Starmer forced to deny Reeves is running Labour after £28bn green spending U-turn
Sir Keir Starmer has been forced to deny that Labour’s policy agenda is being driven by Rachel Reeves instead of him – insisting that the two are “in lockstep”.
The shadow Chancellor is widely credited with the decision to cut the party’s green spending promises in half, sparking turmoil in the party after months of internal rows.
But the Leader of the Opposition played down any suggestion of a rift, saying on Thursday: “We operate together, we are in lockstep. I’m obviously leader of the party – these are our decisions.
“Rachel and I share our thinking, our analysis on all things economic but also on all things political. We are very, very closely aligned – that is why our offices are on the same the corridor, our teams basically intermingle.”
Rumours are flying around among Labour MPs that Ms Reeves and Pat McFadden, the party’s campaign chief who was previously right-hand man to the shadow Chancellor, pushed Sir Keir into cancelling the previously announced policy of spending £28bn a year.
One backbencher who wants to see a more radical economic plan told i: “I don’t understand how she plans to grow the economy without proper investment. If you run an economic strategy where you fight all your battles on Tory territory, you are never going to win those battles.”
A business source said the view in the corporate world was that members of the shadow Cabinet “work for Rachel and Keir – in that order”.
It was Ms Reeves who first announced the “green prosperity plan” at Labour’s 2021 party conference, saying: “I will be Britain’s first green Chancellor.” The timing proved unfortunate, with interest rates beginning to rise within weeks of her speech, making the borrowing needed to deliver the promised investment much more expensive.
Over the course of last year the pledge was watered down in stages: the party said the full £28bn figure would not be reached until the second half of a first term in power, and it also revealed it would take into account any green infrastructure investment already committed by the Government.
Ed Miliband, the shadow Energy Secretary, began to worry about having his funding yanked away from him. While the deliberations were going on, a member of his team remarked: “If Keir thinks he needs two wings of the plane to fly, then it’s obvious that we are the second wing.”
Reports began filtering out of a tug-of-war between Mr Miliband and Ms Reeves, as it became clear the shadow Chancellor was winning: last month, Sir Keir openly admitted for the first time that he was willing to ditch the £28bn plan if it became unaffordable. Labour began being more and more spooked by political attacks from the Conservatives – at Treasury questions in the House of Commons on Tuesday, Tory MPs mentioned the policy nine separate times, accusing Labour of having no way to fund it.
As they confirmed the U-turn, Sir Keir and Ms Reeves claimed one reason for their change of mind was Jeremy Hunt’s promise to use all his fiscal headroom for tax cuts. A Conservative source retorted by summarising Labour’s policy as: “The Tories have ‘maxed out the credit card’ by using all available headroom to cut taxes. But we support those tax cuts, and won’t reverse them either. We are very clever.”
Another wildcard has been the role of Sue Gray, Sir Keir’s chief of staff. She has ordered shadow ministers not to make any criticisms of the Government which could then be held against them in office. One frontbencher told i: “The Sue Gray effect is amazing, that sense of professionalism – the feeling that anything you say as a shadow minister could be used against you in literally a few weeks’ time.”
It is understood that even internally, it was not until the weekend that the leader and Ms Gray agreed to junk the £28bn policy altogether. Sir Keir still backed the figure in an interview on Monday – leading to tricky questions about whether he was being honest with the press and the public.
He said on Thursday: “We have to have robust and honest decisions with our colleagues and with others about this, and therefore those two things have to happen at the same time. And until you get to the final decision, you don’t actually know what you are going to change and what you are going to keep.”
But for some MPs, the commitment to economic prudence will not compensate for a lack of ambition. One said: “People are really f**ked off on this. We will be in a situation where we can’t get a second term because we haven’t done anything.”
