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

12 02 2024 | 07:21Kate Aronoff / THE GUARDIAN

Folding in the face of Tory attacks won’t win Labour any votes. Joe Biden has shown how this spending can pay off electorally

It’s hard, from the US, to feel all that confident about the state of our climate policies. The Inflation Reduction Act – the Biden White House’s trademark legislative achievement, which revolved around green investments – was a major accomplishment. Still, the US is breaking new records for its production and export of fossil fuels, last year extracting more oil and gas than ever before. Even more worrying is just how tenuous the country’s modest progress on the climate feels in advance of November’s presidential election: Donald Trump continues to lead Joe Biden in just about every poll.

However, at the very least, the Biden administration has set a bar for the scale of green investment that centre-left parties should undertake. The same can’t be said of the Labour party, which has reportedly now scrapped its laudable £28bn green spending pledge in favour of some bizarre fealty to its leadership’s own strange idea of fiscal responsibility. So what can Labour learn from the Democratic president’s approach?

To his great credit, Biden took seriously the need to win over progressive supporters of his main opponent in the Democratic primary in 2020. Bernie Sanders was an early adopter of the climate movement’s calls for a “green new deal”, laying out an expansive $16tn plan to tackle global heating and inequality. Biden’s $3.5tn Build Back Better agenda, produced with Sanders and his supporters in consultative roles, was decidedly not a green new deal. It did, however, reflect that platform’s most valuable components, positing climate action as a job creator and driver of 21st-century economic dynamism. Inherent in that was a willingness to spend lots of money, fast, on the things that matter.

Almost as soon as Biden took office, however, climate advocates in the US watched the White House’s already too modest jobs and climate agenda get whittled down to what eventually became the Inflation Reduction Act’s roughly $400bn in new spending on climate and environmental priorities. It’s a shamefully slender programme, given how wealthy the US is, and its outsized historical responsibility for the climate crisis. But it’s also the best we might have hoped for, given the political influence of a fossil fuel industry that’s captured the Republican party virtually wholesale, along with key Democrats such as the West Virginia senator, Joe Manchin.

Without the idiosyncrasies that weakened US climate policy, why do some members of the Labour party seem so keen to negotiate against themselves? The party’s £28bn a year green prosperity plan has now been dropped, thanks to the political cowardice of people such as the shadow chancellor, Rachel Reeves, who was already distancing herself from the policy in an interview with LBC earlier this week. The Labour veteran and podcast host Ed Balls suggested the problem with the plan was the number attached to it – urging Starmer and Reeves to “U-turn” away from it, so as to project fiscal responsibility and deflect repeated attacks from the right that Starmer would raise taxes to fund it. The party establishment is clearly spooked by the spectre of rightwing attacks, as Labour’s latest move so clearly shows.

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.

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.

Cover photo: Keir Starmer, Rachel Reeves and Ed Miliband at the launch of Labour’s policy for all-green electricity by 2030 on 19 June 2023, Edinburgh. Photograph: Murdo MacLeod/The Guardian

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