in government for achieving net zero with The Ministry of Housing, Communities & Local Government (MHCLG) acting as a steward for the local government finance system and having overall responsibility for the planning system.  BEIS is responsible for coordinating with local authorities and other local actors on the effective design of policies, including the local delivery of net zero.  MHCLG assists by advising BEIS on effective forms of engagement with the local sector, and by ensuring policy design has regard for the local government finance and accountability system.

What should local authorities’ roles and responsibilities in reaching net zero by 2050 be? How clear are the expectations about the role of local authorities?

3.                Local Authorities are significant delivery partners on the main building schemes, including the Social Housing Decarbonisation Scheme, (SHDF) Public Sector Decarbonisation Scheme, (PSDS) and Local Authority Delivery phase 2 scheme (LAD2). Working in partnership with central government, local authorities (LAs) have a vital role in delivering net zero at the local level. For example, heat networks and public charge points are both crucial components of any 2050 scenario, and both are heavily reliant on local delivery to succeed.  The local role in the decarbonisation of individual sectors, such as transport and buildings, is set out in existing and upcoming sector strategies, such as the Transport Decarbonisation Plan and the Heat and Buildings Strategy.

4.                The local role is greater than the sum of these sector-specific functions.  By coordinating and optimising delivery of these functions LAs can improve the value for money of their actions and minimise disruption to residents and businesses.  We expect local authorities, in their normal public service provider role, to embed net zero principles throughout their actions. Local authorities are also well placed to support the public to adopt greener choices as they adopt new technologies and approaches: normalising attitudes and practices in their areas to promote climate-friendly behaviours. 

5.                The Government also recognises that local actors are often best placed to align local opportunities, resources and needs with strategic aims. Every area has different characteristics, which present different challenges which need to be overcome on our path to net zero. Local partners can use their expert knowledge about their places and communities to ensure that local opportunities are optimised. Community engagement and projects also need local delivery. Local government can help to galvanise the support and action amongst residents, businesses and communities needed to achieve our net zero ambitions.

6.                Where there is a clear role for LAs to deliver specific outcomes (such as on electric vehicles charge points) expectations have been made clear. A full list of specific outcomes that Central Government has identified as opportunities for Local Authorities can be accessed here: https://www.gov.uk/government/collections/local-government-climate-change-and-the-environment. Local Authorities can access key guidance and relevant information relating to Climate Change and the environment. We do not currently prescribe how Local Authorities should derive co-benefits which are best determined locally. 

7.                Government has drawn in views from the local sector to inform the Net Zero Strategy, which will elaborate on local authorities’ roles and responsibilities in net zero and reiterate the value and importance that central government places on addressing climate change at the local level. We will continue to engage with local government as we implement this Strategy.

What are the priorities for change or clarification to align the national planning framework with net zero?

8.                The National Planning Policy Framework already includes policies on how the planning system can contribute to a low carbon future in England. The Framework sets out that planning authorities should mitigate and adapt to climate change, including minimising greenhouse gas emissions and designing and shaping places that are resilient to, and appropriate for, current and future climate change impacts.

9.                The Planning for the Future White Paper set out that through our proposed reforms we will ensure the planning system supports our efforts to combat climate change and maximises environmental benefits, by ensuring the National Planning Policy Framework targets those areas where a reformed planning system can most effectively address climate change mitigation and adaptation and facilitate environmental improvements. We are reflecting on the detailed design of our current programme of planning reforms, in the light of the many consultation responses received, and will set out the proposed way forward in due course. 

10.            The Government also intends to clarify the longer-term role of local planning authorities in determining local energy efficiency standards for new homes. To provide some certainty in the immediate term, the Government has confirmed that we will not amend the Planning and Energy Act 2008, which means that local authorities will retain powers to set local energy efficiency standards that go beyond minimum standards set through Building Regulations.

What will need to be in place to ensure that the UK infrastructure bank loans to local authorities for net zero work are as effective as possible?

11.             The government has also established the UK Infrastructure Bank with an initial £12 billion of capital for the twin goals of tackling climate change and levelling up.  The Chancellor has said that this will be an enduring feature of our institutional landscape, providing funding, expertise and capacity to local governments and help them to realise their plans.  This model closely resembles the ‘Net Zero Development Bank’ proposed by UK100, a network of councillors from over 110 local authorities that are amongst the most dedicated to mitigating climate change. 

12.            The UK Infrastructure Bank is currently operating in an interim form, as it expands its capability and capacity. It will continue to refine the Local Authority Lending Function over the coming months.

What funding and resources are available for local authority work on net zero, and what are the priorities for improving local authority funding?

13.            Funding for local climate action comes from a combination of the Local Government Finance Settlement, other government grants and support schemes, borrowing, and private finance.  Collectively, this means there is a range of funding available for local authorities to act on climate change, however it would be misleading to set out a total figure incorporating all these potential sources.  It is for each local authority to determine how to manage their finances and use them in the delivery of their functions.  For examples, some have chosen to explore community bonds and crowdfunding.  A third of local authorities say their climate change plans will be cost-neutral by incorporating goals into existing service area strategies, drawing on the funding available for those services.

