Memorandum submitted by the Sustainable
Development Commission
THE SUSTAINABLE
DEVELOPMENT COMMISSION
1. The Sustainable Development Commission
is the Government's independent adviser on sustainable development,
reporting to the Prime Minister, the First Ministers of Scotland
and Wales and the First Minister and Deputy First Minister of
Northern Ireland. We have been working closely with DIUS on skills
policy; most recently we have contributed to the cross departmental
high level forum on LCREE skills and the Windsor Consultation
on low carbon skills, and, with the TUC and the LSC, convened
a round table for the unions, business and the skills sector on
sustainable skills; we have also advised on practical steps DIUS's
skills and innovation directorates should take to play a more
active role in the shift to a low carbon economy.
SUMMARY
2. The Government has stated that the move
to a sustainable and low carbon economy requires "industrial
activism," including interventions to deliver the skills
required. Without these interventions the UK may lose out in international
markets and fail to meet its carbon emission targets. This means
that energy and other policies must send clear signals to industry
about the nature of future demand, steps must be taken to ensure
industry, particularly SMEs, are in a position to respond to these
signals and invest in skills, and the Government must ensure that
the skills sector is in a position to respond to the resulting
demand for training. Unfortunately, although this strategy may
be accepted in theory by the Government, it is not being implemented
effectively. There has been much discussion and considerable activity,
but no real concerted programme is in place to ensure the momentum
need to turn this kind of strategy into action. To put this right,
three things are essential: better co-ordination of policy, crystal
clarity that this is a Ministerial priority, and a timetable for
the period from now to spring of next year. This memorandum concludes
with key milestones for that timetable.
BACKGROUND
3. The Government believes we need to move
to a sustainable and low carbon economy and the social returns
of such a move are well established: reduced reliance on potentially
insecure imported energy resources, reduced carbon emissions,
savings from lower fuel bills and the protection and creation
of a significant number of relatively high value added jobs in
both the long and short term. The Government is also clear that
market forces alone will not bring this about: significant "industrial
activism"—and "skills activism"—is
required.
4. We agree that this "industrial activism"
is needed. In our pre-Budget submission "A Sustainable New
Deal" we convened a number of estimates about the job creation
potential of a "green fiscal stimulus" and estimated
that an investment of £30 billion would create c. 800,000 jobs
(mainly in renewables, retrofit, new buildings, other energy efficiency
measures and infrastructure improvements).[1]
As Deutsche Bank has argued, "one of the reasons that the
'green sweet spot' is an attractive focus for an economic stimulus
is the labour intensity of many of its sectors".[2]
In reality this level of stimulus is now unlikely given the outlook
for public spending, however that makes government's role in facilitating
and enabling private sector investment all the more important.
An important part of that role is the intervention needed to deliver
the skills required ("green skills"), whether these
are sector specific (eg those needed for "the Great British
Refurb") or useful in all sectors (eg resource management
skills).
5. While we believe the Government's overall
objectives in this regard are sound, words are not being matched
by deeds. As business attendees at a recent Windsor "summit"
made clear, it is time to stop talking and start taking action.
ANALYSIS AND
STRATEGY
6. The following analysis of the "green
skills" problem and its solution is now widely but not universally
accepted (NB "green skills" is used as a shorthand for
not only sector specific skills such as those needed for "the
Great British Refurb" but also those skills and capacities
that are needed in all sectors, such as resource management and
carbon accounting, understanding risk and the precautionary principle,
critical thinking and change management. We restate the analysis
here as context.
7. Government interventions around the world
are creating a market for low carbon goods and services, from
the urgent and immediate such as retrofit, or increasing carbon
and resource efficiency in industry and the public sector, to
those which will become important in the longer term, such as
electric cars. To the extent that these interventions send clear
and unambiguous signals about the nature of future demand, investment
in the relevant goods and services will be strong; to the extent
that the signals are ambiguous or weak, investment will be relatively
weak.
