‘An encouraging start’: Reaction as Treasury unveils £3bn boost for green economy

Chancellor Rishi Sunak has delivered his Summer Economic Update to Parliament, including a £3bn package to stimulate the UK's green economy in the wake of the Covid-19 pandemic, which has broadly been welcomed by key individuals and organisations.

‘An encouraging start’: Reaction as Treasury unveils £3bn boost for green economy

In total

Of the package, £2bn will be given as grants while the remaining £1bn will be accounted for through subsidies and loans.

£1bn will be spent on a Public Energy Fund, intended to decarbonise public sector buildings and social housing through the retrofitting of things like insulation, double or triple glazing, smart meters and modern heating systems.

£2bn has been earmarked for a new Green Homes Grant for those who do not live in social housing. The grant will cover two-thirds of the cost of verified energy-saving home improvements – rising to 100% for the poorest households – and be issued in voucher form once a government-approved supplier has provided a quote and the homeowner has accepted.

Applications for the scheme will open in early September. Sunak said that some homeowners would see their annual energy bills cut by £300 as a result of the grant, with the average annual saving likely to be in the region of £200. Up to 650,000 homes will be covered by the grant.

Elsewhere, Sunak confirmed a £50m initiative to trial early-stage energy efficiency and flexible energy technologies in England’s least energy-efficient and a £40m Green Jobs Challenge fund. The fund will help environmental charities and local authorities launch or expand nature conservation and restoration programmes in England.

Sunak claimed that these measures will collectively reduce the UK’s annual greenhouse gas emissions by half a megaton and create more than 140,000 full-time-equivalent roles. Given than more than 600,000 people were removed from payrolls between the start of March and end of May, this will come as welcome news. However, £3bn is but a fraction of the Government’s overall £160bn package.

Reaction from the green economy has been mixed but erring on the side of optimism. Here, we round up all the key reactionary statements from thought leaders, think tanks, trade bodies and NGOs across the UK’s green economy.

Environmental Audit Committee chair Philip Dunne MP said:

“From business groups to environmentalists, the Climate Assembly to Members of Parliament, calls to the Government on greening the economic recovery seem to have resonated.

“The £2bn allocated to improving energy efficiency in homes does appear to just be a one-year funding commitment that the Government has said can make 650,000 homes more energy efficient. There needs to be a long-term, sustainable approach that can help improve the energy efficiency of the 19 million UK homes EPC rated D or worse.

 “It is imperative this momentum is built upon in the Budget and Comprehensive Spending Review this Autumn, particularly as time is running out to make lasting policy decisions that will ensure the UK leads by example at COP26 and meets its own legal commitment of net-zero carbon emissions by 2050.”

The IPPR’s environmental justice commission lead Luke Murphy said:

“This announcement of investment in green jobs is a welcome first step to securing the clean economic recovery we need from Covid-19. However, if this is the sum total of the government’s ambition then it is well short of what is needed both for job creation and to get the UK on track for net-zero.

“The level of investment falls far short of the £30 billion public investment gap that needs to be filled to get the UK on track to meet net-zero and it is also considerably less than the £9.2 billion promised for energy efficiency in the Conservatives’ election manifesto.”

Ashurst Associate Adam Eskdale said:

“It is positive to see that the UK government recognises that sustainable goals can and should form part of our economic recovery. The potential behind the green economic jumpstart is being realised and implemented in many other countries, especially in Europe. However, the funding to be put forward by the UK government pales in comparison to that which is being committed by European counterparts.  

“The Chancellor’s announcement – while referring to energy efficiency (a key part of achieving energy transition and net-zero) – also looks remains silent on the other elements of that transition. This includes wider decarbonisation, electric vehicles and charging infrastructure, digitalisation and technology to integrate more renewables.”

Groundwork’s chief executive Graham Duxbury said:

“It’s encouraging that we’re starting to see the Government deliver on its promises to invest in a green recovery.  Improving the energy efficiency of our homes and public buildings is a vital part of the plan, but this needs to be matched by a commitment to fund independent advice for householders, particularly those who are living in fuel poverty or in substandard rented accommodation. 

“We [also] want to see investment in expanding and improving our green infrastructure alongside construction. The pandemic has highlighted how much we value being able to connect with nature but also the inequality that exists in terms of who has good green spaces on their doorstep.  As well as retrofitting our homes we need to refurbish our neighbourhoods, working with communities to upgrade the local environment so that we reduce air pollution, prevent flooding and preserve biodiversity.”

UKGBC chief executive Julie Hirigoyen said:

“Improving the energy efficiency of buildings is crucial for reducing our emissions…. this announcement of £3bn is a welcome first step.  But it is essential that the funding announced this week is not just another one-off that creates boom and bust in the energy efficiency industry. This funding needs to be part of a comprehensive plan to improve the whole of the UK’s building stock, creating tens of thousands of jobs for the long term, not here-today-gone-tomorrow.

“That will only happen if policies are put in place that will build business confidence, upskill tradespeople and grow capacity in the retrofit market. The quality of the upgrade work must also be put at the forefront of the Government’s approach, with measures in place to ensure work is carried out to the highest technical standards by qualified installers.

“Government must also set about creating long-term consumer demand for green home upgrades, bringing forward a range of attractive financing options and incentives like variable stamp duty to make greener homes cheaper to buy.”

National Insulation Association chair Derek Horrocks said:

“The benefits that come from improving the quality of our homes are substantial on any level but particularly now as we come out of the crisis. Jobs have been lost, incomes have dipped and at the same time energy bills have risen because we are spending more time at home. For anyone living in or at risk of being affected by fuel poverty, this is critical – and the best way to tackle the issue is to improve the quality of our homes.

