Keir Starmer, Leader of the Labour Party, faces backlash after abandoning Labour’s £28bn green investment promise, sparking criticism from environmental advocates.
High cost of borrowing
The abrupt policy U-turn comes amid shifting political priorities, leaving questions about the party’s commitment to tackling climate change and supporting renewable energy initiatives.
Two and a half years after it was first announced, Labour’s green investment plans have been slashed in half from £28bn to £15bn a year in Starmer’s most controversial policy move to date. Starmer points to the government for inflicting “terrible damage to our economy” which triggered a reassessment of labour’s green pledge.
“We announced the £28bn two and a half years or so ago, when interest rates were very, very low,” said Starmer to reporters at Westminster. “Since then, Liz Truss crashed the economy and other damage has been done. [Interest rates] are now very, very high – interest on government debt is already tens of billions of pounds a year.”
Prime Minister Rishi Sunak has publicly criticised Starmer’s green pledge, insisting that Labour would have to raise taxes in order to fund it. In response, Labour have claimed the pledge would be funded through an extended windfall tax on oil and gas producers, raising the rate from 75 per cent to 78 per cent and bringing in an estimated £2.2bn per year.
Overall, Labour’s green strategy has been a central focus of Conservative criticism in the run up to a general election expected later this year.
What’s involved in the new plan?
Labour’s plan was to spend £28bn per year on green energy projects such as offshore wind farms and electric vehicle investment. The impact of cutting their pledge is unclear since Labour has never precisely defined how the money would be used.
So far, Labour have confirmed that it would spend up to £6bn a year on loans and grants for families to improve home insulation, and £500m a year on grants to companies generating green jobs.
£8bn of investment funding has been earmarked, with £2bn assigned to eight battery factories and £1.8bn for nine renewable ready ports. A further £3bn has been set aside for “clean steel” factories. However, the £8bn pledge represent s a one time commitment, rather than a repeat annual investment.
Labour is also honing in on its plan to invest £8.3bn in its national energy supplier, Great British Energy, in order to meet the clean energy requirements of a net zero transition.
The precise outcomes of the new pledge have not yet been specified, but renewable energy industry leaders have criticised cuts to labour’s green pledge claiming it will drive up costs in the long run and slow the clean energy transition.
