Labour ditches £28bn green investment pledge

Labour is ditching its policy of spending £28bn a year on its green investment plan in a major U-turn.

An official announcement will be made on Thursday.

Sources insist the party's Green Prosperity Plan, which includes creating a publicly-owned green power company, is not being dropped altogether.

But Labour will no longer commit to investing £28bn a year in green energy projects if it wins power.

Labour's position on the policy in recent weeks has been increasingly muddled, with some senior figures repeatedly refusing to use the £28bn figure when pressed in interviews, while others, including party leader Sir Keir Starmer, continued to do so.

It is expected Labour will argue that they have to focus on being seen as responsible stewards of the economy, rather than committing to a spending pledge that opponents regard as reckless.

The plan to spend £28bn a year on green energy projects, like offshore wind farms and developing electric vehicles, was first announced by shadow chancellor Rachel Reeves in September 2021.

That pledge was watered down last June, with the £28bn target adjusted so that a Labour government would meet it about halfway through its first term rather than in its first year.

At the time Ms Reeves said the party needed to be "responsible" with the public finances, given the poor economic backdrop and rising cost of borrowing.

Since then there have been growing questions about whether the policy could be scaled back further.

In an interview last month, Sir Keir described the £28bn figure as "a confident ambition", which was subject to the party's fiscal rules.

These include that debt has to be falling as a share of the size of the economy in five years.

However, unlike some of his shadow ministers, he has continued to use the figure as recently as this week.

The prime minister has repeatedly attacked Sir Keir over the policy, suggesting it will lead to higher taxes.

Privately Labour figures acknowledge a long-standing "brand weakness", as one source put it, when it comes to economic credibility.

So the decision has been taken to focus on attempting to reassure voters they can be trusted with the economy, rather than keeping the £28bn promise.

It comes on the day the Conservatives claimed, via Treasury analysis, that part of the plan, to insulate homes, would cost double what Labour had claimed it would. Labour has rejected the analysis as "bogus".

Sir Keir had set a deadline of Thursday to finalise his party's draft general election manifesto.