It’s official: Labour is ditching its £28 billion a year green pledge.
After months of speculation, opposition leader Sir Keir Starmer has confirmed that the party will no longer commit to spending £28 billion a year on green initiatives.
Instead, policies outlined in the renewed plan represent £23.7 billion of investment over the course of the next Parliament, which equates to less than £5 billion a year.
However, the party has doubled down on key areas of its Green Prosperity Plan, including the formation of a publicly-owned clean energy investment vehicle, decarbonisation of the grid by 2030 and ringfenced investment for local power projects.
Just under half of the total investment (£10.8 billion) is set to be raised through a windfall tax on oil and gas companies, with the remaining £12.9 billion due to come from borrowing.
Specific policies committed to within the Green Prosperity Plan include:
- £8.3 billion for the creation of Great British Energy, which will be headquartered in Scotland.
- £3.3 billion of GB Energy’s £8.3 billion will go towards a local power plan designed to “put up wind turbines, solar panels, and other forms of low carbon power to cut bills”.
- A £7.3 billion National Wealth Fund to fund industrial activities. This includes £2.5 billion for steel; £1.8 billion to upgrade ports so they are “renewable-ready”; £1.5 billion for the creation of gigafactories; £1 billion for industrial hubs; and £500 million for green hydrogen manufacturing.
- £6.6 billion for its Warm Homes Plan to upgrade 5 million homes to EPC standard C.
- £500 million per year, starting from the 2026-27 Contract for Difference auction round, to provide capital grants to incentivise companies developing clean technologies like offshore wind, onshore wind, solar, hydrogen, and carbon capture and storage, to target their investment particularly at the regions that most need it.
Labour first pledged to spend £28 billion a year on green energy projects in September 2021. This pledge was watered down in June 2023, with Labour saying it would hit the £28 billion a year target in the second half of its term in office.
The U-turn on the funding pledge comes after civil servants poked holes in parts of Labour’s plan.
Analysis carried out by the Department for Energy Security and Net Zero (DESNZ) – and published yesterday (7 February) – concludes that Labour’s plan to upgrade the country’s 16 million energy inefficient homes would cost up to £15 billion a year, significantly more than of £6 billion annual budget the opposition party had previously said it would spend.
Labour had previously pledged to upgrade every home in the country to EPC standard C within a decade of being elected. It previously estimated that this would cost a maximum of £6 billion a year.
However, DESNZ’s own analysis of the scheme suggests that upgrading the country’s entire inefficient housing stock would cost between £12 billion and £15 billion.
The party has rubbished the analysis as “ludicrous” and “bogus” with ECIU energy analyst Jess Ralston claiming that they are “politically-motivated figures”.
However, the latest iteration of Labour’s Green Prosperity Plan sets aside just £6.6 billion for the scheme during the entirety of the next Parliament.
The Plan adds: “This is a slower initial roll out than we had hoped to deliver when we originally planned this policy, due to the fiscal situation. On the Tories’ watch, insulation rates have crashed 90% – one of the reasons the UK had one of the most acute energy price crises in Western Europe.”
It continues: “This programme will go street by street, installing energy saving measures such as loft insulation and low-carbon heating, saving families on low-incomes hundreds of pounds per year, slashing fuel poverty, and getting Britain back on track to meeting our climate targets.”
Despite rowing back on funding, Labour said its aim is still for every home to be upgraded to EPC C by 2035. However, it estimates that the initial £6.6 billion budget will only cover the upgrades of 5 million homes.
In response, Greenpeace UK’s co-executive director Areeba Hamid, said: “Starmer’s caved like a house of cards in the wind. Labour’s diluted prosperity plan has gone from £28 billion a year extra in vital green investment to less than £5 billion. Yet climate action, including borrowing to invest in warmer homes, remains hugely popular among voters. It would be ironic indeed if Labour’s attempt to make their manifesto ‘bombproof’ from Tory attack ended up just bombing on the doorstep instead.”
He added: “As well as scaling the investment back by around 80%, just a fraction will be spent on insulating homes, and not even a penny will be spent on public transport. These are two of the sectors in greatest need of new government investment to seize the opportunities of green growth, level up the country and lower bills.
“This country is broken. We need bold, visionary leadership that will lower bills, create millions of jobs, increase our energy security, and tackle the existential threat of climate change. The British public and businesses are crying out for a green industrial strategy fit for the 21st century, not a hollowed out plan with an empty wallet.”