14.            One example of the many grant schemes available to Local Authorities is the Local Energy programme which has been supporting Local Enterprise Partnerships (LEPs), local authorities and communities in England to play a leading role in decarbonisation and clean growth. The programme was announced in 2017 as part of the Clean Growth Strategy.  Almost £22 million has been invested in the Local Energy programme to date. The programme has funded a range of measures designed to build local capacity and capability and encourage joined up working between local areas, investors and central government. These include:

1.                £13 million funding for five Local Energy Hubs across England. Each Hub is hosted by a lead local authority and works with LEPs and local authorities to increase their capacity to identify and deliver local energy projects and undertake the initial stages of project development up to the point where they can attract investment. Hubs have already supported over £60m of commissioned energy projects and are working on a pipeline of over £3bn of projects.  

2.                £1.6 million to fund all 38 LEPs in England to develop local energy strategies. The local energy strategies are feeding into Local Industrial Strategies and will identify a pipeline of investable projects for the Local Energy Hubs. 

3.                Good practice guidance, tools and resources including Parish Council Carbon Calculator, SCATTER and REMINDERS which are being developed through a series of pilot projects and will be made available for the benefit of all local areas on completion. 

4.                    Midlands Hub also ran the competition for delivery of the £6.4m GHG Skills Training Fund. The Hubs have also had a role in enabling two pilot studies, on LA scope to implement energy efficiency schemes tied to council tax reductions and social housing technical assessments.

5. A national finance conference and regional workshops, delivered in partnership with the Hubs and UK100, to bring together local authorities, developers, investors, and regulators to address the challenges of financing local low carbon projects (completed 2019). 

15.               In addition to the £22m provided to the Local Energy Programme, additional financial support for Economic Stimulus has also been provided. There are some important examples from an extensive range of schemes and engagement provided by government to support delivery in partnership with Local Government. These include:

1.                 Local authorities were able to bid directly for grants under LAD1A and 1B, totalling around £200m, and the recently closed Sustainable Warmth competition which has a total fund of £350m available, which are just two examples of the range of grants available in the last year.

2.                From March 2021, the Hubs have been delivering the £300m GHG Local Authority Delivery Phase 2 scheme (LAD2).

3.                £10m Rural Community Energy Fund to encourage and support rural communities to develop and benefit from renewable energy, now being delivered through the Local Energy Hubs. 

What should government’s analysis of net zero funding to local authorities focus on in the next Spending Review?

16.            Decisions on the forthcoming Spending Review will be made by the Chancellor. The NAO report into Local Government and Net Zero identifies £1.2 billion in grant funding available in 2020-2021 for local authorities to act on climate change, and notes that this is a sixteen-fold increase on the previous year.  However, the existence of specific grant funding does not reflect the totality of funding and resources available for local authority work on net zero. The NAO has focused primarily on grants available to local authorities for achieving specific net zero outcomes.  Less regard is given to funding with broader purposes that enable local authorities to incorporate net zero action into their wider functions.

Examples of these funds include:

1.                £4.8bn Levelling Up Fund which should be aligned to and support Net Zero goals: they should be based on low or zero carbon best practice; adopt and support innovative clean tech and/or support the growth of green skills and sustainable supply chains. The NAO makes only passing references to the Levelling Up fund as net zero outcomes are expected but not a mandatory success criterion, however, it is funds of this nature that afford LAs the flexibility to act on local opportunities for green recovery, and to align work on net zero with wider co-benefits.  As set out above, the unique value of local delivery is in the strategic alignment of co-benefits that cut across different industries and support local needs in tandem with the national carbon targets. In 2020 the Local Government Information Unit found that 34% of local authorities aim to make their climate change actions cost-neutral by incorporating goals into existing service area strategies. 

2.                £220m through the UK Community Renewal Fund to help areas prepare for the launch of the UK Shared Prosperity Fund.  As with the Levelling Up fund, investment made under this Fund should be able to demonstrate the extent of contribution to net zero objectives or wider environmental considerations.

3.                The UK Infrastructure Bank which has an initial £12 billion of capital for the twin goals of tackling climate change and levelling up.  The Chancellor has said that this will be an enduring feature of our institutional landscape, providing funding, expertise and capacity to local governments and help them to realise their plans.  This model closely resembles the ‘Net Zero Development Bank’ proposed by UK100, a network of councillors from over 110 local authorities that are amongst the most dedicated to mitigating climate change. 

