Labour’s £28bn green package was always a terrible statist policy

Sir Keir Starmer has finally applied the axe to his much-trailed, much-discussed £28 billion green energy policy. He won’t like a lot of the reaction: he’s either not committed to a green energy revolution or he’s a flip-flopper wilting in the face of scrutiny. Whether this U-turn cuts through to the electorate in the face of yet more stunningly maladroit comments from our Prime Minister is hard to know. But really Starmer should be sighing with relief that he’s managed to ditch this gold-plated turkey of a policy and found a convincing reason to do so. The best reason to ditch this policy is not because of the fabled £28 billion but because it was a terrible policy in itself: statist, interventionist, poorly targeted, non-sensical and undeliverable. 

Here’s Gary Smith from the GMB union in The Spectator last year on decarbonising the national grid by 2030: “I don’t even worry about it, it cannot be done. The National Grid can’t get [undersea] cables. There are four suppliers of cables in the globe. They’re all booked out to 2030.”

But commissioning undersea cables is just one reason that decarbonizing the national grid can’t be completed by 2030 and a serious policy unit within the Labour Party would have known that. Indeed, they could simply have looked out the window on a dark and dank winter’s day and asked themselves what they think would likely be the main power source on a day when the wind doesn’t blow and the sun doesn’t shine? 

But they could also have asked themselves why creating a publicly-owned green power was the answer to the problem they were trying to solve. It’s hard to avoid the thought that policy wonks started from the perspective that state-owned-equals-good and then looked at publicly-owned European power companies like EDF in France. Having liked what they saw, they didn’t do even the most basic due diligence as to why those European companies are publicly owned – and the answer, especially in EDF’s case, is not encouraging.

Reading the policy again, it’s still surprising how much of what Labour proposes, and note that they’re still proposing this plan as the way forward for energy in the UK, is based on wishful thinking; a high-cost Field of Dreams type of “if you build it, they will come” approach to a complex problem. They also start from the unhelpful perspective that everything in the UK has gone to the dogs. True in many parts of the public realm for sure but not, as it happens, in the energy sector where the Tories, by accident or design, will leave a legacy that Labour could very easily build on and take the credit for.

It doesn’t help that NGOs loathe the Tories too with Mike Childs from Friends of the Earth telling the FT this morning that the UK “is already lagging behind other countries in the shift to a new low carbon-economy.” No doubt there are some metrics where this might be the case but the uncomfortable truth for many on the left of the political spectrum is that the UK remains a global leader on climate change. 

As Greenpeace points out, the UK will phase out coal power this year versus Germany’s target of 2038. Over the past year, just 35 per cent of power in the UK was generated by fossil fuels. So for Labour, this means continuing the Tories’ approach to wind farms, to solar, to the UK North Sea and to subsidising and carefully selecting those projects that really might make a difference like Tata’s 40 GW battery factor in Somerset. And that subsidy is a good example of where Labour needs to realise, contrary to their interventionist inclinations, that the private sector is where the action already is. Government can, should and does help this most critical of sectors but, as Labour’s dog’s breakfast of a policy shows, it’s best left to the experts.

Starmer has shown throughout his time in office that he can be the grown-up in the room when he chooses to be. He’s done this today by axing this $28bn spending commitment that was clearly making him and Rachel Reeves nervous and nauseous. But his next step should be to junk his party’s entire energy policy and start again from scratch and this time Starmer needs to make sure that it’s done properly. 

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