The Labour Party has officially backtracked on their promise to borrow £28bn annually to invest in the green economy, as shadow chancellor, Rachel Reeves, confirms that the party believes it is unaffordable. The Party argues that this is due to the need to be “responsible” with public finances due to the bad state of the economy.
Labour’s green commitments
In 2021, the Labour Party promised to invest 28bn a year into green projects until 2030. On numerous occasions, frontbenchers have reiterated their commitment to the pledge of a £28bn green transition, with Rachel Reeves stating that she will be “Britain’s first green Chancellor”. Plans for investing in projects such as offshore wind farms and developing batteries for electric vehicles were drawn.
However, now Reeves has said that she would ramp up investment over time from a 2024 election win, reaching £28bn a year by 2027. She says that “financial stability has to come first” as after the Conservatives “crashed the economy”, it is important not to be “reckless” with spending.
Reeves said that when former promises were made concerning green investment, it was not possible to predict “what the Conservatives would do to our economy”. This particularly points to former PM Liz Truss’s mini-budget last year, which included billions of pounds of unfunded tax cuts and prompted turmoil in the financial markets which led to interest rates rising further.
Factors impacting the economy also including the war in Ukraine which has seen inflation soar and the Bank of England has increased interest rates, making borrowing more expensive, in an attempt to tame rising prices.
Reeves has promised that if in Government, the Labour party will get the investment that is needed but, this has to be done “in a responsible way”. When pressed to provide figures on how much investment would be provided in the first year, Reeves could not answer and instead argued that the economic backdrop would not be clear until closer to that time.
Moreover, Reeves has explained that Labour is taking inspiration from US President Joe Biden’s plan to tackle inflation and create jobs, which includes a huge package of subsidies and tax breaks for green industries. She said her “secureonomics” strategy would be “built on the rock of financial stability and economic security”, with strict limits on borrowing.
Labour has also promised to create a publicly owned renewable energy company to create jobs and improve the country’s energy security.
Responses
Responses from the Conservatives have typically argued that Labour’s backtracking was anticipated. However, those on the left and those who prioritise climate justice are disappointed with the party and many have voiced their criticism online. Moreover, Green Party MP Caroline Lucas, who announced she will stand down at the next election yesterday, tweeted “this is exactly why we need more Greens in Parliament”.
Final thought
Since the Labour Party first made their green investment pledge, the economic landscape in the UK, and therefore, the rising level of social issues, has changed massively. Interest rates and inflation has soared, and many more people are facing poverty. It is somewhat understandable that in unstable times, the Labour Party therefore wants to be viewed as economically sensible and credible. However, it is also disappointing that climate action often gets sidelined. As the climate crisis worsens, delaying action will have increasingly negative consequences.