Green Policy Snapshot: First 100 Days

Power

The UK has made strong progress on power decarbonisation compared to other sectors of the economy, and now has the second largest offshore wind market in the world, behind China. Meeting the government’s aim to deliver a fully decarbonised electricity grid by 2030 is highly ambitious and will rely on leveraging significant private investment into the infrastructure required. Ongoing delivery constraints include the planning system, grid infrastructure and supply chains, transmission and interconnection capacity, and cross-border electricity contracting.  

Many UK sectors beyond power are dependent on grid decarbonisation to achieve their own carbon reduction targets, meaning that progress on this goal is vital to unlock decarbonisation across the economy.  

Manifesto commitments and announcements by the new government 

Clean Energy Superpower Mission 

• Manifesto commitment alongside introducing a new Energy Independence Act.
• Included in the Secretary of State for DESNZ’s departmental priorities. 
• Chris Stark appointed to lead Mission Control to deliver clean electricity by 2030, with the Mission Board being set up and industry and academic experts appointed to the Clean Power 2030 Advisory Commission.  
• Manifesto commitment to double onshore wind, triple solar power, and quadruple offshore wind capacity by 2030; delivery supported by policy statement on onshore wind, removing the ‘de facto ban’, a consultation on proposed reforms to the National Planning Policy Framework, and increased budget for 2024 renewable energy auction delivering 131 new green infrastructure projects, the largest auction to date.  
• National Energy System Operator (NESO) formally transferred into public ownership and launched on 1st October; NESO due to be formally commissioned to develop the Strategic Spatial Energy Plan (SSEP) and Centralised Strategic Network Plan (CSNP), to be published in 2026. Ofgem assessing the SSEP methodology for approval in early 2025. NESO has also already been asked to provide advice on the clean power mission.  
• Clean energy investment announced in the run up to the International Investment Summit and launch of and investment scheme for Long Duration Electricity Storage in October 2024 with a cap and floor mechanism following consultation earlier in the year.  

GB Energy 

• Manifesto commitment, included in the Secretary of State for DESNZ’s departmental priorities and the King’s Speech. Great British Energy Bill introduced to Parliament on 25 July 2024.  
• Founding statement announced additional details, including GB Energy’s role in enacting the Local Power Plan to deploy local power generation (a manifesto commitment), a partnership with the Crown Estate, and Juergen Maier’s appointment as its Chair. 

Other priorities announced by the Secretary of State: 

• Upgrading Britain’s homes and cutting fuel poverty through the Warm Homes Plan. 
• Standing up for consumers by reforming the energy system. 
• Creating good jobs in Britain’s industrial heartlands, including a just transition for the industries based in the North Sea. 

Other manifesto commitments included: 

• Introducing a British Jobs Bonus offering up to £500 million per year from 2026 to clean energy developers that offer high-quality jobs, good terms and conditions, and build their manufacturing supply chains in industrial heartlands, coastal and energy communities. 
• Extending existing nuclear power plants and completing Hinkley Point C. 
• Maintaining a “strategic reserve” of gas power stations to guarantee security of supply. 
• Honouring existing oil and gas licenses in a managed way that does not jeopardise jobs, but not issuing additional licences to explore new fields. 
• Extending the sunset clause in the Energy Profits Levy until the end of the next Parliament, increasing the rate of the levy by 3% and removing investment allowances. 
• Banning fracking.

Remaining gaps and future developments 

• Plans to address issues with GB-EU energy trading; review of the relevant Trade and Cooperation Agreement in 2026. 
• Government responses to the second consultation on the review of electricity market arrangements (REMA). 
• Government to host the International Energy Agency’s International Summit on the Future of Energy Security in the first quarter of 2025.  

Aldersgate Group recommendations and upcoming work  

The Aldersgate Group called for three priority actions in the Programme for Government:  

• Remove the barriers preventing the consenting and construction of onshore wind projects and the network infrastructure required to connect them, while protecting habitats. 
• Reduce the Electricity Generator Levy (EGL) for existing renewable energy projects to a point that is at least consistent with treatment of oil and gas extraction. 
• Improve the UK’s participation in neighbouring power markets. 

