We need a green recovery and we need it now
Mervyn Pilley of the Energy Systems and Technology Association (ESTA) is not mincing his words.
The Chancellor through his recent Summer economic update, has been working hard again to try and deal with the immense challenges facing him. In the face of an overwhelming consensus from the UK population that any post pandemic response should be based around tackling the environmental crisis more urgently through a ‘green recovery’, the general view of his announced plans is that it represents an encouraging but far too small start along the road. One must hope that an Autumn statement will go far faster and further. It was always likely to be ultra-difficult for the chancellor to keep everybody happy due to the costs of dealing with the pandemic and the resulting knock on effect of the economy with still a lot of unknows relating to the economic recovery.
All of that said, it would seem to make sense for more joined up policy thinking. In view of the likely huge increase in the UK unemployment figure it would surely be sensible to strive to invest in creating jobs in what should be a fast-growing sector – green jobs involving carbon reduction. Unfortunately, the Government have failed to do joined up thinking at sufficient scale. Whilst there are areas of hope, it is noticeable that the £9.2bn earmarked in the Conservative Party manifesto has not really begun to be spent. Yes, a manifesto is just that and not a policy but even that itself was not enough when compared with green recovery spends in other countries in Europe. There is a debate of just how much of the newly announced spending is new money and not just a rehash of previous announcements. About rehashed things, the green homes grant scheme is clearly a rehashed green deal policy and as was shown then it is very unlikely that homeowners will be sufficiently motivated by promises of part payment towards insulation of their homes.
Installers are needed, both for that scheme and retrofit at scale. Interestingly it is the creation of an army of installers that would potentially help solve a large part of the rise in unemployment. One must ask why the Government does not use the tax system far more to change behaviours. It is ironic that the Government withdrew the Enhanced Capital Allowances on the 1st April this year which has immediately taken away an incentive for UK PLC to invest in equipment offering energy efficiency solutions. Unfortunately, another example of how energy efficiency is treated as the poor relation of carbon reduction whereas it is an absolute cornerstone of a carbon reduction plan. The Government itself, albeit with a different Prime Minster has enshrined net zero targets in law so it must do what is needed to avoid breaking the law.
The installers labour force needed to carry out retrofit to residential and commercial property at the required level is going to be employed largely by SME’s. Main consultants may be the organisers/facilitators, but the SME supply chain will provide the labour. What does not help therefore is confusing policies that never seem to last for long on incentives to take on trainees and apprentices. Very small, one off grants are not going to solve the big problems. SME’s will have a lot of expensive barriers to jump through to get onto the Government’s chosen quality approval schemes for retrofit. A far greater incentivisation, and why not through the tax system, is going to be needed to persuade companies to take on a long term and sustainable workforce. This type of incentivisation would actually cost the Treasury less as the tax take would go up from PAYE on the employees as well as corporation tax on increased profits made by the businesses.
The same issues apply to the construction sector in general. Brexit and an ageing workforce coupled with the abject failure of schemes such as the apprenticeship levy have meant that the skills shortage in all areas of construction and engineering is only going to get worse.
Time is short for all of us. As hosts of the rearranged COP26 we should be leading the World in green policies Unfortunately the current ambition just is not there. There will need to be major increase in green policies in the Autumn budget.
Mervyn Pilley is Executive Director at ESTA