Budget 2021: Tackling the green jobs dilemma

By Dr Jonathan Marshall, Head of Analysis @JMarshall_ECIU

Published:04 March 2021

The 2021 Budget began with an upbeat tone, all things considered. OBR forecasts looking less gloomy; GDP back to pre-Covid levels six months earlier than previously thought with annual growth hitting 7.3%in 2022, pledges of ‘real commitment to green growth’ and claims to be ‘going long’ on a recovery.

But what it clearly missed – apart from the policies and spending needed to get on track to net zero – is the clear link between cutting carbon and creating (and saving) jobs, especially in the short term.

The starkest of warnings on unemployment – rising to above 10% in previous forecasts – were downgraded, albeit rising sharply on current levels to 6.5% by the end of 2021. Despite this, the link between this fearful projection and the green jobs remains conspicuous by its absence.

Opportunity

The Chancellor was criticised for lack of climate action in the 2021 Budget
The Chancellor was criticised for lack of climate action in the 2021 Budget

Looking to address the disproportionate effect of Covid-related unemployment on the young, Rishi Sunak has doubled the Employer Apprentice Bonus, offering payments of £3,000 to firms that get young people into work. This is undeniably a good move and has been widely praised.

However, at the same time, support for one of the most apprenticeship-rich aspect of the net zero transition – decarbonising Britain’s homes – has been cut. The Green Homes Grant was expected to create more than 100,000 new skilled jobs across the country. Even despite considerable teething problems, more than 14,500 new roles have been created to-date, TUC analysis shows.

The number of apprenticeships in the UK is sliding – down by more than 20% between 2015 and 2019 – however they remain strong in skilled trades. Apprenticeships are also a boon to small companies, with more than 70% of construction sector apprenticeships in companies with fewer than 250 employees.

Boosted by the new taper in corporation tax rates, it is exactly this type of company and industry that can act quickly, taking on new work and new staff, and driving forward an economic recovery.

Clearly building upgrades isn’t the sole answer to employing millions of young Brits, but it will certainly help, especially with so much of the recovery seemingly based upon households spending down accrued savings.

There are more than 12 million homes that fall below the Government’s efficiency goals, representing an immense number of green job prospects – a point that has been made extensively in recent months.

If Treasury isn’t interested in the Green Apprentices Scheme, proposed just before Budget, then ensuring that its actions to boost youth employment are at least matched by support for green programmes could be a worthwhile backup option.

Future-proof

The Chancellor also built in a September cliff-edge with the latest delay to the end of furlough. At the same time, he failed to confirm the future of schemes seen as essential for future-proofing British industry.

Among many missing pots of money, previous pledges for green steel and measures to cut energy waste failed to appear. Just months before the Government sets outs its strategy to decarbonise British industry, this isn’t a good look.

If you’re making glass, for example, you’d be a lot more tempted to bring staff back from furlough if there was long-term certainty in your business. The same goes for employees in steel, ceramics, paper and chemicals. More uncertainty and more delays only increase the likelihood of these jobs failing to survive the pandemic.

As it stands, British heavy industry continues to lag well behind European rivals – in terms of both government support and proactive green investment from companies – this uncertainty will only make things worse.

Competing with multinational companies in global marketplaces, once these companies (and jobs) are gone, it isn’t likely they will come back. The lack of joined-up thinking only heightens this risk.

Where now?

With the Budget delivered, the importance of the Treasury’s impending Net Zero Review continues to grow. Of the slew of policies, plans and frameworks due this year, it is second in importance only to the economy-wide Net Zero Strategy.

With publication expected within a couple of months, fears are growing over HMTs focus on the risks – carbon leakage, household impacts, costs to the taxpayer – rather than opportunities like new sources of employment and new means of ‘balancing the books’.

It has been noted before that 'green=jobs' is increasingly at the core of Treasury thinking, now it is time to turn thinking into action.

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