February 27, 2024

Senior Labour officials are to hold crunch meetings on the future of the party’s pledge to spend £28bn a year on green investment, amid reports Keir Starmer is preparing to ditch the entire plan.

Party sources said on Friday that officials would meet in the coming days to discuss the green prosperity plan, which would see a Labour government spend £28bn on environmental schemes each year by the second half of the next parliament.

A Labour spokesperson said Starmer remained committed to the plan after the Sun reported he had decided to drop it altogether. Sources have told the Guardian that the Labour leadership is still considering abandoning it if they decide it is likely to damage them in an election campaign.

One said: “There are discussions going on about this at official and political levels. There are more meetings to come this week but a final decision has not been made yet.”

A spokesperson for Starmer said: “We are committed to Labour’s green prosperity plan to drive growth and create jobs, including our plan to ramp up to £28bn of annual investment in the second half of the parliament, subject to our fiscal rules.”

Rachel Reeves first announced the spending plans in 2021, saying it would be funded by extra borrowing and would make her the country’s “first green chancellor”.

But earlier this year the shadow chancellor scaled it back, saying the party would hit its target only in the second half of the parliament – and only if it could still show debt was falling as a proportion of economic output in five years’ time.

Current projections would give the party only an additional £13bn to spend on the green plan in five years’ time, although Labour officials said their plans to stimulate economic growth would give them more money to play with than currently forecast.

Starmer has spent much of the past few weeks insisting he remains committed to the plan and does not intend to scale it back further.

Earlier this month he told Sky News he was willing to have a public fight with the Conservatives over the idea of borrowing money to invest in the economy.

Last week he told the BBC: “I am very pleased to make the case for investment in the future, and that’s why we will invest £28bn in total by the second half to the parliament, subject of course to what the government’s already assigned to put in on green prosperity, and of course within our fiscal rules.”

On Tuesday the Labour leader met union leaders, where he repeated his insistence that he would not drop the green scheme. One person briefed on the meeting said union chiefs had been impressed by the strength of his commitment to the scheme.

Many in the party are worried about what will happen at the next budget, when Jeremy Hunt is expected to announce more tax cuts that will eat further into the fiscal headroom. Some Labour MPs believe Starmer is preparing to drop the policy after the budget and blame it on the government.

And they believe that the Conservatives are preparing to run an election campaign heavily featuring Labour’s green policies and arguing that they will mean tax rises in the future.

One Labour MP said: “Starmer’s office thinks there’s an attack coming – Labour won’t cut your taxes and will spend your money on windmills.”

Labour MPs will meet on Monday, where backbenchers will press the party leadership for more concrete answers on the future of the plan.

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