Families face £1,000-a-year bill for Labour eco plans: Starmer shows signs of wobbling on ‘naive’ £28BILLION net zero strategy while Treasury analysis warns it will drive up mortgage costs
- Labour’s green energy plans will drive up mortgage rates, ministers warned
Labour’s ‘bonkers’ green energy plans will drive up mortgage rates and make Britain more reliant on foreign oil and gas, ministers warned last night.
Treasury analysis suggests that the idea of investing £28billion a year in tackling climate change could increase interest rates by 0.75 per cent, piling misery on millions of homeowners.
The study said a rise of that level would see the standard interest payments on a £200,000 home loan go up by £83 a month, almost £1,000 a year.
Quizzed about the proposals, Labour hinted the pledge could be scaled back, with a spokesman saying the final plan would be ‘subject to our fiscal rules being met, which includes getting debt falling.’
The Treasury’s analysis warns the unfunded spending would leave the Government and Bank of England ‘pulling in opposite directions’ over inflation.
Keir Starmer has come under fire from all sides over his move to halt new investment in North Sea oil and gas
‘The Bank of England will offset looser fiscal policy with higher interest rates, weighing on the recovery,’ it states.
‘If interest rates go significantly higher, it could cause financial and market stability risks that lead to a recession.’
The green spending plan was announced in 2021 before global inflation took off – and interest rates followed. Senior Labour figures are debating whether it will have to be scaled back to reflect the more straitened economic circumstances.
The warning emerged as Keir Starmer came under fire from all sides over his move to halt new investment in North Sea oil and gas.
The Labour leader faced criticism from both business and unions after confirming he would ban new extraction licences in the North Sea – a key demand of the campaign group Just Stop Oil.
Offshore Energies UK, which represents the industry, warned the plan would see the UK’s reliance on fossil fuel imports rise. And unions called on the Labour leader to adopt ‘plans, not bans’ amid fears for jobs.
Sir Keir will try to placate the unions today by offering to strengthen their role if Labour wins power.
In a speech to the GMB, he will say: ‘Labour in government will work with unions. We will always see the fight for working people as our driving purpose. We will strengthen the role of trade unions in our society, and I want to see Amazon and businesses like it recognise unions.’
The Labour leader faced criticism from both business and unions after confirming he would ban new extraction licences in the North Sea – a key demand of the campaign group Just Stop Oil
A Labour spokesman dismissed the Government’s criticism of its ‘Green Prosperity Plan’, saying: ‘Labour will invest in the long-term productive capacity of our economy, boosting growth and strengthening the public finances.
‘Delaying investment in the low-carbon transition will simply mean higher costs in future.’
But a Cabinet source described the Labour proposal as ‘stark raving bonkers’, and warned that it would increase carbon emissions and threaten energy security by making the UK more reliant on imports. David Whitehouse of Offshore Energies UK said it made no sense to halt investment in the North Sea while domestic demand for oil and gas remained high.
‘In the UK today, 75 per cent of the energy – what drives our cars, our boilers, our energy – is from oil and gas,’ he told BBC Radio 4’s Today programme.
‘We domestically produce about 50 per cent of that. If we choose now to eliminate further investment that means that 80 per cent will have to be imported by the end of the decade.
‘That has real-world implications for our energy sector. It means choosing to import oil and gas from countries that do not share our climate goals, and it means exporting the jobs and skills we need to secure our energy transition.’
Speaking on a visit to the site of the new Hinkley Point C nuclear power station in Somerset yesterday, the Labour leader tried to reassure unions that his proposal would not mean an immediate end to extraction in the North Sea.
Sir Keir said existing licences meant North Sea oil and gas would continue to be part of the energy mix ‘for many, many years to come’. But he said there was a ‘once-in-a-generation opportunity now to seize the jobs of the future’ by embracing green energy.
Gary Smith of the GMB union, which is a major Labour donor, described the plans as ‘naïve’ at the weekend and warned of a ‘cliff edge’ for jobs.
At the union’s conference yesterday, he called for ‘plans not bans’, and warned it would be a ‘huge mistake’ to focus solely on green energy. ‘The energy we are going to need in the future, isn’t guaranteed. We still import too much,’ he said.
Sir Keir yesterday also vowed to proceed with a new generation of nuclear power stations, and accused the Government of dragging its feet on the issue.
‘It’s shambolic that after 13 years of Tory government, not one of the ten nuclear sites approved by the last Labour government has been built,’ he said.
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