Briefing Paper. A Green Beacon: How to deliver Climate Compatible Development in Brighton and Hove
A Green Beacon: How to deliver Climate Compatible Development in Brighton and Hove
Max te Velde, Dirk Willem te Velde, Simon Maxwell
Key points:
Brighton and Hove could well have 400,000 people and an economy worth £20bn by 2040.
The future economy must be ‘climate compatible’, reducing emissions and building resilience – and doing so in a way which fosters inclusion and reduces inequality.
This requires not just ‘growth’ but ‘transformation’, greening existing sectors, building on recent productivity increases, and building new high-productivity clusters.
The green economy has transformative potential, but there may well be choices to make along the way – sector analysis is needed to inform policy.
The strategy needs strong involvement by the public and private enterprises involved, possibly via a new Green Business Growth Board.
Get this right, and Brighton and Hove could be a Green Growth Beacon.
1. Economic Development & the Green Transition
Robert Lucas, the Nobel-prize winning economist, famously said that ‘once you start thinking about [economic] growth, it is hard to think about anything else.’ The current British Government would probably agree! The challenge is even more absorbing when growth objectives are set alongside the social and environmental.
There are many different approaches to what has been called the ‘alchemy of growth’. Is it about accumulating more capital, or increasing productivity or improving institutions, or engineering sectoral shifts (e.g. from low potential to high potential sectors)? No doubt all the above. Dirk Willem te Velde has described the process as one of ‘transformation’, focusing both on the need to increase productivity in existing sectors, and develop new, higher-productivity activities.
How can transformation be delivered? The Commission on Growth and Development identified the common characteristics of high, sustained growth at country level, focusing on: openness, macroeconomic stability; leadership; future orientation; and market allocation (See Figure 1). Crucially, the Commission concluded that there are no recipes for success, only different ingredients, which can be combined in different ways.
Figure 1
The common characteristics of High, sustained growth
Source: Growth Commission Report
That said, there are elements which are generally thought of as ‘good ideas’, and others which are not. Among the good ideas are: high levels of investment in infrastructure and human capital, upgrading technology, and open debate. Among the bad ideas: poor regulation, open-ended protection and subsidies, and focusing on the quantity not the quality of education. Table 1 summarises and develops these ideas. It distinguishes between interventions which support structural change and those which support increased productivity within existing sectors.
Table 1
A typology of public actions to promote economic growth and transformation
Source: Supporting Economic Transformation, McMillian et al. (2017)
To take this further, the Harvard Growth Lab has pioneered growth diagnostics, analysing the constraints to growth in particular cases, Figure 2 illustrates the approach. As Dani Rodrik observes, however, ‘the framework cannot be applied mechanically and requires an inquisitive, detective's mind-set. You need to use economic theory and evidence judiciously to look for a series of clues that will identify the most likely suspect.’
Figure 2
Growth diagnostics: an example
Source: Doing growth diagnostics well
Harvard have also published tools which help analyse economic complexity at City level. Its Metroverse tool claims to ‘provide insights into economic composition, specialization, position in the industry space, and growth opportunities’ for over 1000 cities, including Brighton & Hove. We make use of this later.
Adding environmental, and specifically climate considerations complicates the picture. Green growth is one formulation, climate compatible development is another (see Figure 3). In essence, the objective is to manage both mitigation and adaptation, and to do this in a context where other Sustainable Development Goals (SDG) are also met. The climate compatible ‘sweet spot’ is where all are achieved simultaneously. See here for a discussion of applications of CCD to Brighton & Hove.
Figure 3
Climate compatible development
Source: https://cdkn.org/sites/default/files/files/CDKN-CCD-Planning_english.pdf
Figure 4 illustrates the merging of growth and transformation on the one hand, with green and climate compatibility on the other. In the top right hand corner is what can be described as a ‘green beacon’ outcome, with a high performance on both axes. The other quadrants can be described as ‘green retreat’, ‘green stagnation’ or ‘worst of all worlds’.
