My recent article from Public Finance

The government has gone cool on green issues. Whitehall must do more to support council initiatives

The CBI, environmental campaigners and trade associations were united in criticising Chancellor George Osborne’s lack of support for green initiatives in his latest Budget.

The Association for Public Service Excellence has been one of the organisations arguing that investment in environmentally friendly infrastructure and technology will stimulate economic growth as well as curbing climate change.

There is recognition of this link at central government level, but still not enough tangible support to help local government green our economy. And when we talk about support for green initiatives, we mean providing funds and enabling every sector of civic and commercial life to help the UK compete fully in the £4 trillion global low-carbon market.

To achieve this, central government must unlock local authorities’ potential to develop the green economy as a matter of urgency.

Apse’s report, The transition to the green economy: the vital role of the ensuring council, published in April, shows what local authorities are achieving. It has 46 case studies that highlight the local government contribution, including leadership in Hackney, spatial planning in Peterborough, transport in Bromsgrove and Redditch, property in Birmingham, waste management in Stirling and green skills training in Blaenau Gwent. The ‘ensuring council’ is one that retains a strong core capacity to deliver efficient services and aligns this with strategic vision, policy co-ordination, leadership, entrepreneurship and accountability – all of which is vital in greening our economy.

The report also pinpoints ways in which national policy could be changed to enable councils to do more.

One such step is enabling pension fund investment in low-carbon regeneration projects. Pension fund managers are understandably careful when it comes to making investment decisions. So, the government should bring together local authorities and other leading bodies to offer direction and help raise investment – over and above the £5bn capital investment in national infrastructure that the chancellor announced in November 2011.

The government also needs to secure a legal ruling or amendment on the Government Pension Scheme Regulations to enable local authorities to use their own local government pension funds, valued collectively at £143bn, to invest in low-carbon regeneration projects.

Local authorities should also have greater financial freedom to boost the green economy. For example, they could offer council tax rebates to households that reduce carbon usage. This could be complemented by a tax exemption on low-carbon regeneration projects that are financed through municipal bonds. The exemption would be a temporary measure to stimulate green growth until the UK economy fully recovers.

Other measures outlined in the report include requiring the electricity industry to work on district energy planning and making Feed-In Tariffs viable for large-scale social housing schemes.

Central government needs to support local government for the sake of the economy and the environment. By recognising councils’ important role in the green economy and building on their achievements it can unlock their undoubted potential to do more.

Paul O’Brien is chief executive of the Association for Public Service Excellence