While the Government delays, cities are taking radical steps to cut carbon

Cities are where the biggest experiments can take place; look to them to see the future of the UK.

Our cities are the R&D facility for the country. From 4G rollout to community energy, they let us experiment with what’s possible. This is useful, because we’ve just agreed to change everything. The recent Energy Bill accepts how inevitable a low carbon future is for the UK. It also guarantees the money to deliver it on time – all we have to do now is actually do it.

Of course, some don’t seem to realise this. Some ministers hang desperately onto a gas over renewables strategy, like a hipster to a mini disc player, convinced its time will come again. No evidence will dissuade them back into reality. This wouldn’t be a problem, but the indecision and delay they introduce makes it harder to ensure that the UK will get the maximum benefit from a low carbon future – to own the patents, build the factories and get exporting to the others following behind. Luckily, we don’t need to wait for national government to get its story straight, because our cities are set to leap ahead.

A city has traditionally been something that demands a lot from a country and gives back money and jobs. London has around the same working population as Scotland, Wales and Northern Ireland put together, and so it soaks up more electricity than any of those nations. Without freight coming in from the rest of the world, it would run out of food in four days. Sure, cities pay for this stuff, but it’s the rest of the country that has put up with its infrastructure: the power stations, water reservoirs, and industrial waste facilities all put into the countryside to serve the cities. However, this is changing.

The density of the population and the buildings make for a unique testing ground for the new kind of infrastructure we’re developing - the low carbon, resource efficient approaches to heating and power generation, transport and waste management. They all work best if done where the demand is greatest, and that means at the city scale.

This is what Green Alliance’s new report argues – cities are morphing themselves and what they do ahead of the rest of the country and they are well placed to get the economic reward for doing so. The recent city deals process, initiated by the Cabinet Office transfers new powers, control over funding and approaches to financing to the cities. The first eight cities have thought about what this means to reverse employment trends and attract inward investment which is why most have used their deals to grow their low carbon economy.

Newcastle is going for £0.5bn of investment in offshore energy, bringing eight thousand jobs. Liverpool plans to accelerate £100m in wind and offshore energy, bringing three thousand jobs to the area. Manchester is using its ambitious emissions reduction targets to attract an additional £1.4bn into the UK’s economy and Birmingham has secured a £3m injection to its housing retrofit programme.

Many of these projects, which are central to how our country will work in the future, are already real in the cities. London will have 1,300 different electric vehicle charging points by next year and, in the capital, a Prius seems a more common sight that an Escort. Islington is rolling out council-owned Combined Heat and Power to 700 homes, a power station set up not miles away, but amongst the people that will benefit, protecting them from soaring bills. Meanwhile, Birmingham council is doing the same, trying to reduce the energy it imports every year at a cost of £1.5bn and replace it with energy they make themselves. In the centre of the city, on Broad Street, Birmingham’s CHP serves the ICC, the town hall, the new library and local hotels and theatres. Nottingham too, aims to double its district heating network in five years.

This is where the future is happening. It proves that green infrastructure is the model that keeps costs down for the public and profits up for businesses. All we need now is for Westminster government to realise this. As it plans a big push on renewing our national infrastructure, it should learn from and work with our cities, who are demonstrating that a modern, sustainable approach, employing ideas that reduce energy, reuse waste and simplify our public transport, will bring the biggest rewards.

Photograph: Getty Images

Alastair Harper is Head of Politics for Green Alliance UK

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Let's turn RBS into a bank for the public interest

A tarnished symbol of global finance could be remade as a network of local banks. 

The Royal Bank of Scotland has now been losing money for nine consecutive years. Today’s announcement of a further £7bn yearly loss at the publicly-owned bank is just the latest evidence that RBS is essentially unsellable. The difference this time is that the Government seems finally to have accepted that fact.

Up until now, the government had been reluctant to intervene in the running of the business, instead insisting that it will be sold back to the private sector when the time is right. But these losses come just a week after the government announced that it is abandoning plans to sell Williams & Glynn – an RBS subsidiary which has over 300 branches and £22bn of customer deposits.

After a series of expensive delays and a lack of buyer interest, the government now plans to retain Williams & Glynn within the RBS group and instead attempt to boost competition in the business lending market by granting smaller "challenger banks" access to RBS’s branch infrastructure. It also plans to provide funding to encourage small businesses to switch their accounts away from RBS.

As a major public asset, RBS should be used to help achieve wider objectives. Improving how the banking sector serves small businesses should be the top priority, and it is good to see the government start to move in this direction. But to make the most of RBS, they should be going much further.

The public stake in RBS gives us a unique opportunity to create new banking institutions that will genuinely put the interests of the UK’s small businesses first. The New Economics Foundation has proposed turning RBS into a network of local banks with a public interest mandate to serve their local area, lend to small businesses and provide universal access to banking services. If the government is serious about rebalancing the economy and meeting the needs of those who feel left behind, this is the path they should take with RBS.

Small and medium sized enterprises are the lifeblood of the UK economy, and they depend on banking services to fund investment and provide a safe place to store money. For centuries a healthy relationship between businesses and banks has been a cornerstone of UK prosperity.

However, in recent decades this relationship has broken down. Small businesses have repeatedly fallen victim to exploitative practice by the big banks, including the the mis-selling of loans and instances of deliberate asset stripping. Affected business owners have not only lost their livelihoods due to the stress of their treatment at the hands of these banks, but have also experienced family break-ups and deteriorating physical and mental health. Others have been made homeless or bankrupt.

Meanwhile, many businesses struggle to get access to the finance they need to grow and expand. Small firms have always had trouble accessing finance, but in recent decades this problem has intensified as the UK banking sector has come to be dominated by a handful of large, universal, shareholder-owned banks.

Without a focus on specific geographical areas or social objectives, these banks choose to lend to the most profitable activities, and lending to local businesses tends to be less profitable than other activities such as mortgage lending and lending to other financial institutions.

The result is that since the mid-1980s the share of lending going to non-financial businesses has been falling rapidly. Today, lending to small and medium sized businesses accounts for just 4 per cent of bank lending.

Of the relatively small amount of business lending that does occur in the UK, most is heavily concentrated in London and surrounding areas. The UK’s homogenous and highly concentrated banking sector is therefore hampering economic development, starving communities of investment and making regional imbalances worse.

The government’s plans to encourage business customers to switch away from RBS to another bank will not do much to solve this problem. With the market dominated by a small number of large shareholder-owned banks who all behave in similar ways (and who have been hit by repeated scandals), businesses do not have any real choice.

If the government were to go further and turn RBS into a network of local banks, it would be a vital first step in regenerating disenfranchised communities, rebalancing the UK’s economy and staving off any economic downturn that may be on the horizon. Evidence shows that geographically limited stakeholder banks direct a much greater proportion of their capital towards lending in the real economy. By only investing in their local area, these banks help create and retain wealth regionally rather than making existing geographic imbalances worce.

Big, deep challenges require big, deep solutions. It’s time for the government to make banking work for small businesses once again.

Laurie Macfarlane is an economist at the New Economics Foundation