Appendix—Government response
Introduction
The Government welcomes the Environmental Audit Committee's
focus on Green Jobs and Skills, and is grateful to the Committee
and to all those who gave evidence in the preparation of this
report.
The Government agrees with the Committee that the
employment opportunities arising from the global shift to a low
carbon resource efficient economy represent a major economic opportunity
for the UK. Maximising the UK's potential for growth and job creation
in this area is a cross-Government priority.
The Government's responses to the conclusions and
recommendations of the report are set out below.
Committee Recommendations and Responses
The Government's response to the Committee's individual
recommendations is set out below:
CURRENT POLICY
1. The Government should urgently increase the
amount of money that contributes to the overall green stimulus
by 'greening' more of its current spending plans and ensuring
access to European Investment Bank capital; by doing so it will
help create home markets and develop first mover advantage. (Paragraph
17)
The Government agrees with the Committee that Government
expenditure has an important role to play in supporting development
of the low carbon economy. Indeed since the Government's oral
evidence session in November spending has increased. Support for
the development of the low carbon sector played an important part
in stimulus measures set out in Pre-Budget Report 2009, where
the measures announced make available over £1.4 billion of
additional support for low carbon industries and investment.
The Government is taking steps to improve access
to the package of European Investment Bank (EIB) lending announced
in Budget 2009, to enable up to £9 billion of investment
in UK energy projects, comprising EIB direct lending and matched
private sector lending. In November, the EIB signed deals with
three banks to launch an intermediated lending scheme to small
and medium-sized UK renewable projects, with an initial focus
on onshore wind.
Furthermore, the 2009 Pre-Budget Report announced
the Government's intention to invest €100 million (£90
million) in the 2020 European Fund for Energy, Climate Change
and Infrastructure, to be overseen by Infrastructure UK. This
will establish the UK as a core sponsor of the Fund, alongside
the EIB, enabling the UK to build on an already strong relationship
with the EIB, and facilitate more support for vital energy projects.
The innovative, diversified fund is intended to act as a model
for the introduction of new private sector equity investment into
key sectors including wind, biomass, gas storage, transmission
and CCS. The 2020 Fund will soon start to provide equity to low-carbon
infrastructure of national importance and is the fastest route
open to support these projects. The Fund plans to attract up to
€1.5 billion of equity from a range of investors and has
up to €5 billion (£4.5 billion) of associated debt co-financing
waiting to be deployed.
2. The Government must provide industry with a
clear and stable long-term policy framework to guide them through
the low-carbon transition with enough detail to enable them to
secure investment. Business needs to be confident that financial
incentives and regulation designed to promote low-carbon industries
will be maintained. In addition a bipartisan political approach
should be sought wherever possible. (Paragraph 22)
The Government agrees that a clear, long-term policy
framework is essential to delivering action on climate change,
in particular by enabling businesses to make the necessary major
investments. The Government set out a clear, long-term policy
framework in the Climate Change Act 2008. The Act introduces both
a long-term binding target of an 80% reduction in emissions by
2050, and legislative carbon budgets to clearly set out the path
to 2050. The UK is the first country in the world to set such
targets in legislation.
The Low Carbon Transition Plan, published in July
2009, sets out the policies which will enable the UK's 2020 targets
to be met. This includes emission reductions of 34% on 1990 levels
by 2020 under a 20% EU emission reduction target. The policy framework
set out touches on all sectors of the UK economy and society,
including the power sector, industry sectors & businesses,
homes and communities, transport, farming, and the public sector.
High-level targets are necessary but not sufficient
to drive the investment needed to enable the transition to a low
carbon economy. Government policies provide detail in specific
areas to enable businesses to invest with confidence—including
the Renewables Obligation (RO), EU Emissions Trading System, Climate
Change Levy, Climate Change Agreements and the CRC Energy Efficiency
Scheme. Additionally, the Household Energy Management Programme
(HEM) aims to help the UK achieve a 29% reduction in CO2 levels
by 2020 (compared with 2008) and includes a range of long-term
measures such as smart metering, the Renewable Heat Incentive
(RHI), Feed-in Tariffs (FITs), and Carbon Emissions Reduction
Target (CERT).
