Keir Starmer has downgraded his target of spending £28bn a year on green investment schemes in the next parliament to an “ambition”, in the latest sign of the Labour leader backing away from his flagship green policy.
Starmer said on Friday he wanted to reach the £28bn figure by the second half of the parliament if Labour won the next election, but could not guarantee that he would be able to do so.
His comments are the clearest admission yet that Labour is willing to spend less if it means keeping its promise to get debt falling as a proportion of economic output.
Speaking during a listener phone-in on LBC radio, Starmer said: “[The £28bn plan] is subject to our fiscal rules, it’s an ambition. One of the rules is that debt has to be falling as a percentage of GDP.
“I’m confident. We’re talking about where we might be in 2027. So being a careful and cautious former lawyer, I know that the world can change. Four or five years ago, we didn’t know we were going to hit Covid or Ukraine. I’m confident that we can get to that figure [but] in the end, the fiscal rule comes first.”
Asked by LBC’s Nick Ferrari whether the figure was a pledge or a “gold-plated ambition”, Starmer said: “It’s a confident ambition.”
The Labour leader has put green investment at the heart of his policy pitch to voters, promising to decarbonise Britain’s power sector by 2030. Rachel Reeves, the shadow chancellor, announced in 2021 that this would be achieved in part by the government spending £28bn a year until 2030 on technologies such as battery power and electric vehicles.
In recent months, however, Reeves and Starmer have dialled down the ambition of the plan. Reeves announced last year a Labour government would only hit the £28bn target in the second half of a parliament, and would borrow less to avoid missing its fiscal targets.
Starmer said on Thursday that the party would not borrow the full amount of money if it meant missing the debt target, but appeared to leave open the possibility he would tax more or find the money from other parts of government spending.
His comments on Friday appear to confirm, however, that he is happy to miss the spending target to protect the debt rule.
Labour has said it will take into account the £8bn the government has already pledged towards green schemes, leaving it to find an extra £20bn by the end of the parliament.
Economists estimate that at the end of the current five-year period there is room to borrow an extra £13bn while still having debt falling as a proportion of GDP. Labour insists that once it gets into government the “headroom” will grow because of its pro-growth policies. If that does not happen, however, it will mean the party only has enough space to fund about two-thirds of its plan.
Party officials are locked in talks over how they should present the reshaped green investment programme to voters as Starmer embarks on a national tour of British towns talking to voters.
Some believe he should be more explicit about dropping the £28bn figure altogether, while others say doing so would leave him open to accusations that his promises cannot be trusted.
