Labour is set to scale back its green prosperity plan by ditching its £28bn spending pledge, Sky News understands.
But what is the policy and how has Sir Keir Starmer ended up U-turning on the central investment promise?
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‘First green chancellor’
In 2021, the Labour Party descended on Brighton in its droves for its first in-person conference since the COVID outbreak, and for Sir Keir’s first chance to deliver his big leader’s speech in front of a live audience, rather than over Zoom.
But one of the major policy announcements at the event came from his shadow chancellor, Rachel Reeves, who promised to be “Britain’s first green chancellor” with a green prosperity plan.
She pledged that if her party got into power, they would spend an extra £28bn, through government borrowing, on investment in climate-tackling technologies such as offshore wind farms and battery development, as well as more traditional measures like planting trees and building flood defences.
Ms Reeves said the annual spend would be made every year until 2030 and would create thousands of jobs, as well as encourage more investment from the private sector and help “protect our planet for future generations”.
The ambitious pledge was widely welcomed by green campaigners and even some business leaders, but was quickly seized on by the Conservative Party as Labour being irresponsible with the economy.
Fast forward to the summer of 2023, and Ms Reeves announced that Labour would be watering down its £28bn pledge.
Rather than providing a guarantee of borrowing and spending the large sum from their first year in Downing Street, it would now become a target to work towards.
The shadow chancellor blamed the fallout from Liz Truss’s short tenure in Number 10 – and her disastrous mini-budget – which took its toll on the public finances.
She accused the Tories of “crashing the economy” as interest rates and inflation rocketed to historic highs, saying “economic stability, financial stability, always has to come first”.
But she denied it was an outright U-turn on the key policy, promising spending on green pledges would still go ahead.
“The truth is I didn’t foresee what the Conservatives would do to our economy – maybe that was foolish of me,” said Ms Reeves.
As we approached 2024, the Conservatives seized on the policy and attacked Labour with it – saying it highlighted the party’s lack of fiscal responsibility and added it to a list of U-turns made by Sir Keir.
But a row also erupted within Labour itself, with some calling for the £28bn to be spent in full and others wanting the pledge to be dropped altogether as an election drew nearer.
As we entered the new year, those internal squabbles had made it on to the front pages, and shadow ministers were struggling on the airwaves to make clear whether the policy was still in place – or would remain so when voters headed to the polls.
Ms Reeves herself refused to commit to the spending target 10 times in an interview with Sky News’ political editor Beth Rigby last week.
Yet when shadow minister Sir Chris Bryant appeared on Sky News Breakfast days later, he insisted “we are doing it” and “it will be £28bn”.
Now we understand an announcement will be made later on Thursday to ditch the figure altogether.
Sky News understands that Labour will put the decision down to uncertain public finances due to the Tories, and say it is the outcome of finalising ideas for their election manifesto.
Climate campaigners have already criticised the decision, with Green Party co-leader Carla Denyer accusing Labour of “wearing their fiscal rules as a millstone around their neck”.
And despite attacking the policy since its formation, the Conservatives have also hit out at the change in direction leading to “uncertainty for business and our economy”.
We will bring you more about the future of the policy this afternoon, so stay tuned to Sky News.