True cost of Labour’s net zero target revealed in audio leak

Reaching Labour’s target for decarbonising the economy will cost “hundreds of billions” of pounds, a shadow minister has disclosed in a recording obtained by The Telegraph.

Darren Jones, the shadow chief secretary to the Treasury, said the £28 billion per year originally allocated to Labour’s green investment plan was a “tiny” amount.

He said the fact that Sir Keir Starmer had downgraded his investment plans from £28 billion to £4.7 billion “made it sound as if we basically junked the whole thing but we definitely haven’t”.

Mr Jones told a public meeting in Bristol that private capital would have to be used to upgrade infrastructure, but “public subsidy” would still be needed alongside that.

His comments are set to reignite the row over Labour’s spending plans.

On Wednesday night, Rishi Sunak challenged Sir Keir about the revelation, saying during a debate on the BBC: “Just be straight with people, how many hundreds is it. Is it 200, is it 300, is it 400?”

Sir Keir, the Labour leader, appeared to argue that some of the money would be invested by the private sector rather than just the public sector.

He also joked as Mr Sunak interrupted him during their exchanges: “I think the Prime Minister must have put a bet on how many times he’s going to interrupt me.”

The Conservatives say Sir Keir has not been honest with the public about how he intends to raise the money to pay for his manifesto plans as a whole, and that he will have to raise tens of billions more through tax or borrowing to fill a huge gap in the overall ledger.

Laura Trott, the Chief Secretary to the Treasury, said Sir Keir “must be straight with people and urgently explain what taxes will Labour put up” to fund the green investment plan.

Labour wants to convert Britain to “clean energy” by 2030, a target the energy sector has described as “unachievable”.

The Labour manifesto says the party will “use public investment to crowd in private funding” on clean energy and will “invest in the industries of the future” as well as “investing in carbon capture and storage”. It does not say how much will be invested.

Mr Jones was asked about Labour’s green investment plan during a meeting held in a cinema on March 14, the month after Sir Keir dropped his proposal for a £28 billion-a-year green industrial revolution.

He told the meeting that the £28 billion figure “became a distraction against the mission of decarbonising the power system by 2030” and 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”.

Mr Jones told an audience member who spoke to him at the end of the meeting that decarbonising the power system “is still one of the top five priorities and it is going to be a huge amount of effort to get there because we’ll have to move quite quickly.

“But a lot of the coverage in the news was about that specific 28 [billion pounds], which because journalists saw conflict made it sound as if we basically junked the whole thing but we definitely haven’t.”

When an audience member said some people would say that £28 billion a year was not enough to decarbonise the economy, Mr Jones replied: “No, it’s tiny. Hundreds of billions of pounds we need.”

The questioner said: “We actually need to spend more. So I guess for younger people, we just need to know that, you know, there is hope and that if there is a Labour government that investment will be there because it’s much needed.”

Mr Jones said: “Yeah. So I’m working on the manifesto at the moment and the team has to do all the maths. The manifesto will come out probably in week two of the six-week election campaign.

“Because decarbonising the power sector is a mission, there will be a whole chapter about this stuff. So you’ll be able to see in more detail the policy and the direction of travel that we’ll have, which I think you’ll welcome.”

Ms Trott said: “This is very serious. Rather than costing £5 billion a year, the man Keir Starmer would put in charge of the country’s money is saying Labour’s flagship policy would mean spending ‘hundreds of billions of pounds’ more than Labour are telling people in public.

“This is about trust – tonight Keir Starmer must be straight with people and urgently explain what taxes will Labour put up to pay for it.”

Speaking to GB News on Wednesday night, Mr Jones denied that Labour had a “secret plan” to spend hundreds of billions on green projects.

“It wasn’t a secret recording,” he said. “It was a coffee morning in my constituency, the Tory Party or The Telegraph are very welcome to come to.

“I was setting out what the private sector is going to invest in their own businesses in order to get to net zero by 2050 in, for example, the energy sector.

“It’s based on independent evidence from the likes of the Committee on Climate Change, and it’s also what the private sector and private sector investors tell us they want to do. There’s no secret plan.”

Earlier this week, the independent Institute for Fiscal Studies said both Labour and the Conservatives were being dishonest by saying their manifesto pledges were fully costed.

A Labour spokesman said on Wednesday: “Labour’s mission is to achieve clean energy by 2030 and our plan is fully funded and fully costed. The policies in the green prosperity plan represent £23.7 billion of investment over the course of the next parliament. A large part of this will be funded by a proper windfall tax on oil and gas giants which continue to earn record profits. The remaining investment will be part-funded through borrowing to invest, within our fiscal rules.

“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. We will capitalise the new Great British Energy with £8.3 billion, over the next parliament, and create thousands of good jobs and build up supply chains in every corner of the UK.”

Listen to Gordon Rayner discuss this story on The Daily T here or on the audio player below. 

Shadow minister’s comments in full

Darren Jones

So the £28 billion became a distraction against the mission of decarbonising the power system by 2030. So one of Keir’s five missions is decarbonising the power system. The reason the missions we have as opposed to net zero more generally is that electrification will underpin decarbonisation in lots of other areas. So the electrification of the energy grid generation in the storage and competition for other stuff. So that’s why he set a mission for decarbonising the  power grid; the vast majority of the power system is owned by the private sector. So it will be private capital that will have to go into upgrading infrastructure. They tell us they’ve got the money to do that but they said they can’t spend it for other reasons: for things like planning and supply chain, regulation, that type of stuff.

So we’re working with them to say, well, what do you need the Government regulator to do to unlock the investment so that we can work together on the mission to decarbonise the power system by 2030.

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.

And it was an academic view about how much public subsidy might be needed on average over two years in order to get there.

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 it wasn’t announced because of what happened with debt... 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.

The money that’s been allocated has been repackaged it’s not been scrapped entirely, but it’s been focussed on the mission of decarbonising power, so we’re committed to setting up GB Energy which is a publicly owned energy company that will work alongside the private sector to fund things that are currently precommercial; tidal energy hydrogen that sort of stuff but also to do additional things where the private sector were at capacity if you want to move quickly enough to be able to do it.

So that would be the vehicle. And we’ve also put some money into something called the national wealth fund proposal which is where you can invest alongside the private sector to unlock that. So we’re still absolutely committed to it. It is still one of the top five priorities and it is going to be a huge amount of effort to get there because we’ll have to move quite quickly. But a lot of the coverage in the news was about that specific 28, which because journalists saw conflict made it sound as if we basically junked the whole thing but we definitely haven’t.

Question

Because some people would say that £28 billion isn’t enough.

Darren Jones

No it’s tiny. Hundreds of billions of pounds we need.

Question

We actually need to spend more. So I guess for younger people. We just need to know that, you know. There is hope and that if there is a Labour government that investment will be there because it’s much needed.

Darren Jones

Yeah. So I’m working on the manifesto at the moment and the team has to do all the maths. The Prime Minister seems to have decided there’s not an election on May 2 but it will come pretty soon. The manifesto will come out probably in week two of the six week election campaign. Because decarbonising the power sector is a mission there will be a whole chapter about this stuff. So you’ll be able to see in more detail the policy and the direction of travel that we’ll have, which I, you know, I think you’ll welcome. (Darren Jones, 14 March 2024, archived).