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Labour has finally confirmed it is ditching a flagship pledge to spend £28bn-a-year on green investments if it wins the next general election.

The party says it will now spend just £23.7bn on environmental schemes over the course of its first term in office – equivalent to just under £5bn a year.

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However, Labour insists its commitment to becoming a clean superpower by 2030 remains unchanged and the reduced funding will still meet existing promises made under the original green prosperity plan.

These include:

• The launch of Great British Energy – a publicly-owned green energy company

• A National Wealth Fund to invest in British industries such as electric vehicle production

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• A warm homes plan to insulate millions of homes over a decade

• A British Jobs Bonus to provide capital grants to incentivise companies developing clean technologies to invest in regional areas

• Reforming the planning system to accelerate energy projects like onshore windfarms

• Making the UK the green finance capital of the world with mandatory 1.5C-aligned transition plans for major companies and financial institutions.

It is understood that when the party had announced the £28bn figure in the autumn of 2021, it had not come up with ways to spend that sum.

Labour leader Sir Keir Starmer said that while existing commitments will still be met, “what won’t now happen is that we won’t make further or new investment decisions. And that means that we won’t reach the £28bn envisaged”.

He said the figure was being “stood down” because of the “damage” the Tories had done to the economy – citing the Liz Truss mini-budget and government plans to “max out the credit card” – effectively use up all fiscal headroom ahead of the next election.

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“I have to anticipate the circumstances as they are now, not as I’d wish them to be,” he told broadcasters as he outlined his decision.

While existing commitments are being kept, the party’s Warm Homes Plan is set to be a casualty of the climbdown.

This was going to cost £6bn a year but will now cost £6.6bn over five years and will “unfortunately have to be carried out a little bit more slowly”, Sir Keir said.

While the aim is still to upgrade all homes below an EPC rating of C by 2035, the new timetable will see just five million properties insulated in the first five years of a Labour government.

The move has angered green campaigners, but Sir Keir insisted: “There is nothing we have said we will do that we are now saying we won’t do.

“I don’t want to have a row about the size of a cheque. I want to have a row about the outcomes.”

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Reeves refuses to commit to green pledge

U-turn follows months of speculation

The spending U-turn comes after months of speculation about the policy – which aims to kickstart the UK’s transition to a low-carbon economy, meet climate targets and reduce energy bills.

The new plan will be funded half by borrowing, and half by re-purposing and extending the government’s windfall tax on the profits of oil and gas giants.

This currently stands at 75%, but Labour says it will raise it to 78%, the same rate as Norway, while closing what it calls a “loophole” that gives companies tax breaks if they invest in Britain.

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Previously, the party had pledged to borrow the whole sum to fund the investments, but this has repeatedly been used by the Conservatives to attack Labour’s fiscal credibility in the run up to the election.

The departure from the £28bn pledge is still expected to be met with ridicule by the Tories, who have seized on what they describe as Sir Keir’s “flip-flopping” on major policies as a key attack line.

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Prime Minister Rishi Sunak said the Labour leader “doesn’t have a plan for Britain”.

He posted on X: “His pledge has a £28bn price tag and now he’s admitted there’s no plan to pay for it, which means going back to square one with higher taxes for working people.”

Sir Keir ‘caving like a house of cards in the wind’

Climate campaigners have also attacked the move, with Greenpeace UK’s co-executive director Areeba Hami accusing Sir Keir of having “caved like a house of cards in the wind”.

“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,” she said.

Labour had already watered down the original plan by saying last year that the spending target would likely be met in the second half of a first parliament, rather than immediately, if the party wins the next election.

The party has since insisted the pledge is subject to its fiscal rules, which include getting debt falling as a percentage of GDP.

Confusion over the future of the policy has grown in recent weeks as some senior figures, including shadow chancellor Rachel Reeves, refused to refer to the £28bn-a-year figure, while party leader Sir Keir continued to do so as recently as Tuesday.

The pledge to spend £28bn-a-year on environmental schemes was first made during its party conference in 2021, with Ms Reeves promising to be “Britain’s first green chancellor” if the party wins the next election.

