Green energy: Labour’s Rachel Reeves backtracks on £28 billion a year investment plan

Labour has abandoned a commitment to spend £28 billion every year on green industries if it wins the next general election - in a significant change to its main economic strategy.

Shadow Chancellor Rachel Reeves said the party now planned to get to that figure by the second half of the next Parliament. The government called it an “embarrassing and screeching U-turn”.

What was the plan?

At the Labour party conference in 2021, Reeves claimed she wanted to be Britain’s first green Chancellor - and committed to spending £28 billion in Britain’s “green transition for each and every year of this decade”.

She said it would create “good jobs in the green industries of the future” such as giga-factories for electric car batteries and offshore wind - “protecting and strengthening our everyday economy”.

But the policy has come under renewed scrutiny in recent days. As part of Labour’s green strategy, the party’s leader Sir Keir Starmer intends to ban all new oil and gas licences in the North Sea. The move was strongly criticised by the leader of the GMB union - and at its conference in Brighton on Tuesday (6 June) one member told Starmer the proposals could “decimate” communities in Scotland reliant on North Sea oil for their livelihoods.

The Conservatives have also accused Labour of letting the environmental protest group Just Stop Oil influence its policies - because a major donor to the party, Dale Vince, is one of the campaigners’ key financial backers. Both Labour and Vince deny this.

What’s changed?

In an interview on BBC Radio 4’s Today programme this morning (9 June), Reeves said she now couldn’t commit to £28 billion of investment for every year of the next Parliament because she “didn’t foresee what the Conservatives would do to our economy” and she wasn’t prepared to borrow as much because of the impact it might have on the national debt.

Challenged on whether her policies were now less radical, she insisted Labour would “ramp up and get to the investment that’s needed” without compromising economic stability. “I will never be reckless with the public finances”, she added.

On Twitter, Shadow Energy Secretary Ed Miliband insisted he and Reeves were still on the same page.

What has the government said?

Energy Secretary Grant Shapps said Reeves’ announcement represented an “embarrassing and screeching U-turn”. He accused Starmer of “blowing up” Labour’s financial strategy and “surrendering to eco-anarchists Just Stop Oil” - meaning “extinction for our economy”.

Earlier, ministers faced criticism of their own from the Liberal Democrats for announcing plans to end a windfall tax on oil and gas profits if prices continued to fall.