Figure 4
Green growth scenarios
The green transition is often presented as a way to maximise both climate impact and growth. However, this is not axiomatic. Climate:Change has published a discussion on this topic, starting with a comment by Paul Johnson, Director of the Institute of Fiscal Studies, to the effect that green growth may be sub-optimal. Responses from expert commentators made the point that some green investments may indeed increase the volume of capital and raise productivity, and in the best circumstances may do so as well as alternative investments - but that much depends on good policy design and implementation. One of us, Dirk Willem, concludes that:
‘Of course, good long term policies should consider dynamic patterns, learning by doing, building dynamic comparative advantages etc (and these could include network effects, diffusion of technology, threshold effects etc). The comparison should then be between a good dynamic growth policy and a good dynamic green growth policy.’
So, an active policy targeted on some specific activities (which could be green activities) may well have better growth outcomes than imperfect, passive growth policy based on laissez faire (which may also ignore green issues). Therefore, innovation is key. Stephane Hallegatte from the World Bank makes the important point that:
‘(New) technologies will increase productivity . . ., and they exist because we invested in them. As with other technologies, like computers, vaccines, or planes, the public sector incentivizing more investments in emerging technologies is leading to accelerated productivity growth, and thus more rapid economic growth.’
Note, however, that another area to watch is distribution of income, which may or may not benefit from either growth or green growth policies. Stephane Hallegatte observes that:
‘Because low-emission development scenarios systematically require higher investments and lower operational costs, the short-term impact on household consumptions is larger than on GDP. This impact on consumption highlights the importance of how countries mobilize financial resources, with different sources of finance creating different trade-offs, opportunities, and challenges. It also shows importance of appropriate compensation and social interventions to protect poor people’s consumption and facilitate a just transition for the workers and communities affected by climate policies.’
Finally, the case for investment in a green transformation is strengthened if the cost of not doing so, for example the cost of extreme weather events, is taken into account. This is a point made in the original Stern review on the economics of climate change and reiterated many times since. Most recently, the OECD is reported to have concluded that a third of global GDP could be lost this century if the climate crisis were to continue unchecked - and taking climate action in these circumstances would boost the per capita GDP growth rate (NB not the level) in developed countries by 60%.
In conclusion there are strong overlaps between, on the one hand, good growth policies based on economic transformation, doing new things and creating more and better jobs, and, on the other hand, green growth policies based on innovation. These policies need to be matched with social protection, adjustment assistance, and education and training, to help reduce inequality. This is the ‘Green Beacon’ option in the top right quadrant in Figure 4.
And the question is, can Brighton and Hove step up?
2. The economy of Brighton & Hove: now and planned
Brighton and Hove now
The Brighton & Hove Economic Plan was published in November 2024, but it is important to begin by understanding where Brighton and Hove starts from. The Council published an economic evidence report in January 2024.
First, Brighton and Hove (population 280k) has an economy worth over £10bn a year (Figure 5), about the same as Malawi (pop’n 21 million) or Rwanda (population 14 m). Per capita income in Brighton and Hove is about £35,000 per annum. Since 1998, per capita income and income per hour worked have improved relatively in Brighton and Hove compared England as a whole. In 2022, GDP per head was 16% above the England figure, and GDP per hour worked was 5% above (Figure 6). The relative increase has been particularly visible over the last five years, as a result of growth in high productivity sectors such as ICT and financial services.
Figure 5
Gross Value added (GVA) for Brighton and Hove
Data source: ONS
Figure 6
Gross Domestic Product (GDP) per head and per hour worked in Brighton and Hove relative to England
Data source: ONS
Second, the Brighton and Hove economy is based on services, not manufacturing, even more so than England as a whole. Obviously, it started as a fishing village and developed as a tourist town in the Regency period, but it also had a period of foundries and metal-working: over a thousand railway engines were built in Brighton between 1850 and 1960. The current economy is focused on several large sectors: the Council, the universities, NHS/health, financial services, tourism, arts, tech . . . There are some 15,000 businesses in the City, mostly small or micro, but with a few large employers (e.g. Legal and General and American Express, plus public sector employers like the NHS).
Third, employment reflects the economic structure of the City, with a preponderance of service jobs (Figure 7).
Figure 7
The employment structure of Brighton (2024)
Source: Metroverse.
