Labour has said that decarbonising the economy to hit the 2050 net-zero target will cost “hundreds of billions” of pounds.
Darren Jones, shadow chief secretary to the Treasury, said that the party’s original plan to spend £28 billion a year on green investment represented a “tiny amount”.
Sir Keir Starmer, the Labour leader, and Rachel Reeves, the shadow chancellor, subsequently downgraded the commitment to £4.7 billion a year because of increasingly challenging economic conditions.
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Jones told a public meeting in Bristol that private investment would be used to upgrade infrastructure but there would still need to be “public subsidy” alongside it. The meeting was held on March 14 last year, a month after Starmer downgraded the £28 billion pledge. An audio recording of the event was obtained by The Daily Telegraph.
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Jones said that the £28 billion commitment had become a “distraction” from Labour’s mission to decarbonise the power network by 2030. He said that the vast majority of the power network is owned by private companies which will have to meet the bulk of the costs. He added that after the decision to downgrade the £28 billion commitment, “journalists … made it sound as if we basically junked the whole thing but we definitely haven’t”.
When it was put to him that the £28 billion commitment “isn’t enough”, Jones responded: “No, it’s tiny. Hundreds of billions of pounds we need.”
A Labour source said that Jones’s comment about “hundreds of billions” referred to the combined cost of hitting net zero by 2050, not the cost of its plan to decarbonise the electricity grid by 2030. The National Infrastructure Commission has previously estimated that total public and private investment of about £70 billion a year in the next two decades is likely to be needed to hit net zero and regeneration goals.
A Labour spokeswoman said: “By providing stability and initial public investment, our plan will crowd in billions in private capital over the longer term. Our plan will help unlock the economic growth that the clean energy transition can bring, and cut energy bills for good.”
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The Tories are seeking to make net zero a significant dividing line. Laura Trott, the chief secretary to the Treasury, said that Starmer “must be straight with people and urgently explain what taxes will Labour put up” to fund the green investment plan.
Labour’s manifesto states that the party “use public investment to crowd in private funding” on clean energy while investing in the industries of the future. It does not say how much will be invested. Jones said: “The £28 billion which was announced as part of our green prosperity plan wasn’t just about decarbonising the power system it was about basically everything in the carbon budget.
“The trouble with the 28 was that it wasn’t really defined well enough in the first place, so we probably shouldn’t have announced it in the way we did. And the other issue is that the economy tanked.
“So within the fiscal rules that we have, at the start of a new parliament we practically wouldn’t be able to afford the full £28 billion a year within our fiscal rules because what we inherit is so bad from the current government, so it needed to be repackaged around public subsidy.”
