Labour ditches £28bn green investment pledge

Sir Keir Starmer opened his conference speech by warning that the Conservatives have crashed the pound and lost control of the economy.

In a significant policy reversal, the Labour Party has announced its decision to abandon its commitment to spend £28 billion annually on its green investment plan, marking a departure from its previous stance.

Sources within the party have clarified that while the Green Prosperity Plan, which includes the establishment of a publicly-owned green power company, will not be completely scrapped, Labour will no longer pledge to invest £28 billion per year in green energy projects if it attains power.

Labour’s stance on the policy has been described as increasingly ambiguous in recent weeks, with senior figures refraining from explicitly mentioning the £28 billion figure in interviews. Party leader Sir Keir Starmer, however, has continued to endorse the spending target.

The decision to revise the plan is expected to be framed as a prioritisation of economic responsibility over what opponents perceive as reckless spending commitments. Labour argues that it must demonstrate prudence in managing the economy, especially amidst economic challenges and rising borrowing costs.

The initial pledge to invest £28 billion annually in green energy projects, such as offshore wind farms and electric vehicle development, was announced by shadow chancellor Rachel Reeves in September 2021. However, the target was later adjusted last June to be achieved halfway through Labour’s first term, acknowledging the need for fiscal responsibility given the economic context.

Despite ongoing questions surrounding the feasibility of the policy, Sir Keir has characterized the £28 billion figure as a “confident ambition,” subject to the party’s fiscal rules, including a requirement for debt reduction as a share of the economy within five years.

The decision to revise the plan has drawn criticism from left-wing groups, with Momentum describing it as a capitulation to right-wing interests. However, Chief Secretary to the Treasury Laura Trott accused Labour of lacking a coherent plan for the UK, causing uncertainty for businesses and the economy.

Green Party MP Caroline Lucas expressed disappointment with Labour’s move, arguing that public investment in the green transition would yield numerous benefits, including job creation and emission reduction.

The announcement coincides with claims from the Conservatives, based on Treasury analysis, suggesting that Labour’s plan to insulate homes would cost double the amount previously estimated by the party. Labour has dismissed this analysis as “bogus.”