Net zero ‘missing’ from Spending Review priorities

Industry leaders reacted with disappointment to the Chancellor’s statement, urging the government to go further to embed energy efficiency in infrastructure strategy.

Industry reacts

John Alker, director of policy and places at UKGBC

We welcome references to net zero in the National Infrastructure Strategy, which suggests the climate emergency is finally gaining traction in HM Treasury. In particular, it is encouraging to see projects intended to deliver net zero reflected so prominently in the remit of the new UK Infrastructure Bank.

However, we are disappointed to see that, despite widespread consensus, energy efficiency is not included as a national infrastructure priority, and that the only references to it in the National Infrastructure Strategy involve unlocking private investment. Greater public investment in energy efficiency, beyond the small sums confirmed on social housing and public buildings, will be needed in order to leverage substantial private investment; and this must be accompanied by a longer-term strategy to deliver certainty beyond the Green Homes Grant. The ‘Levelling-up’ Fund should be used to support this, through enabling local authorities to drive further action on energy efficiency at a local level.

Overall, there is clearly more to be done to ensure delivering a green recovery serves as the guiding light for all major investment and planning decisions. We look forward to further action to entrench net zero comprehensively into infrastructure spending and the planning system, notably in the Treasury’s Net Zero Review and other forthcoming strategies.”

Laura Ludlow, principal associate at Mills & Reeve

Chancellor Rishi Sunak’s explicit commitment in the Spending Review 2020 that “The recovery from Covid-19 must be green” will be welcomed by many. With increasing cries that time is running out ringing in their ears, the Government is now committing a substantial £12bn to deliver their “green industrial revolution”. Remember the UK is committed to net zero emissions by 2050 and needs to do more to meet this target. SR20 provides funding for the Prime Minister’s recently announced Ten Point Plan, which includes the following:

• £1.9bn investment in EV charging infrastructure (including rolling out rapid charging hubs at all motorway and major A-road service stations) and customer incentives;
• £1.1bn to make homes and buildings net zero ready. Home and buildings account for nearly a fifth of UK emissions and funding will be available to make public buildings greener and make housing more energy efficient, with low carbon energy heating. Although arguably unsuccessful to date, funding is being extended to the Green Homes Grant as part of this;
• £1bn for the Carbon Capture and Storage Fund and further investment in low carbon hydrogen production, offshore wind and nuclear power;
• £120m for 800 zero emission buses and £257m to improve cycling and walking infrastructure;
• finally, it is encouraging to see investment being allocated to protect natural resources and the environment.

Whilst these are positive steps demonstrating the Government’s drive to achieve the challenging 2050 targets, we wait to see how funds are applied in practice. The Government is committed to spending £3bn on building decarbonisation, but we have no details yet of how this will be implemented.

Coupled with their commitments to the green industrial revolution, SR20 also includes ambitious plans for the regeneration of towns and cities. The Levelling Up Fund promises £4bn of investment to improve the infrastructure and physical environment in England’s cities and towns. Councils will be able to bid for funds up to £20m to support high value local projects. Examples given include: new road schemes, railway station upgrades, bus lanes, regenerating eyesores, upgrading town centres and community infrastructure and local arts and culture. The project needs to be one with “visible impact”, supported by local MPs and delivered within this parliament.  Priority will be given to bids which drive growth and regeneration in places in need; those facing particular challenges; and areas that have received less government investment in recent years.

Levelling up is clearly one of the Government’s top priorities and much has been done to emphasise that the economic recovery must work for everyone in the UK, building on the Government’s commitment to its new voters in the previous “Red wall” areas and away from the previous Tory heartlands in the south of England.

