Memorandum submitted by the Greater London Authority and

the London Development Agency (GJS36)

The Greater London Authority (GLA) and the London Development Agency (LDA) welcome this opportunity to give evidence to the Environmental Audit Committee's inquiry into Green Jobs and Skills. Our response to the Committee's lines of inquiry are set out below.

A. The degree to which the Government's long-term policy framework, including environmental regulations, tax changes or new market instruments, will encourage low-carbon investment and increase employment in environmental industries and their associated supply chains

1. The transition to a low carbon economy is urgent, and the targets to reduce UK carbon emissions by 85 per cent by 2050 shows a long-term commitment.

2. Yet we believe that the scale of support proposed, while a positive step, does not reflect the scale nor the urgency required; both to deliver significant carbon reductions and, importantly, to maximise the opportunities for UK companies to benefit from expanding global markets.

Need for greater coordination of governmental low-carbon activities

3. It is critical that the government sends the right signals and creates the framework and incentives to support a low-carbon economy. To be most effective, greater co-ordination is needed as political interventions can make the already sporadic landscape more confusing.

Establish a business-led taskforce to map fiscal and regulatory barriers

4. While seeking to maximise new measures to encourage low carbon investment and promote employment in environmental industries (EI), the government should assess the negative impact of existing measures, which may constrain the transition to a low carbon economy.

5. Therefore, government should consider establishing a business-led taskforce to map fiscal and regulatory barriers to the development of EI.

Provide coordinated, market-oriented training and employment support aligned to

2050 carbon reduction targets

6. We need to have a clear perspective on the broader UK skill requirements for driving growth in EI and its supply chain and would like to see this firmly embedded in future strategies, directly linked to the proposed changes in public spending.

7. Whilst skills and training funding is becoming available, often it does not match up with rapidly-evolving industry requirements and can be further compounded by government departments being too slow to respond, therefore forcing the private sector to 'fix' the problem themselves. If so, the wider UK population will not be able to fully capitalise on potential opportunities within EI.

8. It is important that there is a coordinated, market-oriented programme of training and employment support in place to deliver the skills to attract and retain EI, and to ensure the UK's competitiveness. We look forward to the Skills Strategy White Paper later in 2009.

9. Actions to be considered:

· Undertake skills audit of all new policies, environmentally focused or not;

· Use 2050 carbon reduction targets and match actions, financial and human resources required to meet this goal;

· Task the Commission for Employment and Skills to review all sector skills councils (SSCs) for implications of moving to a low carbon economy.

Promote greater awareness of potential markets at home and abroad beyond the EI sector

10. There is the need to promote awareness among the investment community of the potential scale of EI markets here and globally, and the existing strengths within the UK to maximise this opportunity.

11. An Ernst & Young report^{^[1]} in March 2009 estimates that if London merely took its share of expected global low carbon investment, it would lead to Ł3.7bn annually of opportunities. However, as GLA Economics found that for every job created in London, another job is created elsewhere in the UK, the long-term prize could be considerably higher if this investment improves UK business competitiveness in sectors where London is strong.

12. Of the five key sectors identified in the Low Carbon Industrial Strategy, London and the Greater South East region (GSE) has particular strengths in carbon capture and storage (CCS), offshore wind generation, nuclear and low carbon vehicles. However, sub-sectors where growth potential has been identified should be given greater priority and support:

· Renewables and building technologies and materials - these will form a major part of the focus for the Thames Gateway Institute for Sustainability;

· Carbon finance - London is a world leader with over 75 per cent of all carbon market trading desks and 90 per cent of the 34 venture capital clean technology companies with Ł186m investments;

· Waste management technologies - should be identified as an important low carbon sub-sector, specifically around waste to energy and processing/reprocessing technologies.

13. Research by the LDA in July 2008^{^[2]} found that other sectors are often key enablers for a low-carbon economy. Sectors where London is a market leader includes R&D, legal services, clean technology, environmental consultancy and business services such as engineering, architecture and project management.

14. It is important for the UK to act fast and decisively as other global cities are positioning themselves to win a leading share of this market.

Reinforce support for business, especially SMEs, to support commercialisation of new

environmental technologies

15. The GLA welcomes the government's incentives, including the Ł405m package allocated to support low carbon and green technologies and the Low Carbon Investment Fund.

· Increased Ł50m funding through the TSB should encourage innovation in areas of high growth potential such as EI technologies.

· Ł90m to fund CCS engineering and design studies is welcomed as the GSE region has the ability to implement these studies and act as a test bed.

