RED TORY

Starmer wants to water down Labour’s £28bn green pledge even more

Daniel Martin
Fri, 24 November 2023 

Sir Keir Starmer and Rachel Reeves, who was was forced to scale back the green plans in June - Stefan Rousseau/PA

Sir Keir Starmer is considering watering down Labour’s £28 billion green borrowing pledge even further as the party aims to prove to the public that it can be trusted with the economy.

Aides of the Labour leader have urged Rachel Reeves, the shadow chancellor, to cut back the green prosperity fund, under which Labour would borrow billions a year to invest in environmental jobs and industries as part of a bid to go for growth.

But in June, she was forced to scale back the plans, saying that instead of coming in at the start of a first Labour term in office, the policy would “ramp up” by the middle of the first Parliament.

Now a party source has said there is growing pressure from Sir Keir’s office to go further to reduce the cost and impact of the scheme.

Another source said it was more important to fulfil Labour’s fiscal rule that debt must be falling as a share of national income after five years. “The fiscal rule matters more, and that will dictate how much is in the green prosperity fund,” the source added.

It comes after Jeremy Hunt’s Autumn Statement projected that many key public services would face real-terms cuts after the next election – leaving Ms Reeves with difficult choices.

The Conservatives have said the fund is a key dividing line at the next election, proving that Labour is unfit to be trusted with the economy. They have called it a “debt bombshell”, with Rishi Sunak raising the issue frequently at Prime Minister’s Questions.

Some shadow cabinet members are known to have concerns about the green prosperity fund, believing Labour has not done enough to articulate what it will do with the money. Earlier this month, one was quoted as saying: “My worry is that we are going to get all the downside of this without any of the upside.”

Critics claim Labour has not said enough about what schemes the money will be spent on, and has not thought enough about how to sell the plan to the electorate.

The party had promised to spend £28 billion a year on green investment until 2030 from the first year after coming to power. In June, Ms Reeves said she had taken the decision to scale back the green prosperity fund as a result of the poor state of the economy.

She announced her decision on BBC Radio 4’s Today programme, saying Labour would “ramp up” to the annual £28 billion plan by halfway through a first Parliament. However, she said she could not have predicted the market crash caused by Liz Truss’s plans for unfunded borrowing for tax cuts last autumn.

“No plan can be built that is not a rock of economic and fiscal responsibility,” she added. “I will never play fast and loose with the public finances.”

The shadow chancellor said she was “on the same page” as Keir and Ed Miliband, the shadow energy secretary, about the need to scale back the ambition of the plan.

Mr Miliband said the delay was partly a matter of practicality because it could take some time to get supply chains ready for the £28billion of spending. He added that the party is “100 per cent not abandoning our plan”.