Labour backtracks on £28bn green prosperity plan

Labour has backtracked on its £28 billion green prosperity plan, saying “economic stability” must come first if it wins the next election.

Shadow chancellor Rachel Reeves said the Opposition could not commit to spending figures until the financial situation it would inherit becomes clearer.

The party had promised in 2021 to invest £28 billion a year until 2030 in green projects if it came to power.

But Ms Reeves told BBC Radio 4’s Today programme on Friday that figure would instead be a target to work towards, not the amount allocated to the plan during the first year of government.

She said after the Tories had “crashed our economy” it would be crucial to show “responsibility” with borrowing.

Ms Reeves refused to commit to a figure on how much investment there would be in the first year of government, saying: “I will never be reckless with the public finances.

“Economic stability, financial stability, always has to come first and it will do with Labour.

“That’s why it’s important to ramp up and phase up our plans to get to the investment we need to secure these jobs so that it is also consistent with those fiscal rules to get debt down as a share of GDP and to balance day-to-day spending.”

Ms Reeves insisted that Ed Miliband, the shadow net zero secretary, was “on the same page” as her.

Disaster

The Tories said shadow ministers had realised the policy would lead to “disaster” and sought to stress that Labour’s ultimate goal remained to reach the £28 billion figure, which it said would worsen the economy.

Conservative Party chairman Greg Hands said: “Keir Starmer’s main economic policy is in tatters, after even he and Rachel Reeves realised it would lead to disaster.

“It doesn’t matter if they try and pretend otherwise, Labour’s plan remains to stick £28 billion of borrowing on the Government credit card which will lead to higher inflation and higher interest rates.”

Labour’s flagship green prosperity plan, which had been billed as the party’s answer to Joe Biden’s Inflation Reduction Act, included ambitions pledges to invest more in projects such as nuclear, wind and carbon capture.

But its fiscal rule – that debt must be falling as a share of national income after five years – has always been the party’s priority, Ms Reeves argued.

The shadow chancellor also hit out at Prime Minister Rishi Sunak’s trip to Washington in which he and US President Mr Biden announced an agreement to deepen UK-US ties.

Hopes of a full-blown trade deal have been abandoned but the new “declaration” by the two leaders includes commitments to allow UK companies access to US green tax credits.

Ms Reeves, who visited the US herself last month, said she was “staggered” that Mr Sunak had returned with “no industrial plan for Britain”.