Keir Starmer is cutting back his ambitious home insulation scheme as part of his decision to scale down Labour’s green policy, sources have told the Guardian.
The Labour leader will announce on Thursday that he is drastically reducing the scale of the £28bn “green prosperity plan” after weeks of uncertainty over the fate of the plan.
People briefed on the scaled-back plan say the party’s home insulation scheme, which was singled out for attack by the Conservatives earlier this week, would be the major victim of the cuts.
One person added they expected Labour to promise an additional £5bn a year of additional green spending on top of what the government has already committed, allowing the party to stick to its separate pledge to cut government debt levels.
Starmer is expected to formally announce the U-turn later on Thursday after heavy speculation about whether the £28bn could survive in its original form.
Rachel Reeves, the shadow chancellor, first announced it at the Labour party conference in 2021, as she promised to be the UK’s “first green chancellor”.
Since then, however, Reeves has become much more sceptical about the policy, with economic analysis showing that sticking to the £28bn would violate Labour’s separate promise to have debt falling as a percentage of economic output by the end of a five-year period.
Starmer has been lobbied heavily in recent weeks both by supporters of the plan, who say it forms the main plank of Labour’s economic policy, and opponents, who worry it could be used against the party in a general election campaign. The Conservatives have claimed that Labour is preparing to put up taxes to help pay for the scheme, though Reeves has denied this.
The home insulation scheme is the largest single item in the green plan, with Labour having promised to spend up to £6bn a year to insulate 19m homes over a decade. A government analysis commissioned by the Conservatives earlier this week suggested the plan could actually cost double that, though Labour said it would fund the scheme through private sector incentives as well as public spending.
However, some experts criticised the Treasury for having released the document at all, given Labour has explicitly said it will spend a maximum of £6bn on the scheme. Nick Macpherson, a former lead civil servant at the Treasury, tweeted on Wednesday: “Since time immemorial, whatever the party in power, these costings have had little if any credibility.”
Over the next 9 months, we will have tobtolerate many an "official Treasury" costing of Opposition policy. Since time immemorial, whatever the party in power, these costings have had little if any credibility. Political advisers determine the assumptions. #rubbishinrubbishout
— Nick Macpherson (@nickmacpherson2) February 7, 2024
Rishi Sunak, the prime minister, said on Thursday morning that Starmer’s decision showed his lack of consistency. “This is a serious moment,” he said. “This was the flagship plank of Labour’s economic policy and it now looks like he’s trying to wriggle out of it.”
Sunak added: “I think it demonstrates exactly what I’ve been saying, that he U-turns on major things, he can’t say what he would do differently because he doesn’t have a plan. And if you don’t have a plan, then you can’t deliver change for our country.”
Starmer was also under fire on Thursday morning from both environmentalists and the left of his party. Barry Gardiner, the former shadow energy secretary, told the BBC: “Politically, it’s strategically incompetent.”
Jess Ralston, an analyst at the Energy and Climate Intelligence Unit, said: “If we want warm homes, reasonable bills, and energy independence, investment is required. Switching to heat pumps will leave us less dependent on foreign gas imports, running our home heating instead on electricity from British renewables.
“There is a global economic race to build clean industries and Britain has to compete for green investment.”
