Labour's Green Sweep
Last month, Rishi Sunak blindsided allies and foes alike as he announced a U-turn on key green measures, with the deadlines pushed back for banning the sale of new petrol and diesel cars and the phasing out of gas boilers.
It sparked criticism, not least within his own party, but left the ball firmly in Labour’s court on how to respond.
While Labour’s front benchers attacked the reversal, and the party was able to say it would restore the 2030 deadline for petrol and diesel cars, it also had to admit it couldn’t bring back the 2026 deadline for beginning the phase-out of all gas boilers, as it sought to avoid leaving open Tory attack lines that a Labour government might cost consumers more.
Nevertheless, party insiders are bullish on green power, with a plan to argue that tackling the climate crisis goes hand-in-hand with its plans to address the cost of living crisis.
A Labour source tells The House its “whole agenda is about lower bills, energy security, good jobs, and climate leadership”. It follows the vote-winning example of US president, Joe Biden, moving the conversation away from the perceived costs of green policy and instead tying the green agenda to economic growth, innovation and employment.
It also takes place amid a race to become a green superpower, which is well and truly under way, with Europe, the US and China clamouring to attract billions of dollars of investment into renewable energy projects, as the countdown to reach net-zero targets by 2050 propels a new eco-industrial revolution.
If we want to be a green superpower, that means showing a real, unwavering commitment to speed and scale
The Labour Party source feels it could play well against the Tories, characterising Sunak’s more cautious approach to net-zero as him listening to “the fringes of his party” and “taking a position that is anti-investment, anti-jobs and anti-business”.
Labour has had grand plans since 2021, when it pledged to invest £28bn a year in climate measures, green technologies and the infrastructure needed to support both, and said it would hope to attract a matching sum of private investment. Labour has since scaled back on these plans, instead pledging to increase investment over time, reaching £28bn a year after 2027.
When it was announced, Starmer’s green prosperity plan – which the Labour source describes as “a huge agenda that will make Britain energy independent and cut energy bills for once and all” – outlined a broad-ranging programme to include: decarbonisation; an eco-retrofit for millions of homes; the part-funding of gigafactories to manufacture batteries for electric vehicles; scrapping the new ban on onshore wind; investment in hydrogen fuel technologies; developing the national grid; and the creation of “Great British Energy”, a publicly-owned clean energy company.
It also promised a “national wealth fund” to build green British industry, largely in the devolved nations and the regions, with profits kept for the country instead of going to shareholders.
Starmer promised his plan would accelerate the UK’s move to zero-carbon emissions to 2030, 20 years earlier than the international legal deadline. The idea is to bring down energy bills for homes and businesses, give Britain energy security and boost the economy, especially in more deprived industrial heartlands where massive investment would be targeted to create one million “good” new jobs and upskill the workforce.
Nick Robins, professor in sustainable finance at the London School of Economics’ Grantham Research Institute on Climate Change and the Environment, says: “There’s a lot in the green prosperity plan to welcome, particularly around how it focuses on using the transition to deliver decent jobs, strengthen local clean energy initiatives and retrofit the country’s housing stock. The proposals to create Great British Energy and a new national wealth fund could prove transformational. But more detail is needed to see how they will connect with existing public finance institutions and partner with the private sector.
“One question, of course, is: where will the £28bn come from? Will it be through tax-based spending, or do you borrow from the markets? Here, there is real potential to upgrade the UK’s existing green sovereign bond programme to access long-term capital, ideally at preferential rates.”
As the country edges closer to a general election, climate change action has become increasingly politicised with both parties apparently mindful of alienating sectors of the electorate that have been shown in polls to be anxious around the perceived costs and inconvenience of net-zero policies, such as driving restrictions and heat pumps.
In June, Reeves announced a temporary retreat from the Labour Party’s ambitious green revolution plans, saying it would be phased in halfway through a first term. Tasked with convincing the electorate that Labour is the party of fiscal discipline, Reeves blamed the economic aftershocks of Liz Truss’s short tenure at No 10, while Miliband backed the decision, saying supply chains and infrastructure need to be put in place first.
The following month, after Sunak announced 100 new licences to drill for oil and gas in the North Sea – even as climate change dominated the headlines, with large swathes of Europe on fire – Starmer was vague over Labour’s response, admitting the UK would be dependent on fossil fuel reserves for “decades to come”.
He called Just Stop Oil protesters “contemptible” and distanced himself from Sadiq Khan’s ultra-low emission zone (Ulez) policy, as the London mayor’s initiative was widely felt to be the decisive factor in Labour’s narrow loss in the by-election for Boris Johnson’s vacated Uxbridge seat.
James Alexander, chief executive of the UK Sustainable Investment and Finance Association, says: “The Ulez effect shows we need a just transition to a sustainable economy that brings people along, [and] shows people there are more opportunities in a net-zero economy than sacrifices.
“It’s estimated the transition to net-zero could create 1.7 million green-collar jobs and be worth up to £1tn to UK businesses [by] 2030,” Alexander adds. “Polls have shown for a decade that the electorate believes climate change is one of the biggest issues and wants committed and long-term government action. We will gain economically from this; we have the opportunity to be world leaders in many industries including carbon capture and offshore wind.
Labour has been working hard to court green energy investors and convince them the UK is a safe place to put their money
“One of the challenges is we don’t know what the state of the economy will be or when an election will happen, so neither party is really setting out clearly what their propositions would be,” he says. “Politicians need to recognise that voters really care about this issue. Joe Biden understands that very clearly and, in 2020, he increasingly talked about climate change as the election approached because it was polling well.”
Abdi Suleiman, political affairs manager at Friends of the Earth, is urging Labour to press on with its initial plans and work on its messaging. “There may well be logistical problems around going straight in with the £28bn spending,” he says.
“But if you start accepting the narrative that you can wait, you undermine the scale of the urgency and the fact that this is at the heart of Labour’s economic policy.
“If we want to be a green superpower, if that is the mission, they have to get the public and investors onboard, and that means showing a real, unwavering commitment to speed and scale. The language around that is important. It cannot seem like it’s up for negotiation.”
Behind the scenes, industry insiders say Labour has been working hard to court green energy investors and convince them the UK is a safe place to put their money.
“Labour is rightly keen to understand what is stopping investment from flowing into the sustainable transition,” says Alexander. “It gives me confidence they recognise this cannot all be done with public money. We need to get a lot of private investment into this space, and that should be a key priority.
Get the inside track on what MPs and Peers are talking about. Sign up to The House's morning email for the latest insight and reaction from Parliamentarians, policy-makers and organisations.