What the UK Budget Means for Public and Private Investment in Our Net Zero Transition: Building Momentum Together
The UK aims to achieve net zero by 2050, one of the world's most ambitious climate goals. But ambition isn't enough. We're on a tight timeline, and each year without real progress makes our task harder. This year's UK Budget outlines new government spending. The key question is: will these investments encourage private sector involvement and speed up our progress? Or are we missing a crucial chance to meet this urgent, binding commitment?
Public projects and government spending are vital for any sustainable transition. They provide the basic infrastructure and policy signals that guide private capital towards climate-friendly investments. Looking at this Budget, some areas show promise. But we need a bolder, more coordinated approach to close the investment and delivery gap. Both private investment and local, effective action will be key to ensuring we're on track to meet net zero targets, with an important focus on the upcoming 2025 Spending Review.
The Spending Review, ending in spring 2025, will be crucial. It will set public spending priorities and budgets for the coming years, including key periods like 2026/27 and 2027/28. This review is a critical moment to align the government's long-term funding plan with the UK's net zero goals. Steady policies, clear funding signals, and commitment to large-scale investment can build private investor confidence. This confidence is needed to bring in the substantial capital required for big changes.
Housing retrofits are an urgent priority. UK housing is among Europe's least energy-efficient, with older buildings causing much of our emissions. The Budget offers some retrofit incentives, but not at the scale needed. Housing retrofits need large-scale investment, but current funding is limited. Private investors could play a key role here if encouraged by clear incentives and stable policies. For example, partnerships with private investors, backed by government guarantees, could fund retrofits for social housing and public buildings. This would give investors stable returns while cutting emissions from UK homes.
The second phase of the Spending Review could learn from the Social Housing Decarbonisation Fund. Here, private money works with public funding to reduce emissions and save energy for residents. But for real impact, we need a stronger national retrofit strategy that includes workforce training. The skills gap is a pressing issue. Large-scale retrofitting needs both funding and skilled workers. Without major investment in green skills training, local authorities, housing associations, and contractors will struggle to deliver the urgent retrofitting work.
Combined Authorities are leading the way, showing that local solutions often work best. Greater Manchester has pioneered large retrofit projects that could inspire other regions. Mayor Andy Burnham's green plans have put Greater Manchester at the forefront, focusing on cutting emissions, creating jobs, and improving homes through retrofits. Other Combined Authorities are following suit. With more powers and targeted funding, they could drive large retrofit projects that meet local needs and national targets. Local authorities in West Midlands, West Yorkshire, and the North East are ready to develop similar programs with the right support.
The government's role is crucial. Funding is just part of the solution. Devolution needs to come with support for skills development, local delivery methods, and stable policies. This stability allows local authorities to plan long-term. The Budget's limited green skills training provisions show there's more work to do. To reach net zero, the UK must train a workforce that can implement these changes at scale. The 2025 Spending Review is a key chance to address this, ensuring regions have the resources and skills to lead local climate action.
The Budget also focuses on renewable energy projects, aiming to attract private money to offshore wind and solar. Green investment incentives, like tax breaks for renewable energy, can attract big investors seeking stable, sustainable returns. The Contracts for Difference (CfD) scheme is worth expanding. It cuts risk for private investors by guaranteeing a minimum electricity price. This encourages private investment in renewables. Expanding CfD to include new technologies like green hydrogen or wave energy could bring essential private money into the transition.
For electric vehicles, the Budget offers funding for charging stations in high-demand areas. This creates chances for private companies to invest alongside the government, crucial for building a national charging network. Partnerships like those between BP Pulse, Uber, and local authorities show how public investment can attract private money to meet sector-wide needs. But like housing retrofits, building EV infrastructure at scale needs a skilled workforce. Without a coordinated plan for skills development, the UK might fall behind on both EV and retrofit targets, risking the net zero timeline.
The Budget introduces green bonds and sustainability-linked loans to help local authorities and private developers fund climate projects. Local authorities can use these for regional adaptation and resilience projects, like flood defenses and climate-proofed infrastructure. This protects public assets and communities. Private investment could play a big role here too. Insurance companies, pension funds, and real estate investors could provide long-term capital. Flood Re, a government-backed scheme with private insurers, shows how public-private teamwork can address climate resilience, with both sectors sharing responsibility for reducing risks.
Ultimately, achieving net zero is everyone's job. Government projects should lay the groundwork, but a more local approach, backed by Combined Authorities, will drive the necessary local action. With public-private partnerships, green financing, and efforts to close the skills gap, we can ensure a fair and effective net zero transition across the country.
The Budget is just the beginning. Achieving net zero needs urgent, coordinated action from all parts of government and society. The 2025 Spending Review will be vital in setting our course. Its approach to devolution, skills, and delivery will determine if the UK can meet its legal targets. By investing wisely now and empowering regions to act locally, we can build a resilient, net zero economy for future generations.