A message to Starmer from the US: ditching your £28bn climate plan isn’t just cowardly – it’s bad politics

If the US can offer any lessons about how to deal with a right wing yammering on about how green policies allegedly hurt “ordinary people” while preaching painful austerity, it’s that it won’t give you a lick of credit for giving in to its ideas. Neither, moreover, will voters. The planet is even less forgiving. The costs of the climate crisis far outweigh the costs of acting on it. Under present policies, the climate crisis could cost the UK 3.3% of GDP a year by 2050. By 2100, that jumps to 7.4% of GDP a year; in today’s terms, that would be about £168bn.

Labour needn’t look to the future, though, to make a straightforward case for going big on green spending. The Conservatives’ long-running war on good climate policy has already made life more expensive for working-class Britons. David Cameron’s bid to cut the “green crap” entailed doing away with a successful home insulation programme in 2013. And the average household could be paying gas bills of up to £400 lower if the Tories hadn’t axed the energy price guarantee scheme.

While Labour’s green prosperity plan was designed with the Inflation Reduction Act in mind, there was an opportunity for Starmer to improve on it by emphasising the short-term benefits, such as the money households could save from national home insulation projects. Though it’s a hot topic among wonkish types in the US, UK and other parts of Europe, very few people here could tell you what the Inflation Reduction Act actually is. As of last August – a year on from the act’s passage – 71% of US residents said they knew “little or nothing” about it. Why is the White House’s high-profile accomplishment so far from most Americans’ minds? For one, the consultancy McKinsey has found that $216bn of the act’s $394bn in climate and energy-related tax credits will flow to corporations. Meanwhile, many benefits, such as incentives for pricey items such as electric vehicles and solar panels, are completely inaccessible to lower-income people and renters, who account for about 36% of US households.

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Driving investment in low-carbon energy and technologies makes a lot of sense: green industries grew four times faster than the rest of the British economy in 2020-21. But courting private-sector investment in green industries above all else – a sadly salient critique of the Inflation Reduction Act – threatens to leave voters in the dark about the benefits of climate action to their pockets. An active green industrial strategy should go hand in hand with an expansion of the public goods, services and planning capacities it will need to succeed. Upgrading public transit infrastructure and ensuring an abundant, affordable supply of low-carbon energy will be key to the success of the emerging green industries. More important, though, is that these can be the foundation on which Labour – should it ever choose to – builds both a broadly shared green prosperity and its electoral mandate for ever-stronger climate policies.

The last few years of climate policymaking in the US point to at least one clear conclusion: Reeves and those who pushed to kill Labour’s green spending pledge are dead wrong. Labour should be sparing no expense on reducing emissions and improving livelihoods; if anything, £28bn a year is much too little. If party top brass can summon even an ounce of political courage they’ll make another U-turn away from disastrous, outdated economic orthodoxy and revive their more ambitious climate plans. Should that happen, the party can make voters acutely aware of the choice before them – to live a good, green life under Labour, or to let another Tory government take away more of their hard-earned money. Otherwise, the differences between Tory and Labour rule will keep getting harder and harder to spot.