The Association for Public Service Excellence (APSE) is calling on central government to unlock local authorities’ potential to develop the green economy.

APSE’s rallying cry came as it launched a new report The transition to the green economy: the vital role of the ensuring council, which shows what local authorities are achieving and highlights ways in which national policy could be changed to enable them to do more.

An environmentally sustainable economy is essential to combat climate change, enable the UK to compete in the £4 trillion global low-carbon market, reduce energy expenditure, improve security of supply and generate employment. Councils have a pivotal role in ensuring the transition to a green economy that is not properly recognised in current national policy, according to APSE.

Forty-six case studies in the report, written by Philip Monaghan and Eve Sadler of think-tank Infrangilis, show how every function within a local authority can make a powerful contribution towards the shift to a green economy. Leadership in Hackney, spatial planning in Peterborough, transport in Bromsgrove and Redditch, property in Birmingham, waste management in Stirling and green skills training in Blaeneau Gwent are among the many examples given.

APSE’s chief executive, Paul O’Brien, said: ‘Councils are already making an impressive contribution to developing the green economy through use of their assets, community leadership, regeneration, planning, procurement, transport, education and management of services on the front-line. It is disappointing that, despite these achievements, the Government’s recent policy roadmap on the green economy does not make any reference to the role of local government in this important transition. Such a fragmented approach undermines collaborative efforts and is damaging to the public purse.’

He added: ‘Our new report identifies practical steps central government should take to help realise local government’s huge potential to ensure the UK’s transition to the green economy.’

Measures which could be taken by central government to help unlock local authorities’ potential discussed in the report include: enabling £143bn pension fund investment in low carbon regeneration projects; requiring the electricity industry to work on district energy planning; and making Feed In Tariffs viable for large-scale social housing schemes. The Government could also allow local authorities greater financial self-determination to boost the green economy, for example by enabling them to offer council tax rebates to households that retrofit homes to reduce carbon.

The report shows how the ‘ensuring council’ model developed by APSE – whereby a local authority retains a core capacity to deliver efficient services and aligns this with strategic vision, policy co-ordination, leadership, entrepreneurship and accountability – can underpin the transition to a green economy.

I gave evidence in London today to Lord Whitty's inquiry on the affordable housing crisis.

My starting point was that to resolve this crisis local authorities need to play a key role again in providing a quality affordable housing option for all not just a safety net for some.

It's important to place where we have got too in a context, therefore I referred to the fact that the challenge for the new government of the day in 1997 was clearly about tackling the £22b backlog of repairs in council houses and bringing them up to the decent homes standard. However, the process which brought this about resulted in stock transfers, continuation of right to buy and demolitions. Ultimately this resulted in better quality social housing but with about 1m fewer social housing units. By the end of the last Government recognition was given to the massive waiting lists which had built up and a programme commenced once again to deliver new build council housing once again. If the dominant issue in 1997 was backlog of repairs, clearly now it had moved on to lack of supply.

APSE undertook research at this point on issues around creating a new generation of council homes and found that a large group of councils were trailblazing on this agenda, a significant amount of others were interested and a smaller group were unaware or were paying little attention to the issue. Those who were trailblazers had a vision built around delivering for their community’s not only affordable accommodation, but also about delivering on environmental concerns and for the local economy. We also found that most authorities were in a state of readiness to deliver on this agenda either by having the skills to deliver directly themselves or in collaboration with their partner organisations.

Unfortunately, over the past couple of years as a result of reduced budgets and a tinkering with form again rather than a concentration on need, this has not progressed as far as we would have liked. Most focus has been on the new self-financing regime with many considering carefully the implications of a 30 year business plan at present, with rumours of further restraints on borrowing limits emerging and recent controversy over enhanced discounts on right to buy also causing concern.

APSE would like to see a stronger recognition of the direct role councils can play in delivering on one of the major public policy issues of our time. We think new build should commence on a significant scale, we believe that borrowing limits should be opened up to facilitate this new build and that local government has the skills to deliver on this agenda. APSE believes that in order to solve the affordable housing crisis you need to increase supply; you have a sector that can clearly deliver on this and help address an ever increasing need for local communities.

Having met with three very different local government chief executives recently I was struck by the commonality of understanding of the challenges that council’s face in the coming years. Fiona Lees from East Ayrshire, Manjeet Gill from West Lindsey and Carolyn Downs of the LGA all shared a vision that the answers to the tough times ahead would be found in working closely with and within local communities.

With demographic change towards people living longer we know that a smaller percentage will be working in the future and that there will be greater demands for care services amongst an increasing elderly population. With increasing social problems created by alcohol and drugs, the number of children being looked after is also rising.

