What is Labour’s green prosperity plan and why has the £28bn spending pledge been axed?

Labour is scaling back its green prosperity plan by ditching its £28bn spending pledge.

But what is the policy, and how has Sir Keir Starmer ended up U-turning on the central investment promise?

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‘First green chancellor’

In 2021, the Labour Party descended on Brighton in its droves for its first in-person conference since the COVID pandemic struck, and for Sir Keir’s first chance to deliver his big leader’s speech in front of a live audience, rather than over Zoom.

But one of the major policy announcements at the event came from his shadow chancellor, Rachel Reeves, who promised to be “Britain’s first green chancellor” with a green prosperity plan.

She pledged that if her party got into power, it would spend an extra £28bn, through government borrowing, on investment in climate-tackling technologies such as offshore wind farms and battery development, as well as more traditional measures like planting trees and building flood defences.

Ms Reeves said the annual spend would be made every year until 2030 and would create thousands of jobs, as well as encourage more investment from the private sector and help “protect our planet for future generations”.

The ambitious pledge was widely welcomed by green campaigners and even some business leaders, but was quickly seized on by the Conservative Party as Labour being irresponsible with the economy.

‘Foolish’

Fast forward to the summer of 2023, and Ms Reeves announced Labour would be watering down its £28bn pledge.

Rather than providing a guarantee of borrowing and spending the large sum from its first year in Downing Street, it would now become a target to work towards.

The shadow chancellor blamed the fallout from Liz Truss’s short tenure in Number 10 – and her disastrous mini-budget – which took its toll on the public finances.

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She accused the Tories of “crashing the economy” as interest rates and inflation rocketed to historic highs, saying “economic stability, financial stability, always has to come first”.

But she denied it was an outright U-turn on the key policy, promising spending on green pledges would still go ahead.

“The truth is I didn’t foresee what the Conservatives would do to our economy – maybe that was foolish of me,” said Ms Reeves.

Another U-turn

As we approached 2024, the Conservatives seized on the policy and attacked Labour with it – saying it highlighted the party’s lack of fiscal responsibility and added it to a list of U-turns made by Sir Keir.

But a row also erupted within Labour itself, with some calling for the £28bn to be spent in full and others wanting the pledge to be dropped altogether as an election drew nearer.

As we entered the new year, those internal squabbles had made it on to the front pages, and shadow ministers were struggling on the airwaves to make clear whether the policy was still in place – or would remain so when voters headed to the polls.

Ms Reeves herself refused to commit to the spending target 10 times in an interview with Sky News’ political editor Beth Rigby last week.

Yet when shadow minister Sir Chris Bryant appeared on Sky News Breakfast days later, he insisted “we are doing it” and “it will be £28bn”.

Now, Sir Keir has confirmed the axing of the figure, telling reporters it was because the Tories had “done terrible damage to our economy” and were being “reckless” with plans to “max out on the government credit card” ahead of the next election.

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

But 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.