Local government and the path to net zero Contents

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1A net zero framework for local government

The role of local government in net zero

10.As highlighted already, local government has a critical role in reaching net zero.18 According to the CCC, local authorities are a “cornerstone of climate change partnerships”. They are “the closest form of government to local people” and know “what works best in their areas”. This is especially important as many of the areas where reductions will need to be made have “a strong local dimension”, such as decarbonising buildings, transport and waste.19 Likewise, the NAO said local authorities had “an essential part to play in decarbonising local transport, social housing and waste because of their powers and responsibilities in these sectors”, although it also acknowledged that the precise “challenges and opportunities for local authority work on net zero will vary according to their powers, functions and local circumstances”.20 While local authorities have limited direct control over emissions, they have powers or influence over roughly a third of emissions in their local areas.21

11.The evidence to this inquiry agreed that local government was central to the UK’s efforts to reach net zero.22 E3G, the climate change think tank, said local government would “need to play a central role as the UK moves further into the net zero transition, as decisions and their impacts move closer to people’s daily lives” and that there was “a growing consensus” that different approaches to decarbonisation would be needed “to reflect regional variation and assets”.23 Cadent Gas said local authorities’ knowledge “of local stakeholders and the local economy, as well as their relationship and trust with the community”, meant they were best-placed “to develop and deliver tailored local area energy plans”.24 The Thakeham Group said local government had “a key role to play in driving the net zero agenda forward and ensuring that new developments in their area are setting an example for achieving net zero”.25 The Energy Saving Trust told us that by “taking an area-based approach, pooling existing budgets and leveraging additional funding”, local authorities had “an almost unique ability to ‘add value’”.26

12.It was also recognised that public support for the net-zero agenda would depend on there being a just transition and that local government, through its various roles and responsibilities, could help to ensure that climate action benefitted all communities.27 As we heard, no one can be expected to support measures that make their lives worse.28 Philippa Borrowman, from the Green Alliance, said: “If we start doing stuff that benefits some people and not others, they will not understand why we are investing in it”.29

13.The joint submission by MHCLG and BEIS also recognised the role of local government in the path to net zero. It said councils were “key delivery partners and place-shapers” and that they played “a role in driving local climate action” through their “direct control and indirect influence” over many national priorities, such as energy, housing and transport.30

The need for a framework

14.Most councils have already set climate change targets at least as ambitious as central government’s.31 Nonetheless, in its report, Achieving Net Zero, the NAO reported that local government representatives had warned of “a lack of clarity from central government on the role local authorities should play in achieving net zero”.32 In its more recent report, Local government and net zero in England, it further found that central government had “yet to determine, in consultation with the sector, local authorities’ overall responsibilities and priorities in achieving the national net zero target” and that consequently there was a risk local authority climate action would not be “as coordinated, targeted, or widespread as it might need to be”.33 Echoing these concerns, the CCC said the Government “should engage with local authorities to ensure that a net zero delivery framework is included in its Net Zero Strategy” and that this framework should “align and clarify national, sub-national, regional and local delivery roles and areas for collaboration”.34 Without some central government co-ordination, it said the UK risked pursuing a “fragmented strategy towards net zero”, with councils duplicating both effort and expense.35

15.The evidence agreed that local government needed a stronger steer from central government and a more joined-up approach between government departments.36 Lord Deben, Chair of the CCC, told us local authorities were “doing it on their own” because there was “no centralised help”.37 The Association of Directors of Environment, Economy, Planning and Transport (ADEPT) said the Government “must strengthen its coordination and improve its engagement with local government” and “provide a framework for action”.38 The Green Alliance, an environmental think tank, said government policy must “make clear exactly how central government will partner with regional and local governments to collaboratively work to reduce emissions”.39 Councillor Sarah Rouse, Enhancing Quality of Life Board Member, District Councils’ Network (DCN), told us: “The critical key from a district level is give us that framework. Tell us what you want us to do and under what banner and we will develop the policies and deliver it. That is very much the frustration, I think, of the districts, just give us the framework”.40 Electrical Safety First said it was vital that government agendas aligned “to avoid overlap or conflict”.41