A tough economic situation over the coming years will throw up further challenges around poverty and deprivation. Increasing unemployment will mean local government having to contribute significantly in terms of promoting local sustainable economic growth.

Demand for affordable housing is at its highest for a generation reaching crisis levels and now at the top of the political agenda. Energy costs and fuel poverty are also creating considerable worries.

So how are smart local authorities responding to these challenges?

Firstly, by redesigning services with users and communities, starting from the service interface and working backwards rather than top down. Secondly, by then reducing cost through stripping out unnecessary posts within structures.

Thirdly, by looking to focus on protecting and increasing local employment, the public sector makes significant spend, if as much of this as possible can be retained within the local economy then the multiplier in local supply chains will be significant. Never more so than in these times does every £1 spent have to be a £1 well spent, a message that APSE has pushed hard through our economic footprint work.

Fourthly, by reprioritising spend to focus on outcomes, with 80% of local government’s budget spent on 20% of the community; we need to think more strategically about how this cycle of dependency can be changed over the longer term. Perhaps a way of doing this is by reinventing relationships with local communities and working with them to develop the solutions to the collective problems faced.

I recently gave evidence on behalf of APSE to the Associate Parliamentary Corporate Responsibility Group, chaired by Baroness Greengross, on the emergence of mutuals in the public sector - new ways to serve the public good?

It was an interesting debate with Professor Julian Le Grand, Head of the Government's Mutual's Taskforce, Peter Walls, CEO of Gentoo Group and myself. If you want to check the evidence click the hyperlink.

http://www.apcrg.org.uk/files/?id=82

Copy of an article Neil McInroy from CLES and myself recently did for Public Finance magazine.

Councils should be leading the way with renewable energy schemes. They can reap important economic and social rewards as well as environmental benefits

A report published this week by the Association for Public Service Excellence (APSE) suggests there is still a business case for local government-led renewable energy schemes.

We are finding that many councils around the UK are pushing ahead with the renewables agenda and would urge others to do the same. Our new research provides evidence as to both the business case and broader impacts of renewables for local economies and communities.

APSE commissioned the Centre for Local Economic Strategies (Cles) to examine the issue. Our report, Powerful Impacts: Exploring the economic and social benefits of renewable energy schemes, assesses the benefits of projects in terms of: payments from Feed in Tariffs (FiTs); number of people employed; value to supply chains; training and skills development; and savings in carbon emissions.

Cles researchers found that £1 invested in local renewable energy schemes that were early to get off the ground could deliver an average £2.90 in cashable benefits. They also found that a scheme fitting solar panels to 500 homes can create 12 full-time equivalent jobs and save 650 tonnes a year in carbon emissions.

The model built in sensitivity tests for factors that are liable to fluctuations, principally FiT rates, borrowing rates, equipment costs and energy costs. While government proposals to cut FiTs for solar schemes might have dented confidence, public sector decision-makers are now recognising that lower tariffs can be offset by falls in costs of equipment that are forecast.

Researchers re-calculated the return on investment in light of the latest information on reductions to FiTs. Based on reducing the tariff from 43.3p per kWh to 21p for solar schemes, they found this falls to £1.50.

A return on investment of £1.50 is obviously a drop compared with rewards for those trailblazer projects. But £1.50 can still be a healthy return and the predicted fall in the cost of solar panels also means the initial outlay is reduced.

The report features case studies demonstrating how forward-thinking councils have not only developed renewable energy projects as a way of cutting energy bills, enhancing energy security and reducing emissions, but also used them as a catalyst to stimulate jobs, skills and supply chains locally.

It must be remembered that solar is just one element of renewables. While the authorities discussed in our report have used solar technology, we believe similar benefits can be derived from other projects such as wind, biomass, electric fleet and energy efficiency schemes.

APSE’s previous publication, The Virtuous Green Circle, set out how a ‘revolving fund’ for investment in sustainable energy can operate in local government. Cles researchers found critical success factors are to deliver schemes at minimum cost and risks to the local authority and to ‘lock in’ economic benefit – and that a direct local authority approach offers most ability to control these factors.

Our new report argues that impacts of renewable energy on local economies should be fully recognised in local decision-making and national funding mechanisms. To this end, we are pleased that the Department of Energy and Climate Change appears to have recognised the need to differentiate between schemes that provide a community benefit and those driven by profit and will consult to protect social landlords from an additional cut for multi-installations.

This distinction is an important one. If cuts to FiTs make commercial rent-a-roof schemes less attractive to those seeking purely to maximise profits, there is all the more reason for councils that can make a sound business case for renewables but also have broader environmental, social and economic ambitions, to take a direct approach.