Upcoming publication: 

• Final recommendations in the autumn on how to improve the planning system to deliver energy and grid infrastructure, in collaboration with Renewable UK and CPRE (interim findings available here) 

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Industry

Industrial sectors contribute £152 billion in Gross Value Added (GVA) to the UK economy, support over 1.4 million jobs, and enable clean energy, transport, and infrastructure. However, UK industry faces fierce international competition. Other countries are pursuing ambitious plans to decarbonise and grow their industrial sectors, most notably through the US Inflation Reduction Act and EU Green Deal Industrial Plan. This presents a unique challenge for the UK, which lacks the fiscal power to match the high levels of public investment committed by competitors. A joined-up plan is required to drive green growth in these sectors while remaining competitive in international markets.  

Manifesto commitments and announcements by the new government 

Industrial Strategy 

• Manifesto commitment to deliver an industrial strategy. 

• Green Paper ‘Invest 2035: the UK’s modern industrial strategy’ published outlining long-term sectoral growth and priority industries, with final strategy due in spring 2025. The eight growth-driving sectors identified are advanced manufacturing, clean energy industries, creative industries, defence, digital and technologies, financial services, professional and business services.  

• New Industrial Strategy Council to be set up on a statutory footing, launched in the interim as the Industrial Strategy Advisory Council with Clair Barclay, CEO of Microsoft UK, as Chair.   

• New Regulatory Innovation Office (RIO) launched by DSIT to help update regulation, speed up approval timelines and coordinate across boundaries. The RIO will initially focus on fast-growing technologies before broadening to other sectors (engineering biology, space, AI and digital in healthcare, connected and autonomous technology).  

National Wealth Fund 

• Manifesto commitment, expected to play a central role in supporting the government’s Industrial Strategy, growth and clean power missions; National Wealth Fund Bill announced in the King’s Speech and will build on and expand the UK Infrastructure Bank’s (UKIB) offer with additional detail announced at the International Investor Summit.  

• £7.3 billion over the course of this Parliament with a target of attracting £3 of private investment for every £1 of public investment. Includes £2.5 billion for the steel industry, £1.8 billion to upgrade ports and supply chains, £1.5 billion for new gigafactories, £1 billion to accelerate carbon capture deployment, and £500 million for green hydrogen manufacturing. The NWF will inherit UKIB’s £22 billion capitalisation, with an additional £5.8 billion confirmed over this Parliament. The remaining £1.5 billion is reserved by the government for flexibility.  

Steel 

• Release of £13.5 million from the Tata Steel/Port Talbot Transition Board fund to support affected supply chain businesses and workers, and new deal reached between Tata Steel, Trade Unions and Port Talbot workers. 

• New steel sector strategy to be published in spring 2025. 

Other manifesto commitments included: 

• Implementing the Carbon Border Adjustment Mechanism. 

• Developing a ten-year infrastructure strategy, aligned with industry strategy and regional development priorities; Planning and Infrastructure Bill included in the King’s Speech.  

• Creating a new National Infrastructure and Service Transformation Authority, to set strategic infrastructure priorities and oversee the design, scope and delivery of projects. 

Remaining gaps and future developments 

• Plans and policies to support industrial electrification, following the government’s response to the call for evidence on enabling industrial electrification, and policy to decarbonise dispersed sites.  

• Government responses to the consultations on the introduction of a UK carbon border adjustment mechanism, UK Emissions Trading Scheme (ETS) scope expansion to waste and integrating greenhouse gas removals into the UK ETS. 

• Upcoming consultation expected on voluntary product standards. 
• Obligatory review of the Trade and Cooperation Agreement in early 2025, providing an opportunity to explore greater alignment with the EU. 

Aldersgate Group recommendations and upcoming work  

Building on the recommendations in our Programme for Government, the Aldersgate Group has called for ten priority actions to kickstart a new era of clean industry in a jointly authored briefing with E3G, Green Alliance and Cambridge Institute for Sustainability Leadership, endorsed by 19 organisations. The immediate priorities include: 

• Setting out an ambitious green industrial strategy that includes a plan for the decarbonisation of energy intensive industry and manufacturing. 

• Commissioning a supply chain and skills capacity assessment to identify the UK’s capability gaps and competitive strengths. 

