Austerity and climate inaction

Austerity and local government budget cuts have undermined efforts by local authorities to implement climate action initiatives, according to new research from CAGE.

Climate action requires significant public and private sector investment to achieve meaningful reductions in carbon emissions.

In a new CAGE working paper, PhD student Immanuel Feld and Professor Thiemo Fetzer analyse the unintended consequences of austerity and the gap between the setting of national policies and the ability of local governments to implement them.

Their research found that cuts in budgets along with poor digital connectivity may have been a significant barrier to delivering climate action initiatives within local government.

Following the global financial crisis in 2008, the UK government implemented severe cuts to public spending through a broad range of austerity measures. Aimed at reducing budget deficits it was hoped that the cuts would bring efficiency gains to boost public sector productivity and the quality of public services.

Using programme evaluation techniques, the research explored the Energy Company Obligation (ECO) retrofit programme which was launched in 2011.

Data from the ECO provided a unique setting for the team to study the way in which austerity – measured as the extent of cuts in local government spending – limited local governments’ ability to implement and manage centrally designed climate action policies.

Designed centrally but facilitated locally, the ECO offered support for home energy efficiency upgrades to eligible households. Local authorities played an important role in supporting the administration and delivery of the programme, ensuring the smooth flow of information and data between suppliers and their constituents.

By analysing the implementation of the ECO programme, the research discovered that the local government areas hit the hardest by funding cuts and with the poorest digital and information processing skills, saw the worst delivery of publicly supported climate action initiatives.

Professor Thiemo Fetzer, CAGE Theme Leader said:

“Our analysis has shown that spending cuts and digital skills, proxied by broadband availability, are important to understand the efficiency of a climate action policy.

“In the light of recent crises, it became clear that governments struggle in their ability to efficiently carry out policies and interventions. In this paper we show that austerity undermined local authorities’ efforts to effectively carry out a climate action policy that was centrally planned but locally administered.

“An effective policy response requires not just legislation but capable implementation on the ground. However, austerity weakened local government functions precisely when supporting climate initiatives like ECO.”

Recent crises have highlighted the struggles government faces in their capacity to deliver efficient policies or interventions. The evidence suggests that the interplay between austerity, skills, and the delivery of public services needs to be considered to ensure that national and local policies do not act against each other.

· Read the full research paper: Performative State Capacity and Climate (In)Action (April 2024)