The Labour party's green plans are being criticised for being too profligate. But the rewards - electoral and ecological - could last at least a decade.
- The UK fired up a coal plant in order to meet aircon demand during a heatwave.
- 65 per cent of the annual revenue of the world’s 2,000 largest companies is now covered by a net zero target.
- Meatless Farm, a vegan food company, made its 50-strong workforce redundant.
Labour is at a climate crossroads. Rachel Reeves, the shadow chancellor, last week watered down a pledge to invest £28 billion a year in the green economy, saying “financial stability has to come first.”
Sir Keir Starmer meanwhile has defended the party’s decision to end new licences for oil and gas in the North Sea, vowing not to allow a “repeat of what happened in coal mining” to workers in the sector.
So what? Up to 75,000 British workers are employed in sectors that the Committee on Climate Change says will need to “phase down” or “redirect” in order to reach net zero. Starmer and Reeves want to win those communities over with a Biden-esque plan for the economy that will replace those jobs with ones that are green and secure.
It won’t be cheap or simple. Retraining for a job in offshore wind can cost £7,000 and over two-thirds of North Sea workers surveyed have paid for a course using their own funds.
Expectations have been bruised by politicians overpromising on offshore jobs: Gordon Brown said the industry would support 70,000 by 2020 – the most recent data suggests just over 30,000 are employed across the supply chain.
- The economic picture isn’t helping. When Labour announced the plan in 2021, the Bank of England base rate was 0.1 per cent. It is now 4.5 per cent. At the Kite Festival co-hosted by Tortoise at the weekend, Reeves evoked the ghosts of Truss and Kwarteng and said she was unwilling to put household finances at risk for a “sugar rush plan”.
- Internal pressures. Some of Labour’s union backers have criticised the party’s position on the North Sea. The Tribune group of Labour MPs has argued that the strategy should centre on “climate security”. John McTernan, former political secretary to Tony Blair, argues the party should push a message of “reindustrialisation” rather than “decarbonisation” in order to win votes in the Red Wall and Scotland.
- The political reality of going into an election with a cast-iron spending pledge in the middle of a cost-of-living crisis. There are eighteen months to go until a general election, a time when sensible policies can be stolen and grand claims subjected to attack. There’s anxiety in party leadership over revisiting 2019 headlines that electing Labour could lead to a run on the pound.
Reeves’ decision to delay full implementation of the £28 billion until 2027 is in part a response to Tories attacking the plan as inflationary. “The commitment is actually in line with the Biden stimulus – about 1 per cent of GDP – but it was always going to be the case that the design and “slope” of the investment would have to get settled closer to the election based on economic conditions like inflation and interest rates,” says one Labour MP.
The UK risks missing out on investment. British businesses including Johnson Matthey have set up green projects in the US, drawn partly by the lure of subsidies under the Inflation Reduction Act – and pushed away by the attritional impacts of Britain leaving Europe.
“Borrowing for a consumption binge is foolish… But borrowing to invest in productive assets is a different matter, especially when those assets deliver cheaper energy and jobs. The sooner we get on with decarbonising the economy, the better,” says Professor Cameron Hepburn, director of the Smith School for Enterprise and Environment at the University of Oxford.
On the North Sea, the divide between Labour and the Tories is smaller than it appears to be. The UK is legally committed to a position of maintaining extraction while reducing emissions; in practice, that means pumping oil and gas while running platforms on renewable energy.
Even though the North Sea is in its twilight years, with the oil majors pulling out to seek more profitable opportunities elsewhere, Britain has yet to put climate at the heart of its strategy for the region.
The political consequences of green spending will last well beyond the next election cycle. Analysis of Biden’s IRA shows that Republican states stand to receive nearly twice as much investment than Democratic ones by the end of the decade.
Labour could copy this tactic should it win next year; targeting green spending towards industrial areas where its vote collapsed in 2019. The hope is to secure votes for Labour long-term.