She stood by that promise as she defended the latest row-back, saying: “These policies will transform our economy in ways that are incredibly exciting and can boost growth and I am determined to do that.”

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Why Boris’s best mate is off to Reform

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Why Boris's best mate is off to Reform

👉Listen to Politics at Sam and Anne’s on your podcast app👈       

Former Conservative chairman and friend of Boris Johnson – Sir Jake Berry – is defecting to Reform UK, causing more problems for Tory leader Kemi Badenoch.

On today’s episode, Sky News’ Sam Coates and Politico’s Anne McElvoy discuss if his defection will divide parts of Reform policy.

Elsewhere, the Anglo-French summit gets under way, with Prime Minister Sir Keir Starmer hoping to announce a migration deal with French President Emmanuel Macron to deter small boat crossings.

Plus, chatter around Whitehall that No10 are considering a pre-summer reshuffle, but will it have any value?

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Australia to test CBDCs, stablecoins in next stage of crypto play

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Australia to test CBDCs, stablecoins in next stage of crypto play

Australia to test CBDCs, stablecoins in next stage of crypto play

The trial is part of Project Acacia, an initiative from the RBA exploring how digital money and tokenization could support financial markets in Australia.

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Starmer and Macron agree need for ‘new deterrent’ to stop small boat crossings

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Starmer and Macron agree need for 'new deterrent' to stop small boat crossings

Sir Keir Starmer and Emmanuel Macron have agreed the need for a “new deterrent” to deter small boats crossings in the Channel, Downing Street has said.

The prime minister met Mr Macron this afternoon as part of the French president’s state visit to the UK, which began on Tuesday.

High up the agenda for the two leaders is the need to tackle small boat crossings in the Channel, which Mr Macron said yesterday was a “burden” for both the UK and France.

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The small boats crisis is a pressing issue for the prime minister, given that more than 20,000 migrants crossed the English Channel to the UK in the first six months of this year – a rise of almost 50% on the number crossing in 2024.

Sir Keir is hoping he can reach a deal for a one-in one-out return treaty with France, ahead of the UK-France summit on Thursday, which will involve ministerial teams from both nations.

The deal would see those crossing the Channel illegally sent back to France in exchange for Britain taking in any asylum seeker with a family connection in the UK.

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However, it is understood the deal is still in the balance, with some EU countries unhappy about France and the UK agreeing on a bilateral deal.

French newspaper Le Monde reports that up to 50 small boat migrants could be sent back to France each week, starting from August, as part of an agreement between Sir Keir and Mr Macron.

A statement from Downing Street said: “The prime minister met the French President Emmanuel Macron in Downing Street this afternoon.

“They reflected on the state visit of the president so far, agreeing that it had been an important representation of the deep ties between our two countries.

“Moving on to discuss joint working, they shared their desire to deepen our partnership further – from joint leadership in support of Ukraine to strengthening our defence collaboration and increasing bilateral trade and investment.”

It added: “The leaders agreed tackling the threat of irregular migration and small boat crossings is a shared priority that requires shared solutions.

“The prime minister spoke of his government’s toughening of the system in the past year to ensure rules are respected and enforced, including a massive surge in illegal working arrests to end the false promise of jobs that are used to sell spaces on boats.

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“The two leaders agreed on the need to go further and make progress on new and innovative solutions, including a new deterrent to break the business model of these gangs.”

Chris Philp, the shadow home secretary, seized on the statement to criticise Labour for scrapping the Conservatives’ Rwanda plan, which the Tories claim would have sent asylum seekers “entering the UK illegally” to Rwanda.

He said in an online post: “We had a deterrent ready to go, where every single illegal immigrant arriving over the Channel would be sent to Rwanda.

“But Starmer cancelled this before it had a chance to start.

“Now, a year later, he’s realised he made a massive mistake. That’s why numbers have surged and this year so far has been the worst in history for illegal channel crossings.

“Starmer is weak and incompetent and he’s lost control of our borders.”

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