Labour Party proposes £8bn ‘national wealth fund’ to invest in green industrial transition

Shadow Chancellor Rachel Reeves has stated at the Labour Party conference that, if elected, the Party would create a new £8bn blended finance fund to grow domestic industries like hydrogen, electric vehicles and low-emission steel plants.

Labour Party proposes £8bn ‘national wealth fund’ to invest in green industrial transition

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

Reeves used her platform at the conference, in Liverpool to warn that UK Plc is “falling behind in a global race for new industries” which are growing rapidly as the energy transition continues. These include wind turbine manufacturing, electric vehicle (EV) battery manufacturing and the production of hydrogen using electrolysers.

She also mentioned the need to grow the UK’s offshore wind sector and carbon capture and storage sectors, and to help heavy industrial sectors such as steel to reduce their emissions.

In a bid to boost British clean technology sectors, Reeves said, Labour would create a new ‘National Wealth Fund’ if elected. The fund would combine money from Government coffers with investments from the private sector. It could also be fed into by a windfall tax on North Sea fossil fuel producers while wholesale prices are high, as they are at present.

Labour has stated that the Fund could reach £8bn in the first instance and would allocate funding to the EV battery sector, net-zero industrial clusters and low-carbon steel production technologies.

Reeves said that “a zero-carbon economy – made right here, made in Britain” would be a “real plan for levelling up”, making a dig at the Conservative Government’s current plans.

The speech built on an overarching pledge made by Reeves at last year’s Labour Party conference to be the UK’s first “Green Chancellor”. Then, she stated that the Party would add to its manifesto a pledge to invest an additional £28bn annually through to 2030 to assist net-zero.

Reeves stated at that point that the £28bn is around four times the amount that the Government allocated annually to tackle the climate crisis since the Conservatives were elected in 2012. According to data from the Office for National Statistics (ONS), the UK Government spent £14.5bn on environmental protection during 2018 – the last full year for which data is available.

Energy plan

The speech from Reeves came after an address from Shadow Secretary for Climate Change and Net-Zero, Ed Miliband, who outlined a new vision for the energy transition for the Party.

Miliband stated that Labour would target a fully clean power system by 2030. This marks an increase in ambition; the Party’s previous ’30 by 2030’ plan targeted 90% of electricity from low-carbon sources by the end of the decade.

In contrast, the current Conservative administration is aiming for a net-zero power system by 2035, at which point gas-fired power plants would only operate with abatement measures.

On the National Wealth Fund specifically, Miliband said: “It is about creating jobs here. I am very struck that if you look at the global race that there is on green energy, which Britain is currently losing, the state being an actor to invest in the future is really really important.

“We should think creatively about how the wealth fund thinks for example about conditionality when it comes to governance and the role of workers.”

On the new 2030 vision, Miliband reiterated Party Leader Kier Starmer’s commitment to double onshore wind capacity, triple solar and more than quadruple offshore wind by 2030, against 2020 levels.

He stated that the Party would draw up a proper skills plan to ready some half a million people for jobs in the renewable energy, nuclear energy, power distribution and energy storage sectors.

These comments have been welcomed by green economy organisations including the IPPR and Greenpeace UK. Some unions, such as GMB, are calling for more information about how workers in oil and gas in Aberdeenshire will be upskilled, reskilled and supported through the energy transition.

Comments (1)

  1. Richard Phillips says:

    The high ambitions on onshore wind generation, raise questions upon how this power would be used. Unless there is some means of power storage, surplus electricity is of little use; it sounds good, but it is trickier than that.

    It happens quite often that ambitions do not have a stable technical base, it is the Ah but……….. factor.
    Richard Phillips

Action inspires action. Stay ahead of the curve with sustainability and energy newsletters from edie