3. The Government must remove barriers and provide
both financial and non-financial incentives for the faster development
of all the low-carbon sectors of the economy highlighted by the
Committee on Climate Change. (Paragraph 27)
As set out in the UK Low Carbon Industrial Strategy,
addressing barriers and market failures is a central part of Government's
role in enabling the transition to a low carbon economy. The Climate
Change Committee identified a number of priorities for further
action—including: 1) decarbonisation of the energy supply
(including wind, nuclear, carbon capture and storage), 2) energy
efficiency measures at home and at work and 3) reducing transport
emissions through new technologies. Measures being taken in each
sector include:
1) Decarbonisation of the energy supply
The Renewable Energy Strategy (RES) set out the high
level framework to enable a seven-fold increase in renewable energy
over the coming decade through greater financial support, swifter
delivery and a stronger push on new technologies and resources.
The RES also established the Office for Renewable Energy Deployment
(ORED), with a clear remit to address delivery issues across a
range of deployable renewable energy technologies.
The UK is leading international efforts to develop
CCS; PBR announced that the Government is substantially increasing
its commitment to this important technology in order to fund four
demonstration projects; we intend to phase in these projects over
the period 2014-18. And in the nuclear sector Government is doing
everything it can to facilitate new build here in Britain. For
example, the Nuclear Advanced Manufacturing Research Centre (NAMRC)
which will be key to the development of the nuclear supply chain
in the UK. The Centre will address the skills and capability barriers
of UK-based companies. It will seek to raise the quality of products
being produced by UK companies to ensure they meet the required
standards of the nuclear industry in a short period of time.
2) Energy efficiency measures at home and
at work
In addition to the HEM programme outlined under recommendation
2, DECC provides grant funding to the Energy Saving Trust (EST)
to cut greenhouse gas emissions by promoting the sustainable and
efficient use of energy and a low carbon lifestyle to the public.
Government also has a range of policies in place to support emission
reduction from businesses and public sector organisations, including
capping emissions from the largest emitters through the EU Emissions
Trading System, incentivising emissions reductions from larger
energy users (in particular through the CRC Energy Efficiency
Scheme and Climate Change Agreements), providing information and
advice through the Carbon Trust and Business Links and providing
financial support (e.g. through the Enhanced Capital Allowance
scheme and interest free loans for SMEs).
3) Reducing transport emissions through new
technologies
We have announced over £250 million of funding
to encourage the development of an early market in ultra-low carbon
vehicles, most of which will be used to reduce the cost of vehicles
by around £2,000 to £5,000 for consumers from 2011 at
the latest. Up to £30 million will be used to support charging
infrastructure installation in a number of key areas in the UK,
encouraging innovation and interoperability. The Plugged in Places
scheme, which was launched in November 2009, has seen strong interest
from Local Authorities. A new cross-Government team has been established—the
Office for Low Emissions Vehicles (OLEV)—which brings together
the key policy interests of transport, environment and business
into a single team focused on delivery.
4. Increased investment in renewables and low-carbon
industries depends on a stable carbon price at a sufficiently
high level. The Government should take steps to ensure that a
strong carbon price signal will encourage the investment needed
to drive the low carbon transition. (Paragraph 31)
The UK Low Carbon Transition Plan sets out how the
Government is seeking to create and maintain the right conditions
for investment in low-carbon technologies and innovation. At the
heart of the plan is the EU Emissions Trading System (EU ETS)
which sets a limit or "cap" for emissions and creates
a price for carbon.
The carbon price creates incentives for firms to
invest in low-carbon technologies, however, the carbon price and
its long-term certainty is one of many, and not the most significant
factor, that affects investment decisions in low carbon industry
and electricity generation. Gas price volatility and its relationship
to electricity price is a key driver, as well as uncertainty around
future electricity demand, impact of renewables, the oil price,
construction and capital costs and capacity factors. Providing
greater carbon price certainty through a price floor is therefore
not a panacea and will not necessarily lead to the required low
carbon investment. Moreover, as carbon can be bought and sold
in an EU wide market, policies on carbon pricing will have to
be implemented on a multilateral basis. This is likely to become
increasingly the case as our vision for a global market of linked
emission trading schemes is realised.