Fourth, Brighton and Hove exhibits a high degree of inequality. The Economic Evidence Report states that
‘Average household earnings after housing costs in Brighton & Hove are £30,100 (only slightly above the national average of 29,500). In Hangleton and Knoll and East Brighton, there are neighbourhoods with average earnings below £25,000.
On average men earn £4.45 more per hour than women.
Communities on the edge of the city are within the most deprived nationally for access to healthy and affordable food. In some areas residents cannot access a GP within 15 minutes via public transport.
Disadvantaged school leavers are less likely to progress to higher education and training after A-levels. There are neighbourhoods within East Brighton and Hangleton and Knoll where over 30% of residents have no formal qualifications.
Finally, Brighton and Hove has below average territorial GHG emissions, which is not surprising given the absence of manufacturing: per capita emission in 2022 were 2.9 tons in Brighton and Hove, 5.1 for England as a whole. Perhaps surprisingly, consumption emissions are also below the national average, though not by very much: the Place-Based Carbon calculator gives both as being around 8 tons per capita (Figure 8). Note, however, that the consumption data are now listed as ‘legacy data’ and are being reviewed. The latest UK-wide data on consumption emissions shows the national average footprint as being about 10 t per capita.
Figure 8
Consumption emissions per capita in Brighton and Hove, and England
Source: https://www.carbon.place/
Brighton and Hove planned
The Brighton & Hove Economic Plan identifies 8 ten-year imperatives. These are:
Capitalise on our digital competitive advantage.
Build community involvement as a response to poverty and economic inequality
Decarbonise and create a more regenerative economy
Build a stronger, more inclusive labour market
Celebrate our city and welcome investment
A world-leading creative destination worthy of the UK’s best small city
Build new knowledge partnerships to benefit all of our communities
Thrive within a city region with a clear economic identity.
The Plan contains a discussion of each of these elements. It aims to achieve sustainable economic growth, increasing quality of life and establishing the City as a leader in the green economy. The plan looks at the competitive advantage of some of the current industries and how to minimise the carbon emissions and environmental impact of these industries. It also identifies continued economic transformation in high productivity sectors (new startups, digital/IT clusters (including AI), finance and insurance).
In terms of decarbonisation and creating a regenerative economy, the Plan says that
‘Net zero is a central consideration when thinking about a transition to a new economy, and there will need to be fundamental changes to ensure that this ambition is met. Our businesses will need to be supported to make the adaptations necessary to reduce their carbon footprint and adapt to changing government legislation. We will also need to support our residents to gain the skills needed to access new green opportunities, or to upskill in their current roles.
There is also an immediate commercial need to act. Our research shows that 41% of our commercial space will not be fit for purpose by 2027 based on current Minimum Energy Efficiency (MEES) legislation – this creates significant pressure on our already tight commercial property market, particularly in the city centre.’
As three-year indicators of success in the decarbonisation space, the Plan gives:
Increase in the proportion of our commercial buildings which are EPC B and above, protecting supply of space for business;
Target a decline in yearly scope 1 emissions across the city’s business base, with evidence of a decrease in the cost of doing business, through annual surveys;
Decrease in the operational carbon emissions associated with the visitor economy;
Increase in number of residents completing green skills courses and finding employment; and
Increase in waste intercepted and reused in the local economy.
The Decarbonisation Pathways Study provides granular detail on how to deliver this mission in relation to energy use. (Figure 9).
Figure 9
Decarbonisation Pathway Overview
Source: Decarbonisation Pathways Study
3. Becoming a Green Beacon: Discussion and next steps
Is all this enough to embed Brighton and Hove firmly as a Green Beacon within the top right quadrant of Figure 4? And has Brighton and Hove drawn the right lessons from the theories of growth, green growth and climate compatible development? A few points.
First, it is worth thinking about what ‘growth’ might mean in quantitative terms over the ten year horizon of the Economic Plan, or the fifteen year perspective of the City Plan. Allowing for population growth (linked to the housing targets in the City Plan) and modest increases in per capita income, it is not unreasonable to imagine that Brighton and Hove should be expecting a population of 400,000 by 2040, and should be targeting a GVA of £20bn by the same year, in 2024 prices. The challenge is to grow at this speed, while achieving net zero ambitions and creating good jobs, by decoupling economic growth from emissions growth through appropriate economic transformation. There may well be some risks to Brighton and Hove if central Government focuses on levelling up in other parts of the country, or on projects like the Oxford-Cambridge corridor – and never mind defence industries. The City will need a plausible offer.
