The National Audit Office is warning that there are serious weaknesses in central government’s approach to working with local authorities on decarbonisation, stemming from a lack of clarity over local authorities’ overall roles, piecemeal funding, and diffuse accountabilities.

The warning comes in a new report from the the UK’s independent public spending watchdog published today - Local government and net zero in England - in response to a request from the House of Commons Environmental Audit Committee for the NAO to examine local government and net zero.

The NAO is highlighting serious concerns about the inadequacies of the Government’s current approach on a range of issues. The Government has committed to outline responsibilities at national, regional and local level in its overall net zero strategy – publishing before the upcoming United Nations COP26 climate conference which takes place in Glasgow in November 2021.

However, the report is highlighting that the Government has not yet set out to local authorities how it will work with them to clarify responsibilities for net zero.

The NAO says that many local authorities are keen to play a core role in delivering net zero, for example the UK100 group of local authority leaders published Power Shift 100 (April 2021), which highlighted the essential role that local authorities have in decarbonising local transport, buildings, energy and waste.

The main government departments with responsibilities related to local authorities' work on net zero are: The Department for Business, Energy & Industrial Strategy (BEIS); The Ministry of Housing, Communities & Local Government (MHCLG) ; The Department for Environment, Food & Rural Affairs (Defra); The Department for Transport (DoT); HM Treasury.

The report says that MHCLG, BEIS and other departments have recognised the challenges and are taking steps to improve their approach. However, while their progress has “understandably been slowed” by the COVID-19 pandemic, there is now “great urgency to the development of a more coherent approach”, particularly in the context of the imminence of the COP26 Summit.

Key findings in the report on the local authorities’ role in achieving net zero include:

• Central government has not yet developed with local authorities any overall expectations about their roles in achieving the national net zero target.
• Government has not yet set out to local authorities how it will work with them to clarify responsibilities for net zero.
• While the exact scale and nature of local authorities’ roles and responsibilities are to be decided, it is already clear that they have an important part to play.
• Current reforms are a critical opportunity to ensure that the national planning framework supports local authorities to align decisions with net zero.
• There is little consistency in local authorities’ reporting on net zero, which makes it difficult to get an overall picture of what local authorities have achieved.
• Overall, local authorities find it hard to engage with central government on net zero.
• Departments have started to coordinate their engagement with local authorities on net zero but there is no single senior point of responsibility for making more fundamental improvements.

Funding is a critical issue for local authority work on net zero

Commenting on finance, the report says that funding is a critical issue for local authority work on net zero.

Local authorities can use core funding from MHCLG, they can bid for grant funding, or they can access wider funding targeted at more general outcomes such as social or economic growth. From late summer 2021, the UK Infrastructure Bank will also be able to lend up to £4 billion to local authorities to help them achieve the net zero target and support economic growth.

However, neither MHCLG nor HM Treasury has assessed the totality of funding that central government provides to local government that is linked with net zero, or whether the balance of different types of funds is likely be effective.

The NAO’s analysis shows that dedicated grant funding for local authority work on net zero increased significantly in 2020-21 but remains fragmented. Grant funding for local authorities’ net zero activities increased from £74 million in 2019-20, to £1.2 billion in 2020-21.

NAO analysis of 21 grants available to local authorities for net-zero work shows that local authorities have received very different amounts from these funds: 17 local authority areas received £20 million or more each, while 37 received less than £2 million each. Per person, 14 local authority areas received £50 or more, while 67 received less than £12.50.

The report warns:

“While competitive processes can help focus funding on the best projects, a fragmented funding landscape dominated by competitive funds brings the risk that money does not go to where the need or opportunity is greatest, and it can make it difficult for local authorities to plan for the long term.

“It can also mean that local authorities that have been successful in winning funding previously continue to win most of the funding, because they have people with the expertise and time to identify suitable grants and apply. These challenges can be more severe where funds have short timescales for application and delivery.”

The NAO also expresses concern that HM Treasury’s standard approach to Spending Reviews is not likely to provide an adequate analysis of local authorities’ resourcing for net zero. The Treasury is expected to start the next Comprehensive Spending Review this summer, which will allocate budgets to departments over the medium term, including funding to local authorities.

