The Labour party in the US has announced that it is planning to put the UK at the head of a worldwide green industrial revolution, with a massive US-style, public-private investment scheme targeted at the most deprived regions.
In an interview, Rachel Reeves, the shadow chancellor, who will travel to Washington in May to meet senior Democrats, says a Labour government will follow the model of US president Joe Biden’s hugely ambitious regional recovery plan, using the climate crisis as the catalyst for economic revival.
She said that Labour’s new national wealth fund, to be endowed with an initial £8bn of funding from the state but which it is hoped will then pull in private investment, will be given a specific remit to focus on green industrial revival in deprived areas with regional targets to create hundreds of thousands of jobs outside London and the south-east.
Ahead of the spring budget on Wednesday, in which the chancellor, Jeremy Hunt, will be under pressure to prevent an exodus of UK green industries to the US and the EU – both of which are preparing incentives to lure green firms from overseas – both Labour and the Tories are determined to ensure the UK will not be left behind.
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Hunt will announce a £20bn investment in technology to reduce Britain’s carbon emissions in the budget, as well as plans to boost the nuclear sector with a competition to develop small modular nuclear reactors (SMRs).
Reeves said that many UK companies were desperate to invest in areas such as offshore wind, tidal energy, green hydrogen and carbon capture and storage, but feared that without government backing – on a partnership model like that pioneered by Biden in his Inflation Reduction Act – they “would not get off the ground”.
“The Tories are the last people in town believing that the ‘laissez fair approach of leaving it all to the market can work. Everyone else recognises that, in a world of such huge change and increased competition between nations for this investment, you have to have this partnership approach,” she said. “All of this is up for grabs, no one is doing a lot of this stuff at scale yet. We could be global leaders in some of this. There is a real urgency because growth is so low. This would be real levelling up, where the government has failed. We have got a serious plan and we just want a chance to get on and get started with it.”
According to reports, several key UK-based companies are now examining where best to operate. Jaguar Land Rover’s owner, Tata Motors, is reported to have asked the UK government for more than £500m in state subsidies to build a battery factory in Somerset, a move is seen as crucial to the future of the entire British car industry.
Story was adapted from the Guardian.