· Expansion of the Carbon Trust small scale loan scheme for SMEs to take energy efficiency measures and the increase in Salix funds could have spill-over benefits to EI.

· New Ł4bn capital through the European Investment Bank to access debt and early stage finance will be of particular importance to EI.

16. While the UK has a good record in developing innovative environmental goods and services, it does not have a particularly good track record in commercialising them. In addition, market failure often prevents the rapid adoption of new and environmentally better technologies. Growth in already strong sectors relies on effective access to venture capital. This is not as developed as it could be, particularly at the lower end for 'angel' investment under Ł1m or at the upper end for large scale, transformative schemes.

17. Therefore, we believe that even in the current economic climate, the government could have gone further as many environmental activities contribute directly to stimulating economic activity and maximise employment opportunities.

18. The GLA sees access to finance, new vehicles for delivering this access, and new sources of investment as critical to EI success. We are committed to working closely with the government to maximise EI business support in London.

Align the tax regime to be a market leader in EI investment

19. The Ernst & Young report^{^[3]} in March 2009 found that for EI investment, the tax regime is the sixth most important factor after transport and communications infrastructure, productivity, labour costs, and political and economic stability. It also identified various countries which have tax incentives for EI investments. The US, in particular, is moving fast and may become attractive to existing UK expertise unless similar tax incentives are put in place.

Ensure public procurement supports environmental technologies through the Sustainable Procurement Taskforce

20. The public sector has a major opportunity through its procurement to encourage the development and adoption of environmental technologies. For example, the Mayor of London will help to stimulate the market for electric vehicles through plans to procure 1,000 electric vehicles across the GLA fleet by 2015.

21. However, it is recognised that short-term, risk averse and uncoordinated approaches to public procurement can stymie opportunities for new technologies and services.

22. The Sustainable Procurement Taskforce at the Office of Government Commerce could lead more effective public procurement to encourage new technologies.

Support Low Carbon Economic Areas in the GSE region

23. We would welcome discussions on Low Carbon Economic Areas in the GSE region, as it has the research strengths and industry base to help the UK become a market leader in CCS, offshore wind, nuclear and low carbon vehicles. Its projects around decentralised energy, district heating, energy efficiency and waste management sectors can provide the scale of intervention needed to create a step change in the approach being taken by the UK. In particular, a Low Carbon Economic Area in building technologies would be recommended.

B Whether the changes in public spending intended to help tackle the recession will maximise employment opportunities in environmental industries

Address key structural issues to maximise employment opportunities

1. The Ernst & Young report^{^[4]}of March 2009 identified key factors to transform into a low-carbon UK and maximise EI employment opportunities:

· access to stable, affordable finance and incentives for businesses and investors;

· a competitive tax regime;

· long-term planning commitments and removal of barriers within the planning system;

· a single point of contact for private enterprise to engage with government instead of the current fragmentation of public bodies involved with EI;

· greater predictability, collaboration and consistency in governmental policies to give investors confidence in emerging EI businesses.

2. The GLA would be keen to work with government to develop the appropriate policies and ensure that the UK remains competitive with the right skill sets to attract ongoing EI investment.

Use London's innovative low-carbon work to benefit the UK

3. The Mayor has made a commitment to reduce carbon dioxide emissions by 60 per cent by 2025. London's key programmes align with the Low Carbon Industrial Strategy.

· Waste-to-energy

· Retrofitting

· Electric vehicles

· Decentralised energy

4. The GLA is working to transform London into a low carbon, resource efficient city and would be pleased to share this work with the Committee. Its work includes:

· Buildings Energy Efficiency Programme: capital funding for retrofitting of public buildings for energy efficiency. Phase 1 is underway to deliver 25 per cent energy savings worth Ł1m per annum with wider roll-out from late 2009.

· Decentralised energy networks - District Heating Networks support the Renewable Energy Strategy as they provide energy infrastructure which maximises the effectiveness and efficiency of renewable heat technologies. The GLA plans a programme of work so that 25 per cent of London's energy will be delivered by decentralised energy by 2025.

· London Thames Gateway Heat Network - the GLA is looking to set up a heat transmission network to connect sources of low cost, low carbon heating to properties in the Thames Gateway.

· Better access to energy efficiency investments - London is lobbying for a fair share of the Ł2.8 billion energy supplier investment in energy efficiency / CERT funds.

· Green Enterprise District - the GLA is exploring the opportunity to create a green industry showcase district, including higher education, clean technology cluster, and a green industrial park.

