‘Arbitrary’ or a major retreat? Green economy leaders react to Labour U-turn on £28bn pledge

Green economy leaders have weighed in on the Labour Party's decision to water down its £28bn-a-year sustainable public finance commitment, with some slamming the decision and others arguing it is prudent for the private sector to do the heavy lifting. Members can read our reaction round-up here.

‘Arbitrary’ or a major retreat? Green economy leaders react to Labour U-turn on £28bn pledge

More than half of UK adults believe that the Labour's decision to ditch the green investment plan is misguided.

After weeks of speculation, the Labour Party confirmed on Thursday evening (8 February) that it will not include a commitment to £28bn of public spending on low-carbon industries and nature in its manifesto for the next general election.

Under new proposals from the Party, spending would be cut to £15bn in total. The Guardian reports that only a third of this would be considered new money.

Party leader Kier Starmer said he has proposed the change because it would not be feasilble to deliver the commitment in full given the UK’s current economic situation. He laid the blame for current challenges partly at the feet of Prime Minister Rishi Sunak and his Conservative predecessors.

Some have argued that this approach is short-sighted, given that the climate and nature crises are not going away and present a significant long-term risk to the UK’s economy. Another criticism has been how this move will impact the UK’s international competitiveness in cleantech, after the likes of the USA, China and EU scaled up green economy funding significantly in recent times.

Others have stated that the price tag is arbitrary and that Labour can take a different approach, leveraging the bulk of the necessary funding from private sources. Here, edie rounds up the reaction from the UK’s green economy leaders.

Paul McNamee, director, Labour Climate and Environment Forum:

“It’s extremely disappointing to see a row back on the [funding pledge] from Labour in the run-up to an election. Despite this the Green Prosperity plan still has the potential to be an ambitious piece of policy, to ensure energy independence, stable bills and new jobs across the country.

“Selling this to the country as a climate policy rather than an industrial strategy designed to address the UK’s long-term issues was a misstep. Labour need to focus on the benefits that this plan will bring – jobs in the areas that need them most, lower energy bills, a more energy-independent nation – to bring workers and communities with them, showcasing what green prosperity looks like in practice.

“Growth is what the country desperately needs, and the focus can now turn to the full ambition of labour to not only protect the environment and prevent further climate change, but also to in the process create thousands of new jobs, expansive new green industry, and clean, British energy for families up and down the country.”

Champa Patel, executive director of governments and policy, The Climate Group:

“Backtracking on climate is the last thing we need at a time when climate impacts are intensifying, the UK’s biodiversity is in freefall and the current government is consistently failing to meet even the most basic of targets.

“Constant political point-scoring is setting us back when research consistently shows people want a greener, energy-secure future for them and their children. Labour needs to listen and deliver an alternative strong, climate-focused strategy.”

Professor Lorenzo Fioramonti, director, University of Surrey’s Institute for Sustainability:

“Politicians on both the right and left of the political spectrum are so shortsighted that one is pushed to believe that the solution to the environmental and social crisis will not come from politics.

“Policymakers argue that they can’t commit funding to the green transition because they must be economically responsible. This is a ludicrous statement: climate change is the most significant threat to economic stability that the world has ever faced. Not understanding this is tantamount to total economic recklessness.”

Sebastian Peck, managing partner, KOMPAS Venture Capital:

Labour’s rollback of its £28bn green investment plan is not just detrimental to the climate, but it doesn’t make financial sense either.

£28bn sounds like a large figure, but it’s just 2.3% of the Government’s total expenditure in a single year. Scrapping that commitment will diminish the UK’s credibility that it is committed to transition to net-zero, and also diminish its ability to attract much-needed private investment at the necessary scale.

“The UK must find a way to ensure that it uses this once-in-a-lifetime opportunity to pursue a smart strategy of reindustrialisation, job creation and sustainable transformation of its economy or it risks being left behind.”

John McTernan, political secretary to Tony Blair during his tenure as Prime Minister:

“This is probably the most stupid decision the Labour Party has made. This is a decision that we have to make now to decarbonise our economy and it is one which stands for a purpose, a great purpose, a grand purpose.

“Great parties have great causes. If you don’t have a great cause, you want to change from this Government, sure, but change to what? What is the change Labour now offers? It is very disappointing.”

Sharon Graham, general secretary, Unite the Union:

“The retreat from Labour’s £28bn green investment pledge confirms workers’ scepticism of the endless promises of jam tomorrow and ‘it will be alright on the night’ rhetoric on the green transition.

“If different choices aren’t made, Britain will again lag behind other nations. The Labour movement has to stand up to the Conservatives’ false accusations of fiscal irresponsibility. There is a catastrophic crisis of investment in Britain’s economic infrastructure. Britain needs more, not less, investment.”

Ed Matthew, campaigns director, E3G:

“A lack of investment in our clean energy transition has left the UK off track to meet our climate targets and uncompetitive in the global clean tech race. Securing climate safety and future prosperity requires a major uplift in public green investment.

