Placing a speculative price tag on Labour party spending plans is, of course, a time-honoured pre-election manoeuvre by Conservative governments. In January 1992, as John Major seeded the ground for what turned out to be a fourth successive Tory victory later that year, voters were warned of a “tax bombshell” costing the average taxpayer £1,000. The calculations were spurious but politically damaging.
A year or so away from the next election, the front-page headline in one newspaper on Tuesday read: “Families face £1,000 a year bill for Labour eco plans”. Ministers are warning that the cost of the green strategy outlined by the shadow chancellor, Rachel Reeves, would spook markets and drive up mortgage rates.
One can marvel at the chutzpah while deploring the cynicism. Aware that just these consequences followed Liz Truss’s disastrous experiment in free-market fundamentalism – a memory etched on the public mind – the government hopes to weaponise that experience against Labour’s plans to use the state to drive the transition to net zero. It has identified Labour’s £28bn “green prosperity plan” as a prime zone of vulnerability, within which it can target opposition spending pledges this time round.
There will be much more of this to come. But Labour has winning economic as well as ethical arguments on its side, and needs to make them with confidence. The shadow chancellor’s proposals to borrow to subsidise windfarms (onshore as well as offshore), insulate homes, encourage the battery manufacture necessary for a viable car industry, and invest in nuclear power all go with, rather than against, the grain of market sentiment.
Britain is already lagging badly behind its European neighbours and the United States when it comes to public investment in the green transition. The government’s refusal to contemplate an industrial strategy worthy of the name has dismayed leading businesses. The Climate Change Committee (CCC), the independent advisory body, has become steadily more withering in its criticisms of Whitehall drift. In the absence of a more proactive state to shape, collaborate and intervene in markets, the price of passivity will be paid in terms of lost jobs, growth and opportunities in a new economic era.
The markets know this, and so do the unions. As a CCC report published last month emphasised, a crucial dimension of intervention must be to minimise the disruption caused to those at the sharp end. The gradual transition away from fossil fuel production must be accompanied by a focus on transferable skills that can be deployed in carbon capture storage and a thriving hydrogen sector. The general secretary of the GMB, Gary Smith, was right to point out at the weekend that good jobs in renewable energy had not yet materialised on a big enough scale to inspire confidence. Their creation requires a committed government prepared to invest to get ahead of the times (or rather catch up with them), and prepare the ground, rather than the chronically short-termist one currently in office.
Speaking to the GMB conference in Brighton on Tuesday, Sir Keir Starmer promised that a Labour government would never allow “an industry [to come] to an end and nobody had planned for the future”. To deliver on that pledge, and on the broader green transition, Labour must make its case and stick to the principles of its plan.