• Establishing a roadmap for industrial electrification that sets out immediate-, medium-, and long-term actions to tackle high electricity prices, capex support and access to grid connections. 

• Continuing the current programme of reforms to UK carbon pricing and review linkage of the EU and UK Emissions Trading Schemes. 

• Maintaining the momentum of CCUS and hydrogen development by continuing with the UK’s initial cluster projects. 

• Consolidating and simplifying innovation and resource and energy efficiency funding, with the aim of scaling up decarbonisation solutions. 

Longer-term issues to address include dispersed sites, demand-side policies for low carbon products, skills, just transition, and circularity.  

We have also set out the Aldersgate Group’s vision for a successful UK industrial strategy which can deliver growth and decarbonisation in tandem, in Placing Decarbonisation at the Heart of Industrial Strategy. Further briefings are planned on ensuring the success of the UK’s industrial strategy, including unlocking financing industrial decarbonisation and mapping out the public policy landscape for industrial decarbonisation. 

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Built Environment

The built environment contributes 25% of the UK’s total emissions, with 19% coming from operational emissions needed to heat, cool and power buildings. To deliver the UK’s net zero target, it is imperative that policy measures are introduced to improve energy efficiency and address issues such as embodied carbon and circularity in the construction sector. Retrofit to reduce energy use also offers part of the solution to reduce the cost-of-living crisis, currently exacerbated by high energy prices and energy inefficient housing.  

Manifesto commitments and announcements by the new government 

Warm Homes Plan 

• Manifesto commitment to offer grants and low-interest loans to support investment in insulation, other forms of low-carbon heating such as solar, and batteries.  

• Change to winter fuel payments, to be means tested for winter 2024/25. 

• New Warm Homes: Local Grant announced to support low-income homeowners and private renters with energy performance upgrades and clean heating (September 2024). 

• Public Sector Decarbonisation Scheme and Warm Homes: Social Housing Fund announced as replacements to the replacing the Social Housing Decarbonisation Fund (September 2024). 

House building  

• Manifesto commitment to build 1.5 million new homes over the next Parliament.  

• Manifesto commitment for a dedicated Planning and Infrastructure Bill, announced in the King’s Speech; consultation on proposed changes to the National Policy Planning Framework (September 2024).  

Other manifesto commitments: 

• Ensuring homes in the private rented sector meet minimum energy efficiency standards by 2030. 

• Plans to work with the private sector, including banks and building societies, to provide further private finance to accelerate home upgrades and low carbon heating. 

• Building more high-quality, well-designed, and sustainable homes that are resilient to the impacts of climate change while promoting nature recovery. 

• Addressing nutrient neutrality and its role in housebuilding without weakening environmental protections. 

Remaining gaps and future developments 

• Plans and policies to decarbonise heat. 

• Further policy development to support the development of financial products to mobilise green finance for home improvements, support for consumers to facilitate the transition to low carbon forms of heating (such as certification), addressing skills gaps and supply chains to meet demand, measures to increase energy efficiency and circularity in the built environment. 

• Upcoming consultations on proposals for private and social rented homes to achieve Energy Performance Certificate (EPC) C or equivalent by 2030 and proposals for improvements to EPCs to make them more accurate and reliable. 

• Government responses to the consultations on the Future Home Standards and the Home Energy Model: replacement for the Standard Assessment Procedure (SAP). 

Aldersgate Group recommendations and upcoming work  

The Aldersgate Group called for the following priority actions in the Programme for Government and other previous reports:  

• Introduce a Minimum Energy Efficiency Standard regulation that requires all homes to be EPC C by 2035.  

• Reform the Energy Performance Certificate (EPC) rating metric to support net zero 

• Establish an independent, impartial, and central Energy Advice Service for England. 

• For those unable to pay, ensure that existing public funding schemes – such as the Public Sector Decarbonisation Scheme, the Social Housing Decarbonisation Fund, and the Energy Company Obligation – are allocated and expanded over time to support energy efficiency and heating system upgrades. 

• Offer a stamp duty rebate to homes that improve their EPC rating through renovation within two years of a purchase. 

