For too long, sustainability has existed at conceptual odds with financial responsibility within the management of public sector estates. However, mounting evidence emphasises that action on sustainability will be fundamental to the long-term viability of public estates, as well as human health.

Overwhelming evidence already supports the business case for sustainable change across the UK public sector. In 2022/23 alone, £163 million was saved through reduced overall energy consumption across UK public sector buildings. The Climate Change Committee’s Seventh Carbon Budget recently re-emphasised the importance of decarbonising the UK’s non-residential buildings, so it’s time to consider the true cost of inaction on sustainability on public sector estates.

On the 5th of February 2025, Public Policy Projects and NHS Commercial Solutions united public sector decisionmakers against some of the greatest estates-related challenges at the Sustainable Estates Solutions Conference. The panel on “Busting common sustainability myths” clarified the real cost of sustainability for public estates, exploring the urgency of climate-friendly interventions for long-term financial planning against a growing array of climate and non-climate related externalities.

Feasibility beyond upfront costs

Insufficient capital remains the ‘great wall’ keeping financial leaders and estates managers from making climate-friendly progression in the UK. This follows real-term cuts to public sector expenditure since 2010 which have necessitated stricter spending by public organisations. Consequently, upfront costs associated with estates measures like solar PV and insulation retrofits have increasingly become perceived as unfeasible.

At this stage, public sector decisionmakers are in a deadlock; if they lack the upfront capital then asset upgrades, sustainable or otherwise, cannot be financed. As a result, service delivery, safety, and human health will suffer while public buildings continue spiralling into dilapidation. For this reason, decisionmakers may consider the reprioritisation of their capital, apply to funding streams like the Public Sector Decarbonisation Scheme (PSDS), or even negotiate off-balance sheet funding agreements with private partners that negate capital requirements. Each could provide a critical route to financing the long-term viability of public sector service delivery.

The long-term business case for low-carbon upgrades to public buildings has become extremely compelling, with the government now expecting decarbonisation to save an estimated £650 million per year on average to 2037. At an organisational level, these benefits can provide potent and near immediate financial relief; Royal Devon University NHS Foundation Trust, for example, is now saving £1.2 million in yearly energy costs, and 828 tonnes of CO2, through LED lighting installations alone.

The hidden costs of delays

Ultimately, ‘affordability’ becomes a relative term for public sector organisations that recognise inaction as a cost in itself. Sustainability is not a standalone consideration that exists at odds with other priorities – it’s a fundamental component of the operations and cost-efficiency of public sector services.

Climate-related threats are already demonstrating the costs of inaction. Heat inefficient buildings are haemorrhaging scarce public funds on avoidable utility costs, while extreme weather events inhibit service delivery on an increasingly regular basis. Overheating incidents, for example, doubled across the NHS in England between 2016-21, and heat related deaths are now projected to increase nearly 6-fold from the 2007-2018 baseline average, reaching 10,889 per year in the 2050s.

At an organisational level, maladapted public buildings exact measurable costs to service delivery. In 2022, for instance, a single heatwave triggered critical IT outages at London’s largest NHS trust. Referrals dropped to 64 percent, more than 100 treatment delays were reported (including a missed organ transplant), and £1.4 million were incurred in additional costs.

Looking ahead

From solar PV to heat pumps, low-carbon estates solutions can promote human health and safeguard against operational risks, which are projected to become considerably worse. As the £49 billion public sector maintenance backlog continues to grow, replacing dated infrastructure with cleaner and greener solutions will be fundamental to the long-term viability of public sector services.

Addressing the interrelated issues of human health, climate change, and service delivery across public sector estates was a core focus of the Sustainable Estates Solutions Conference held on the 5th of February 2025. Public Policy Projects’ Climate Programme will deliver a range of work in 2025, through events including conferences and roundtables, focused on the sustainable optimisation of public sector service delivery this year. For partnership enquiries, please contact Kieran Cornwell at: Kieran.cornwell@publicpolicyprojects.com.