Ex-Bank of England economist ‘laments’ Labour U-turn on £28bn green pledge

A former chief economist at the Bank of England has expressed disappointment at Labour’s decision to axe its £28bn green investment pledge.

Andy Haldane, who is now the managing director of the Royal Society of Arts, told Sky’s Sophy Ridge that the original promise “led the world” in its ambition, and would have benefitted the country – both in achieving its net zero goals and stimulating growth.

But the decision by Sir Keir Starmer last week to bin the target showed how politicians are “scaling back our plans in the UK at the same time as other countries have stepped up their plans,” he said.

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The pledge to spend £28bn every year until 2030 on green investments, from new technologies to planting trees, was made by shadow chancellor Rachel Reeves during the Labour Party conference in 2021.

But she scaled it back to a target last summer, with Ms Reeves blaming high inflation and interest rates following former prime minister Liz Truss’s disastrous mini-budget.

Last week, Sir Keir confirmed Labour would scrap the headline figure entirely. He said: “Because of the damage the Tories have done, we can’t now do everything that we wanted to do” if he got the keys to Number 10.

However, he was criticised by some within his party – as well as opposition MPs – for U-turning on such a key policy.

Asked about Labour’s decision in an exclusive interview for the Politics Hub With Sophy Ridge – airing at 7pm tonight on Sky News – Mr Haldane said: “I think it’s a shame. I mean, I think back to when that green prosperity plan was first hatched. It was big, it was bold, ambitious. It led the world, actually, in terms of its scale.

“And we now have seen a number of other countries playing catch-up, putting forward their own plans.

“So I think the scaling back of our plans in the UK at the same time as other countries have stepped up their plans is unfortunate for two reasons.

“One, it slows our transition to net zero, which is really important. And two, we do need that investment. And the green prosperity plan was about that extra dose of investment to stimulate growth.

“So I rather lament the sort of paring back of those plans.”

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Mr Haldane appealed to whoever takes charge at the next election to show “a little more boldness about the economy and boldness around investment”.

He added: “I understand the fiscal constraints, but I also think the rules that we have boxed ourselves in on might not be as effective as they need to be to stimulate and support that investment.”

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The former economist said growth had to be the priority after the economy had “stood still” for two years.

“That has put huge pressure on households, huge pressure on public services, huge pressure on local governments,” he said.

“And the only way to break free from the constraints of that is by us growing our economy sustainably in a way that hasn’t happened for the past 24 months.”