• Regulate building design to reduce embodied carbon and operational emissions, with the introduction of a minimum whole lifecycle carbon standard.  

• Bring forward the decision on the role of hydrogen in home heating from 2026 to provide clarity to industry. 

• Accelerate the deployment of heat pumps, learning lessons from existing UK schemes and international success stories. 

• Invest in skills and build on the recommendations of the Green Jobs Taskforce, through the Green Jobs Delivery Group, to address skills gaps in the sector and ensure the workforce is equipped with suitable knowledge to recommend, install, service and maintain low carbon heating systems. 

• Reduce VAT on housing renovation and regeneration to match the level on new builds, to incentivise the reuse of existing building. 

• Integrate circular design principles in all engineering, architecture and design degree courses and industry training boards. 

• Introduce mandatory product standards to reduce embodied emissions in construction materials and increase their resource efficiency. 

• Create markets for recycled construction materials, through the introduction of tax adjustments and construction standards. 

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Transport

Carbon emissions from transport remain the highest among all UK sectors. Though some progress has been made, such as the increased uptake of electric vehicles, emissions reduction across surface transport must accelerate with policy to drive a modal shift to public transport, active travel and shared mobility.  

Freight and commercial vehicle decarbonisation also continue to face significant challenges. The government must take decisive measures to reduce the use of fossil fuels in powering road vehicles and trains. Currently, 89% of all goods in the UK are transported directly by road, and Heavy Goods Vehicles (HGVs) are almost all diesel powered.  

Manifesto commitments and announcements by the new government 

• Manifesto commitment to bring rail passenger services to be brought back into public ownership and Passenger Railway Services (Public Ownership) Bill in the King’s Speech.  

• Sustainable Aviation Fuel (Revenue Support Mechanism) Bill in King’s Speech to support the production of sustainable aviation fuels. 

• Promise of “unprecedented levels of funding” in cycling and walking. 

• Manifesto commitment to develop a long-term strategy for transport, ensuring transport infrastructure can be delivered efficiently and on time; internal review of the DfT capital spend portfolio review commissioned by Secretary of State. 

Priorities announced by the Secretary of State: 

• Improving the performance of railways and driving forward rail reform.  

• Improving bus services and growing usage across the country.  

• Transforming infrastructure to work for the whole country, promoting social mobility and tackling regional inequality.  

• Delivering greener transport. 

• Better integrating transport networks. 

Labour’s Plan for the Automotive Sector (October 2023)  

• Restore the 2030 phase-out date on the sale of new petrol and diesel cars. 

• Create a new category of Nationally Significant Infrastructure Projects for growth industries, including gigafactories. 

• Part-finance the new, additional gigafactories required to hit the Faraday Institution’s recommended target of 220GWh of supply of manufactured batteries for domestic electric vehicle production. 

• Introduce ten-year automotive R&D funding decisions, matching that given to aerospace, to give businesses the certainty to invest in the UK. 

• Accelerate the EV charge point roll-out by setting new binding targets and delegating responsibility - tied to existing funding - to regional and local levels to ensure that there is a balanced spread of infrastructure across the whole country. 

• Turbocharge planning decisions for net zero infrastructure like charging by removing unnecessary planning barriers that delay projects going ahead – particularly around height restrictions. 

• Introduce an Electric Vehicle Confident labelling requirement on new electric vehicles that give consumers the details they need to make informed decisions. 

• Establish a Supply Chains Taskforce which will build capacity to examine supply chains and identify key interventions to support resilience in sectors like automotive. 

Other commitments: 

• Maintain and renew the road network, to ensure it serves drivers, cyclists and other road users, remains safe, and tackles congestion. 

• Fix an additional one million potholes across England in each year of the next Parliament, funded by deferring the A27 bypass. 

• Introduce a duty to promote and grow the use of rail freight. 

• Give English Mayors new powers to franchise local bus services, lift the ban on municipal ownership, and create unified and integrated transport systems.  

Remaining gaps and future developments 

• Suitable replacement for fuel duty and vehicle excise duty; Transport Select Committee identified in 2022 that net zero policies are likely to result in zero revenue from motoring taxation by 2040. 

• Policy and greater clarity for the decarbonisation of HGVs. 

