Keir Starmer defends Labour's rollback of £28bn green spending

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

He defended the shift by claiming that it was no longer affordable because the Conservative Party had caused the economy to collapse.

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

But Prime Minister Rishi Sunak said Labour's signature economic policy was “in tatters”.

“This is what happens when you don't have a plan, and if you don't have a plan you can't bring any change to the country.”

He added that the Labor leader had a “track record of backing down on key issues”.

Labour's announcement represents a significant scale back of its plans to invest in green industries if it wins power, adding around an extra £4.7bn a year.

It comes after weeks of confusion over the policy, which came under increasing Tory attacks ahead of the election, with Sunak saying the borrowing required would force Labor to impose taxes.

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

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

The investment package will be partly financed by taxes on energy company profits, but not entirely by further government borrowing.

The £28bn spending pledge, first announced for 2021, has 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 the first year of a Labor government.

The party then included around £10bn a year of planned government spending in its figure, bringing the additional spending commitment compared to the Conservatives closer to £18bn a year.

Now the party has confirmed that total additional investment compared to government plans will now amount to around £4.7bn a year.

She also said she would finance it in part by keeping a proposed high “windfall” tax on energy company profits throughout her first term in office, if she wins power.

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

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

He added: “I cannot ignore the fact that the Conservatives have done huge damage to the economy.”

Labor insisted the rollback was necessary to allow the party to meet its spending rules, which stipulate that debt must fall as a proportion of the size of the economy in five years.

Speaking to the BBC, Shadow Chancellor Rachel Reeves said the Conservatives would leave a “dismal legacy” and that she would “make no apologies” to ensure Labour’s plans are “fully funded”.

However, the move to abandon the spending promise has been criticized by left-wing campaign group Momentum and Unite, Labour's biggest union backer.

A Momentum spokesperson said: “This latest shift in Starmer represents another capitulation to right-wing interests.”

Union leader Sharon Graham said: “The Labor movement must confront the Conservatives' false accusations of fiscal irresponsibility.”

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

It is difficult to assess the consequences of Labour's reduction in environmental spending, as the party has never specified in detail where all the money will go.

She confirmed that her plan to finance grants for families to improve home insulation will now cover only five million homes over five years, instead of 19 million homes over a decade.

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

Unchanged pledges include £1.8bn for nine ports “ready for renewal”.

Remain also includes a pledge to spend £2bn on eight battery plants and £3bn on “clean” steel, figures that include supposed government spending.

A pledge to spend £500m a year on grants to companies that create green jobs also remains in place, but the party has specified that it will not start until 2026.

The party has never specified how much it will spend on GB Energy, the publicly owned clean generation company it wants to establish.

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