· Green 500 - has identified nearly 120,000 tonnes of CO₂ savings across 200 members.

· Better Buildings Partnership - these companies hold 15 per cent of London's property assets, and are working on key issues such as green leases.

· 10 new low carbon zones - funding to catalyse development of 10 low carbon zones to reduce CO₂emissions by 20 per cent.

· Green Investment Fund - LDA is exploring a Green London Investment Fund, using public and private funds, to make investments in environmental programmes.

· JESSICA - Progression of the JESSICA mechanism to help fund initiatives supporting carbon reduction for businesses and support environmental infrastructure projects.

· Homes Retrofit programme - to retrofit 60 per cent of London's homes by 2015 and save 1 million tonnes of CO₂in collaboration with London boroughs.

· Retrofitting Academy - the LDA is looking to set up a Retrofitting Academy to help deliver fit-for-purpose skill sets.

· Commercial waste and recycling - The London Waste and Recycling Board funds improvements in waste management, especially commercial, through the creation of new waste facilities in London. Priorities are waste-to-energy, advanced thermal technologies, and waste processing / reprocessing facilities.

· Electric vehicles - our aim is to become the European electric car capital with plans to procure 1,000 electric vehicles across the GLA fleet and deliver 25,000 charge point across London by 2015.

· Mayor's Green Procurement Code - drive greater resource efficiency procurement behaviour in the private and public sector.

· Mayor's Parks and Trees programme - over four years, the Streets programme will deliver 10,000 trees in 40 priority areas while the Parks programme will improve the public realm offering of 11 parks.

C. The nature of the jobs that might be created in green industries as a result of the green fiscal stimulus

Job creation will be widely distributed across sectors and skills

1. The 'green economy' agenda is proving to be a lever for job creation and economic growth. The types of jobs that may be required range from higher-level engineers and designers to jobs requiring lesser qualifications such as installation and maintenance of emerging EI technologies. There is also the recognition of potential for transformation of current jobs to lower carbon activities.

2. The Ernst & Young report^{^[5]} of March 2009 estimates a 'most likely' scenario 14,000 gross jobs per annum from the Mayor's proposed carbon mitigation initiatives as below:

Scheme	R&D	Finance	PM / legal	Manuf	Install	FM / Ops	Total
Waste plants	100	22	228	75	229	606	1,260	9 per cent
Decentralised energy plants	52	22	101	27	599	47	848	6 per cent
Retrofitting -basic	7	43	55	1,252	1,252	,65	2,674	19 per cent
Retrofitting - extra	10	61	79	2,399	1,190	46	3,785	26 per cent
Retrofitting - micro generation	45	27	35	998	507	63	1,675	12 per cent
Public building energy efficiency	12	8	38	258	316	215	847	6 per cent
Commercial building retrofitting	35	23	112	785	930	551	2,436	17 per cent
Electric vehicles	114	32	6	19	352	309	832	6 per cent
Total	375	238	654	5,813	5,375	1,902	14,357
	3 per cent	2 per cent	5 per cent	40 per cent	37 per cent	13 per cent

3. Further investigation into 'green' jobs and skills for London is currently being scoped. The LDA Retrofit Academy, which is currently under development, also aims to build the evidence base on such 'green skills' and test a number of approaches to meet their needs, thereby opening up jobs and skills opportunities. We would be very pleased to share this data as it becomes available.

Identify effective stakeholder frameworks to maximise local job creation

4. There is a real need not only to create jobs, but also to identify effective stakeholder frameworks to ensure co-ordination with a range of partners to maximise this job creation and ensure that these meet identified local needs.

D. The Low Carbon Industrial Strategy, what it needs to deliver, how, and by when

1. While the Low Carbon Industrial Strategy makes reference to regional commitments to collaboration between Regional Development Agencies and other partners, and also highlights support for new Low Carbon Economic Areas, the GSE RDAs are not cited. (GSE includes East of England Development Agency, the LDA and South East England Development Agency).

2. Each of the GSE organisations is already working in its region and also across the GSE, to enable the transition to a low-carbon economy:

· The Low Carbon Economy as an established priority across GSE, including making the most of the GSE's shared assets and opportunities;

· Existing strengths in a number of sectors related to the low carbon economy including the presence of university and research leaders, international relationships, major and emerging companies along with associated supply chains;

· A number of real 'on the ground' projects which are being aligned more effectively across the GSE to deliver the greatest benefit to the UK economy;

· Experience and inclination to working across boundaries which will be essential to deliver the government's agenda at the scale and in the time needed to achieve significant results.