Fortune has most definitely favoured the brave and pioneering authorities have seen the best return on investment in renewables schemes. We suggest that others should push ahead as a matter of urgency.

With recent announcements on feed in tariffs for solar photovoltaics creating such controversy, many could have been forgiven for believing the opportunity for local government to deliver local growth through its response to climate change had gone. From what I have seen in councils around the country, this is far from the case. However, the reduction in tarrifs does create an opportunity to reappraise what strategy authorities should pursue in a rapidly changing environment.

It could be said that there has been an over emphasis on renewables to the detriment of energy efficiency measures of late. Indeed, it has been a bit like investing in larger size clothing to tackle an expanding waistline rather than focusing on the fundamental problem of over consumption.

In the current financial climate nobody needs to apologise for building their previous strategy around pursuing feed in tariffs, renewable obligations certificates or the renewable heat incentive to fund an overall approach to tackling climate change. However, I predict a rebalancing of strategy brought about by a shifting Government emphasis towards energy efficiency measures signalled by Green Deal. Significant opportunities exist for local authorities in this area and, as with the feed in tarrifs, councils that move first will get the most benefit, while those that dawdle may fall victim to funds running out further down the line.

One authority that has been at the forefront of strategy development on environmental sustainability over the past decade is Nottingham City Council and there will be very few in local government who are not familiar with the Nottingham Declaration. An ambitious plan has been developed aimed at providing 20% of the city’s energy through renewable and low carbon sources by 2020; the rate is 11.5% already.

I was therefore interested to hear the authority’s plans for Green Deal. It is looking to become a Green Deal provider and targeting an £80m investment with potential benefit for 12,900 properties across the city. This should generate £13m of annual savings with a payback period of 20 years.

Combine this with recent investment in solar and the 8,000 jobs that are predicted from the imminent expansion of the city’s tram system and you can see very quickly how an economic growth strategy built around energy efficiency and the development of renewable energy schemes adds up.

APSE's view is that at a time when local government is once again being looked at as a vehicle for creating local economic growth it would be surprising if the opportunities that the green economy creates were not near the top of the list for politicians and strategists alike.

If local government thought 2011 was tough, 2012 may be about to get a whole lot tougher. With an estimated 145,000 job losses in councils over the previous 12 months, some may have thought the heavy lifting had been done. However, my fear is that whilst many have made significant progress in efficiency programmes, this may prove difficult to sustain – and the knock-on effect for councils that didn’t quite get there in year one could be catastrophic. With ongoing redundancies, wage freezes, rising pension payments and inflation remaining relatively high, morale will be near the floor.

Local government will be asked to question its very role as a place shaper as it struggles to cope with social problems created by unemployment, crime and disenfranchisement. Paradoxically, in the midst of this it will continue to be asked to retrench in terms of service delivery, whilst localising and fragmenting provision. Towards the end of the year Ministers will begin more ‘guided localism’.

Further changes in political control will take place at May local elections as the four yearly cycle comes around again and Labour moves away from its historic low of 2008. This could play out differently in Scotland as the SNP’s popularity continues.

The future will remain bleak as on-going economic problems in Europe feeds through as further pressure on public finances from national government level.

APSE’s first strategic forum of the New Year took place last night on the theme of energy efficiency in asset management. Guest speaker was David Kilduff, Head of the Commercial Group at Walker Morris Solicitors, who gave an overview of the issues facing local government in this area.

These events are used as an opportunity to develop policy and share knowledge.

David spoke about the opportunity to examine the corporate assets of the council to identify environmental and actual financial savings through better utilisation of property, procurement and behavioural change. Energy price inflation and energy security are also significant headaches for local authorities.

Prior to Christmas Local Government Minister Eric Pickles touched on the potential savings from better management of local government’s £250B property portfolio, suggesting that £7B savings could be achieved from reduced property use and £8B from enhanced productivity through better space utilisation.

David identified that you need political leadership with a vision for the area, you need sound advice in developing your strategy, a business plan of what you aim to achieve and the implementation skills to deliver. You also need to audit what natural resources and assets you have in your locality. In a time of austerity it’s an opportunity to make an economic case for growth not just an environmental case for change.

A wide ranging discussion took place around using pensions funds to invest in the green agenda, whether recent announcements on feed in tariffs represented a shift in government policy from renewables to energy efficiency, whether it was practical to take a cross public sector approach in this area, lack of public awareness of green deal and how you go about rebalancing property portfolios when your estate is heavily occupied at present.

The meeting closed with agreement that as legislation bites and belts tighten this will become an area of ever increasing importance for local government.