After announcing a U-turn on Labour’s £28bn annual spending pledge for green investment, Keir Starmer has defended his position, asserting it is no longer affordable due to the Conservatives “crashing” of the economy.
Green Investment
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.
Despite a backtrack on the £28bn pledge, Labour insists it would still spend more than the Conservatives on green projects and remains committed to clean power by 2030. The Party states that all other green plans announced will remain in place including funding for battery factories and clean steel production. However, grants and loans to help families heat their homes will be scaled back.
Labour has insisted the roll-back is necessary to allow the party to meet its spending rules, which say debt has to be falling as a share of the size of the economy in five years. Shadow chancellor Rachel Reeves said the Conservatives would be leaving a “bleak inheritance” and that she would not “make any apologies” for ensuring Labour’s plans were ” fully funded”.
Labour’s Backtracking on Policy
However the move to ditch the spending promise was criticised by left-wing campaign group Momentum and Unite, Labour’s biggest union backer.
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.”
Additionally, Rishi Sunak has reportedly mocked Keir Starmer, stating “I think what Labour announced yesterday just demonstrates what we’ve been saying – they absolutely don’t have a plan. Their signature economic policy is in tatters, and when you don’t have a plan, you can’t deliver any change for the country”.
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.
