Labour in needless tangle over headline policy that didn’t exist in detail at all
The incredible – needless – tangle that Labour got itself into over its £28bn green investment policy only truly became clear as leader Sir Keir Starmer and shadow chancellor Rachel Reeves were killing it.
The flagship policy had been that it borrows £28bn a year to turn Britain green.
But at 5pm on Thursday, Labour announced it would only be borrowing just a tenth of that sum – £2.6bn a year – an extraordinary switch.
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Yet in the same breath, Sir Keir and Ms Reeves say that they will continue to press ahead with all the projects they were talking about doing before this change, reducing the scale of spending on just one project while keeping all the rest in train.
Only over the course of briefings and interviews did the true scale of the underlying mess become clear.
All the agony and pain that Labour has been absorbing over this policy – a bruise the Tories have been mercilessly punching – was for a headline policy that, in reality, didn’t exist in detail at all.
As recently as Tuesday, Sir Keir recommitted to spending £28bn a year. Last month, he told Sky News the Tories were trying to “weaponise this issue, the £28bn… this is a fight I want to have”.
Yet even as he said this, it wasn’t true.
Since it was first announced two years ago, this policy has already been changed three times – to delay its introduction in full until the second half of the parliament, make it subject to fiscal rules, and to set this target inclusive of existing government decisions.
This meant that despite repeating the headline figure, Labour was never going to spend anything like £28bn.
Some £10bn of the £28bn had already been committed by this Tory government – so would not need further additional borrowing by a future Labour government.
Read More:
What is Labour’s £28bn green prosperity plan?
Sir Keir Starmer and Rachel Reeves
On top of that, Labour never worked out how to spend all the remaining £18bn a year. Around £6bn of that had no plan attached to it whatsoever, so that’s been slashed – a cost-free cut.
Shadow climate secretary Ed Miliband might have had designs for how to spend that remaining sum, but it never appears to have passed muster with the shadow Treasury team.
Yet it seems incredible that Labour was drawing fire, worrying and losing political capital and sleep over a borrowing pledge it did not know how to spend.
It had become a strange mirage of a policy – about signalling intent – yet Sir Keir appeared determined to continue fighting in public to defend it – until today. Now he will spend just £4.7bn, only £2.6bn of which is from borrowing.
Nobody would say this has been easy.
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But in killing it, Labour is setting a clear course that very tight fiscal discipline matters most, just at a point where big decisions are about to be made that will determine what Labour does in office.
Sir Keir and Ms Reeves made clear that the fiscal rules – artificial rules to curb borrowing – are more important than anything else, yet have not spelled them out in full.
Reeves – who seemed to be the architect of the U-turn – is pushing to copy the Tory fiscal rules, meaning an even tighter regime than the one implemented by Gordon Brown as chancellor in 1997.
This worries some, as it will hinder spending all the way through the next parliament if as many think growth remains anaemic.
It is one thing to scrap an artificial spending pledge which had become a political millstone.
But if Ms Reeves is about to bind the hands of Labour for the whole of the next parliament, with the blessing of Sir Keir, decisions like this could become more tricky and more frequent.
A group of US Senate Democrats known for supporting the crypto industry have said they would oppose a Republican-led stablecoin bill if it moves forward in its current form.
The move threatens to stall legislation that could establish the first US regulatory framework for stablecoins, according to a May 3 report from Politico.
Per the report, nine Senate Democrats said in a joint statement that the bill “still has numerous issues that must be addressed.” They warned they would not support a procedural vote to advance the legislation unless changes are made.
Among the signatories were Senators Ruben Gallego, Mark Warner, Lisa Blunt Rochester and Andy Kim — all of whom had previously backed the bill when it passed through the Senate Banking Committee in March.
The bill, introduced by Senator Bill Hagerty, is formally known as the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act.
Related: Fed’s Powell reasserts support for stablecoin legislation
Senate prepares to vote on stablecoin bill
The Senate is expected to begin floor consideration of the bill in the coming days, with the first vote potentially taking place next week.
The bill has been championed by the crypto industry as a landmark step toward regulatory clarity. However, the Democrats’ about-face reflects growing unease within the party.
Although revisions were made to the bill after its committee approval to address Democratic concerns, the lawmakers said the changes fell short. They called for stronger safeguards related to Anti-Money Laundering, national security, foreign issuers, and accountability measures for noncompliant actors.
The statement was also signed by Senators Raphael Warnock, Catherine Cortez Masto, Ben Ray Luján, John Hickenlooper and Adam Schiff.
Senator Kirsten Gillibrand and Senator Angela Alsobrooks were absent from the list, who co-sponsored the bill alongside Hagerty.
Despite their objections, the Democratic senators emphasized their commitment to shaping responsible crypto regulation. They reportedly said they “are eager to continue working with our colleagues to address these issues.”
Related: US banks are ‘free to begin supporting Bitcoin’
Crypto needs a stablecoin bill
On April 27, Caitlin Long, founder and CEO of Custodia Bank, criticized the US Federal Reserve for quietly maintaining a key anti-crypto policy that favors big-bank-issued stablecoins, despite relaxing crypto partnership rules for banks.
Long explained that while the Fed recently rescinded four prior crypto guidelines, a Jan. 27, 2023, statement was left intact in coordination with the Biden administration.
The guidance, according to Long, blocks banks from engaging directly with crypto assets and prohibits them from issuing stablecoins on permissionless blockchains.
However, Long noted that once a federal stablecoin bill becomes law, it could override the Fed’s stance. “Congress should hurry up,” she urged.
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Bitcoiners and United States government officials have criticized Arizona Governor Katie Hobbs’s decision to veto a bill that would have allowed the state to hold Bitcoin as part of its official reserves.
“This will age poorly,” Casa co-founder and cypherpunk Jameson Lopp said in a May 3 X post. Bitcoin (BTC) entrepreneur Anthony Pompliano said, “Imagine the ignorance of a politician to believe they can make investment decisions.”
Call for government officials who understand Bitcoin is “the future”
“If she can’t outperform Bitcoin, she must buy it,” Pompliano said. Crypto lawyer Andrew Gordon said, “We need more elected officials who understand that Bitcoin and crypto are the future.”
Wendy Rogers, who co-sponsored the bill with State Representative Jeff Weninger, also voiced her disappointment.
“Politicians don’t understand that Bitcoin doesn’t need Arizona. Arizona needs Bitcoin,” Rogers said.
On May 2, Hobbs vetoed the Arizona Strategic Bitcoin Reserve Act, which would have permitted Arizona to invest seized funds into Bitcoin and create a reserve managed by state officials. “Today, I vetoed Senate Bill 1025. The Arizona State Retirement System is one of the strongest in the nation because it makes sound and informed investments,” Hobbs said.
Rogers said she would refile the bill during her next session. Rogers also pointed out that Arizona’s state retirement system already holds stocks of Michael Saylor’s Strategy (MSTR).
“Which is basically a leveraged Bitcoin ETF. Arizona’s Strategic Bitcoin Reserve bill will be back. HODL,” Rogers said. The stock price of Strategy rose 32% in April, the most significant monthly gain since November 2024.
Related: US gov’t actions give clue about upcoming crypto regulation
However, well-known crypto skeptic Peter Schiff sided with Hobbs. “The government should not be making decisions to use public funds to speculate in cryptocurrencies,” Schiff said.
Arizona would have become the first US state to establish a Bitcoin Strategic Reserve if it had passed.
Arizona joins several other US states where similar efforts have failed. Similar proposals in Oklahoma, Montana, South Dakota and Wyoming have stalled or been withdrawn recently.
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