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Labour set to finally abandon £28 billion green investment promise in major U-turn

Sir Keir Starmer is facing mounting criticism within his party as he prepares to abandon Labour’s policy to spend £28bn a year on environmental projects in a major U-turn.

The Labour leader is expected to confirm that the pledge is being scaled back, blaming a more difficult economic outlook since it was first unveiled in 2021.

It comes just days after Sir Keir said £28bn of annual investment in green initiatives was “desperately needed” and that his support for the spending plan was “unwavering”. Labour sources said the party will instead focus on previously-announced plans to wean Britain off fossil fuels.

But Sir Keir faced an immediate backlash, with former shadow minister Barry Gardiner calling the decision “economically illiterate, environmentally irresponsible and politically jejune”.

Former adviser to Tony Blair John McTernan said it was “probably the most stupid decision the Labour Party's made”.

A member of Sir Keir’s shadow cabinet told The Independent the U-turn had been “handled dreadfully” and now risked distracting from two potentially disastrous by-elections for Rishi Sunak next week.

News of the announcement came just after the Greater Manchester mayor Andy Burnham and the Liverpool city region mayor Steve Rotheram warned the party to “stick to the pledge” around green transition.

Sir Keir Starmer said this week that the £28 billion-a-year green spending plan was ‘desperately needed’ (PA Wire)
Sir Keir Starmer said this week that the £28 billion-a-year green spending plan was ‘desperately needed’ (PA Wire)

Last year, Labour adjusted its original plan by saying the £28 billion-a-year spending target would likely be met in the second half of a first parliament, rather than immediately, if the party wins the next election.

The party has since insisted the pledge is subject to its fiscal rules, which include getting debt falling as a percentage of GDP, as it seeks to reassure voters it would handle the economy responsibly in government.

Confusion over the future of the policy has grown in recent weeks as some senior figures refused to refer to the £28 billion-a-year figure, while party leader Sir Keir continued to do so as recently as Tuesday.

Shadow chancellor Rachel Reeves has repeatedly declined to recommit to the spending pledge, instead highlighting the need for “iron discipline” with the public finances.

Labour has come under pressure as the Conservatives have increasing seized on the figure as a key attack line, claiming Labour would have to raise taxes to meet the “unfunded spending spree”.

Barry Gardiner said the decision was ‘economically illiterate, environmentally irresponsible and politically jejune’ (PA Media)
Barry Gardiner said the decision was ‘economically illiterate, environmentally irresponsible and politically jejune’ (PA Media)

Mr Gardiner, who served in Jeremy Corbyn’s shadow cabinet, told BBC Radio 4’s Today programme that Britain needed to follow US President Joe Biden, whose inflation reduction act inspired the spending pledge.

He said Sir Keir’s u-turn was “environmentally irresponsible” at a time when climate change is leading to increasingly destructive natural disasters.

And Mr Gardiner warned Labour now risked “being so bland that you stand for nothing”. “The government will then write your policies for you, and will say, “you see Labour’s not telling you what they what they’re going to do. It’s going to be this it’s going to be that”.

“They can paint their own picture, so I think politically, it’s strategically incompetent.”

Other MPs on the left of the party also criticised the plan.

Bell Ribeiro-Addy, the MP for Streatham in London, said that “now is not the time to scale back our green industrial strategy”.

Mick Whitley, the MP for Birkenhead, tweeted: “The dumping of the Green Prosperity Plan casts major doubt on whether Labour can provide the leadership to meet the challenges of a fast warming world. This latest u-turn will leave many voters asking what, if anything, our party stands for. Dangerously short-sighted politics.”

The Unite union, a major donor to Labour, said the “retreat” would “confirm workers’ scepticism of the endless promises of jam tomorrow and it will be ‘alright on the night’ rhetoric on the green transition”.

General secretary Sharon Graham said: “There is a catastrophic crisis of investment in Britain’s economic infrastructure. Britain needs more not less investment.”

But Labour received surprising support from David Cameron’s former spin doctor Craig Oliver, who said the move would leave “glum faces” inside No10 and CCHQ today, following the loss of what “was going to be a major Conservatives attack line for months” in the run up to the general election.

For his part, Mr Sunak accused Labour of “trying to wriggle out” of the £28bn green pledge and said the move demonstrated his argument that Sir Keir “U-turns on major things, he can’t say what he would do differently because he doesn’t have a plan.”

Jeremy Hunt said Labour’s only economic plan is to “copy the Conservatives”.

John McTernan said the decision was ‘very disappointing’ (NurPhoto via Getty Images)
John McTernan said the decision was ‘very disappointing’ (NurPhoto via Getty Images)

Mr McTernan, Sir Tony’s former political secretary, said Labour needed to stick to the pledge. “Great parties have great causes, and if you don’t have a great cause, people may want change from this government, sure, but change to what - what is the change Labour now offers? It is very disappointing.”

The policy was first announced in September 2021 by Ms Reeves.

But Labour has pointed to recent economic turmoil under the Tories, including Liz Truss’ disastrous mini-budget.

As they attempted to capitalise on the row, Tory staffers stayed up until 1am on Thursday posting a thread on X of the 311 times Labour has talked about the £28bn spending commitment, saying it showed “311 reasons you cannot trust a word Starmer and the Labour Party say”.

Greenpeace slammed Sir Keir’s decision as showing “weak” political, economic and climate leadership. Head of politics Rebecca Newsom said without the radical pledge, voters “will start wondering what the Labour party actually stands for”.

The Green Party described the U-turn as a “massive backwards step for the climate, for the economy and for good quality jobs”.

SNP Westminster leader Stephen Flynn said the U-turn would “destroy Scottish jobs, harm economic growth and hit families in the pocket by keeping energy bills high”.

The u-turn comes after the Tories claimed an official Treasury costing suggested part of the plan – to upgrade insulation for 19 million homes – would cost more than double the party’s estimate of £6 billion.