- Written by Peter Saul
- BBC political correspondent
Labour’s shadow chancellor, Rachel Reeves, previously said she would invest in “good jobs in green industries for the future”.
A source close to Sir Keir Starmer told the BBC that a Labor government was unlikely to be able to achieve its ambition of spending £28bn a year on green initiatives.
The Labor Party announced its main policy at its annual conference in 2021.
But in June, shadow chancellor Rachel Reeves watered down the pledge, saying that number would not be reached until 2027.
It is now understood that this number will probably never be reached.
A senior source in the Labor leader’s office said this was due to the state of public finances. They stressed that Labour’s financial rules were more important than any policy.
Conservatives have previously warned of the alleged risks of the policy, claiming that additional borrowing could lead to higher interest rates and mortgage costs.
She unveiled Labour’s Green Prosperity Plan, explaining that the money would go to offshore wind farms, tree planting and battery development. She added that it will be financed through borrowing.
“No plan can be built that does not represent the rock of economic and fiscal responsibility,” Reeves told BBC Radio 4’s Today program at the time.
she added. “I will never play with public finances too fast or too loosely.”
Speaking in June, Rachel Reeves said Labor would now “step up” on its plan to spend £28bn a year on green industries.
Five months on, there are serious doubts at the Labor summit about the prospect of reaching this level of investment due to the state of public finances.
This is because the party’s fiscal rules – which include a promise to reduce debt within five years – are seen as a “north star”; More important than any policy, according to a senior Labor source who spoke to the BBC.
Another Labor Party source told… telegraph“The fiscal base is more important, and this will determine how much is in the Green Prosperity Fund.”
Labor is determined to portray itself as the party with economic credibility – even if that means watering down one of the core elements of its government programme.