8 FEBRUARY 2024 | NEWS
The Labour Party has rowed back on its commitment to spending £28bn a year for the next decade on green investment projects in a major policy U-turn this afternoon.
The policy was initially announced by Shadow Chancellor Rachel Reeves in 2021. The change in stance comes in the wake of widespread speculation in Westminster in recent weeks that it would be dropped, at least in part.
It follows inconsistent statements in the media from various senior Labour figures as to whether or not the policy would be going ahead. Indeed, Labour leader Sir Keir Starmer appeared to remain committed to the figure only two days ago on Times Radio, telling the public: “We’re going to need investment – that’s where the 28 billion comes in.”
Speaking to the BBC earlier today, however, Sir Keir said it would be “irresponsible” to commit to the figure at this time, citing the rise in interest rates since the policy was first announced.
But he added that the party’s other green commitments, including its proposed £7.3bn National Wealth Fund – as well as the creation of ‘GB Energy’, which is intended to be a publically-owned company and is forecast by the party to cost £8.3bn – were to be retained.
However, he added that some of them – such as the Warm Homes Plan – would need to be “scaled back”. Sir Keir said that “we won’t be making further investments, and therefore we won’t reach the £28bn, which is effectively stood down”.
The move comes as global warming is now recorded to have exceeded 1.5 degrees Celsius for the first time over a single year.
The party also plans to increase the windfall tax on oil and gas companies from 75% to 78%, and to extend its term to the end of the next parliament. Under the current Government, the tax is due to end in December 2025.
In response, Prime Minister Rishi Sunak said the announcement showed that Labour had “no plan” for the country, striking a note of warning that “the uncertainty about what a Labour government would do is a real risk to our country’s future”.
“This will mean higher taxes for working people to fill Labour’s black hole,” he continued, adding: “That’s why the choice this year is to stick with our plan that’s working, or go back to square one with Labour, which would put our country’s future at risk.”
But the Labour leader hit back, accusing the incumbent Conservative Government of “recklessly” damaging the economy and “crashing” it by “maxing out the credit card”, adding that “we have to anticipate the economy as it is, not the one we want to inherit”.
The environmental charity Greenpeace was highly critical of the announcement, saying that Starmer had “caved like a house of cards in the wind”. Its co-executive director, Areeba Hamid, added: “This country is broken. We need bold, visionary leadership that will lower bills, create millions of jobs, increase our energy security, and tackle the existential threat of climate change.”
The policy shift has also seen some criticism from the Labour backbenches, with former Shadow Climate Change Secretary Barry Gardiner describing them as “economically illiterate”.
The First Minister of Scotland (SNP), Humza Yousaf, also criticised the move, saying: “Scotland will suffer because of another screeching Labour U-turn.”
The Labour Party has pledged that government debt should have fallen as a share of GDP after a full parliamentary term if it is in power. It has also stated that the ratio of money invested by the private sector in producing clean energy, as compared to the state, would need to be 3:1.
Owing to the growing anticipation in Westminster of this announcement recently, further reaction is expected in the coming weeks.