£28bn green U-turn confirmed as Labour says Tories ‘maxed out UK credit card’

Labour has confirmed it has ditched a £28 billion spending target for its Green Prosperity Plan today, with leader Keir Starmer embarking on another significant policy rowback.

The party said in a press release: “Due to the Conservatives’ crashing the economy and Jeremy Hunt’s plans to ‘max out’ the country’s credit card, it would not be possible to reach the previous commitment of £28 billion a year.”

The party expects extra investment to now total only around £4.7bn a year. It said the GPP will be funded by a windfall tax on the oil and gas giants, and borrowing to invest within Labour’s fiscal rules.

While Labour will remain committed to a wide-ranging green agenda, the abandonment of the figure – first announced under Starmer’s leadership rather than his predecessor Jeremy Corbyn’s – comes just days after leader Keir Starmer himself said it was “desperately needed”.

Shadow Chancellor Rachel Reeves had notably refused recently to use the figure, and it has not featured in some recent party campaign literature.

It follows months of occasional press reports citing unnamed party sources claiming the £28 billion will be junked, and subsequent official denials by party spokespeople and shadow cabinet members.

But the party said it had “reconfirmed its commitment to the policies announced through the Green Prosperity Plan” despite the price tag shift.

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Another win for safety-first advocates

The change marks a significant victory for senior figures focused on de-risking the party against Tory attacks on the figure, which have increased in recent weeks and months, and against financial market jitters.

But months of uncertainty and other rowbacks so far – including delaying the target date and making it subject to fiscal rules – have caused frustration in the party.

A further significant retreat by ditching the figure altogether will also likely spark a major backlash.

“It’s probably the most stupid decision the Labour party’s made.”

John McTernan, former adviser to Tony Blair tells #Newsnight that Labour’s decision to reportedly scale back on their £28bn green pledge is “disappointing.” pic.twitter.com/Qz9DX0BJsx

— BBC Newsnight (@BBCNewsnight) February 7, 2024

Voters may think Labour ‘doesn’t stand for anything’

Labour MP Barry Gardiner said the decision was “economically illiterate”, “environmentally irresponsible” and it’s politically jejune.

Sharon Graham, general secretary of Labour affiliated trade union Unite, said “Britain needs more not less investment”, warning it risks lag behind other nations.

“The retreat from Labour’s £28 billion green investment pledge will confirm workers’ scepticism of the endless promises of jam tomorrow,” she added.

A spokesperson for left-wing campaign group Momentum said it marked a “capitulation to right-wing interests”, defying a “consensus” from Labour members to economists for the need for major green investment. The leadership appears “afraid of its own shadow”, they added.

John McTernan, a former adviser to Tony Blair usually supportive of Starmer, told BBC Newsnight it was “probably the most stupid decision the Labour party’s made”.  He added: “What’s the change Labour now offers?”

Luke Tryl, director of pollsters More in Common, said: “The green investment pledge was Labour’s second most popular manifesto pledge with those intending to vote for the party.

“It reinforces what is a major weakness that Labour doesn’t stand for anything.”

‘Good riddance’ to figure it makes it easier to argue for change

Former cabinet minister Peter Hain has written for LabourList today arguing Labour must hold firm in defending its green plans against “desperate” right-wing attacks, and that green investment is vital to boost growth and hit net-zero tragets.

But he also calls a scaling back on the quantity of investment promised “prudent” when the Institute for Fiscal Studies has questioned its affordability, and to avoid an “action replay” of successful Tory “tax bombshell” attacks in 1992.

Meanwhile Josh Simons, director of the influential think tank Labour Together, said: “The £28bn number has become a distraction from Labour’s arguments for the credible, transformative change that Britain needs.

“Clinging on to a fixed investment figure when the Tories have crashed our economy and failed to generate growth would not be a credible offer to the British people. If ditching the number enables Labour to make the argument for investment with confidence, focusing on the benefits for working people, then good riddance to the number.”