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

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Keir Starmer confirms Labour is dropping its £28bn spending commitment.

By Paul Seddon
Politics reporter

Sir Keir Starmer has insisted he had no choice but to ditch 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 Labour would still spend more than the Tories on green projects if it wins the election, and was committed to “clean power by 2030”.

But Rishi Sunak said the Labour leader “has confirmed he doesn’t have a plan for Britain”.

Labour’s announcement represents a major scaling back of the amount the party plans to invest in green industries if it wins power.

With a general election looming, Sir Keir hopes it will kill off Tory attacks on the £28bn plan, which Mr Sunak says would have led to tax rises.

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

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

And the investment package will be part-funded by taxes on energy firms’ profits, rather than entirely by more government borrowing.

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

Last June, shadow chancellor Rachel Reeves announced the spending target would only be met after 2027, instead of from the first year of a Labour government.

The party then included around £10bn a year of planned government spending in its figure, making the extra spending commitment compared to the Conservatives more like £18bn per year.

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

Speaking to the BBC, Sir Keir said changing the spending plans was “perfectly sensible,” adding it would be “irresponsible” to ignore the economic situation.

“I can’t ignore the fact the Conservatives have done huge damage to the economy,” he added.

Labour has insisted the roll-back is necessary to allow the party to meet its spending rules, which say debt has to be falling as a share of the size of the economy in five years.

‘Yet another capitulation’

However the move to ditch the spending promise was criticised by left-wing campaign group Momentum and Unite, Labour’s biggest union backer.

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

Unite leader Sharon Graham said: “The Labour movement has to stand up to the Conservatives’ false accusations of fiscal irresponsibility.”

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

Mr Sunak said Labour’s change in approach was a “serious moment” that showed the Labour leader “U-turns on major things, he can’t say what he would do differently”.

“This was the flagship plank of Labour’s economic policy and it now looks like he’s trying to wriggle out of it,” he added.

Where does this leave Labour’s plans?

The consequences of Labour scaling back its green spending are hard to assess, as the party had never set out in detail where all the money would go.

It has confirmed its plan to fund grants for families to improve home insulation will now only cover five million homes over five years, instead of 19 million homes over a decade.

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

Pledges that remain unchanged include £1.8bn for nine “renewable-ready” ports.

Also staying is a pledge to spend £2bn on eight battery factories and £3bn on “clean” steel, figures that include assumed government spending.

A pledge to spend £500m a year on grants for companies bringing green jobs also remains – but the party has specified it won’t start until 2026.

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

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

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