8. As things stand in the UK, these signals
are not reaching industry—and indeed the public sector—as
clearly as they could: the Government has set ambitious emissions
targets for 2050 and 2020, but there is widespread scepticism,
expressed at several seminars and fora for business that we have
attended, as to its intentions in the short to medium term that
frames most business decisions: will it create either the regulatory
and fiscal regime or the government investment programme that
will drive the necessary commercial investment in green skills
(whether sector specific or useful in all sectors)? So for example
potential investors in renewable energy have doubts about the
future planning regime and investors in retrofit have doubts about
financing plans. Investors in all sectors are uncertain about
the future price of carbon or even the Government's commitment
to ensuring a carbon price that will really drive change.
9. In internationally traded sectors the
resulting danger for the UK is that the uncertainty about future
domestic demand holds back the investment in skills that businesses
will need to compete successfully in the global market. In purely
domestic sectors the danger is that the same uncertainty and resulting
failure to invest will create supply bottlenecks, making it impossible
for government to achieve its carbon emission targets, and ultimately
damaging the global fight against climate change. And in all sectors,
the danger is that industry, particularly SMEs, will be unprepared
for rises in carbon and other resource prices, reducing competitiveness
and increased costs for consumers.
10. Our impression is that these dangers
are recognised by the government, at least in theory, and that
accordingly a three pronged strategy to deal with it is emerging:
1. The government will ensure signals about future
demand are clearer—not just in green industries but across
the economy; this is partly a matter of making sure that the range
of government interventions—including regulations, incentives,
investments, taxes and enabling measures—do indeed add up
to a plan that will drive change, and then communicating this.
2. It will take steps to overcome the lack of
knowledge, shortage of finance and other barriers which prevent
businesses understanding and then acting on these signals, ie
prevent them from investing in "green skills" whether
sector specific or useful in all sectors. Many SMEs for example
may not appreciate the savings they can make from best practice
resource management, and even if they do may not know how to implement
this.
3. It will ensure that the skills sector—those
who specify and deliver qualifications and training—understands
the likely future demand for skills and responds accordingly.
For example all National Occupational Standards could and should
include a module on sustainability.[3]
11. This strategy, were it implemented,
would be entirely coherent. It does not add up to central planning,
with BIS attempting to control how many courses in what are conducted
where, but active indicative planning combined with a whole series
of enabling interventions. The problem is it is not turning into
action with the urgency we would expect, given the recession and
the imperatives of climate change itself.
THE NATURE
OF THE
PROBLEM
12. There has been much discussion and consultation,
a new machinery (the UKCES, SFA, LSIS)[4]
is coming into being, the Low Carbon Industrial Strategy will
be published in July, and a green fiscal stimulus was announced
in the budget. At the same time the DECC "Summer Strategy"
for meeting the greenhouse gas targets set by the Climate Change
Committee, combined with individual departments' sectoral emissions
reduction strategies, will start to strengthen the signals sent
to industry. Good work is also in hand to identify and showcase
best practice. This is all positive. However, any change strategy
requires a degree of momentum to turn words into real and significant
change—without this, entirely valiant implementation efforts
of the kind just referred to make no headway against existing,
well established patterns. The requirement for momentum is all
the more pressing given the potential scale and speed of the change
to a low carbon economy and the complexity of the array of measures
being introduced.
13. This momentum can be achieved through
a combination of real progress on the long and medium term planning
required, clear communication and those quick wins that reassure
business the Government really means what it says. Our strong
impression, however, is that as yet the well co-ordinated and
prioritised programme across government that would achieve these
things, and so the necessary momentum, is not in place.
14. So for example we have been taking part
in the Windsor Consultation on low carbon skills, most recently
attending the skills summit with leading employers held at Windsor
Castle on 18-19 May. While these discussions have been interesting
and some useful ideas have been generated, there has been little
sense of government progress or action, with no clear accountability
or ownership. Not surprisingly, the businesses participants feel
frustrated: after all, they might reasonably observe, over 18 months
have passed since publication of the excellent CEMEP report setting
out a strategy[5]
and a year since the group arrived at a coherent plan for skills
delivery which was accepted by the Government.[6]
15. At the same time, in the discussions
we have had and are continuing to have with officials, it has
become apparent that the kind of ambitious, momentum building
programme we would like to see and which would convince business
that government really is acting is unlikely to be implemented,
essentially for administrative reasons rather than because of
any disagreement as to its value. It just hasn't reached the top
of the in-tray.