“Whilst dropping the £28bn pledge is disappointing, Labour can reassure the investment and industrial communities that their mission to make the UK a clean energy superpower has not faltered by developing a Net-Zero Investment Plan in line with our climate targets, with long term, detailed sectoral investment commitments. This is what investors have been calling for.”

Dr Donal Brown, director of UK programmes, Ashden:

“Everyone can see that the climate impacts are being felt around the world and in the UK in terms of extreme weather events which have a knock-on effect to everyday life in a multitude of ways. So now is the time that UK political leaders of all hues must show bravery and economic common sense on the green agenda.

“We need proper, concrete, decisive action now. People will respond politically when their homes are safe places to live in during weather extremes, and they don’t see their energy bills rising. This is not rocket science.”

Simon McWhirtier, deputy chief executive, UK Green Building Council:

“Political leaders must recognise the green economy for the transformative opportunity it is instead of mischaracterising it as an unaffordable luxury. This is mission-critical for our country, our people, and our planet.

“We hope that all parties, including Labour, will soon provide firm and ambitious commitments to the green economy as a whole – including a nationwide home energy efficiency upgrade drive powered by government investment and incentives, and a comprehensive policy portfolio that plugs existing gaps and charts a course to a net-zero, climate-resilient future for the UK.”

Kate Norgrove, executive director of advocacy and campaigns, WWF:

Now is not the time to shy away from the investment the UK needs, or to row back on climate commitments. Bold action is needed to drive down household bills, replace imported, polluting fossil fuels with clean, secure British energy, and turbocharge economic growth. Strategic investments will help the UK to seize the economic opportunity of the 21st century and rebuild our economy.”

Stuart Ferguson, investment partner, Sustainable Ventures:

“It’s disappointing to see Labour roll back the figure – but it doesn’t signify the end of green investment in the UK. The UK’s climate tech sector is already a global leader – London’s climate tech startups raised all-time high levels of VC investment in 2023, and the UK ranked number two in the world. Investors know that this is a strong, growing space and interest for investment is only going to increase.”

Christophe Williams, chief executive officer and founder, Naked Energy:

“On first sight, Labour’s announcement has delivered a blow to the UK’s green industries – domestic manufacturing of renewables has huge potential, but now both leading political parties are letting the chance slip through their fingers to set the foundation for an economy that works for the planet and the people.

“If the UK wants to keep pace with US and Europe, we must now pull out all the stops and take every opportunity to invest in green energy. This weakening green policies will no doubt weaken investor confidence too – something that has already rapidly been slipping offshore.”

Jess Ralston, analyst, Energy and Climate Intelligence Unit (ECIU):

“There is a global economic race to build clean industries and Britain has to compete for green investment. Investors are looking for policy certainty and a clear plan from policymakers.

“Moreover, a lack of investment in insulating homes and building more British renewables over the past decade left UK households on the hook for high gas prices, which cost bill payers and taxpayers in the region of £50-60bn in one year alone.

“Each home could have saved up to around £2,000 last year had we made those investments.”

Carys Roberts, executive director, IPPR:

“While the key existing policies Labour has recommitted to in its green prosperity plan are an ambitious step forward, such significant scaling back on investment will undermine efforts to grow the economy and manage the transition to net zero fairly.

“This Government has set the economy on the wrong trajectory, with sharp cuts to public investment to come after the election. Whoever wins the election will not be able to escape the need for an uplift in public investment to turn around our sluggish economy, achieve energy independence, rebalance our regions, and secure a fair transition to net-zero.”

Dr George Dibb, associate director for economic policy, IPPR:

“Without greater investment we risk foregoing future growth and hurting, rather than improving, the UK’s fiscal sustainability. A well-targeted public investment programme, such as in green sectors and infrastructure, can crowd in business investment. Without such a programme, a return to higher economic growth is likely to remain a challenge.

“We’re pleased to see the Labour Party re-committing to putting the Green Prosperity Plan at the heart of its pre-election plans. Its 2030 clean energy target, its proposed National Wealth Fund and GB Energy, along with industrial strategy and plans to support specific sectors from warmer homes to steel, remain ambitious commitments, many of which IPPR have argued for. However, investment at scale is the best way to realise the full benefits of the future green economy.”

Dan McGrail, chief executive, RenewableUK:

“We should acknowledge that the bulk of funding for the energy transition is coming, and will come, from the private sector, but a stable and predictable business environment is critical in mobilising high levels of private investment.

“We would encourage Labour to continue to take a partnership approach with us in developing an industrial strategy for the offshore wind sector and other key clean energy technologies. This is vital at a time when the USA and the EU countries are offering significant financial incentives to attract supply chain investments”.

Rachel Solomon-Williams, executive director, Aldersgate Group:

“The UK is now in a highly competitive global race to secure investment in new and developing industries, and already we are seeing this drain away to the United States, EU and China.

“Businesses in the UK are on board with the net-zero transition. They recognise that it is the greatest opportunity to drive growth in the UK, as well as being necessary environmentally, and have already started reflecting this in their own plans and operations. This election should be a race to the top in terms of policy ambition, as part of a positive vision that drives growth, productivity and prosperity across the whole of the UK.”

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