• Maritime transport to be included in the UK Emissions Trading Scheme (ETS) and free allocations to be phased out for aviation in 2026.  

• Expected publication of a Low Carbon Fuels Strategy. 

Aldersgate Group recommendations and upcoming work  

The Aldersgate Group called for the following priority actions in the Programme for Government:  

• Publish a strategy setting out how the rapid decarbonisation of freight and commercial surface transport will be facilitated. This should consider findings from the 2023 call for evidence on Infrastructure for zero emission heavy goods vehicles and coaches. 

• Take a place-based approach to strategy, reflecting the widely varying transport needs and conditions in different parts of the UK. Considering the role of multimodal hubs, especially at ports and major freight distribution locations, designed around electricity and (where appropriate) hydrogen supply for mixed uses alongside planned integration between maritime, rail and road journey legs. 

• Accelerate the electrification of rail, focusing on “Infill” sections of the network. 

• Expand charging infrastructure, as it is still insufficient for both light commercial vehicles and heavy freight. Introducing price parity between VAT charged for electricity at home and at public charge points would increase fairness for those who do not have access to off-street parking. 

• Increase depot charging for fleets. To support depot charging we encourage the creation of a simplified process to make applications for grid upgrades, transparency in costs for District Network Operator (DNO) upgrades and increased acceptance of load balancing options to reduce DNO upgrades. 

The Aldersgate Group is exploring further work on the decarbonisation of HGVs.  

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Nature

The UK is one of the most nature-depleted countries globally. The Green Finance Institute found that nature degradation could cause UK GDP to be 6% lower than it would have been otherwise by the 2030s, and the Office for Environmental Protection (OEP)’s 2024 progress report found that the UK is largely off-track to achieve its environmental targets. The CCC’s Assessment of the government’s Third National Adaptation Programme (NAP3), published in March 2024, also concluded that the UK’s policy programme fell far short of what is needed to ensure resilience to the effects of climate change.  

Manifesto commitments and announcements by the new government 

Priorities announced by the Secretary of State 

• Cleaning up Britain’s rivers, lakes and seas. 

• Supporting farmers to strengthen food security.  

• Accelerating nature recovery; rapid review of the Environment Improvement Plan (EIP), to be completed by the end of 2024. 

• Speeding up the construction of flood defences. 

Planning:  

• Consultation on proposed changes to the National Planning Policy Framework (NPPF), including a new approach to greenbelt land designation prioritising the release of lower quality ‘grey belt’ land and introducing ‘golden rules’ to ensure development benefits communities and nature (September 2024). 

Other manifesto commitments:  

• Deliver the Environment Act targets. 

• Introduce a Land Use Framework.  

• A new deal for farmers, which includes strengthened support through the Environmental Land Management schemes. This focus will also cover food production as Labour set a target for half of all food purchased across the public sector to be locally produced or certified to higher environmental standards. 

• Create of nine new National River Walks, one in each region of England, and the establishment of three new National Forests in England. 

• Establish new National Forests in England, as well as bolster the delivery of tree planting and expansion of other nature-rich habitats such as wetlands and peat bogs. 

• Put failing water companies under special measures and give regulators new powers to block the payment of bonuses to executives who pollute waterways.  

• The creation of a new Regulatory Innovation Office to help regulators update regulation, speed up approval times, and co-ordinate issues that span existing boundaries. 

• Improving resilience and preparation across central government, local authorities, local communities, and emergency services to address climate change adaptation. 

Remaining gaps and future developments 

• Delivery plans for the UK’s environmental goals and joined-up policy across government departments to ensure that nature recovery is incorporated into planning reform, housebuilding and other infrastructure development.  

• Upcoming consultations expected on the land use framework (by end of 2024). 

Aldersgate Group recommendations and upcoming work  

The Aldersgate Group called for the following priority actions in the Programme for Government:  

• Implement a rapid delivery programme to fulfil the promise to protect 30% of land and sea for nature. 

• Set interim targets for adaptation measures in the next update to the Environmental Improvement Plan. 

• Provide further information on how a range of evolving spatial initiative will work alongside each other in the upcoming Land Use Framework.  

• Clearly set out how nature restoration and decarbonisation will be integrated throughout the planning process. 