16.Lord Deben told us a framework could also clarify the role of MHCLG in the net zero agenda.42 Except for planning and new homes, the Department (now DLUHC) does not have direct policy responsibility for any of the areas where climate action is most pressing, such as retrofitting existing buildings and transport, for which BEIS and DfT have primary responsibility, although, according to the Minister, Eddie Hughes MP, it does have a role as a conduit between central and local government.43 According to the CCC’s 2021 progress report to Parliament, Progress in reducing emissions, however, the Department “is not fully supporting local government to play its part in the transition to Net Zero”.44 Lord Deben said this would require a “new partnership” between central and local government, as opposed to the Department, “as it very often does”, simply “handing down requests and determinations”.45

17.When we asked the Minister, Eddie Hughes MP, if the Department was drawing up a framework to clarify the role of local government, he said only that it was “contributing towards the Net Zero Strategy” and implied that a framework, as a “constituent element of that”, was not “important”.46 When pressed, he said the Department did not have much policy responsibility for net zero and was not providing any specialist support to local authorities, other than a website, and appeared to concede it had not asked local authorities what they would like to see in the Net Zero Strategy.47

18.In the recently published Net Zero Strategy, the Government acknowledges the need to support local authority climate action and improve co-ordination between different layers of government. The strategy promises to support “all local government in developing and delivering their net zero delivery plans” by setting “clearer expectations for local places, clarifying how the partnership with local government should work, and considering how action at national, regional, local, and community levels fits together”. It also says the Government will establish a Local Net Zero Forum to ensure direct input from local leaders and BEIS “will take overall responsibility for improving coordination with local government and other local actors on the effective design and delivery of local net zero policies, as part of the Department’s overall responsibility and wider leadership on delivering net zero”.48

Powers and funding

19.As well as greater clarity on what local government should be doing to meet their climate change targets, the Government has also been told it needs to give local government the means to do it, particularly additional powers and funding, for upskilling within local authorities as well the delivery of individual measures.49 UK100, in its report, Power Shift, said the Government had “yet to provide local leaders with the powers and resources to really deliver” and that the system was therefore “structurally incapable of delivering net zero”.50 The NAO found that, while dedicated grant funding for local authority climate action increased significantly in 2020–21, it remained fragmented, and that the nature of grant funding, with its reliance on competitive bidding, ran the risk of money not going to the right places and made it more difficult for local authorities to plan for the long term.51 Likewise, the CCC concluded: “Short-term competitive funding for narrowly specified projects with tight bidding times makes it very hard for smaller authorities with less capacity to apply and concentrates funding in certain areas. HMT [Her Majesty’s Treasury] should ensure that funding is made over longer time periods to enable better delivery.”52

20.These concerns were echoed in the evidence to our inquiry.53 London Councils said that without the “policies, powers and funding” needed to support their climate action, councils would “not be able to deliver on the climate crisis or support thriving net zero carbon places”.54 Energy Systems Catapult told us local authorities had “very few powers and responsibilities to deliver on often lofty climate ambitions”.55 When asked what they most needed from central government, all three council representatives who gave oral evidence called for a consistent policy framework and sufficient long-term funding.56

21.A particular concern was raised about the Government’s tendency to allocate funding through competitive bidding, which we were told favoured better resourced councils, as they could afford to hire people to write good bids.57 Moreover, councils that bid successfully are more likely to win the next round of funding, whilst those “most in need of support are those least likely to bid due to lack of capacity”.58 As the Energy Saving Trust explained, “competitive grants focus resources into those most able to respond quickly, creating a vicious circle for those with less staffing/capacity”, whereas “long-term stable funding schemes … enable a wider range of LAs to benefit and build capacity”.59 If bids are unsuccessful, the money is wasted, and, according to the Green Alliance, some bids can cost councils as much as £100,000.60

