Keir Starmer defends Labour U-turn on £28bn green spending

  • By Paul Sedon
  • BBC political reporter

Video Caption,

Keir Starmer confirms Labor will drop its £28 billion spending commitments.

Sir Keir Starmer has insisted he had no choice but to abandon Labour’s £28bn-a-year green investment pledge.

He defended the U-turn by claiming it was no longer affordable because the Tories had crashed the economy.

And he told the BBC that Labor would still spend more than the Tories on green projects if it won the election, and would commit to “clean energy by 2030”.

But Prime Minister Rishi Sunak said Labour’s signature economic policies were “in tatters”.

“That’s what happens when you don’t have a plan, and if you don’t have a plan, you can’t make any change for the country.”

He added that the Labor leader had “a proven track record of turning around key issues”.

Labour’s announcement marks a major scale back on its plans to invest in green industries if it comes to power, bringing in around £4.7 billion extra a year.

It follows weeks of confusion over the policy, which has come under increasing Tory attack in the run-up to the election, with Sunak saying the needed loans would force Labor to raise taxes.

The Labor leader said all green plans announced by the party so far – including money for battery factories and the production of “clean steel” – would remain in place.

But grants and loans to help families better insulate their homes will now be scaled back.

And the investment package will be partly financed by taxes on energy companies’ profits, rather than entirely by more government borrowing.

The £28 billion spending pledge, first announced in 2021, had already been significantly watered down by Labour.

Last June, Shadow Chancellor Rachel Reeves announced that the spending target would not be met until after 2027, rather than from the first year of a Labor government.

The party then included around £10 billion a year in planned government spending in its figures, making the additional spending commitments compared to the Conservatives look more like £18 billion a year.

Now the party has confirmed that total additional investment compared to government plans will now be around £4.7 billion per year.

The country has also said it will be partly funded by keeping the higher proposed windfall tax on energy companies’ profits in place for the first term if it comes to power.

The party now says it hopes this will raise £10.8 billion over the next five years to fund the plans, reducing reliance on loans.

Speaking to the BBC, Sir Keir said changing spending plans was ‘completely sensible’, adding that it would be ‘irresponsible’ to ignore the economic situation.

“I cannot ignore that the Conservatives have done enormous damage to the economy,” he added.

Labor has stressed that the rollback is necessary to allow the party to meet its spending rules, which say debt must fall as a percentage of the size of the economy within five years.

Speaking to the BBC, Shadow Chancellor Rachel Reeves said the Conservatives would leave a “bleak legacy” and that she would make “no apology whatsoever” for ensuring Labour’s plans were “fully funded”.

However, the decision to abandon the spending pledge was criticized by left-wing campaign group Momentum and Unite, Labour’s biggest trade union funder.

“This latest U-turn from Starmer represents yet another capitulation to right-wing interests,” a Momentum spokesperson said.

Unite leader Sharon Graham said: “The Labor movement must resist the Conservatives’ false accusations of fiscal irresponsibility.”

Carla Denyer, co-leader of the Green Party, said: “This is a huge step backwards – for the climate, for the economy and for good quality jobs.”

Where are Labour’s plans?

Image source, Getty Images

The consequences of Labor cutting green spending are difficult to assess because the party has never detailed where all the money would go.

It has confirmed that its plan to fund grants for families to improve home insulation will now cover just five million homes over five years, down from 19 million homes over a decade.

The funding allocated for this will amount to £13.2 billion over five years, around double the amount currently committed by the government, but less than Labor had planned.

Commitments that remain unchanged include £1.8 billion for nine ports to be ready for renewable energy sources.

The stay also includes a pledge to spend £2 billion on eight battery factories and £3 billion on ‘clean’ steel, figures that include supposed government spending.

A pledge to spend £500 million a year on grants for companies creating green jobs also remains, but the party has indicated this will not happen until 2026.

The party has never specified how much it would spend on GB Energy, the state-owned clean generation company it wants to set up.

It has now confirmed that this will “initially” be £8.3 billion over five years, including £3.3 billion for councils and community groups to become “owners of local power”.

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