3. Our RDAs work effectively with each other and we would be pleased to offer learnings from this relationship. Given our important role in regional economic development, the GSE RDAs look forward to strengthening our direct involvement in the development and delivery of national low carbon policy.

E. The skills base for the UK environmental industries, and the effectiveness of Government policies to improve and enlarge it

London is working on a fit-for-purpose Retrofit Academy

1. Research suggests that there will be a skills shortage through the introduction of 'green' jobs and that without intervention, London will lack the skills to fulfil the jobs being created. While the market is likely to adjust, it may need time to do this (which could impact on delivery) and workless Londoners may not benefit fully.

2. The LDA is developing a virtual Retrofit Academy that will address a potential skills shortage and ensure that London's workforce is 'fit for purpose', and enable to access jobs in this rapidly growing market. To aid in the development of this subject area, identify approaches and ensure strategic mainstreaming, the LDA is establishing a Low Carbon Skills Group, which will draw together a wide range of key stakeholders and will help to guide policy, project development and implementation.

Skills base - Upskilling vs. new jobs - ascertain what is really required

3. The Skills Strategy White Paper later in 2009 is critical to determining specific skills shortages.

4. It is expected that many of the skills required for the expansion of EI will not be new. Green skills may often be simply additional skill-sets to those which people already possess, and may involve some additional technical training.

5. However, specialist skills may need to be created and cross-sectoral, effective stakeholder participation will be required in establishing effective frameworks for skills development. Some aspects of this are being tackled with the Office for Nuclear Development and The Office for Renewable Energy Deployment working to identify specific skills sets. There is also work in progress for the development of a National Skills Academy for Power.

6. Larger companies are already providing 'green skill' training to their own staff in areas which they see they are lacking, in order to stay competitive in their markets.^{^[6]}^, rather than hiring additional 'green' staff. This appears to be supported by anecdotal evidence with larger employers when asked about skills gaps in their own companies.

7. While there is undoubtedly new job creation in EI, these jobs may actually be spread across a wider number of people who work part-time in the 'green economy'.

8. This will have implications for formal training programmes:

· Wider provision of green skilling training;

· Additional upskilling short courses / modules should be considered in future Train to Gain and Skills for Jobs funding;

· A speed-to-market system to develop new market-relevant NVQs and higher education courses.

Ensure cross-sectoral consistency to skills provision across EI

9. According to a 2006 report for the LDA, Green Skills in London^{^[7]}, there are 15 out of the 25 SSCs which cover EI and there appears to be an opportunity for greater consistency. Also, green skills are not consistently embedded into National Occupational Standards or workplace training, which means that they may not be part of new training.

10. There is a range of tailored solutions in place to cope with the vocational training programmes which specific industries have identified. However, concerns remain over the ability to mainstream such training to ensure the widest involvement from as many industries and sectors as possible.

11. The GLA would welcome strong guidance from the government to ensure cross-sectoral consistency to skills provision across the EI.

Enhance third sector involvement across EI for social equity purposes

12. According a July 2008 report^{^[8]}, the waste management sector in London has a prevalence of third sector organisations, and these initiatives employ socially-excluded groups in innovative projects which have often led to subsequent deployment on a larger scale.

13. However, as many of the jobs in the green economy are likely to evolve from upskilling of existing private sector resources, socially excluded groups may not benefit from the opportunities arising in other EI sectors without intervention.

14. Considerable effort should be directed to enhance third sector involvement so that employment opportunities across the EI are accessible to all.

31 July 2009

[1] Prospectus for London, the 'Low Carbon Capital', prepared by Ernst & Young for the London Development Agency, March 2009

[2] The Commercial Opportunity for London Businesses in the Environment Sector, prepared by UK CEED for the London Development Agency, July 2008

[3] Prospectus for London, the 'Low Carbon Capital', prepared by Ernst & Young for the London Development Agency, March 2009

[4] Prospectus for London, the 'Low Carbon Capital', prepared by Ernst & Young for the London Development Agency, March 2009

[5] Prospectus for London, the 'Low Carbon Capital', prepared by Ernst & Young for the London Development Agency, March 2009

[6] Impacts of Climate Change on European Employment and Skills in the short to medium-term: Company Case Studies- prepared by GHK Consulting for the European Commission, May 2009

[7] Green Skills in London, prepared by SE² for the London Development Agency, August 2006

[8] The Commercial Opportunity for London Businesses in the Environment Sector, prepared by UK CEED for the London Development Agency, July 2008