Alex Brummer: Labour’s credibility gap after abandoning the Green Prosperity Plan
Imagine this scenario. The Chancellor of the Exchequer stands at the despatch box on March 6, Budget Day, telling the House of Commons that he will cut public investment by £140bn – about four HS2 programs – and instead spend £23.7bn over five years.
This is precisely what Labor did by scrapping the Green Prosperity Plan, one of the key elements of Rachel Reeves’ book Security Economics.
To put the revised green investment spending into perspective, it falls short of the £8bn a year the Conservatives have already allocated to their Energy Security Plan, titled Strengthen Britain.
Incidentally, New Labour’s investment will be funded by a windfall tax of £10bn or so on North Sea energy producers.
This equates to far less than what the UK’s oil majors, BP and Shell, have committed to spending on zero-carbon projects over the coming years. There is a risk that, by jeopardizing North Sea oil investment and the country’s energy security in the medium term, the windfall tax could lead to fewer rather than more climate change projects.
No laughing matter: Keir Starmer and Rachel Reeves have shown that nothing they say can be trusted if the biggest policy on their horizon is abandoned so easily
Keir Starmer justifies green change on the basis that the Conservatives have “broke the economy”. But this is not entirely true either. Yes, Truss’ tantrum was a bad moment. The largest local impact was on mortgage rates. They were heading higher anyway as the Bank of England sought to crush inflation.
In fact, the housing market – as measured by mortgage approvals – and two of the largest lenders, Halifax and Nationwide, are already improving.
The real narrative is that if anything has weakened economic performance it is the 2019 coronavirus and Putin’s war on Ukraine. In light of the abnormal growth among the European members of the Group of Seven rich countries, Britain is performing better than its biggest competitor, Germany.
Rachel Reeves has good reason to be cautious. Although Labor leads by a large margin in the polls, the £28bn figure has been an open target for the Conservatives who realize that everything Labor says publicly cannot be achieved without raising taxes.
There are memories of 1997, when Gordon Brown, Ed Balls and accountants Arthur Anderson, although public finances were in a much stronger state than they are at present, were working on secret plans to raise taxes to fund favored projects.
The energy reversal will have consequences for Labour. The direct hit is the novel “The Detour.” The generally friendly Guardian newspaper felt the need to run a front-page headline, “Fire as Starmer winds down.”
Starmer and Reeves’ opinion page op-ed, which spoke of a “long-term plan to invest in Britain’s future”, seemed ridiculous given that Labour’s boldest project had been consigned to landfill. There is a bigger problem. Reeves and Starmer have done their best to win over the business community.
Powerful CEOs have been jostling for access. Some observers saw this as evidence that Boris Johnson, through his careless actions, had lost the business lobby. This understates how timid senior officials are when faced with a change in government, and does not say much about what they really think.
Most CEOs value stability and predictability so that much needed investment to enhance productivity can be made.
Perhaps Reeves and Starmer believe they are demonstrating fiscal responsibility. What they have really shown is that nothing they say can be trusted if the biggest policy on their horizon is abandoned so easily.
Many bosses I speak to accept the possibility of a Labor victory, but they also praise some of the things the Conservatives are doing.
Jeremy Hunt’s expansion of whole-business expenses for plant and equipment has infrastructure investors, such as BT’s Openreach broadband provider, dancing in the aisles.
What are the projects that provide labor? A violent attack on oil energy projects in the North Sea, and an end to the tax concessions granted to non-residents that actually drive them and their potential investment funds abroad.
Without an energy revolution, the opposition’s growth plan amounts to tearing down planning laws so that infrastructure projects become more accessible and the nation gets the housing it deserves. No one can disagree with the need for this. The danger here is that this much-needed reform may turn a corner due to the objections of local governments. Certainty has been eliminated.
(tags for translation) Daily Mail