- By Paul Seddon
- BBC Political Correspondent
Sir Keir Starmer has insisted Labor has no choice but to abandon its £28bn-a-year green investment pledge.
He defended it by saying the U-turn was no longer affordable because the Tories had crashed the economy.
He told the BBC Labor would spend more than the Tories on green schemes if they win the election and ensure “cleaner power by 2030”.
But Prime Minister Rishi Sunak said Labour's signature economic policy was “falling apart”.
“That's what happens when you don't have a plan, if you don't have a plan you can't deliver any change for the country.”
He said the Labor leader had a “proven record of U-turns on key issues”.
Labour's announcement reflects the scale of its plans to invest in green industries, adding an extra £4.7bn a year if it wins power.
There has been confusion over the policy for weeks, which has come under growing Tory attacks ahead of the election, with Mr Sunak saying the borrowing would force Labor to levy taxes.
The Labor leader said all the green plans the party had announced so far – including money for battery factories and “clean steel” production – would remain in place.
But grants and loans to help families better insulate their homes will now be scaled back.
And the investment package will be financed in part by taxes on energy companies' profits, rather than entirely by government borrowing.
The £28bn spending pledge first announced in 2021 has already been significantly reduced by Labour.
Last June, shadow chancellor Rachel Reeves announced that the spending target would not be met until after 2027, rather than the first year of a Labor government.
The party then added about £10bn a year in government spending to its figures, an additional spending commitment of £18bn a year compared to the Conservatives.
Now the party has confirmed that the total extra investment compared to government plans will now be £4.7 billion a year.
It has also said that if it wins power, it will be funded in part by keeping a higher proposed “windfall” tax on energy company profits throughout its first term.
The party now says it hopes to raise £10.8 billion over five years to fund these projects.
Speaking to the BBC, Sir Keir said it was “very sensible” to change the spending plans, adding that it was “irresponsible” to ignore the state of the economy.
“I cannot ignore the fact that the Conservatives have done enormous damage to the economy,” he added.
Labor has insisted the roll-back is necessary to allow the party to meet its spending rules, which stipulate debt must fall as a share of the size of the economy over five years.
Speaking to the BBC, shadow chancellor Rachel Reeves said the Conservatives would leave a “dark legacy” and would make “no apologies” for ensuring Labour's plans were “fully funded”.
However, the move to ditch the spending pledge was criticized by left-wing campaign group Momentum and Unite, Labour's biggest union supporter.
“This latest Starmer U-turn represents yet another capitulation to right-wing interests,” said a motivated spokesman.
Unite leader Sharon Graham said: “The Labor movement must stand up against the Conservatives' false accusations of fiscal irresponsibility.”
Green Party co-leader Carla Denyer said: “This is a massive step backwards for the climate, the economy and good quality jobs.”
Where does this leave Labour's plans?
The effects of Labor's cuts to its green spending are difficult to assess because the party has never detailed where all the money will go.
It has confirmed plans to subsidize households to upgrade home insurance to only five million homes over five years, instead of 19 million homes over a decade.
Funding for this would be £13.2bn over five years, double what the government is currently committing to, but less than Labour's plan.
Commitments that remain unchanged include £1.8bn for nine “renewable-ready” ports.
The pledge also hinges on spending £2bn on eight battery factories and £3bn on “clean” steel, including government spending.
There is also a pledge to spend £500m a year on grants for companies bringing in green jobs – but the party has noted that this will not start until 2026.
The party has never said how much it will spend on GP Energy, the publicly owned clean generation company it wants to set up.
It has now confirmed that this will amount to an “initial” £8.3bn over five years, including £3.3bn for councils and community groups to become “owners of local authority”.