Providing support to those in need must take priority, but incentivizing the deep street by street retrofits that will be needed to achieve our climate targets will drive uptake in all homes below standard; this makes sense when it can be done at the same time. If we are going to ‘build back better,’ it is now time to turn promises into action.”

Aldersgate Group executive director Nick Molho said: “It is positive that the Chancellor wants to align the recovery effort with the UK’s climate, environmental and clean growth objectives, but the size of the package is nowhere near in line with the scale of the investment challenge needed to kickstart the recovery and put the UK on track for net-zero emissions. The £1bn focused on improving energy efficiency in public buildings is a welcome move, but it is out of kilter with the £9.2bn earmarked in the Conservative Party Manifesto for energy efficiency retrofits. It is therefore important that this week’s announcements be only a first step ahead of a more meaningful package and set of measures to be announced at the forthcoming Autumn Budget.”
“Beyond the need to commit public investment to support shovel ready projects and early-stage innovation trials, it is critical that the government puts forward a comprehensive policy plan in the autumn to drive private sector investment towards the low carbon and environmentally resilient infrastructure needed to put the UK on track for its net-zero and nature restoration targets.”

Friends of the Earth’s climate specialist Muna Suleiman said:

“If this announcement was supposed to be a bold and ambitious move towards a greener and fairer world, it has massively underestimated the scale of the problem. The recovery plan should offer a unique chance to reimagine what the future could look like, but so far this plan shows that the government is still keeping its feet firmly in the past.”

Bryan Cave Leighton Paisner partner Nicole Bigby said:

“The Chancellor’s ambition to level up on infrastructure with today’s announcements of investments in new green homes and energy efficiency in public buildings is a welcome first step in building a more sustainable, inclusive, greener recovery.

“The UK is uniquely placed to build on this commitment and expand its scope – not only in response to active business engagement around transitioning business models and generating sustainable goods and services to boost innovation, productivity and jobs – but as part of its global leadership in the lead up to COP26 in Glasgow and as the UK assumes the Presidency of the G7 in 2021. Setting out a structured framework for policy and economic engagement with business to fully leverage these opportunities would be a valuable next step in driving a resilient recovery.”

Ramboll’s UK managing principal for environment & health Philippa Spence said:

“The £3bn package to bolster green jobs is a welcome measure from the government, but further needs to be done to deliver a green revolution and reaffirm the UK as the undisputed leader in green innovation. 

“Addressing the emissions issue in existing public building stock is certainly positive, but the carbon crisis cannot be attributed to just a handful of sectors. Decarbonisation requires considerable and collaborative change across all industries, but changing deep-rooted mindsets will require further government support schemes and funding. Existing funding programmes are already making an impact where they are needed most, but if we are to make a real difference, the government needs to put its money where its mouth is.”

Tonik Energy’s chief executive and co-founder Chris Russell said:

“The recovery package is definitely a step in the right direction from the Government in encouraging households to invest in improving the energy efficiency of their homes but more could be done through the self-generation of energy via solar panels and the installation of electric vehicle (EV) charge points. This will bear fruit in the long term as more people are able to generate their own green energy and it will accelerate the adoption of EVs at a mass-market level.” 

The Association for Decentralised Energy’s head of policy Caroline Bragg said:

“This retrofit investment from the Chancellor will support thousands of jobs, reduce energy bills and make homes healthier and lower carbon. It will be welcome news to the many retrofit workers about to come off furlough and will stimulate future jobs growth.

“But to really be ‘retrofit Rishi’, the Chancellor will need to back a multi-year national buildings programme, including social housing, owner-occupied and the private rented sector, to ensure every building in the UK is fit for the future.”

SUEZ UK’s chief executive John Scanlon said:

The Treasury is sending a strong message about its support for a green recovery with funding set to be allocated for retrofitting insulation, planting trees and greening spaces. 

“We would like to see Government go further and accelerate the series of reforms linked to its Resources and Waste Strategy that are now three years in the making,  as we are ready to continue to invest to help bring about a circular economy fit for UK 2050 net-zero carbon targets and beyond. Once Government finalises the detail of these reforms, companies like SUEZ within the resource management and recycling sectors, will be able to unlock billions of pounds of private sector investment in new infrastructure across the value chain, stimulating a raft of many more green jobs and youth skills training to sustain further economic growth and helping preserve our finite reserves of natural capital.”

PwC UK’s head of energy and utilities Steve Jennings commented:

“A recent report published by PwC and Energy UK highlighted that 60% of consumers are more engaged with their energy use than before lockdown, which means the timing of this grant scheme is coming as people take a greater interest in the impact of their energy use, both in terms of the environment and their pockets. The roll-out of smart meters and time of use tariffs will play its part in complementing this, and we await further initiatives from the Government as we aim to meet the Net Zero target.

“As we begin to rebuild our economy following the onset of the COVID-19 crisis, it is clear that there is an opportunity to put clean energy at the heart of a cleaner UK. The likes of a heat sector deal that supports the development and installation of low carbon alternatives to gas boilers would create further jobs and save consumers hundreds of pounds a year. Measures like this, alongside a series of major infrastructure programmes to upgrade our housing, decarbonise transport and create a modern, flexible energy system are crucial to the future of a greener UK.” 

 Mitie’s managing director for sustainability and energy services Pradyumna Pandit said:

“We’re pleased to see government leading by example with the announcement of a £1 billion fund to make public sector buildings more energy efficient. However, with around 65% of the commercial building stock that will be used in 2060 already built, if the UK is going to meet its net zero emissions targets the government needs to encourage the private sector to make green investments too. As companies begin to get back to business, now is the time to ensure that green thinking is leading the UK’s economic recovery.”

Sarah George

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