The importance of local communities has been brought to the fore by the pandemic, with lockdown forcing us to focus on the area outside our front doors. Many communities are in desperate need of investment to rescue failing high streets (a problem only exacerbated by the pandemic) and deliver much-required local facilities. We need further details of how the Fund will operate in practice, but we are told a prospectus will be issued and the first round of competitions held in the new year. Rishi Sunak promises the Levelling Up Fund will deliver “what people want and places need”. We can argue over whether those are the same thing but what cannot be argued with is the fact that cash-strapped local authorities will welcome this investment. Communities in the new Tory strongholds should be planning their applications for regeneration funds now.

Melanie Leech, chief executive, British Property Federation

With many parts of our economy still very much in the eye of the Covid-19 storm – including the retail, hospitality and leisure sectors, and the commercial property owners supporting them – the Spending Review today was always going to be more difficult and shorter-term in its scope than we would have liked. While, as anticipated, the Chancellor kicked his statement off by setting a rather sombre scene, he did however set out a number of welcome decisions to lay the foundations for recovery, which must be followed through in the next few months.

Most notably, the long-awaited National Infrastructure Strategy and Green Book Review have been published today. New infrastructure investment to connect and modernise places, while delivering on the Government’s Net Zero Carbon commitments, will be fundamental to UK recovery, and the announcement of a new National Infrastructure Bank suggests the Government understands the need for a long-term strategy and commitment to attract private sector investment alongside public spending.

The outcome of the Green Book Review, which sets out changes to how government appraises and evaluates spending decisions, should also mean the private sector is able to partner more effectively with public investment to deliver wider economic, social and environmental benefits in an inclusive way across the country.

A new Levelling Up Fund of £4bn, underpinned by a place-based approach and managed collectively by the Treasury, the Department for Transport and MHCLG – is absolutely a step in the right direction. Town centres, however, urgently need this investment and so the bidding process must be as streamlined as possible. Given immediate pressures, local authorities must not be made to jump through hoops today to only fail in their bids later down the line. A short-term fund is no replacement for properly resourced local government.

It comes as little surprise that housing remains a top priority for the government, and with initial funding of £7.1bn over the next four years to unlock up to 860,000 new homes, clearly the Chancellor remains committed to funding an ambitious housebuilding programme.

Today’s announcements reflect that this is a one-year Spending Review, but provide further new money to Homes England to continue a variety of support mechanisms. The Government will need to continue to invest in housing delivery if it is to meet its target of 300,000 homes a year, and it has provided welcome support to ensure that housing delivery continues during the pandemic. That has taken various forms, allowing construction to continue and SDLT relief, for example. Our own statistics show build-to-rent development has been delivering new homes throughout the past year, with a strong pipeline going forward.

The freezing of the business rates multiplier is welcome additional relief for all businesses, but can only paper over the cracks. We would have liked to see some additional funding commitments for the Valuation Office Agency – to fund the reforms needed for a more modern and responsive business rates system. Business rates are an unsustainable burden on businesses trying to rebuild from the Covid-19 pandemic and the Government must bring forward the results of its fundamental review as soon as possible.

Carl Ennis, CEO of Siemens UK and Net Zero North West chairman

The Chancellor has begun to move the dial on the levelling up agenda today with a new national infrastructure bank to be headquartered in The North, levelling up fund, and commitment to rewrite the Green Book which will help tackle the entrenched North-South divide in investment decisions. On the green industrial revolution, the £12bn investment pledge is a welcome step forward but it is crucial that the Government now quickly follows up the Spending Review and National Infrastructure Strategy publication with the delayed Energy White Paper so we can get under the bonnet of its vision.

The scale of the net zero ambition is crystal clear, but industry requires more flesh on the bones and long-term policy certainty if we are to secure the level of private investment that the Prime Minister and Chancellor have targeted over the next decade to drive this agenda. As the region with the largest concentration of advanced manufacturing and chemical production in the UK, the North West has hit the ground running with our decarbonisation projects and is leading the way. A detailed decarbonisation blueprint from Government will provide the region with the springboard to do what we do best: innovate, invest, create high value jobs, and build the industries of the future.