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The Labour Party is set to ditch its pledge to spend £28bn a year on green projects, following months of mixed messages on the plan.
The pledge was first made by shallow chancellor Rachel Reeves at the 2021 Labour Party conference in Brighton, during which she said she would become the UK’s first “green chancellor” with £28bn per year in green investments for the rest of the decade if Labour won the next general election.
This would be comparable to the EU’s Green New Deal and the US Inflation Reduction Act, both of which put tens of billions in public investment every year into green projects, such as electrification of transport, renewable energy and more efficient agriculture.
Following the economic turmoil of the 2022 mini-budget, Reeves scaled back on the commitment, saying that funding would increase to £28bn per year by the middle of a first term in government. Since then, senior Labour figures have issued conflicting public statements on whether the pledge will make it into the final draft of the manifesto.
Party representatives have declined to comment on reports that the pledge is about to be dropped. Few details are yet known, although The Guardian has reported that Labour’s home insulation plan – which would spend £6bn per year for a decade insulating almost 20 million homes – will be significantly scaled back as “the major victim” of the spending cuts.
Labour’s abandonment – or partial abandonment – of the £28bn pledge is expected to be defended as a pragmatic decision made in the light of continued uncertainties around public finances.
The decision has been criticised by various political parties and pressure groups.
First minister of Scotland Humza Yousaf said: “Scotland will suffer because of another screeching Labour U-turn.”
Carla Denyer, co-leader of the Green Party, said: “Labour have chosen to wear their fiscal rules as a millstone around their neck. A different approach through tax reforms, in particular by introducing a wealth tax on the super-rich, could help pay for the green transition.”
“There is more than enough money in the economy to pay for this. Indeed, the Green Party would go further and faster, investing at least double what Labour originally pledged, so we can turbo charge the transition to a green economy.”
A spokesperson for Momentum described the decision as “another capitulation to right-wing interests”. Former shadow environment secretary Barry Gardiner called it “economically illiterate”.
The Conservative Party has attacked Labour on different grounds, with Prime Minister Rishi Sunak commenting: “This was the flagship policy of Labour’s economic policy, and now it looks like he’s trying to wriggle out of it.”
Chief secretary to the Treasury Laura Trott attacked Labour for creating economic uncertainty: “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.”
However, former energy and clean growth minister Chris Skidmore, who recently resigned the Conservative whip in protest at the government’s Offshore Petroleum Licensing Bill, defended the decision, arguing that it is more important to consider long-term outcomes rather than specific spending figures.
In a statement, the Labour Party said: "Labour has today announced plans to invest in Britain’s future, with Keir Starmer setting out further details of Labour’s mission to kick start growth and deliver clean power by 2030.
"As part of the party’s finalisation of policies for a general election campaign, Labour has reconfirmed its commitment to the policies announced through the Green Prosperity Plan, to create jobs, cut bills and unlock investment.
"The Green Prosperity Plan will be funded by a windfall tax on the oil and gas giants, and borrowing to invest within Labour’s fiscal rules.
"The party also confirmed that, due to the Conservatives’ crashing the economy and Jeremy Hunt’s plans to ‘max out’ the country’s credit card, it would not be possible to reach the previous commitment of £28bn a year.
"The centrepiece of the package is Great British Energy, a publicly owned energy company to take back control of the energy system on behalf of the British people."
