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Labour’s Green Investment U-turn

Labour

Labour has decided to backtrack on its pledge to invest £28bn a year in green energy projects. Keir Starmer is expected to make the announcement this afternoon.

It comes on the day the Conservatives claimed, via Treasury analysis, that part of the plan, to insulate homes, would cost double what Labour had claimed it would. Labour has rejected the analysis as “bogus”.

The Climate Crisis

Labour’s plan to spend £28bn a year on green energy projects, like offshore wind farms and developing electric vehicles, was first announced by shadow chancellor Rachel Reeves in September 2021. That pledge was watered down last June, with the £28bn target adjusted so that a Labour government would meet it about halfway through its first term rather than in its first year.

At the time Rachel Reeves said the party needed to be “responsible” with the public finances, given the poor economic backdrop and rising cost of borrowing. Since then there have been growing questions about whether the policy could be scaled back further.

The informal abandonment of the policy as a firm commitment therefore happened some time ago but Labour’s position on the policy in recent weeks has been increasingly confusing with some senior figures refusing to use the £28bn figure when pressed in interviews, while others, including Keir Starmer, continued to do so. In an interview last month, Starmer described the £28bn figure as “a confident ambition”, which was subject to the party’s fiscal rules.

It is expected Labour will argue that they have to focus on being seen as responsible stewards of the economy, rather than committing to a spending pledge that opponents regard as reckless.

However, this comes on the same day that the EU’s climate change service announced that global warming has exceeded 1.5C across an entire year for the first time. Sources insist the party’s Green Prosperity Plan, which includes creating a publicly-owned green power company, is not being dropped altogether.

Labour Faces Criticism

The decision to drop the £28bn pledge has been criticised from across the political spectrum. Those on the left such as Momentum have called the party out for backtracking on a range of pledges, with a spokesperson stating “This latest Starmer U-turn represents yet another capitulation to right-wing interests. Sadly, there is a huge gap emerging between the scale of the economic and environmental crises facing us, and the solutions being offered by a Labour leadership afraid of its own shadow.”

Moreover, Unite leader Sharon Graham said “The Labour movement has to stand up to the Conservatives’ false accusations of fiscal irresponsibility. There is a catastrophic crisis of investment in Britain’s economic infrastructure.”

Barry Gardiner MP, former shadow environment secretary said “It’s economically illiterate, it’s environmentally irresponsible and it’s politically jejune.” He said he understood the desire to “minimise the attacks from the opposition” but warn his party against becoming “so bland that you stand for nothing”.

Carla Denyer, co-leader of the Green Party, said “This is a massive backward step – for the climate, for the economy and for good quality jobs. Both the security of our planet for future generations and the UK’s future prosperity is dependent on greening our economy and that requires large scale investment.”

Chief Secretary to the Treasury Laura Trott said “This is a serious moment which confirms Labour have no plan for the UK, creating uncertainty for business and our economy. On the day that Labour are finalising their manifesto, Keir Starmer is torpedoing what he has claimed to be his central economic policy purely for short-term campaigning reasons.”

Stephen Flynn, the SNP’s leader at Westminster claimed that Starmer’s decision will damage the Scottish economy. “It’s a weak and short-sighted U-turn, which shows Westminster is incapable of delivering the investment Scotland needs to compete in the global green energy gold rush and secure strong economic growth. As our partners and allies across the world press ahead with investment to attract jobs and secure economic and energy security, the UK has turned away. It’s as depressing as it is predictable” he said.

Will Labour be Shielded from Attacks?

Rishi Sunak has repeatedly attacked Keir Starmer over the £28bn policy, suggesting it will lead to higher taxes. With the £28bn now off the table, it is now more difficult for the Conservatives to attack Labour’s policies as fiscally irresponsible in the run up to the General Election.

However, the U-turn does validate other Conservative messages including statements that Starmer cannot be trusted on anything as he keeps changing his mind. It also makes it harder for Labour to argue that it is offering a distinctive alternative policy at the election.

Those on the left also argue that the retreat from Labour’s £28bn green investment pledge reveals a weakness in the Labour leadership, with some arguing that the Opposition must stand up to the Conservative’s attacks and accusations, rather than backtracking on progressive policy.

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