Rachel Reeves backtracks over Labour’s £28bn climate plan

Rachel Reeves has just rowed back on a flagship Labour policy. Speaking on Radio 4’s Today programme, the shadow chancellor watered down her earlier pledge to spend £28 billion a year on climate investment ‘for each and every year of this decade’ – Labour’s version of Joe Biden’s Inflation Reduction Act. Explaining her decision to delay the spending, Reeves insisted that a Labour government would still hit the figure eventually. Reeves promised to ‘ramp up’ the investment over time to reach a total of £28 billion a year in the second half of the parliament at the latest.

So, what’s behind the change of approach? It comes after the policy received heavy criticism publicly from the Tories and privately from figures in her own party. Ministers have gone on the offensive over the policy, arguing that this level of borrowing would mean mortgage rates rising even higher.

Sunak has personally criticised Labour for their green agenda, suggesting the party has a ‘completely bizarre policy’ following the news that Starmer plans to put an end to new licences for drilling for gas and oil in the North Sea.

This has been getting to Labour with aides concerned the policy was becoming a distraction that might make voters doubt whether the party could be trusted with the economy. In a sign that Reeves is trying to mitigate such concerns, she conceded that the plan could have spooked the markets in its original form – arguing ‘no plan can be built that’s not on the rock of fiscal and economic stability’. Reeves tried to blame this on the Tories – pointing to Liz Truss’s mini-budget as a factor in the worsening economic situation since she first announced the pledge in 2021.

Internally this will be seen as a blow to Ed Miliband, the shadow climate and net zero secretary, who has been credited as a driving force in the green prosperity plan. He has taken to social media this morning to insist that the £28 billion investment will happen:

‘Some people don’t want Britain to borrow to invest in the green economy. They want us to back down. But Keir, Rachel and I will never let that happen. Britain needs this £28 billion a year plan and that is what we are committed to’.

The problem for Miliband is that Reeves’s decision to concede problems with the policy – and scale it back – will only fuel talk that the policy could be watered down even further by the time of the next election.