A U-turn on the eve of a major policy announcement is not usually part of the plan for a government in waiting. Later this month the Labour leader, Keir Starmer, will set out his pitch on energy, jobs and net zero, hoping to place a green economy at the centre of his vision for revitalising the UK.
But with just weeks to go, his shadow chancellor, Rachel Reeves, admitted on Friday that the key plank of that vision – the party’s much-heralded flagship commitment to spend £28bn a year on green investment – would be delayed. She blamed the economic mess being left by the Conservative party, and insisted the target would be met in the second half of a Labour parliament.
Green investment will instead start at an unspecified level and “ramp up”. Aides said the move was not a U-turn, but an act of economic realism, given the need for fiscal stability after years of Tory chaos.
Economists and green campaigners were far from convinced. Several Oxford economists questioned the move and suggested that Reeves and Starmer had misunderstood the economics of green investment.
Prof Cameron Hepburn, director of the Smith School of Enterprise and the Environment, said: “Fiscal prudence matters. Borrowing for a consumption binge is foolish, particularly in the current economic climate. But borrowing to invest in productive assets is a different matter, especially when those assets deliver cheaper energy and new jobs. The sooner we get on with decarbonising the economy, the better.”
Prof Sam Fankhauser, also of the Smith School, added: “By delaying the investment, Labour will also delay the returns – economic, environmental and social.”
Green campaigners were up in arms. Rebecca Newsom, the head of politics for Greenpeace UK, said: “This prevarication risks throwing in the towel on the global race in green tech, with the US, China and the EU already far ahead. It would simply be bad economics to say that we can’t afford this now, when it would pay for itself. Green infrastructure investment is now one of the best economic growth generators, and with it the opportunity to lower bills and tackle the climate crisis. Labour mustn’t let this go.”
The furore over the delay to the £28bn investment promise was the latest twist in a fortnight of turmoil for Labour over its green ambitions. When Starmer laid out the first tranche of his green plans – an end to new licences for oil and gas drilling in the North Sea – to world business leaders at Davos in January, it generated little interest.
But when he reiterated his stance at the end of last month, the knives were sharpened and ready – and not only from the predictable quarters. Grant Shapps, the Tory energy secretary, took to social media to accuse Starmer of being in the pocket of the Just Stop Oil protesters, and the rightwing media duly took up the same cry.
They sensed an opportunity to claim that halting new licences would raise energy bills, even though this was comprehensively debunked by the chair of the Climate Change Committee, Lord Deben, who said that fuel from new fields would not flow for a decade or more, and that it would have no impact on UK prices as it would be sold to the highest bidder.
Those inconvenient facts have not deterred Shapps. One Tory insider indicated the attack lines would continue, saying: “He doesn’t believe families should pay the price for making the country dependent on foreign fossil fuels from the likes of Putin, which is exactly what Labour’s Just Stop Oil-sponsored policy would do.”
Attacks from political enemies could be shrugged off. Far harder to dismiss was the public outcry from unions. Two major unions – hefty donors to Labour historically – lambasted the plans. Sharon Graham of Unite called the pledge “reckless”, and Gary Smith, the general secretary of the GMB, said the move was “naive”.
Union leaders fear losses among the 200,000-strong North Sea fossil fuel workforce, and called for a “coherent, fully funded plan for jobs” as part of any moves to question the UK’s energy future.
The Labour leader stood firm on the North Sea, but a few days later offered an olive branch to unions in supporting nuclear power, a move that also conveniently distances him from his anti-nuclear predecessor Jeremy Corbyn. Starmer is also expected to woo the unions by making highly skilled green jobs a central plank of his pitch later this month, though that may be harder to do convincingly given the scaling back of the £28bn pledge.
Opposition to green initiatives from within the ranks of Labour, and its usual allies, has deep roots, according to Newsom. “Parts of the Labour party don’t sufficiently grasp that green investment is as much of a vote winner as it actually is. Polling on Labour’s £28bn pledge shows it is popular across the population – people seem to understand that you need to borrow to invest on this issue,” she said.