17.            The NAO report also undervalues the importance of the core financial settlement (LG DEL) which MHCLG administers, although it does note that “the local authority settlement for 2021-22 provides the sector with an increase of up to 4.6% in cash terms in core spending power… compared with 2020-21”.  MHCLG provided the NAO with evidence that 72% of LAs say this is how they expect to fund work on climate change. LAs also receive funding for the execution of their functions that can be turned towards actions that contribute to the local delivery of net zero, by incorporating net zero principles into a wide range of council functions.  For example, LAs received funding from DfT for highway maintenance.  While in many cases this funding may not be sufficient or practical for purposes beyond essential repair, LAs can where appropriate, ensure that new road markings and signs support cycling and walking.

How is central government co-ordinating its engagement with local government on net zero?

18.            The Local Climate and Energy team in BEIS gathers evidence from local areas and works with policy teams across BEIS and other government departments to inform the development of national policy and programmes.  For example, officials in BEIS and MHCLG work formally with member network organisations like UK100 to advise on that organisation’s proposals for a local government policy framework for net zero. 

19.             We will be establishing and co-chairing a Net Zero Buildings Council, which aims to support the successful delivery of the Net Zero Strategy. The Council will bring together Government, industry and third sector to ensure that we are working together in effective partnership.

20.            BEIS has also established a Local Energy Contact Group, which provides a forum for invited representatives from LEPs, local authorities and community energy groups to provide input to emerging policy and programmes. This year they are organising community, local government, and mayoral round tables to involve these areas in Together for Our Planet in the run up to COP26. The Local energy Contact Group last met on July 8, 2021.

21.            Officials and ministers also hold frequent ad hoc meetings with individual councils, and with organisations such as the LGA and SOLACE. For example, On 5 August Director Generals from MHCG and BEIS met with regional representatives from the local government sector to seek views on how we might continue to improve the way government departments engage with LAs on net zero, and how MHCLG can best support that engagement.     

22.            Across government, other forms of engagement to date have included regularly convening groups with a focus on specific priority components of the government’s approach to climate change.  For example:

23.            To support communication across government, MHCLG has established the Cross-Whitehall Policy Group for Local Climate Action in early 2020 to ensure policy teams with LA-facing remits are fully networked and aware of key upcoming publications, engagement events and policy milestones.  This Policy Group has helped to ensure government strategies such as the Transport Decarbonisation Plan include dedicated sections to set out how key actions, decisions and responsibilities will be split across national, regional, and local government bodies.  The group has ensured policymakers across departments are in contact with each other so that the core messages for the local government sector are complementary, even across diverse subjects from heat networks to public charge points.

24.            MHCLG has also launched a landing site on gov.uk to improve the navigability of guidance, support and information that is available for local authorities seeking to act on climate change.  This is a simple service that MHCLG will develop and improve over time based on feedback from local authorities.

25.            For COP26 the President Designate has set up the UK Mayors and Regions Advisory Council with mayors and local authority leaders from across the UK.  We are also engaging with local authorities to encourage further climate ambition, particularly through joining campaigns ahead of COP26 such as the Race to Zero and Together for our Planet.

What role can local community groups play in helping local authorities achieve their net zero ambitions?

26.            The Government is supportive of community involvement in net zero action and recognises the valuable role that community groups can, and do, play in supporting the UKs national net zero targets.

27.            A key way in which local community groups currently support local areas to decarbonise is through the community energy sector. Community energy groups can be the catalysts for raising awareness and the promotion of green choices by the public such as the adoption of low carbon technology, a key outcome if we are to achieve our 2050 goals. We expect community energy will only play a small, but important, role in electricity decarbonisation. Community energy contributed 264.9MW in 2019[1] to a 47GW total of renewable energy generated in 2020.[2]

28.            Importantly there are social outcomes and localised economic benefits from community energy. Locally owned energy projects allow communities to either reduce their energy costs or to generate an income that can be reinvested in the area. Community energy can therefore be a driver for growth, through the creation of jobs and volunteering opportunities in the communities where projects are located.

29.            To support the sector, Government currently funds the Rural Community Energy Fund, which was launched in 2019. The £10 million scheme supports rural communities in England to develop renewable energy projects, which provide economic and social benefits to the community. As of August 2021, the fund has received 1,270 enquiries, 188 applications and awarded over £5million in grants to projects focusing on a variety of technologies for heat and energy generation including solar, wind and electric vehicle charging.

Conclusion

30.            The Government recognises that there are opportunities to better articulate the role that local government can play in achieving Net Zero. Departments across government are working closely with local and regional partners to understand what support the sector might need as we transition to net zero. 

31.            Reducing emissions to net zero will need a systematic, integrated transformation of all sectors of the economy and of society. Which is why the Government is developing the Net Zero Strategy, in advance of COP26, building on the foundations established in the Clean Growth Strategy. The strategy will be our delivery plan for CB6 and will set out a clear route map for the country to follow. This will provide greater clarity about the key initiatives and actions needed to decarbonise the UK, the role that local government can take in achieving this objective. This will underpin our future work together and be invaluable for local actors to understand their part in delivering net zero.

August 2021