The Treasury should see that levelling up and the green recovery go hand in hand

Of the myriad of outcomes of the elections last week, one consistent lesson was that delivering (or at least the perception of doing so) wins votes. There was consolidation for Conservatives where Brexit felt like a promise kept or where, initially, funding from the Treasury has been noticed by residents.

Local leaders, like Andy Burnham in Greater Manchester or Andy Street in the West Midlands, were similarly rewarded, as were governing parties in Wales and Scotland, who can point to consistent communications during the pandemic as a reason. Parties were punished in places were voters felt local politicians hadn’t delivered for them. 

This is why the government is now doubling down on the currently amorphous theme of levelling up. Improving economic opportunities across the country, whether through skills, infrastructure or innovation got top billing, as has the idea of tangible improvements to the places people live, reducing the push factors to live and work elsewhere.

To back up this top line, the government has appointed a new levelling up adviser in Neil O’Brien MP, and a dedicated delivery unit in the Cabinet Office. Meanwhile, there are other manifesto promises to deliver on, not least on net zero and the environment.

Action on net zero and the environment, and levelling up are, in fact, two sides of the same coin, brought together under promise of a green recovery.

Strong synergies exist between the levelling up and green recovery agendas
Research by WPI Economics for Green Alliance, finds that those towns and small cities with the highest risk of underemployment after the pandemic, also have some of the greatest potential for employment in environment jobs after it.

This research found that over 16,000 jobs are available in the 20 per cent of constituencies with the worst labour market outcomes, a majority of which are in the ‘red wall’. It also identified that many of these seats have poor access to green space and have coasts or woodlands in need of restoration, so the job opportunities are there for the taking.

Environmental and levelling up solutions overlap. Both will need to be underpinned by investment in skills, infrastructure and innovation. Both will ensure that people and places can grow and develop. The UK Infrastructure Bank, for example, has a dual mandate to tackle climate change and level up. So it should be actively targeting the projects, like urban green infrastructure, that can deliver both.

Any investment in skills can prioritise emerging job opportunities in the green economy, whether that’s digital mapping new forests or programming electric vehicles.

As well as economic benefits, climate and nature investment can also help to level up by improving the quality of the urban environment, bringing with it better outcomes for our physical and mental health. Reducing barriers to enjoyment of the outdoors, whether that’s having a nicer park to run in, or a restored waterway to picnic beside, is tangible for people. 

Fiscal conservatism is holding back progress
But the downside is that both agendas are being held back by the same problem: a lack of Treasury buy-in. The Treasury has long been sceptical of the value of regional development and is now dragging its feet on the green recovery.

Although it has set good economic policy, for example on greening the financial system, the Treasury is failing on green fiscal policy. Despite needing more spending to achieve government commitments to net zero, and the increasing evidence of the validity of greater investment to overcome the economic damage caused by the pandemic, it is holding back progress through its institutional fiscal conservatism. Our recent Net zero policy tracker found that the last budget added just one per cent of the spending on net zero needed to meet the government’s legal climate target.

Election success could mean change
The prime minister’s hand, and the Conservative party’s direction, have been strengthened by last week’s election outcomes and, as both levelling up and a green recovery are seen as his agendas, there could be progress on them. But Boris Johnson and voters will be left frustrated if the Treasury doesn’t follow suit.

The Treasury needs a new philosophy, not just to add small pockets of funding here and there. That means putting carbon budget oversight on the same peg as spending budgets. It means changing the definitions of policy success beyond financial returns, to include improved health or carbon reduction.

There are easy wins to be had. By widening the Levelling Up Fund to include nature, or ensuring funding commitments on home decarbonisation, like the new incarnation of the Green Homes Grant, are long term and stable, the private sector will have the confidence to open its pockets.

Without this fundamental change in direction, alongside the prime minister’s rhetoric, the Treasury could remain the weak point in the government’s ability to reach its ambitions.

A survey, carried out for Green Allliance by BritainThinks recently, found that 62 per cent of the UK public are in favour of the government increasing spending on the environment, with only 17 per cent saying it should be cut. If voters are left waiting for environmental or levelling up to be delivered, they’re aren’t likely to vote the same way again.

See our report on this research, Jobs for a green recovery, the longer report it was based on, Green renewal – the economics of enhancing the natural environment, and the interactive map which allows investigation of local area opportunities.

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