A think tank has branded Labour’s pledge to spend £28 billion a year on green policies as “fantasy” plans, while comments from the shadow chancellor have caused confusion over the exact timeline of the pledge.
Labour’s original “climate investment pledge,” announced by shadow chancellor Rachel Reeves during Labour’s autumn conference, claimed that Labour would oversee investment of £28 billion on green proposals each year, every year until 2030.
However, she claimed during an interview with the BBC last weekend that it may take until the “second half of the first Parliament,” to reach the goal of spending £28 billion.
Labour ‘Required to Make Hard Choices’
Andy Mayer, energy analyst at the Institute of Economic Affairs think tank, told The Epoch Times: “Labour will be required to make hard choices about public spending if they form the next government. The alternative—spending more without tax rises—would just mean higher borrowing costs paid for generations to come. If Labour spends more on fantasy green industry plans, there will be further impacts on prices.”Mr. Mayer added: “Competition for the raw materials and components in pylons, wires, batteries, wind turbines, nuclear plants, and solar panels is global. Western governments throwing money at net zero could fuel price rises for many basic goods. We’re already seeing that in the near doubling in the offered strike prices for the next round of renewable generation, a slowdown in the growth of the electric car market, and further delays to nuclear delivery.”
On Nov. 25, Labour had to refute claims that Sir Keir Starmer intended to dilute the party’s commitment to allocate the annual expenditure to green initiatives. Media reports suggested a potential scaling back of the plan as Labour emphasises adherence to fiscal rules.
A party spokesperson dismissed reports of Sir Keir seeking a dilution, asserting that the position on the green prosperity plan remains unchanged.
Misspending May ‘Damage Growth’
Mr. Mayer also warned that if Western governments keep spending on green policies at the same rate, “misallocation” of capital may “damage growth.”He said: “Longer term markets and supply chains will adjust, but the misallocation of capital to dodgy eco-solutions, zombie firms, and rent seeking corporate interest groups will damage growth. Meanwhile, the cost will fall on our taxes or energy bills, raising the wider cost of everything, and damaging UK competitiveness.
“Labour would be better off setting a UK carbon price, competitively, not excessively, and letting entrepreneurs compete to deliver the most efficient decarbonisation solutions first. If they must spend money to support green industries, doing it through competitions for early-stage R&D funds, not subsidising commercial delivery, is the wiser path.”
At the heart of Labour’s green plan lies the creation of GB Energy, a state-owned company dedicated to substantial investments in renewable energy.
It also plans on creating a National Wealth Fund with £1.8 billion allocated for port upgrades, £1 billion for industrial decarbonisation, £2 billion for a so-called Battery Power Fund, £3 billion for transitioning the steel industry, and £500 million for green hydrogen manufacturing.
Additionally its Warm Homes Plan encompasses a £6 billion budget dedicated to green-friendly upgrades to 19 million homes.