The Government believes that the EU ETS remains the
right mechanism to deliver a carbon price which investors can
have confidence in. One of the most effective way of strengthening
the carbon price signal is by tightening of the EU emission cap.
Our efforts will now be focussed on taking forward the work agreed
at Copenhagen to secure an ambitious legal treaty this year. The
UK has already committed to tightening of the EU emission reduction
cap further as part of a possible EU wide move from 20% to 30%
emissions reductions in 2020, in the context of a legally binding
international agreement. In addition, we are looking at all the
options in our Energy Market Assessment by undertaking a methodical
assessment of what market reform may be required to bring on the
investment needed, and we will set out initial findings alongside
the Budget.
WHERE ARE THE GREEN JOBS?
5. To inform its activist approach the Government
should build on the work of the Committee on Climate Change and
the Low Carbon Industrial Strategy to reassess the number of new
jobs that will be created in the move to a low-carbon economy
and provide more robust data on where these jobs will come from
and why. (Paragraph 35)
The Government agrees that robust data on the low
carbon economy are important, particularly to estimate the net
impact on employment of the transition to a low-carbon economy.
The March 2009 work by Innovas,[1]
commissioned by BERR, provided an assessment of a Low Carbon and
Environmental Goods and Services (LCGES) sector. It estimated
that in 2007-08 the UK LCEGS sector was worth over £106 billion
and employed 880,000 people. Employment was projected to grow
to over a million by the middle of this decade. Our aim is to
measure economic activity and estimate jobs within this wide sector
to enable the UK to identify shifts in employment and opportunities
in the transition to a low carbon economy.
The sectoral assessment provides a view of activities
that can be classified as 'low-carbon' or 'environmental'. However,
it will not capture all activities across the economy that are
reducing carbon emissions, such as some energy efficiency measures
that are more difficult to identify as they are achieved through
behavioural change leading to different ways of working. The transition
to a low carbon economy will require a 'greening' of the whole
of the economy. As such, all jobs will need to be 'greened' to
some extent. It is therefore difficult to establish an agreed
definition of a 'green job' which captures the breadth of this
change, and hence difficult to measure the change towards, or
expectations of, 'greener' employment. However, analysis such
as that done by Innovas sets down a useful sectoral marker which
will inform how a move to a low carbon economy is impacting the
labour market.
Government also agrees that data on the size of low
carbon industries and employment are kept current where practicable,
along with forecasts of where the growth and employment opportunities
might be within key sectors. Government is working to ensure that
data on the scale and scope of this sector are kept up-to-date
to remain relevant and effective in supporting policy development
in this area. This includes, in conjunction with wider Eurostat
initiatives, the Office for National Statistics conducting a feasibility
study in 2010 to specify an environmental goods and services industry
definition identify providers and construct a survey to gather
data.
6. The Government should undertake research in
partnership with trades unions, employers and Regional Development
Agencies to gain a broader understanding of the impact of any
job displacement resulting from the move to a low-carbon economy
and to develop strategies to mitigate these effects. (Paragraph
41)
The Government agrees that it is important to understand
job displacement. Ensuring a fair transition is a key part of
the Low Carbon Industrial Strategy and Government is committed
to doing all it can to ensure a fair distribution of costs and
benefits in the transition to a low carbon economy. To this end
Government established the Forum for a Just Transition to provide
advice to ministers on national, regional and local impacts for
all sections of society. The Forum includes representatives from
Central Government, national, regional and local bodies, Trade
Unions, business organisations, and third sector bodies.
The Forum will consider issues such as the capacity
within existing industries to develop the knowledge, skills and
business practices to benefit from the move to a low carbon economy.
The first Forum meeting that was held in December
2010 brought together key stakeholders to discuss the impact of
the low carbon transition on different regions of the UK based
on preliminary analysis of the issue. The next forum meeting on
10 March is due to discuss green jobs and skills.
7. The Government needs to do more to link its
policies on tackling poverty and unemployment with the green agenda.
The forthcoming DWP White Paper provides an opportunity for the
Government to embed this thinking within its employment policy.
(Paragraph 45)
The Government is committed to maximising the job
opportunities from growth in the Low Carbon Environmental Goods
and Services sector and to help unemployed people take advantage
of them.
