Lack of finance

Results of the survey point to councils being behind on meeting net-zero targets.

While some would suggest that the targets were unrealistic in the first place, a common refrain across the interviews was that lack of funding was hampering progress on net zero, particularly across counties and district councils. It meant there was pressure to make choices that would provide the best return on investment.

Funding failing to keep pace with inflationary costs, combined with exploding demand for child protection, adult social care and homelessness services, is taking its toll on net zero efforts. In early December 2023 Nottingham City Council became the fourth authority in the past 12 months – and the eighth in six years – to effectively declare insolvency. A Local Government Association survey found that one in five council chiefs believe it is “fairly or very likely” that they will go bust in the next 15 months.

Against this backdrop, results of the survey pointing to funding problems impacting on net zero were to be expected: 81% of respondents scored ‘financing as a barrier to decarbonisation’ as four out of five, where five is a considerable barrier. There was little confidence either that funding will be forthcoming from government to deliver net zero. When asked the question, ‘how confident are you that government will provide local authorities with sufficient funding to deliver net- zero?’, 89% answered not confident at all (one out five) with another 8% scoring it two out of five.

The cost of going net zero is enormous. One local authority, for example, said that they had spent £30 million on decarbonising (including government grants) which had reduced carbon dioxide emissions by 6%. A city council officer estimated the cost of decarbonising council functions by 2037 at £8 billion and said they would not be surprised if that figure eventually rose to as much as £10 billion.

As a consequence, two thirds (66%) said that it would be necessary to raise council tax to deliver net zero, even though they could not see this happening. As one interviewee put it: “The councillors won't stay in office very long if they're putting up council taxes at the current time and because we've lost a bit more government money we've got to save several million pounds.”

Environment leaders within councils highlighted how difficult it had become to get decarbonisation funding internally: “Just saying this money is needed for a carbon saving project is not good enough anymore, you need to show that there are accompanying additional benefits."

One interviewee commented: “I think it's important to explore those anyway and start talking about the potential health savings of cleaner air and things like that. But if you want to get a scheme funded, you have to frame it in terms of saving the authority money somewhere else.”

Though there was support from interviewees for decarbonisation funding from government through the Public Sector Decarbonisation Fund, there was a genuine weariness of the constant need to keep competing for funds which was time consuming and resource hungry. The funds are opened up in waves and bidders have to be quick off the mark to get them.

Others pointed out that the Social Housing Decarbonisation Fund required matched funding from those bidding, which put it out of reach of some councils and social housing providers.

Other difficulties with the scheme were also raised, including the tight timeframe in which the funding had to be spent.

Christopher Hammond, chief executive of UK100 – a network of climate-conscious councils - says the relationship between national and local government on net zero will need to change. “Local authorities have had 12 years of seeing their resources shrinking and shrinking. They've had to deal with a pandemic, they've had to deal with Brexit, and mounting social care issues. So there isn't a lot of money swirling around the system to then take on the big decarbonisation challenges.

“But the good news is that recent research shows that for every pound that you invest in local climate action, communities can reap up to about £14 worth of benefits, whether that's social, economic, or health benefits. So the cost of not doing this is going to be more significant than the cost of us planning for net zero.”

Hammond is convinced that funding has to be a mixture of public and private – a view shared by those local authorities interviewed. He says: “If we see decarbonisation as absolutely integral to our economic strategy and our industrial policy, then I think the country can get behind it.

“But we need a change in the settlement between local government and national government, because we can't just rely on council tax for these things.”

Interviewees were asked: ‘Thinking about the planning and delivery of energy capacity, to what extent had your authority faced challenges securing new connections?’ On a score of 1 to 5, the average score was 4.17, where five represents considerable challenges. Half of those responding scored their answer as a five and 69% four or five. Asked where the challenges arise, 81% were cited as being down to electricity, with the remaining 19% having problems with electricity and gas.

This degree of concern and frustration, and the extended waiting times they were told to expect for a new connection, was reflected across many of the interviews. For some councils it was driving a coach and horses through their decarbonisation plans, particularly around solar power developments and even heat pump installation on larger buildings.

A comment by Melania Tarquino from Surrey County Council was not untypical: “We have quite a few projects to do solar farms on council land and for the last year we have been trying to find out when we can connect those projects to the grid. The response we are given is that there is a constraint imposed on a national level by National Grid that wouldn't allow us to connect any project bigger than 1MGW before 2037.”