• Double the nature-friendly farming budget to support large-scale nature restoration.  

Upcoming work from the Aldersgate Group includes a briefing on the business case for nature.  

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Circular Economy

An effective and expanded circular economy could create over 450,000 jobs by 2035, including in regions where there is persistent unemployment. Keeping products and resources in use for as long as possible has the potential to lower production costs, increase supply security, and secure long-term competitiveness. The 2018 Resources and Waste Strategy built a positive overarching vision, but progress and implementation has been slow. According to the 2024 OEP progress report, changes in overall recycling rates were limited or non-existent and waste disposal via incineration increased.  

Manifesto commitments and announcements by the new government 

Priorities announced by the Secretary of State: 

• Working towards a zero-waste economy; establishment of a new Circular Economy Taskforce to advise on the development of a circular economy strategy.

Remaining gaps and future developments 

• Policy support and clarity to enable the reduction of material use, including R&D, standards and regulation, recycling and waste infrastructure, and encourage uptake of new behaviours, products and services. 

Aldersgate Group recommendations and upcoming work  

The Aldersgate Group called for six priority actions in the Programme for Government: 

• Urgently implement the policy proposals first set out in the 2018 Resources and Waste Strategy. 

• Introduce fiscal mechanisms to reflect the whole lifecycle economic and environmental benefits of using secondary materials. 

• Provide public finance through the UKIB to support the development of vital infrastructure.  

• Develop criteria for the £290 billion spent annually by the UK on public procurement. 

• Use tax incentives to incentivise waste management and sorting companies to supply valuable scrap and waste materials to UK industry. 

• Introduce a statutory target on resource productivity. 

Our recent briefing on placing decarbonisation at the heart of industrial strategy highlighted opportunities to embed circularity with a whole-value chain approach to industrial strategy. 

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Green Finance

The UK is a world leader in green finance, with London ranked as the top-rated financial centre for green finance ahead of New York, Singapore, Amsterdam and others. Progress has stalled in recent years, with several green financial regulations yet to be implemented. For example, the previous government missed both a legal deadline to put the climate element of the UK Green Taxonomy into law by 1 January 2023 and a target set out in the 2023 Green Finance Strategy to publish a consultation on the Taxonomy by Autumn 2023. 

Manifesto commitments and announcements by the new government

• Manifesto commitment to “make the UK the green finance capital of the world”, with plans to mandate UK-regulated financial institutions and FTSE 100 companies to produce credible transition plans that align with 1.5C and restore climate change as a priority in the Bank of England’s annual remit letters. 

• Plans to introduce legislation in 2025 to regulate environmental, social, and governance (ESG) rating agencies. 

Labour’s Plan for Financial Services (published February 2024)  

• Define a clear timeline for completion of the taxonomy, and voluntary and mandatory reporting for all businesses in scope. 

• Fulfil the UK’s commitment to the Sustainability Disclosure Requirements (SDR) aligned with the International Sustainability Standards Board’s (ISSB) standards. 

• Determine a clear timeframe for instituting voluntary and mandatory transition planning and disclosure requirements for public/private businesses. 

• Work with financial services sector and data providers to evaluate a potential model for tracking green finance flows. 

• Explore the potential for nature-related finance through building on the work in the Voluntary Carbon Market and natural capital public-private partnerships. 

• Ask the Financial Conduct Authority (FCA), the Prudential Regulation Authority (PRA) and HM Treasury to consult on allowing banks and insurers to issue a covered bond secured against green infrastructure. 

Remaining gaps and future developments 

• Government response to the report from the Transition Finance Market Review, published in October 2024. 

• UK Sustainability Disclosure Technical Advisory Committee expected to assess ISSB’s first standards in 2024 and make recommendations on enforcement to the Secretary of State for Business and Trade.  

• Consultations expected on the UK Green Taxonomy, mandatory transition plans and the draft UK Sustainability Reporting Standards. 

Aldersgate Group recommendations and upcoming work  

The Aldersgate Group called for the following priority actions in the Programme for Government: 

• As an immediate priority, deliver on the outstanding commitments in the 2023 Green Finance Strategy. This includes implementing a UK Green Taxonomy, mandating transition plan disclosures for large UK companies, and adopting the ISSB’s sustainability standards. 