DWP's Future Jobs Fund[2]
aims to create up to 10,000 'green jobs'.[3]
The Future Jobs Fund is running in monthly assessment rounds and
to date the DWP has agreed to fund just over 3,600 'green jobs'
which is just under a third of all jobs for these rounds.
The DWP is working closely across government in order
to ensure that departments make full use of the Future Jobs Fund
and the potential to create sustainable 'green jobs' for 18-24-year-olds
and people from unemployment hotspots. It has also worked closely
with Groundwork[4] to create
a large national bid that will provide green jobs across the country.
The Future Jobs Fund is still open for bidding and the DWP will
therefore be encouraging more bids to create 'green jobs' to the
fund.
The Young Persons Guarantee[5]
launched in January 2010 to provide guaranteed training, or work
experience to all 18-24-year-olds claiming Jobseekers Allowance
for six months, offers young people the opportunity to apply for
new jobs created through the Future Jobs Fund (FJF).
8. We recommend that the Government immediately
and substantially increases the scale and speed of its programmes
to improve the energy efficiency of existing buildings, and make
this the UK's number one priority for green fiscal stimulus. The
Government must ensure that a workforce is developed to enable
the work on energy saving to be carried out and that it is equipped
with all the necessary skills. (Paragraph 51)
Through the Government's Carbon Emissions Reduction
Target (CERT) scheme (which began in 2002), suppliers have cut
the number of houses without cavity wall insulation by a third—from
8 million to around 5.5 million—and have cut by half the
number of houses without loft insulation from 2 million to almost
1 million. Moreover, the total CERT investment from suppliers
in improving household energy efficiency will be around £3.2
billion from 2008 to 2011. During 2009 the Government increased
the size of the CERT target by 20%. In addition, we are currently
consulting on extending the programme for a further 21 months
to the end of 2012 with a strong focus on insulation. We expect
the extension to drive more than £1.8 billion of additional
investment and to benefit 1.5 million more households.
The recently published Household Energy Management
strategy sets out the Government's plans for accelerating energy
efficiency in homes and for ensuring that the skilled workforce
exists to deliver our objectives. The strategy brings together
a number of policies to create a simple consumer offer to help
householders save money on their energy bills, improve the comfort
of their homes and reduce their carbon emissions. We have set
ourselves interim milestones:
- by 2011, to have insulated
a further 6 million homes;
- by 2015, for all lofts and cavities to be insulated,
where practical; and
- by 2020, for up to 7 million homes to have had
the opportunity for more significant 'whole house' changes and
all homes to have smart meters.
We are looking to further develop our understanding
of the barriers to developing skills for key low carbon sectors,
and how to overcome them. As set out later in this response, we
intend to launch a consultation on these issues in the spring
of 2010.
SKILLS FOR THE TRANSITION
9. The Government must put employer participation
at the heart of its changes to the skills system. (Paragraph 60)
In November 2009, Skills for Growth: The National
Skills Strategy signalled how the skills system will better anticipate
and respond to employer needs in priority sectors of the economy
for future economic growth. A number of employer-led measures
hold particular importance for the transition to a low carbon
economy. They include:
- looking to the employer-led
UK Commission for Employment and Skills to produce an Annual Strategic
Skills Audit as the basis for identifying current and future skills
needs and priorities;
- looking to the Skills Funding Agency to focus
more of the skills budget on those national priorities and on
areas of the economy which can do most to drive economic growth,
and ceasing to fund training that is unresponsive to employer
need and contributes least to national priorities;
- offering employers the opportunity to influence
directly the content and delivery of skills for their sector through
National Skills Academies (NSAs) and their Specialist Networks.
There are now 16 NSAs either in operation or development. We are
currently undertaking a fifth competitive bidding round for NSAs;
- piloting a Joint Investment Programme with employers
at advanced technician and associate professional levels in areas
key to economic recovery, by re-prioritising funds within Train
to Gain, with a cash match from business; and
- working with employers through their SSCs, and
with the UK Commission, to substantially reduce the number of
SSCs and, through clustering and consolidation, achieve a better
fit with emerging sectors of the economy, while keeping employers
at the heart of the skills system.
