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It is unlikely a Labour government will be able to meet its ambition to spend £28bn a year on green initiatives, a source close to Sir Keir Starmer has told the BBC.
Labour announced the flagship policy at its annual conference in 2021.
But in June shadow chancellor Rachel Reeves watered the pledge down, saying the figure would not be reached until 2027.
Now, it is understood the figure will probably not be reached at all.
A senior source in the Labour leader’s office said that was because of the state of the public finances. They stressed that Labour’s fiscal rules were more important than any policy.
The Conservatives have previously warned of the alleged dangers of the policy – claiming extra borrowing could increase interest rates and mortgage costs.
During the Labour party conference in Brighton two years ago, Ms Reeves announced her ambition to be the UK’s first “green” chancellor.
She unveiled Labour’s Green Prosperity Plan, explaining money would go on offshore wind farms, planting trees and developing batteries. She added it would be funded by borrowing.
But in June Ms Reeves said she took the decision to scale back the Green Prosperity Plan as a result of the poor state of the economy.
“No plan can be built that is not a rock of economic and fiscal responsibility,” Ms Reeves told BBC Radio 4’s Today programme at the time.
She added. “I will never play fast and loose with the public finances.”
Speaking in June, Rachel Reeves says Labour will now “ramp up” its plan to spend £28bn a year on green industries
Five months on, there are major doubts at the top of the Labour party about the prospect of ever hitting that level of investment due to the state of the public finances.
This is because the party’s fiscal rules – which include a promise to get debt falling within five years – are viewed as the “North Star”; more important than any policy, according to the senior Labour source who spoke to the BBC.
Another Labour source told the Telegraph: “The fiscal rule matters more, and that will dictate how much is in the green prosperity fund.”
Labour is determined to paint itself as the party of economic credibility – even if it means tempering one of the central planks of its programme for government.
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