22.In defence of competitive bidding, the Minister, Eddie Hughes MP, argued money from this source supplemented funds allocated through the funding settlement.61 Moreover, departments are tasked by the Treasury to deliver value for money and there are differences in the quality of bids and how good local authorities are in delivering schemes.62 Lord Callanan argued that because Liverpool Council had secured funding from the Local Authority Delivery scheme, it could not be true that competitive bidding favoured better-off councils.63

23.In our recent report, Local authority financial sustainability and the section 114 regime, we noted the Government’s increasing use of short-term grants, often allocated through a process of competitive bidding, to fund local government. We concluded that the uncertainty around such funding could “hinder robust financial planning and management by local authorities” and recommended the Government reduce the number of these “burdensome and time consuming” bidding processes.64 In its response to our report, the Government said it appreciated “that multiple, competitive funds bring challenges to local councils” and was “exploring opportunities to simplify the system, while recognising that there will be cases where competitions or ringfences are helpful in ensuring value for money”.65

24.The recently published Net Zero Strategy acknowledges the mix of funding required to finance local authority climate action and calls grant funding from central government an “important part of the funding landscape”. It also recognises that “longer term and more co-ordinated funding streams can enhance innovation and investment, reduce bureaucracy, and encourage more efficient and integrated decision making” and promises to explore ways to “simplify and consolidate funds which target net zero initiatives at the local level where this provides the best approach to tackling climate change”. The strategy contains no clear commitment, however, to increasing the overall level of funding specifically for local authority climate action. It also recognises the importance of longer-term funding streams but does not explicitly commit to providing such funding.66

25.Given how significant is local government’s influence over greenhouse gas emissions, it is clear the UK will struggle to reach net zero by 2050 unless central and local government work together to deliver solutions tailored to meet local circumstances.

26.Local authorities will be particularly important in ensuring a just transition to net zero, since no layer of government is closer to people or better able to tailor climate action to meet the needs of local communities. Only by harnessing local government can central government deliver a just transition that benefits all communities. Without that just transition, the Government will struggle to persuade the public to make the necessary changes.

27.We welcome the ambitious targets set by many local authorities, and we are pleased the Government has now committed in its Net Zero Strategy to clarifying the relationship between central and local government in the delivery of net zero and to improving co-ordination between different layers of government. It remains to be seen, however, if this will amount to the comprehensive delivery framework called for by the Climate Change Committee. We also recommend that any framework strike a careful balance between clarifying the expectations on local authorities and leaving them free to determine what climate action is most appropriate in their areas.

28.We note that the Net Zero Strategy assigns responsibility for co-ordinating with local government to the Department for Business, Energy and Industrial Strategy and that the role of the Department for Levelling Up, Housing and Communities remains undefined.

29.On funding, we welcome the commitment in the Net Zero Strategy to explore ways to simplify and consolidate the number of local net zero funding streams, but we note it included no clear commitment to increasing the level of long-term funding specifically for local authority climate action.

30.In line with the recommendation from the Climate Change Committee, and seemingly in line with its own commitment in the Net Zero Strategy, we urge the Government to immediately begin consulting local government on the contents of a draft net zero delivery framework setting out the relative roles and responsibilities of local and central government. The framework should also clarify the critical role local government must play in delivering a just transition that benefits all communities. The Government should also consult local government on what additional powers it might need to meet its climate targets.

31.Either in that framework, or elsewhere, the Government should also clarify what role, if any, the Department for Levelling Up, Housing and Communities will play in supporting local authority climate action, given that the Department for Business, Energy and Industrial Strategy is now responsible for co-ordinating with local government in this area.

32.We also recommend that the Government come up with a plan for funding local authority climate action in a way that gives councils the confidence and ability to plan for the long term, including by making good on its commitment in the Net Zero Strategy to simplify and consolidate the number of local net zero funding streams.