Sir Keir Starmer promised that his green prosperity plan would be a manifesto commitment ahead of the next election. Labour’s proposal was to be the centrepiece of its economic offer to generate growth, create well-paid, secure jobs and reduce greenhouse gas emissions. It was striking, exciting and popular. In mid-January, the party leader told the BBC’s Laura Kuenssberg that spending £28bn by the end of the next parliament would make the UK secure in energy and lower household bills.
If a week is a long time in politics, then a fortnight might be called an era. Sir Keir’s plan appears to have gone up in smoke. If so, that’s bad news for the environment and the economy. Inadequate public and private spending is holding back growth while there is a crying need for investment to decarbonise the UK. Other countries are already eyeing up the opportunities. New green industries could be worth $10tn to the global economy by 2050. Britain risks being left behind.
At the turn of the year, on Sky News, Sir Keir said that “if the [Tories] want that fight on borrow to invest, I’m absolutely up for that”. To his credit, the Labour leader has turned up at the crease to face bouncers delivered by the Conservatives. But he’s cut a lonely figure on the field. The gap between the Labour leader and his Treasury team was laid bare on Friday by Darren Jones, whom Sir Keir appointed to control the party’s public spending. Mr Jones conspicuously didn’t mention the £28bn figure. He said the party’s green policy was not going to drive economic growth, but instead would be dependent on it.
This was not just a change of policy, but a change of thinking. Green measures, on this argument, would be funded not by borrowing, but by an expanding financial services sector. This fits with shadow chancellor Rachel Reeve’s embrace of the City. This week she ruled out wealth and windfall taxes and said there would be no Labour cap on bankers’ bonuses. By championing a light touch regulatory regime for the Square Mile and refusing to raise benefits, Ms Reeves risks stoking a banking bubble while poverty rates are rising.
Labour won’t get Britain growing by sticking to failed Tory policies. Rather, dropping the £28bn pledge would irritate the party base and prove Tory attacks right. It would also erase a key dividing line. The Tories would continue to assail Labour, asking where the money will come from to pay for its £6bn commitment to insulate 19m homes. The government wants to contrast its tax cuts in a forthcoming budget with specious claims that Labour spending will mean higher taxes. Ministers won’t desist because Sir Keir has conceded the headline policy.
The opposition’s fiscal rules are self-imposed restraints meant to suggest Labour is responsible. But what is more irresponsible than ditching a green industrial plan in the middle of a climate emergency? Labour will look pusillanimous if it simply accepts the Tory argument that its spending is unaffordable. Public investment can boost the economy by more than it increases public debt. Labour will not finalise its manifesto until next Friday. Sir Keir has a bold plan which requires the radical in him to triumph over the calculating politician. That demands courage. But voters want to know that Labour will change the country for the better rather than just muddling on.
