In January 2023, former Energy Minister Chris Skidmore published his ‘Net Zero Review’, making 129 recommendations all geared towards maximising economic investment, opportunities and jobs.
The Review calls on the government to set out clear, comprehensive industry-specific strategies to tackle net zero, in line with the Budget submission ICAEW made to HM Treasury in January.
While we support the ‘Review’ in its entirety, there are certain recommendations that we believe should take priority and where ICAEW and its members can contribute the most to their delivery.
Governance and regulation
Good governance plays a key role in the move to a sustainable economy and we fully support the creation of an ‘Office for Net Zero Delivery’ (Skidmore recommendation #7) to ensure that the cross-departmental priorities for net zero are properly managed.
The Department for Business, Energy and Industrial Strategy (BEIS) was recently restructured, with more emphasis on net zero with the creation of the Department for Energy Security and Net Zero (DESNZ). We support the creation of a standalone department and hope that Parliament will establish an accompanying select committee.
In addition to managing cross-cutting risks, sharing best practice and ensuring policy cohesion across Whitehall, the new department should have oversight of the activities of the different UK regulators to ensure the business environment and investment opportunities are optimised for net zero where possible (Skidmore recommendation #4).
We support a review of how policy incentivises investment in decarbonisation, including via the tax system and capital allowances (Skidmore recommendation #58). However, business investment decisions run much deeper than the headline corporation tax rate. Policymakers must take a holistic view, recognising that areas including capital gains tax, R&D incentives, grants, labour skills, infrastructure and political stability are as likely – if not more so – to exert and influence on decisions.
Finance and reporting
For the UK to maintain its position as a global leader in green finance, we urge the government to bring forward its updated Green Finance Strategy at the earliest opportunity (Skidmore recommendation #69). This should include a ‘Net Zero Investment Plan’, which outlines sectoral transition pathways to net zero and an assessment of the low-carbon investment gap by sector and how these can be bridged.
Carbon investment in the UK must triple by the end of this decade if it is to meet its climate goals, according to the Climate Change Committee. DESNZ should create a Net Zero Delivery Tracker to assess the financial flows in support of these goals in each Budget and Spending Review. All stakeholders must agree on clear, science-based definitions of what is green, that are simple to apply and allow good actors to demonstrate their green credentials and make greenwashing more difficult (Skidmore recommendations #15 and 16).
The implementation of the UN’s sustainable development goals and their accompanying assurance will become ever more critical for maintaining investor and public confidence. The updated Green Finance Strategy sets out an ambitious approach to disclosure and standard-setting – including how government will meet its existing commitments to implement sustainable disclosure requirements across the economy and endorsing and implementing ISSB standards as soon as possible (Skidmore recommendations #14 & 69).
Skills and business
ICAEW has long advocated for initiatives to support SMEs in this transformation, and we welcome the proposal of a ‘Help to Grow Green’ campaign, offering information resources and vouchers for SMEs to upskill, plan and invest in the transition to net zero (Skidmore recommendation #65).
Reiterating Skidmore recommendations #59 and 61, we believe the government should implement the recommendations of the Green Jobs Taskforce, while recognising the important role for Apprenticeships in addressing skills gaps; it should increase the flexibility of the Apprenticeship Levy, assess whether it aligns with net zero and growth priorities, and incentivise its use.
To boost training in this green space, ICAEW is embedding sustainability in the ACA qualification, launching an introductory sustainability certificate, and developing role-specific training to increase members’ competence in sustainability.
Local and regional government
Local authorities are impeded by the current funding arrangements that waste valuable resources on preparing funding bids from multiple pots. The short-term nature of this approach discourages vital long-term investment in the infrastructure and skills that are needed for progress on delivery of net zero.
We would support multi-year funding settlements that allow local authorities to use their local knowledge to invest in the net-zero projects most suitable for their areas. This view is shared by the Skidmore report, which calls for a simplified net-zero funding landscape by the next Spending Review (Skidmore recommendation #92).
However, delivery will also require central government to provide guidance, reporting mechanisms and additional capacity and capability support to enable local authorities to better monitor and report their net-zero progress. ICAEW would support the introduction of a statutory duty for local authorities to take account of the UK’s net-zero targets, based on a clear framework of local roles and responsibilities as laid out in Skidmore recommendations #91 and #96.
ICAEW fully supports Skidmore’s recommendation #97 that central and local government should work together to convene an annual Local Climate Summit to share best practice, attract green investment and showcase progress. It would be an opportunity to demonstrate to the public where public funds are being spent and the positive impact on our climate.
- ICAEW considers an extension on VAT relief for energy saving materials
- Tax news in brief 31 May 2023
- Changes to self assessment criteria
- EU Council reaches agreement on exchange of information for crypto assets and advance tax rulings for high-net-worth individuals
- HMRC additional needs working group
Discover more from ICAEW Insights
Insights showcases news, opinion, analysis, interviews and features on the profession with a focus on the key issues affecting accountancy and the world of business.
Hear a panel of guests dissect the latest headlines and provide expert analysis on the top stories from across the world of business, finance and accountancy.Find out more
News in brief
Read ICAEW's daily summary of accountancy news from across the mainstream media and broader financing sector.See more
Stay up to date
You can receive email update from ICAEW insights either daily, weekly or monthly, subscribe to whichever works for you.Sign up