Second, Brighton and Hove’s future strategy can be built around clusters. A long term vision will begin by understanding what clusters there are and what support they need to increase the value. The plan correctly identifies the potential for continued economic transformation in high productivity sectors (new startups, digital/IT clusters (including AI), finance and insurance). There are some good ideas: for instance, the idea of using the competitive advantage in digital services to foster the creation of digital clusters in Brighton & Hove.
But what do others need? Hospitality? Education? Health? Tourism? Arts? For instance, if the goal is better, higher value tourism, then maybe more can be done with Brighton Festival, linking it to other sectors e.g. food. Sometimes for innovation to occur, the cluster needs specialised jobs. This could involve looking at the high-skilled cluster focused on the world-leading international development work at the University of Sussex.
Brighton & Hove’s employment structure is relatively more focused in the ICT and financial sectors; both have relatively high productivity, so it must capitalise and build upon this. Between 2018 - 2023, the digital and technology sector had a 40% increase in jobs (Economic Plan), strengthening the idea of a ‘silicon beach’. Other industries, such as education, need more partnerships and linkages across the local economy for the full effects to be seen. Thus, in addition to investment to create new industry, the focus should include green growth in these sectors. What do the sectors/clusters need to transform?
Third, though, it is essential to analyse the economic strategy through the lens of climate compatible development, and to be clear about priorities and trade-offs. Thus, the plan lists decarbonisation as important, but are there trade-offs with the other policies to meet this goal? The plan naturally welcomes investment. Is there a goal to look specifically at soliciting green investment and channelling funds toward climate policies? Sectors and industries in Brighton and Hove can be ranked against each other in how climate compatible their growth is and will be. This could include a ranking by value added, employment numbers, and a subjective green metric. If the sector has high productivity/value added but poor green power, how best to transform the cluster to improve the green score? Conversely, the opposite is important, how to take clusters that have high green power to help them grow in terms of productivity/value added? How to take the various sectors and increase the overall value of Brighton & Hove from £10bn to £20bn by 2040 whilst being a green beacon. And what are the capabilities in both public and private sectors to implement such targeting.
Fourth, in this context the green transition itself will create many investment and employment opportunities. If there are over 80,000 gas boilers in the City, investing in heat pumps or heat networks, creating new housing standards, and increased use of solar panels for domestic properties, all create large investment opportunities. The council can create new rules and guidelines for commercial retrofitting to ensure businesses are incentivised to be compliant. Delivering these green investments ipso facto creates a green cluster, with mutually-reinforcing investment, training, and employment. This could be a major opportunity for economic development whilst simultaneously reducing inequality. The Decarbonisation Pathways Study, launched at a Climate:Change meeting in December 2024, identifies the priorities and illustrates the potential.
Fifth, green growth can reduce inequality and provide jobs providing a necessary revitalisation. However, the exact effects of policy can vary and possibly lead to a temporary decline in output and consumption depending on the context and application of policy. Thus, a strong social focus is needed. Education will be key, especially in providing the skills needed to deliver renewable energy and retrofit: the Brighton Metropolitan College will have a crucial role.
Finally, on process. Brighton & Hove City Council already has an Economic Growth Board. However, it would be desirable to establish a Green Business Growth Board in order to stimulate the local economy in a green way and formulate a specific action plan. Under this growth plan, there is the development potential of existing sectors to make them more climate compatible: universities, tourism, festivals. In addition, there is the notion of supporting transformative new clusters, for example Brighton & Hove as a new ICT/AI focal point, perhaps with funding through the universities.
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Max te Velde holds an MSc in International Finance and Economics from the University of Sussex.
Dirk te Velde is Principal Research Fellow and Director of the International Economic Development Group at ODI Global, and a Professor of Practice at SOAS, University of London, Centre for Global Finance.
Simon Maxwell is Co-Chair of Climate:Change.
Perspective pieces are the responsibility of the authors, and do not commit Climate:Change in any way. Comments are welcome.