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Rachel Reeves will announce new restrictions on Labour’s plans to invest in new low-carbon energy production next week, pledging that the party’s proposed “national wealth fund” must attract at least £3 of every £1 invested. Sterling private sector investment.
According to her aides, the shadow chancellor’s pledge is intended to show that Labor will not pour billions of pounds of state money into green schemes if it wins next year’s election unless they have the potential to generate business for the taxpayer Return.
Reeves will address the party’s annual conference in Liverpool on Monday, which starts on Sunday and runs for four days.
Under the party’s current plans, a Labor government would borrow up to £28 billion a year to invest in a “green prosperity package” that would exceed US President Joe Biden’s similar inflation-cutting bill on a per-capita basis.
The money will be spread across a variety of schemes, from the National Wealth Fund to domestic insulation schemes to UK energy companies investing in low-carbon energy schemes.
The National Wealth Fund aims to co-invest in projects that are deemed essential to the energy transition and the future of UK industry but fall outside the scope of energy production.
Reeves hopes it will take stakes in projects such as eight new electric vehicle battery “gigafactories”, six clean steel plants and nine “renewable energy ready” ports.
On Monday, she will say that introducing a 3:1 ratio for the fund should force £24bn of private sector investment into the UK.
Reeves will say a Labor government will help companies make the low-carbon transition so they are not forced to do the “heavy lifting”. But she would add: “Financial responsibility means knowing when not to spend money and getting your money’s worth.”
The comments in Reeves’ speech reflected the nervousness among some Labor MPs over the massive green prosperity plan, which was conceived in an era of near-zero interest rates. At the time, the policy did not attract much attention.
But this summer, as borrowing costs rose sharply, some City figures raised questions about the £28bn a year of debt being added to the government’s balance sheet.
As a result, Reeves said in June that the £28bn figure would not be reached until halfway through the next five-year parliament and that she would tighten the policy further if it threatened to breach her fiscal rules. Under the rules, which are designed to boost voters’ confidence in Labour’s economic management, the Labor government is obliged to reduce public debt as a share of gross domestic product within five years.
However, Labor insists on an overall green prosperity plan, arguing that without it the UK will be left behind by a more interventionist approach to the low-carbon transition from China, the US and the EU.
Prime Minister Rishi Sunak last month postponed a series of targets to tackle climate change, including postponing a ban on the sale of new petrol and diesel cars, to avoid what he called an “unacceptable impact” on “struggling British families”. the cost of” . But some business leaders complain that the changing regulatory environment is undermining their ability to invest with confidence.
Reeves will argue on Monday that the National Wealth Fund will help boost business investment in the UK, which has been at the bottom of the G7.
She is also expected to set out how a Labor government will reform the planning system to ensure faster delivery of key infrastructure projects.
Labor donor Dale Vince, founder of the green energy group Ecotricity, said Friday he would stop funding direct action climate groups like Just Stop Oil.
Instead, Vince said he would put money into winning votes for Labor at the next election. The entrepreneur has donated £1.5 million to the party in recent years.
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