Amid an increasingly bitter row over whether Keir Starmer should stick to his £28bn pledge, a Labour frontbencher has said that Britain needs its own ambitious green investment plan to keep up with its allies.
Jonathan Reynolds, who is the shadow business secretary, said that the UK should come up with a version of Joe Biden’s $369bn (£290bn) Inflation Reduction Act, which has provided support to a range of technologies including electric cars and renewable power.
Reynolds warned that the UK risked losing business to the US if it did not commit to a significant plan of its own, even as some around the Labour leader said it would risk damaging the party in the polls.
As Labour officials race to finalise the main manifesto commitments in time for its 8 February deadline, the fate of its green prosperity plan remains one of the main unanswered questions. Reynolds’s comments will bolster the arguments of those who have urged Starmer not to drop it in the face of a sustained Conservative attack.
Reynolds said that the Biden’s act was “probably the most significant disruption to investment capital markets in 40 years – a greater impact than the pandemic and the global financial crisis … we’ve got to respond to that. We’ve got to increase our competitiveness, we’ve got to understand there’s a huge offer there from the US.”
Labour officials are expected to meet later this week to discuss the £28bn promise, and further meetings are planned between shadow ministers in the coming weeks.
Some of those in the shadow cabinet believe that the policy which was launched in 2021, should be ditched given that the UK faces much higher borrowing rates and Labour is desperate to avoid making unfunded spending commitments.
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However, others say the policy is the party’s main economic and environmental offer to voters and that dropping it will only intensify accusations that Starmer cannot be trusted to keep his promises. Like Reynolds, they make the point that the UK could lose business to the US if it fails to come up with its own version of the US act.
“What’s so significant about the Inflation Reduction Act is, they have recognised that if you just do it in the cheapest way … that’s going to be Chinese,” he said. “This [the act] has been a huge disruptor, sucking away from Europe a whole range of exciting companies and technologies.”
Reynolds said the precise sum mattered less than what it was being spent on. “We’ve the same view as Rachel [Reeves] and the [shadow] Treasury on this,” he added.
His words echo the recommendations of a group of leading economists, who said in a paper on Monday that Britain should invest £26bn a year in the low-carbon economy rather than using the money for tax cuts.
David Lammy, who is the shadow foreign secretary, said that over the weekend the party was sticking to the policy, after a report in the Sun that it would be dropped. But he added it would not spend the full £28bn if economic circumstances did not allow it.
Story was adapted from the Guardian.