The NAO is recommending that central government carries out an analysis of the net zero funding available to local authorities to inform the next Comprehensive Spending Review, considering the cost pressures they face.

Local authorities’ resources and skills for net zero

According to the NAO, while the exact scale and nature of local authorities’ roles and responsibilities in reaching the UK’s national net zero target are to be decided, it is “already clear that they have an important part to play” as a result of the sector’s powers and responsibilities for waste, local transport and social housing, and via their influence in local communities.

However, central government has not yet developed with local authorities any overall expectations about their roles in achieving the national net zero target. Nonetheless, local authorities have started a range of climate work, some as a result of government schemes.

The NAO finds that 91% of local authorities have adopted at least one commitment to decarbonise their activities, or their local area. More than a third (38%) of single and upper tier authorities have committed to decarbonise their local area by or before 2030.

Despite this, central government is still yet to decide whether local authorities’ roles in meeting the national net zero target should have statutory basis. The report says:

“Without a clear sense of responsibilities and priorities, there is a risk that local authority action on net zero is not as co-ordinated, targeted, or widespread as it might need to be.”

The report also finds that local authorities have varying levels of capacity to engage with net zero, drawing attention to recent reports by the Climate Change Committee which have also raised concerns about the need to develop skills in the wider supply chain to enable local authorities’ work on net zero, especially on energy efficiency and low-carbon heating.

In a 2020 survey from the Local Government Association, 79 out of 90 respondents thought a lack of workforce capacity was a moderate or significant barrier to tackling climate change.

Local authorities have also told the NAO that they find it hard to engage with central government on net zero, and that there is a lack of coordination between departments on their specific net zero requirements.

The report concludes that while Government departments have supported local authority work related to net zero through targeted support and funding, there are serious weaknesses in central government’s approach to working with local authorities on decarbonisation, stemming from a lack of clarity over local authorities’ overall roles, piecemeal funding, and diffuse accountabilities.

This hampers local authorities’ ability to plan effectively for the long-term, build skills and capacity, and prioritise effort. It creates significant risks to value for money as spending is likely to increase quickly.

However, the NAO is not convinced that overall engagement has been sufficiently strategic or co-ordinated to ensure that the role of local authorities in meeting the national net zero target is clearly defined.

Gareth Davies, the head of the NAO commented:

“There are serious weaknesses in government's approach to working with local authorities on net zero, stemming from a lack of clarity over roles and responsibilities and piecemeal funding. This hampers local authorities’ ability to plan effectively for the long term, build skills and capacity, and prioritise effort.

“Government’s efforts to improve its approach to local action on net zero have been understandably slowed by the COVID-19 pandemic. However, there is now great urgency to make progress”

UK100 - "unless ministers empower local leaders before UN COP26 Summit UK government will be going naked into the conference chamber"

Responding to the NAO report, Polly Billington, Chief Executive of UK100, which represents over 100 mayors and local authority leaders committed to action on climate change, said:

“We’ve been warning for years that the approach to funding local authorities to achieve Net Zero is ‘piecemeal’, so this report from the NAO is welcome, and must be a wake-up call for ministers. Unless ministers empower local leaders before the UN COP26 Summit in November, the UK government will be going naked into the conference chamber.

“Local authorities have the ability to reduce greenhouse gas emissions by up to a third: cities and councils must be front and centre of Net Zero. As the summit communique signed by 32 mayors and leaders set out this week, local leaders need new powers and resources, enshrined in a Net Zero Local Powers Bill. That includes oversight of strategic bodies to tackle energy market failure, along with the financing to decarbonise transport and tackle emissions from homes and workplaces. We look forward to the Government’s response to the UK100 communique and the NAO report.”

On Tuesday this week the Mayor of the West Midlands, Andy Street and UK100 co-convened an international Net Zero climate change summit in Birmingham. A communiqué issued at the conference signed by a group of 32 cross-party Mayors and local leaders is calling for a ‘Power Shift’ from Whitehall for additional powers to tackle climate change so that local and regional authorities can deliver Net Zero.

Click here to download the full report Local government and net zero in England