5 lessons from the demise of Labour’s Green Prosperity Plan  

After months of speculation, Keir Starmer has confirmed that Labour has dropped its commitment to spend £28 billion per year on its Green Prosperity Plan. Labour blamed the decision on the deterioration in the public finances under the Conservatives and attempted to fend off criticism by reaffirming other elements of its net zero policy, including the mission to decarbonise the power sector by 2030. What does it tell us? 

Labour’s political objective is to reduce the scope for Conservative attacks 

However politically painful, the demise of Labour’s £28 billion per year Green Prosperity Plan was inevitable and entirely consistent with its safety-first strategy. No policy – no matter how high profile – will come above Labour’s determination to present itself as economically competent, or at the cost of giving the Conservatives grounds to argue that a Labour government would result in higher borrowing, higher spending or higher taxes.  

The protracted unwinding will harden Labour’s caution as it stress tests other potential manifesto commitments 

No opposition can ever compete with the government in terms of policy resource. This is partly why Labour has avoided setting out significant policy detail. Labour frontbenchers have had to submit proposals for inclusion in Labour’s manifesto this week. The internal process of stress-testing and agreeing policies will follow. This will be disciplined and highly political. Labour will not repeat the mistake of the £28 billion saga.  

The Conservatives have Labour’s 2030 net zero power target in their sights  

The Conservatives are unlikely to let the issue drop and will now turn their attention to Labour’s mission to decarbonise the power sector by 2030. Labour insiders accept that this target will be extremely stretching. But they are less likely to resile from it, given the current government has a similar target for 2035, it is already couched more as an ambition, delivery depends primarily on the private sector rather than government, and they have relied on the 2030 pledge to assuage concerns about their commitment to net zero following the decision to the drop £28bn. 

Labour has ground to make up with business 

The u-turn has dented Labour’s credibility. Starmer and Reeves have made a big pitch to business that Labour would offer stability and clarity, in a break from recent years of Conservative government. Even after a last-minute ring-round to reassure business leaders and investors, these commitments will now be regarded slightly more sceptically. Politically, however, Starmer’s shifts in position have done little damage to Labour’s poll lead so far, and if it deprives the Conservatives of one key line of attack, Labour will conclude this is a price worth paying. 

A future Labour government is not going to be able to compete with the US or Europe on green subsidies 

The dilution of Labour’s Green Prosperity Plan leaves a big gap in Labour’s plans for growth. Given the significant pressures on the UK’s public finances, the only way to fill this will be with greater levels of private investment. Labour’s receptiveness to measures to leverage this investment, including supply side reforms, will increase – creating an opportunity for businesses that can provide concrete, well-evidenced proposals. 

This blog was written by James Kilmartin, who is a former adviser to Labour’s Shadow Cabinet on energy policy and a Deputy Director at the energy regulator Ofgem. For more information on how Flint's Labour Team can help you navigate any points discussed in this blog, contact us here.