• Use the UK Green Taxonomy as a tool to inform public policy and spending decisions. For example, using it to underpin tracking assessments of finance flows into the net zero economy and monitor the portfolio of Public Financial Institutions. 

• Set out an iterative roadmap to mandatory Taskforce on Nature-related Disclosures (TNFD) reporting, beginning with the UK’s largest companies and financial institutions. 

• Amend the 2023 Financial Services and Markets Act to explicitly include the transition to net zero and a nature positive economy as a secondary objective for financial regulators. The Chancellor should also reinstate ‘environmental sustainability and climate change’ as one of the Bank of England’s Financial Policy Committee’s priorities. 

Upcoming plans include further work on financing industrial decarbonisation, building on our response to the Transition Finance Market Review’s call for evidence.  

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Skills

Supporting skills development in the workforce will be crucial to delivering the UK’s net zero and environmental targets, meeting demand from employers, and supporting the growth of new sectors. Green skills shortages are emerging, and deepening, across the economy. 

At the heart of this growing skills gap is low business investment. UK employer investment in training and development is far less than OECD counterparts and has fallen by 28% in real terms since 2005. This has been partly driven by economic downturn following the 2007-8 financial crisis and the COVID-19 pandemic, but also the lack of incentives and long-term policy certainty.  

Manifesto commitments and announcements by the new government 

The Labour Party’s election manifesto pledged several significant reforms to the further and higher education system to help achieve its national mission of breaking down barriers to opportunity. These included: 

Mission to break down barriers to opportunity 

• Manifesto commitment; Skills England Bill and English Devolution Bill which will give local leaders greater powers over skills announced in King’s Speech. 

• Skills England established to bring together business, training providers, and unions with national and local government to ensure the UK has the highly trained workforce needed to deliver the Industrial Strategy; report to be published with an initial assessment of the UK’s working skills, future skills needs and gaps.  

• Manifesto commitment to reform the Apprenticeship Levy into the Growth and Skills Levy, with Skills England informing eligibility for Levy funding of non-apprenticeship training based on the assessment of priority skills needs; employers to be asked to rebalance funding towards younger workers and fund degree-level apprenticeships outside the Levy. 

Other manifesto commitments: 

• Bringing forward a comprehensive strategy for post-16 education, setting out the role of providers and how students can move between institutions.  

• Guaranteeing training, an apprenticeship, or help to find work for all 18- to 21-year-olds.  

• Transforming Further Education colleges into specialist Technical Excellence Colleges. 

• Guaranteeing two weeks’ worth of work experience for every young person and improve careers advice in schools and colleges.  

• Merging Jobcentre Plus and the National Careers Service together to provide a national jobs and careers service.  

Remaining gaps and future developments 

• Greater clarity needed on how the government plans to link skills policy with industrial strategy and the delivery of the clean power and growth missions, including the future of the Green Jobs Plan (expected under the previous government). 

• Publication of full year data on adult (19+) further education and skills in England for the academic year August 2023 to July 2024.  

Aldersgate Group recommendations and upcoming work  

The Aldersgate Group called for the following priority interventions in the Programme for Government: 

• Set out a low carbon and nature skills strategy. This should include the development of granular sectoral skills plans and should consider how government departments can coordinate more effectively. 

• Reform the apprenticeship system to incentivise businesses to investment in skills and training. This should include: reforming the Apprenticeship Levy to give employers more flexibility on how they can spend their funds; raising the apprenticeship grant for SMEs as well as Apprenticeship Rate so it is level with national minimum wage; and improving knowledge and understanding of apprenticeships amongst individuals and employers.  

• Support the creation of more green and low-carbon short qualifications to help plug immediate gaps in the workforce and provide those enrolling in further education courses with the skills they need to thrive in the future net zero economy.  

Later in 2024, the Aldersgate Group will publish a briefing in response to the government’s proposal to reform the Apprenticeship Levy into a Growth and Skills Levy. The briefing will set out a series of recommendations to ensure the successful implementation of the new Levy. Upcoming work on industrial strategy will also consider skills policy. 

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