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Shadow ministers seeking to raid Labour’s flagship £28bn-a-year “Green Prosperity Plan” for capital spending pledges in other areas in the run-up to the UK general election will be rebuffed, according to one of the leading members of the main opposition party’s Treasury team.
Many senior Labour figures have suggested the debt-funded policy, which is the party’s biggest single spending commitment, could still be tweaked to encompass a broader variety of capital spending including housing or transport projects.
But Darren Jones, shadow chief secretary to the Treasury, said the scheme — designed to fund low-carbon programmes — would “not be a cover for general additional spending” by a future Labour government.
“The Green Prosperity Plan will be specifically ringfenced,” he said in an interview with the Financial Times. “I get that there is a demand for capital . . . across different front-bench teams. Can you basically use it to pay for other stuff and just pretend it’s relevant? No.”
The Labour leadership has repeatedly cut back the scope of the plan after it became a target for attacks by the ruling Conservative party. Prime Minister Rishi Sunak has challenged the main opposition repeatedly on the affordability of the policy.
Some senior Labour MPs have privately expressed concern that the party has committed such a large amount of public money to fund the transition to net zero by 2050 rather than other critical policy areas, such as the NHS or education.
“It does feel like a problem that we don’t have extra money for schools and hospitals but we have all this borrowing for green stuff.” said one shadow minister. “It should not be outside anyone’s imagination to squeeze some other capital spending into the GPP, whether it’s ‘green social housing’ or ‘green railways’ or whatever else.”
But Jones said that there would be no such shifting of the goalposts for the scheme. “We know during that process that obviously there are demands but the GPP . . . will be specifically ringfenced. It will not be a cover for general additional spending.”
The Conservatives trail Labour in the polls by an average 18 points and last week Sunak signalled the general election would take place in autumn in line with the assumption in Westminster that he wants to give himself as much time as possible for the economy to improve.
Sir Keir Starmer, the Labour leader, unveiled the plan two years ago when borrowing rates were at rock bottom, modelling it loosely on US President Joe Biden’s Inflation Reduction Act. But since then, the party has been forced to scale it back significantly as interest rates have risen.
The changes included a delay to the plan’s full implementation by five years to the end of the next parliament, while the party also opted to include £8bn of existing annual green capital spending thereby lowering the net borrowing required to £20bn a year.
Rachel Reeves, shadow chancellor, has previously warned that the policy would have to fall within Labour’s fiscal rule that stipulates public debt must be falling as a percentage of gross domestic product after five years, otherwise it would be reined back.
Starmer re-emphasised the point about the fiscal rule last week when he described the £28bn annual figure as a “confident ambition” rather than a pledge. But on Sunday the Labour leader insisted he was prepared to defend the policy, arguing his party was ready to borrow to invest to boost the growth potential of the economy.