A Strategic Advisory Group of leading edge
employers was formed to help Government develop the skills contribution
for the Low Carbon Industrial Strategy (July 2009). That group
continues to advise Government on the development of a Low Carbon
Skills Strategy, on which we plan to consult in the Spring, with
a view to publication later this year. Employers will be the primary
audience for this consultation.
10. The Government must establish a leader for
the green skills agenda to deliver the skills needed for the low-carbon
transition, to coordinate on removing barriers in the current
system and to maintain a focus on the current environmental skills.
(Paragraph 65)
The Government agrees that leadership is needed at
a number of levels in the skills system if we are to maintain
focus on developing, raising demand for, and delivering the skills
needed for the transition to a low carbon economy. The cross sector
nature of low carbon skills requires a coordinated approach at
each level.
At Government level a High Level cross-Government
Forum was established to align skills policy thinking for
the Low Carbon Industrial Strategy. That group has recently
been enlarged to include a wider range of Government departments
and strategic skills partners, with a view to producing a Government-wide
consultation document on the Low Carbon and Resource Efficient
Skills Strategy in the Spring, and eventually a skills strategy
later this year. The consultation will focus on identifying priority
skills actions and overcoming barriers to progress in each of
the emerging low carbon 'sectors'. Leadership of this cross-Government
effort is being provided jointly by BIS and DECC.
A number of SSCs and other sector bodies are also
working collaboratively to provide leadership on different aspects
of the low carbon skills agenda, or in specific low carbon sectors,
for example:
- all SSCs have come together
under the joint leadership of Cogent and Energy and Utility Skills
to coordinate the alignment of low carbon skills initiatives
across the economy and the SSC network;
- 11 SSCs and 1 ITB have formed a steering group
to deliver a Low Carbon Cluster Report to inform the UK
Commission's first Strategic Skills Audit;
- 8 SSCs and 1 ITB have formed a steering group
to develop a Renewable Energy Skills Strategy; and
- 4 SSCs and a range of 3rd sector partners and
employer bodies have formed a steering group to support and shape
the skills element of DECC's Housing Energy Management Strategy.
Looking forward, both the Joint Investment Fund
and NSA Round 5 provide further opportunities for collective
employer leadership of the changes needed to skills delivery in
key emerging sectors of the economy, like low carbon.
11. In its role to assess demand and prioritise
sectors for extra funding, the new Skills Funding Agency must
take account of the need to develop skills in sectors recognised
as vital in the low-carbon transition. (Paragraph 68)
The Skills Funding Agency (SFA), which is operating
in shadow form and will be fully operational on 1 April, will
be an agency of the Department for Business, Innovation and Skills
(BIS). It will be much closer to the department than its predecessor,
the Learning and Skills Council, ensuring a swifter response to
policy imperatives such as the low carbon agenda.
The Skills Funding Agency will be responsible for
funding all post-19 learning in England, excluding higher education.
The agency's main function will be to direct public funding quickly
and efficiently to colleges and training organisations, in response
to individual and employer demand. Regional Development Agencies
will work closely with networks of colleges, universities and
other training organisations to get their input to regional strategies
and priorities and to help them to align their courses and skills
offers accordingly.
Following this transitional year, national skills
priorities identified by the UK Commission for Employment and
Skills, and those set out in the regional strategies, will be
agreed by BIS and confirmed in the annual ministerial Skills
Investment Strategy, against which the Skills Funding Agency
will fund colleges and training organisations.
It will continue to be important for Regional Development
Agencies to work with their partners and employer networks to
encourage demand for the priorities, and sufficient high quality
training to meet that demand. In this way, as new and established
businesses grow to meet the opportunities in the new low carbon
economy, the new adult skills system will ensure they are able
to get the skilled workers they need in the right place and at
the right time.
An important part of how we seek to focus skills
investment on national priorities will be through a pilot Joint
Investment Programme, for which we will be seeking expressions
of interest in March 2010. It will involve employer match-funding
for selected SSC and ITB proposals addressing specific technical
skills needs in areas key to economic recovery. It will also promote
collaborative action between SSCs and ITBs, and collective action
by employers and by colleges and training organisations, to develop
skills solutions that cut across traditional sector boundaries.
