Labour leader Keir Starmer said the promised £28billion figure was ‘stood down’ because interest rates have soared after the damage inflicted by Liz Truss’s disastrous mini-Budget
Keir Starmer blamed the Tories for wrecking the economy as he finally ditched his plan to spend £28billion-a-year on green investment.
The Labour leader said the promised figure was “stood down” because interest rates have soared after the damage inflicted by Liz Truss’s disastrous mini-Budget. Standing alongside Shadow Chancellor Rachel Reeves, he told reporters in Westminster that Labour had also been alarmed by claims from Treasury insiders that the Tories plan to “max out the credit card”.
The spending pledge, first announced in 2021, was a key plank of Labour’s commitment to green jobs and delivering clean power by 2030. Mr Starmer said the party’s climate objectives could still be achieved and “everything on the table is staying on the table”.
But the amount of new cash has been scaled back due to the grim economic reality. A senior Labour source said it was because “Labour are really getting serious. We are looking closely at how the policies add up ahead of the election.”
After weeks of internal battles and Tory attacks, Mr Starmer confirmed that Labour would now spend an extra £23.7billion over the next Parliament on green schemes – equating to £4.74billion per year. It will be partly funded by a bigger-than-promised windfall tax on the profits of oil and gas giants, raising £10.8billion between 2024/25 and 2028/29. The remaining £12.9billion would be raised through borrowing.
The plan was first announced by Ms Reeves in 2021 as part of her pitch to be Britain’s first “green Chancellor”. It involved investing £28billion each year- funded by Government borrowing – in green schemes such as offshore wind, giga-factories for electric vehicle batteries, home insulation, planting trees and building flood defences. Labour had already watered down the commitment last year, with Ms Reeves saying the £28billion figure wouldn’t be met until the second half of Labour’s first term in power – rather than immediately.
The party still plans to press ahead with these ideas, with Mr Starmer saying: “There is nothing we have said we will do that we are now saying we won’t do.” He said: “What we are saying this afternoon is there will be no new further investment in the Green Prosperity Plan, therefore we will not reach the £28billion. £28billion is therefore stood down and we focus on the outcomes.”
He added: “When we announced the £28billion two and a half years or so ago, interest rates were very, very low. Since Liz Truss crashed the economy and the other damage that’s been done, they are now very, very high.” He said a Labour Government must “never do what Liz Truss did to the economy”.
The Labour leader said the decision was being announced today as it was the deadline for ideas for the party’s manifesto – and they need to be ready in case Rishi Sunak decides to call an election in May.
The biggest casualty is Labour’s plan to insulate the country’s coldest homes has been drastically scaled back, to 5 million houses over the next Parliament. It was due to cover 19 million homes over the next 10 years.
Ms Reeves said: “Something had to give if we were going to be within our fiscal rules and to achieve clean power by 2030. We have got to get on with the national wealth fund and GB Energy, and so we have scaled back our ambition on warm homes. Would we like to go further and faster? Yes. Are we constrained by the inheritance that we’re likely to face? Yes, we absolutely are.”
Households that are eligible will still save up to £500 on their energy bills due to better insulation, she said.
Speaking alongside Ms Reeves, Mr Starmer insisted the pair were in “lockstep”. Shadow Energy Secretary Ed Miliband, who is regarded as the architect of the original plans, has publicly backed the plans too amid speculation he was opposed to the climbdown.
“Following today’s announcements, Labour have confirmed we will fight the election with a world-leading climate agenda,” Mr Miliband said. “The Conservatives’ economic mismanagement and their scorched earth policy have obviously made the fiscal situation far worse than envisaged when Labour announced the Green Prosperity Plan. That is what has led to today’s decisions.”
Unite, one of Labour’s biggest union backers, welcomed commitments to green steel but warned that Labour needed to be bolder. General Secretary Sharon Graham said: “Britain needs more not less investment and there is still much to do in order for Labour to gain the trust of workers impacted by net zero.If Labour keep getting scared off by Tory attacks, they will end up outsourcing their policy making to the Conservatives.”
Mike Childs, head of policy at Friends of the Earth, accused the party of turning its backs on low income houses living in cold and draughty homes. He said: “The party’s claims that it is doubling the current Government’s spending commitment are misleading because not all the money is to be spent on insulation. Their new pledge pales in comparison to the investment required to tackle the worst homes and lift millions out of hardship.”
Greenpeace UK’s co-executive director Areeba Hami accused Labour of having “caved like a house of cards in the wind”. “Climate action, including borrowing to invest in warmer homes, remains hugely popular among voters. It would be ironic indeed if Labour’s attempt to make their manifesto ‘bombproof’ from Tory attack ended up just bombing on the doorstep instead,” she said.