Tom Burke, a co-founder of the thinktank E3G and a veteran adviser to governments, said the Labour leader had not yet laid out a coherent green vision for his party, and the public, to rally around. “He’s trying to buy off these lobbies [such as the unions, and nuclear industry] but that just gets you back to where the Tories were. He needs his own clear political narrative,” Burke said. “Jobs is just one part. He needs to talk about incomes, raising incomes, how green policies can tackle the cost of living.”
Senior Labour insiders say the North Sea pledge and the £28bn investment are just two parts of a much wider strategy, which will be laid out more compellingly when Starmer takes to the stage in Scotland later this month. They point to a series of measures already: a pledge to reach 100% clean power by 2030, and make the UK a green energy superpower; to establish Great British Energy, a homegrown publicly owned champion of green power generation; to set up a national wealth fund to create green industries; and to upgrade 19m homes through a warm homes plan for insulation and energy efficiency.
What is missing from this list, green campaigners worry, is much commitment to the other side of green policy: the natural environment. Within the shadow cabinet, the focus on nature is the purview of Jim McMahon, the shadow minister for environment and rural affairs, who many feel has made little impact.
Starmer recognises that the countryside must be a key part of his strategy. The limited appeal of his predecessor was mainly to young urban voters. But Labour’s thumping majorities in English cities – such as Corbyn’s own 64% vote share in Islington North – are wasted in the UK’s first-past-the-post system. With an overall vote share of 43.6% in 2019, the Conservatives were able to win an 80-seat majority partly through scores of rural and semi-rural constituencies with much smaller majorities.
“The path to electoral victory runs through rural seats,” said one former shadow minister. Starmer’s advisers have long understood that he needs a message for the shires, and in 2021 and 2023 he headed for the National Farmers’ Union (NFU) conference to proclaim farming was “in my DNA”. He met a receptive audience, battered by Brexit, supermarkets and soaring input costs.
Minette Batters, president of the NFU, said she was impressed. “We need to see clarity on Labour policy, but they’ve been very engaged,” she said. “Keir has visited my farm. They know, as do all parties, that the rural vote will matter at the next general election.”
Yet farmers, rural linchpins though they appear, make up only a minority of voters in rural and semi-rural constituencies, and their needs are sometimes at odds with those of the rest of the public.
Take sewage. The scandal, years in the making, of routine releases of raw sewage from the privatised water companies is likely to be a key flashpoint for voters, with Labour and the Liberal Democrats vying to come down hard on what is obviously a Tory weak spot.
But while the misdeeds of water companies have rightly grabbed the headlines, the other major cause of pollution and ecological death for rivers and streams is runoff from agriculture. Farmers have gone largely unpunished by this government, which has shrunk the number of inspectors and created a virtual indemnity for farmers.
Intensive farming is also behind the precipitous decline of wildlife, from farmland birds and small mammals to insects and plant species. Labour has vowed to reform the environmental land management system of payments for farmers. But unless there is more money for farmers to switch to less intensive, more ecologically sound practices, then there is little chance of stemming the nature losses, let alone hitting the target of preserving 30% of the UK’s biodiversity by 2030.
Craig Bennett, the chief executive of the Wildlife Trusts, said: “[Starmer] can’t U-turn on nature because Labour has not yet constructed a strong, authentic narrative on nature to U-turn on. Why not? The pandemic showed the depth of people’s appreciation of the natural world, and that’s something to build on. Labour should be championing access to nature, which is good for health, and would reduce pressure on the NHS, including mental health services. But they’ve been curiously silent on nature.”
When Starmer sets out his green vision this month, his low-carbon efforts will take centre stage, and anger over the delay to the £28bn investment may have died down. But if the Labour leader wants a genuine green strategy, to get the UK to net zero and protect and restore the natural environment, then the storms of the past fortnight will be just the beginning.
Pursuing net zero and protecting nature involve taking on vast ranks of vested interests: farmers; the car lobby, who will label any attempt to tackle transport emissions as “a war on motorists”; while addressing aviation will threaten foreign holidays. Gas boilers will have to go, provoking resistance from boiler makers and tens of thousands of plumbers and heating installers, as well as housing developers and private landlords who have little enthusiasm for heat pumps or insulation. Even companies that loudly claim to be green need to be held to account. If Starmer is serious about leading Labour to a greener future, he will have to be prepared to make far more enemies.
