Raising money

We've written this guide to help you understand more about the section on raising money in the Climate Action Plan for councils.

13 Sep 2021

Background information

According to the Local Government Association councils face an £8 billion funding shortfall by 2025. Whilst lack of money can sometimes just be an excuse for inaction, a lack of staff, expertise and finances is hindering action on climate change and nature restoration even when there is political will.

The goal

Councils should have sufficient resource to invest in the changes needed to restore nature and meet climate goals, so that they can reap the dividends and deliver their fair share of greenhouse gas reductions.

What councils should do

Points 7 to 10 in our Climate Action Plan for councils suggest councils should:

7. Introduce a workplace car parking levy and/or similar initiative to fund sustainable transport.

  • Nottingham City Council has used powers to charge a levy for workplace parking. This both encourages a greater use of public transport and provides funds for the council which they ring-fence for public transport. It has delivered £44 million over 5 years, after an initial £4 million set-up cost. Councils can also introduce a congestion charge and use the money to fund public transport.

8. Raise money from the UK Municipal Bonds Agency for low carbon infrastructure.

  • This is a new body which has been formed to provide a cheap way for local authorities to raise money. It is based on the successful experience of other European countries.

9. Use legal and planning mechanisms such as Section 106 agreements, Community Infrastructure Levy and others to fund climate actions and nature restoration projects.

  • Section 106 agreements are when a local authority gives the approval for a new development, such as new homes, based on the requirement that the developer also funds other related projects. Milton Keynes uses this approach to require new housing developments to fund energy efficiency work in other areas to offset the carbon emissions the new homes will create.

10. Implement licensing of the private rented sector to cover the enforcement costs of ensuring compliance with minimum energy efficiency standards. (Applicable in England only).

  • Newham Council requires every home that is privately rented to pay for a licence. It achieved this power “after a consultation with Newham residents, and a lengthy struggle with central government”. Such as scheme can fund energy efficiency checks. Oxford City Council also has a self-financing scheme to police minimum energy efficiency standards.

The Centre for Cities, together with the Joseph Rowntree Foundation, has identified additional ways in which councils can raise money.

Government action

Councils can’t raise all the money they need for action on climate change locally, particularly those in poorer parts of the country. There will always be an important role for national government to provide funds. In addition to the much-diminished block grant the government pays to local authorities, sources include EU funds, the ‘Shared Prosperity Fund’, and Industrial Strategy funds.

The government also needs to empower councils to raise much more money locally for climate change action and nature restoration. Research by transport experts at the consultancy Transport for Quality of Life has identified that there are at least 16 different ways councils on the continent raise money for public transport, including payroll taxes, local sales taxes, property taxes, visitor taxes and others.

Further reading

Funding and financing inclusive growth in cities. https://www.centreforcities.org/publication/funding-and-financing-inclusive-growth-in-cities

Transport for Quality of Life. http://www.transportforqualityoflife.com/policyresearch/publictransport

Case studies. https://takeclimateaction.uk/resources/councils-tackling-climate-chaos

How climate friendly is your area? https://takeclimateaction.uk/climate-action/how-climate-friendly-your-area-enter-your-postcode-see-results-your-community

Resources