2020 saw the UK’s largest ever economic slump, effectively taking us back to 2013 levels. In a fortnight the chancellor will have this at the front of his mind as he lays out his budget. Although output has returned to past levels, economic policies can’t go back. In planning the recovery, Rishi Sunak shouldn’t seek to restore how things were in 2013 or 2019, but build a futureproof economy that is still growing in 2033 and 2049.
One of the most significant changes has been an acceleration of remote working. According to the Office for National Statistics, 36 per cent of the population are currently working exclusively from home, with 20 per cent expected to continue after lockdown. This will mean a rethink in economic policy, with three trends to consider for a green recovery.
We’re acutely aware of what working from home is doing to our energy bills. Workers are now picking up the cost of emissions that were previously shouldered by employers. However, private dwellings (especially rented ones) have poor average energy standards, which could raise emissions further overall. That means the government needs to prioritise homes over offices in efficiency improvements.
Higher energy bills raise the incentive to improve home energy efficiency. Warm homes are more important than ever. Most people that work from home are affluent and have increased their savings in the past year. There’s a pot of money and public support for upgrading homes to a better standard. A long-term commitment will be key to incentivising workers and business to supply this demand. However, government just cancelled the Green Homes Grant with £1bn left unspent. A more flexible, larger scheme will be a crucial part of the recovery. One way of doing this would be to commit to a 5,000 strong Energiesprong (a new approach to zero carbon retrofits) programme to drive down costs.
Green spaces for everyone
Most of those working from home do so in wealthy parts of the country. Wealthier communities already have higher quality green spaces, better air quality and enjoy longer, healthier lives. Now, spending more time at home, they have the political incentives to improve further. Without targeted financing in the recovery, the gap in access to high quality green space, and its associated physical and mental health benefits, could widen. But where could the money come from?
According to PwC, businesses could save nearly £1,500 for every employee who works remotely due to lower rental, energy and catering costs. What happens to this money? For one, most businesses won’t notice in a year when other impacts have cost them dear. Costs saved are not the same as a liquidity ready to invest. However, a new relationship between business and communities could leverage some money for improvements in high streets and green spaces in the future.
Councils had funding holes well before the pandemic and these holes have become chasms. Bristol, for example, an environment leader, has an £80 million shortfall. The council will cut climate and environment budgets rather than frontline services. This is understandable, bins have long ruled British politics and home waste is soaring with furlough and remote working. But again, it implies a widening of the gap in environmental services. Although central government can work with business and councils, ultimately closing this gap will be a national responsibility in the recovery.
When people are forced into behaviour change, those behaviours tend to stick. After tube strikes, for example, a majority who took a new route to work stuck with it. A TfL report that 31 per cent of Londoners are now walking more is reassuring. But after previous lockdowns car use recovered faster and to higher levels than public transport. This raises questions of our existing infrastructure pipeline, roads should be secondary to broadband access, for example.
If people continue to prioritise private transport when commuting picks up again after lockdown, this will not only hit public transport budgets, but weaken the political will to improve bus or train networks. This could shift the government’s emphasis to further driving the acceleration of electric vehicle use, for example frontloading public charging networks, as well as providing subsidies or vouchers to support demand.
But focusing on private vehicles alone would cause the government to overlook active travel (policies that prioritise walking, cycling and public transport) and fail to build on the improvements that many local authorities have already rolled out since the start of the pandemic. With a huge hole in TfL’s budget, a ‘catch the bus to help us’, or ‘ride the train for the country’s gain’ could overcome the same fear factor that Eat Out to Help Out did, and be more efficient than going back to prioritising cars.
These are not the only trends affecting the government’s green recovery. A surge in structural unemployment, changes in business practices and a push to re-shore industries will affect the skills, investment and regulations a growing, greening economy requires. Bigger questions for the G7 may come as remote workers start to wonder why they can’t work abroad. For a green recovery plan to be effective, the government needs to move with these tides, not try and push against them.