Labour leaders could have been singing from a 2010 austerity hymn sheet. As they rushed to defend the cancellation of their flagship promise to invest £28bn a year in the UK’s net zero transition, they did so on the basis that the Conservatives had wrecked the economy and “maxed out on the government credit card”. Once again the British public is told that there is no money left for the investment Keir Starmer had acknowledged was desperately needed only days before.
A long list of leading UK organisations, from the Grantham Institute to the British Chambers of Commerce and the Confederation of British Industry (CBI), has called for public sector investment now – and at scale – to get the UK to net zero by 2050. What the scientific and business community recognise, and what Labour leaders are now politically unable to acknowledge, is that whatever arbitrary fiscal rules they may have chosen for their manifesto, climate change will not simply stop and wait for the UK government to decide that the economic conditions are finally good enough to invest.
It is important to remember that £28bn was not a random figure plucked out of nowhere. The amount aligns with the UK’s leading analysis into the annual investment required this decade to address the climate crisis and meet the UK’s 2050 net zero commitment. The 2006 Stern Review called for investment of 1 per cent of GDP per year to the prevent the worst effects of climate change. The IPPR’s Environmental Justice Commission, which I co-chaired alongside Ed Miliband, called for similar levels of investment.
For many – the Green Party included – £28bn was the floor, not ceiling of what is so urgently required. As Labour’s commitment dropped from £28bn a year to £23.7bn over its first term in office, the “national renewal” promised at the start of the month was revealed to be nothing more than a renewal of the same rationalisation of austerity under which the Conservative Party has starved the UK of investment.
As an economic strategy, this has long proved a dismal and demonstrable bust. As the US and EU unleash a wave of new jobs and private sector funding by investing hard in their transition to net zero, UK national investment levels have consistently ranked lowest in the G7. We are among the worst in this regard in the OECD 27 advanced economies. CBI research has found that 90 per cent of UK-owned businesses now hold a negative opinion of Britain as a place to invest.
If the lack of investment has been bad for British business, it has been devastating for ordinary people. According to National Energy Action, there are now 6.5 million households who can no longer afford to heat their homes, a rise of two million households since October 2021. Every year, there are around 10,000 excess deaths as a result of people living in a cold home, with many more suffering worsening conditions such as heart attacks, asthma and bronchitis.
Faced with skyrocketing fuel bills and cold homes, crumbling schools, roads and hospitals, Labour’s pledge to invest £28bn a year in the green transition spoke to millions of ordinary people. It showed a government-in-waiting that recognised the scale of the climate and cost-of-living crises and was committed to investing both in liveable homes and a liveable planet. It represented a pledge to millions that life would get better under Labour – not only with lower emissions, but with lower bills, warmer homes, cleaner air, new jobs and better, healthier lives.
That election-winning offer has now been taken away. Instead, it looks likely that Labour will defer action and downscale vitally needed green investment under the guise of the “fiscal responsibility” adopted for so long by their predecessors. Yet nothing could be more fiscally, let alone morally, irresponsible than to fail to invest adequately in climate action.
If Labour wants to avoid the very thing it says – the astronomical mushrooming of UK debt – it has chosen the worst possible way to go about it. If we fail to make the investments needed now, the costs of runaway climate change could see national debt grow to a staggering 289 per cent of GDP by 2050. According to the Office for Budget Responsibility, our continued reliance on expensive natural gas could cost more than double the public investment required to deliver net zero in the first place.
The quicker we invest, the cheaper it will be. The government’s own climate advisers say that the capital investment to get to net zero will more than pay for itself through savings on fuel, healthcare and other costs. For example, Citizens Advice research suggests upgrading Britain’s inefficient homes to EPC band C would save consumers £24bn on their energy bills by 2030 alone.
Having held out the prospect of such popular and beneficial investments, Labour candidates will now struggle to defend such a reversal to a public that has had enough of the anti-investment policies of austerity Britain. Investing in a secure, green future is a choice both the Conservatives and Labour have demonstrated they are unwilling to make. Whoever forms the next government, it will be more important than ever to have Green MPs in parliament, holding their feet to the fire and demanding the UK is bolder, braver, and better than this.
[See also: How indecision turned toxic for Labour in Rochdale]
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