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Sir Keir Starmer has said Labour could further reduce the amount it had pledged to borrow for the party’s flagship “green prosperity plan”, even as he called the scheme an essential “investment in the future”.
The Labour leader, giving his New Year speech in Bristol, did not rule out further changes to the scheme to invest billions of pounds in low-carbon projects in the run-up to the general election expected this year.
The plan initially outlined £28bn a year of additional state borrowing for green projects but has already been reduced in scope since it was unveiled two years ago at a time of low interest rates.
Some senior Labour figures are nervous that the proposal is rapidly becoming the focal point for Conservative political attacks.
Starmer said he had delayed the £28bn plan by several years, netted off existing government spending of about £8bn a year and pledged it must be carried out within the party’s fiscal rules.
“It would be subject to our fiscal rules. That means that if the money is from borrowing, which it will be, borrowing to invest, but the fiscal rules don’t allow it then we will borrow less,” he said.
Labour’s fiscal rule is that debt must be falling as a share of national income after five years.
Asked if Labour could tweak the green prosperity plan further ahead of the election, Starmer dodged the question. Instead he said there was “no question of pushing back” on a separate target to draw 100 per cent of the UK’s energy from low carbon sources by 2030.
He gave no such assurances on the wider £28bn pledge, saying the party would continue to “look very carefully at the investment that is needed” if Labour forms the next government. But he insisted Conservative attacks on the policy were “utterly misconceived”.
Starmer has vowed that Labour will take on the Conservatives on their economic record in this year’s UK general election, claiming that the issue was now Prime Minister Rishi Sunak’s “weakness” after his predecessor Liz Truss “trashed” the economy.
Asked by journalists if a Labour government would cut income tax or raise thresholds on the levy he said he wanted to reduce Britain’s tax burden but added that growing the economy had to be the first priority before any such tax cuts.
The Labour leader said the Tories had repeatedly promised tax cuts but instead had raised taxes to their highest level since the second world war.
“We have heard the Tories want to fight this election on this [economic] terrain, but . . . what used to be their strength is now their weakness,” he said. “Their credit rating is zero.”
Truss survived as prime minister for barely a month in late 2022 after her package of unfunded tax cuts prompted chaos in financial markets — which Labour aims to exploit in this year’s election campaign.
Sunak’s party is currently languishing 18 points on average behind Labour in the opinion polls.
But the Labour leader has ordered aides and shadow ministers to be alert for the possibility of an earlier election in May to coincide with local polls.
Speaking at a business park in Emersons Green in north-east Bristol, Starmer argued that “things can be better” and said the prospect of an election this year would bring hope to people across the country.
“The thought of millions of people, right across our country, putting a cross on that ballot paper, it’s what we’ve been waiting for, preparing for, fighting for. A year of choice and the chance to change Britain.”
Starmer warned that his party would face an aggressive election campaign from the Conservatives. The Tories would “unleash” a “gauntlet of fear” ahead of polling day. “Every opportunity for division will be exploited for political potential.”