How will the first Labour Govt’s budget mobilise Green Investment in the regions of the UK?

The new Labour Govt has set out their first ever budget, committing to fixing the foundations and creating change in the UK. Chancellor of the Exchequer Rachel Reeves laid out her stall with statements including ‘change must be felt’ and ‘invest, invest, invest’. So what do we know so far and what does this new budget mean for the green economy?

Reeves began by laying out 7 key pillars of her growth strategy:

“First and most important is to restore economic stability. That is my focus today. 

“Second, increasing investment and building new infrastructure is vital for productivity. So we are catalysing £7 billion of investment through our national wealth fund, and we are transforming our planning roles to get Britain building again.

“Third, to ensure that all parts of the UK can realise their potential, we are working with the devolved governments and partnering with our mayors to develop local road plans.

“Fourth, to improve employment prospects and skills. We are creating Skills England, delivering our plans to make work pay and tackling economic inactivity.

“Fifth, we are launching our long-term modern industrial strategy and expanding opportunities for our small and medium-sized businesses to grow.

“Six, to drive innovation, we are protecting record funding for research and development to harness the full potential of the UK science base.

Finally, to maximize the growth benefits of our clean energy mission, we have confirmed key investments such as carbon capture and storage to create jobs in our industrial Heartlands”

From here she laid out difficult decisions affecting business including increasing the rate of employers national insurance, to 15%, minimum wage increases and a decrease in business rates relief for hospitality and retail from 75% to 40%. Of the £40b tax increases, £25b will come from the national insurance increases. So business will be disproportionately hit by this budget.

However, there was also a lot in this budget about Reeves’ plans to invest in the UK. Let’s dig into some of these:

£2b confirmed for 11 Green Hydrogen projects across the UK:

The government is committing to “making Britain a clean energy superpower,” Reeves says. These will be some of the world’s first commercial scale hydrogen projects.

The shortlisted projects waiting for the funding to be confirmed are:

• Carlton Power’s 21MW Barrow Green Hydrogen Project, Cumbria
• Hygen’s 24.5MW Bradford Low-Carbon Hydrogen, Yorkshire
• Scottish Power and Storegga’s 10.6MW Cromarty Hydrogen, Scotland
• HYRO’s 10.6MW Green Hydrogen 3, Southeast
• Marubeni Europower’s 5.2MW Hybont, Wales
• JG Pears and GeoPura’s 9.3MW HyMarnham, East Midlands
• Carlton Power’s 7MW Langage Green Hydrogen, Southwest
• EDF Renewables Hydrogen’s 5.2MW Tees Green Hydrogen, Northeast
• Carlton Power’s 10.5MW Trafford Green Hydrogen, Northwest
• H2 Energy and Trafigura’s 14.2MW West Wales Hydrogen, Wales
• Scottish Power’s 7.1MW Whitelee Green Hydrogen, Scotland

Carbon Capture and Storage Funding announced:

Ahead of the budget, it was announced that the govt will put £21.7bn towards helping to get the UK’s first carbon capture and storage projects up and running; this has come with mixed reviews, with proponents of the scheme hailing it as an opportunity to create new green jobs in our industrial heartlands, and opponents saying it’s essentially a huge risk that extends the life of the oil and gas industries. The UK Climate Change Committee says that carbon capture and storage is an important part of the picture when it comes to reaching our net zero targets. Time will tell!

The creation of GB Energy, headquartered in Aberdeen:

Not much has been revealed about plans for GB Energy, except that it will be a publicly owned energy company, headquartered in Aberdeen, and with smaller sites in Edinburgh and Glasgow too. GB Energy is a cornerstone part of Labour’s plans for the UK to become a clean energy super power, and is hailed as crucially important not just for our net zero aims but also for our energy security needs too. GB Energy will receive £8.3b in govt funding over this parliament.

Skills England – opportunities to support the Green Skills Gap?:

Skills England is one of the key new arms-length bodies mentioned in todays’ budget. According to the Govt website, Skills England will:

• create a national picture of skills gaps in the UK and how we best address them 
• work collectively with the Mayoral Combined Authorities, key local partners and large and small businesses to ensure that the skills landscape is unified and the workforce of today and tomorrow is equipped to ‘power economic growth’ 
• identify and respond to skills gaps in the UK by reshaping technical education and training
• advise on the highly trained workforce needed to deliver a clear, long-term plan for the future economy

The UK’s green economy is increasingly recognised as a critical pathway toward sustainable development, with regions outside London and the Southeast playing a pivotal role. Mobilising green investment across these regions is not just an environmental imperative but also an economic one, driving growth, creating jobs, and fostering innovation. The success of this transition, however, hinges on effective devolution and the empowerment of local authorities through the combined authority mayoral model.

The Importance of Devolution to the Green Investment Landscape:

Devolution in the UK has evolved considerably in recent years, offering regional authorities greater control over key areas such as transport, housing, and economic development.  Reeves mentioned in her speech just how important devolution is to the Govt’s plans and you can see from key decisions to headquarter GB Energy in Aberdeen, and to fund projects in Wales, Scotland and the North, the new govt are purposely trying to spread the wealth of the green economy across the UK.

At TSC, we see devolution support as crucial for driving green investment, as local governments are often better positioned to understand and address the unique environmental and economic challenges of their areas. A brilliant example of this is in the West Midlands and Greater Manchester, who have been trailblazers in using their devolved powers to attract significant green investments, vital for their ambitions to become carbon-neutral regions​.

National Economic Growth and Regional Green Investment:

Regional green investment is essential for levelling up the UK’s economy. Areas like the East Midlands, which have historically seen lower levels of investment, are now poised to receive substantial funding through new devolution deals. The East Midlands Combined County Authority (EMCCA) is expected to manage around £4 billion in investment, including funds specifically earmarked for green initiatives such as sustainable transport and renewable energy projects​.

These investments are not just about environmental sustainability; they are also about economic resilience. By focusing on green growth, regions can attract new industries, create high-quality jobs, and improve public health through better air quality and access to green spaces. Investment in green infrastructure, such as energy-efficient housing and public transport, can stimulate local economies and reduce long-term costs associated with climate change impacts.

The Role of the Regions:

Combined Authority Mayors have the ability to integrate green strategies across different sectors under their control, aligning transport, housing, and economic policies toward a common sustainable goal.

Mayors can also play a crucial role in attracting private investment, as well as effectively managing public funds. By creating a stable and predictable policy environment, combined authorities can de-risk green projects and make them more attractive to private investors. The concept of “Investment Zones” introduced in some regions is an excellent example of how devolution can be used to foster partnerships between the public and private sectors, unlocking significant private sector investment to complement public funds​.

While devolution and the mayoral model offer significant opportunities for green investment, challenges remain. One key issue is ensuring that all regions have the capacity and expertise to manage these funds effectively. The budget sets out intent from central government to ensure that devolved regions can sustain their green initiatives over the long term, but more will need to be done to support the transition to a net zero economy over time. The plans laid out in this budget as well as the recent expansion of devolution deals to more regions, such as Hull and East Yorkshire, is a positive step, but it also highlights the need for tailored approaches that consider the specific needs and capacities of each region​.

Mobilising green investment across the UK’s regions is essential for driving forward the green economy. Devolution and the combined authority mayoral model are central to this process, providing the governance, funding, and local leadership necessary to implement ambitious green projects. As more regions gain devolved powers, the UK has the potential to build a more sustainable and economically resilient future, with green growth at its core.