16. This matters. To take just one example,
there is evidence that for retrofitting housing stock, the current
levels of investment in skills is insufficient to meet even the
existing level of demand, let alone that which will be required
to meet the Government's targets, and this shortage will, of course,
push up the costs of the programme and make it less comprehensive.[7]
RECOMMENDATIONS
17. To put this right three things are needed
and needed now: co-ordination, prioritisation and a timetable.
18. Effective co-ordination is important
for the whole programme, but particularly to achieve quick wins.
The merger of BERR and DIUS into BIS will make co-ordination easier
to achieve. We are confident that if the other two ingredients
can be secured, effective co-ordination can follow.
19. Most important, if Ministers want real
progress then they need to make crystal clear to officials that
this is a priority. There have been a number of other pressing
issues in the skills area (notably the FE capital budget): it
would be appalling—but entirely typical—if shortage
of official time was holding back the UK's progress. In addition,
although both the Prime Minister and the First Secretary have
made public statements that the shift to a low carbon economy
may be the critical underlying change—and opportunity—facing
the UK economy and that intervention is needed to make it happen,
we are told that there are still pockets of resistance within
government to the analysis and strategy set out above. This too
could hold back progress. So clarifying priorities is essential.
20. Third and finally, a timetable needs
to be set out in a way which will translate ministerial priorities
into effective action, and which will allow Ministers to hold
officials and the various NDPBs involved to account. This may
be partly a matter of creating priorities within the programme,
given unavoidable shortages of time and money in the immediate
short term, but it is also a matter of setting target dates for
the key milestones that will contribute to momentum and working
back from those. We accept that the problems are difficult and
complex and new, but that is precisely why these rather basic
programme management principles need to be applied if we are to
avoid drift.
21. Our view is that visible progress can
and should be made by three key dates. Autumn 2009, ie the start
of a new "season" and the run up to Copenhagen, January
2010, ie the start of a new decade and the natural follow up to
Copenhagen, and Spring 2010, ie the first point at which evidence
of real progress could be produced. The following sets out the
kind of milestones that should be set now for these dates.
THE TIMETABLE
22. Autumn 2009: BIS and the UKCES
should have published a quantified jobs and skills action plan
for the next two years, linked to but going beyond the financial
support measures announced in the Budget and building on work
that has been done inside and beyond government over the last
two years. It will address (a) how many people need to be trained
in what skills for what jobs in the short term (including both
technical skills and more generic skills such as carbon accounting,
sustainable procurement and change management which need to be
integrated into programmes for the existing workforce), and (b)
the actions BIS will take to ensure the signals government is
sending about the future are being acted on. It will be communicated
actively to the skills sector.
23. January 2010: BIS and the UKCES
should have published estimates of the size and nature of the
markets that government interventions will create. This will require
BIS to have worked with other relevant departments to ensure both
that their measures are sufficiently robust to work as the basis
of a signal to industry and that they are as ambitious as leading
edge practice and thinking in UK industry allows. It will have
been developed with business and should be communicated to business.
It should also form the basis for advice to SMEs through the Train
to Gain/Business Link network (who are not yet equipped to advise
in this area) and ongoing communications to the skills industry
via UKCES and the RDAs.
24. Spring 2010: BIS should have
published a report of progress against the Autumn 2009 plan.
The skills industry should have developed appropriate revised
qualifications, occupational standards, course content and inspection
guidance (an on-going process but significant progress should
have been made).
25. Our very strong view is that if BIS
is to set and maintain a timetable along these lines it will need
to work with an external partner able to apply the necessary pressure
for momentum building dates.
May 2009
1 Sustainable Development Commission, April 2009 Back
2
DB 2009 quoted in Sustainable Development Commission op cit. Back
3
As recommended by the first "Outcomes Note" arising
from the Windsor Consultation, "Skills for Sustainable Future:
facing the challenge." June 2008 Back
4
UK Commission for Employment and Skills, Skills Funding Agency,
Learning and Skills Improvement Service Back
5
Commission on Environmental Markets and Economic Performance Back
6
Windsor Consultation-op cit Back
7
ProEnviro, Skills for a Low Carbon and Resource Efficient Economy,
2008 Back
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