Addressing low carbon skill issues could be an example of innovative
collaborative action of this type. Over time, Government anticipates
the combined fund growing to £100 million per year, including
a £50 million or more cash match from employers, and £50
million from the Skills Funding Agency.
12. Government must use the first National Skills
Audit to provide a comprehensive assessment of current and future
gaps in low-carbon skills. The results of this could provide the
basis for any future development of the green skills strategy.
(Paragraph 72)
The UK Commission's first National Strategic Skills
Audit is due for publication in March 2010. The Audit will review
evidence of current skills mismatches in England and consider
the implications for current and future skills priorities and
occupational standards. It will provide valuable evidence on strategic
skills priorities to help individuals, employers and training
providers take well informed decisions. At the same time, Regional
Development Agencies have been developing their first regional
skills priorities statements for 2010/11 with their regional and
sub-regional partners. These statements are living documents and
will be continually refined to take account of developments including
the UK Commission's audit.
The Government will be publishing a formal response
to the Audit in due course. The BIS/DECC consultation on a Low
Carbon and Resource Efficient Skills Strategy is planned to issue
[mid March]. This will build on the Audit by drilling more deeply
into each of the low carbon sectors, drawing out skills priorities
and barriers to progress, with a view to publishing a full Low
Carbon and Resource Efficient Skills Strategy later this year
to accelerate priority skills solutions in those sectors where
growth is strongest.
13. By establishing a leader for the green skills
agenda the Government could provide an opportunity to deliver
green skills across all sectors. This will be important as green
skills must eventually be mainstreamed throughout the whole economy.
(Paragraph 75)
The Low Carbon and Resource Efficient Skills Strategy
consultation will look at skills needs across the economy, in
each low carbon sector. It will also consider how we further develop
the framework set out in Skills for Growth to best deliver
the skills for low carbon and resource efficient growth across
the economy. It will look at skills in a range of key sectors
and cross-cutting themes:
- decarbonising the power industry;
- decarbonising industry and the food chain through
resource and energy efficiency;
- manufacturing sectors that are key opportunities
in the low carbon economy;
- a low carbon transport system;
- decarbonising existing and new buildings; and
- equipping UK management and leadership to seize
the opportunities and deliver the requirements of a low carbon
economy.
Department for Business, Innovation and Skills
1 http://www.berr.gov.uk/whatwedo/sectors/lowcarbon/marketintelligence/page50106.html
The sectoral assessment provides a view of activities that can
be classified as 'low-carbon' or 'environmental'. However, it
will not capture all activities across the economy which are reducing
carbon emissions, such as some energy efficiency measures that
are more difficult to identify as they are achieved through behavioural
change leading to different ways of working. The transition to
a low carbon economy will require a 'greening' of the whole the
economy. As such, all jobs will need to be 'greened' to some extent.
It is therefore difficult to establish an agreed definition of
a 'green job' which captures the breadth of this change, and hence
difficult to measure the change towards, or expectations of, 'greener'
employment. However, analysis such as that done by Innovas sets
down a useful sectoral marker which will inform how a move to
a low carbon economy is impacting the labour market. Back
2
http://campaigns.dwp.gov.uk/campaigns/futurejobsfund/index.asp Back
3
For the purposes of this fund a 'green job' can be defined as
one that provides a good or service that helps move in the economy
to lower carbon emissions and greater resource efficiency. This
includes jobs in environmental sectors (including recycling, waste
management, environmental consultancy and monitoring), renewable
energy technologies (including wind, wave, geothermal and biomass)
and emerging low-carbon sectors (such as alternative fuels, CCS,
carbon finance and building technologies). Further examples of
sectors can be found in the following report commissioned by the
Department for Business, Innovation and Skills: www.berr.gov.uk/files/file50253.pdf.
http://campaigns.dwp.gov.uk/campaigns/futurejobsfund/pdf/fjf-bid-assessment.pdf Back
4
http://www.groundwork.org.uk/what-we-do/major-initiatives/future-jobs-fund.aspx Back
5
http://research.dwp.gov.uk/campaigns/futurejobsfund/youngpersons.asp Back
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