The Guardian Online - article references CLCF study 'The Economics of Low Carbon Cities'

Philip Monaghan

Even during an age of austerity with unprecedented spending cuts, the economic footprint of the public sector is huge. Take for instance, local government, where each year £42bn is spent on external contracts alone. The value of local government pension funds last year was £143bn, and it is estimated that local authorities have £250bn worth of property.

But is taxpayers money well spent, for instance, by simultaneously helping to tackle high levels of youth unemployment while delivering frontline public services? I would argue not always.

For starters, we need to redirect the £143bn of local authority pension funds from investments in big overseas business to local job creation (especially if beneficiaries of this investment were the big banks that caused the global crisis in the first place). To do this, there is a need to make it much easier for local councils to access their own municipal pension funds for local regeneration schemes. It is legal to do so already, yet this practice is uncommon due to regulatory red tape and a lack of awareness and competency. We not only need the government to make it clear that this is possible, but also that it is expected, and as such will be monitored.

Crucially, this money could be invested in a way that prevents a significant amount of GDP leaving an area and decarbonises the local economy too, while stimulating job creation amongst the unemployed at the same time.

A new study by the Centre for Low Carbon Futures shows that UK cities such as Leeds (which has an economy worth £54bn a year and an energy bill of £5.4bn a year) could cut their costs by billions through exploiting commercially attractive opportunities in energy and carbon management.

Increased energy efficiencies could be made in homes, public and commercial buildings, as well as to industry and transport, which would pay for themselves in commercial terms in just four years.

The study concludes that by 2022 an area such as the Leeds city region, by investing 1% of GDP for 10 years, would typically lead to cuts in the energy bill worth 1.6% of GDP every year (and cut emissions based on 1990 levels by 35%). Crucially, this would also create jobs, improve energy security and tackle fuel poverty. So for instance, £1bn spent on investment in low carbon options would generate £220m of cost savings and create 1,000 new jobs and wider economic benefits of a further £50m per year.

Leeds is not alone in striving to find innovative ways to make the transition to a greener and more prosperous economy whilst dealing with savage spending cuts. Local authorities up and down the country are also taking great strides in this regard. Solutions range from electric vehicle infrastructure in Newcastle to decentralised energy networks in Lambeth.

But the government needs to help these local authorities achieve even more, beginning with unlocking the use of municipal pension funds. By recalibrating aspects of our current economic model in this way it both boosts local resilience and enhances our nation's sustainability.

Philip Monaghan is founder and chief executive of Infrangilis. His book, How Local Resilience Creates Sustainable Societies was published in February by Routledge

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