Speakers at the latest Room151 Monthly Online Treasury Briefing (MOTB) have called for the Public Works Loan Board to introduce a discounted rate for “green” projects that help local authorities to achieve their net-zero targets.
Taking part in the MOTB finance panel debate on affording net zero, Stephanie Mitchener, director of finance at Essex County Council, said she would welcome a discounted rate.
“[Net zero] is not just a national agenda, it’s an international agenda. And it’s critical for generations to come. So if it’s that high a priority, then we need to have some way of enabling it to happen,” she said.
Joseph Holmes, executive director for resources at West Berkshire Council, agreed and pointed out that many councils had declared a climate emergency with tough net-zero targets. West Berkshire, for example, has said it aims to be carbon neutral by 2030 and was the first local authority to launch a local climate bond.
“Any sort of discounting would be good. We don’t have the luxury of parking this for a few years,” he added.
Ryan Jude, programme director for the Green Finance Institute and a Labour councillor at Westminster City Council with responsibility for climate policy, compared the situation with the growth in “green” mortgages in the domestic housing market. But in the domestic market, he said, banks issuing discounted green mortgages were either losing profit or cross-subsidising from other products.
“We have been saying that it might make sense for the government, the UK Infrastructure Bank or someone else to guarantee that if loans are going towards a green outcome, that they will guarantee any losses, and therefore the interest rate being lower would make sense.”
Net zero is not just a national agenda, it’s an international agenda. And it’s critical for generations to come. So if it’s that high a priority, we need to have some way of enabling it to happen.
Net-zero funding pots
Jude also highlighted the lack of a coherent system of grant funding for net zero.
He referenced a 2021 report from the National Audit Office that examined the 22 different pots of grant funding that are potentially available to councils – many of which are based on competitive bidding.
“The fact that these pots are set up on a competitive basis means that we’re crowding out some of the councils that might need it more, purely because they don’t have the resources internally.”
Mitchener said that Essex had been successful in many of its funding bids, but the “disparate” approach could lead to stretched resources.
‘It would be really helpful if it could be co-ordinated in some logical way. So there is one place that local authorities can go to identify exactly what is available,” she said.
The other speakers at the MOTB session were: Heather Lamont, director of client investments at CCLA Investment Management, and Iain Buckle, head of credit UK for Aegon Asset Management.
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