UK needs ambitious green plan to keep up with allies, says Labour frontbencher

Britain needs its own ambitious green investment plan to keep up with its allies, a Labour frontbencher has said, amid an increasingly bitter row over whether Keir Starmer should stick to his £28bn pledge.

Jonathan Reynolds, the shadow business secretary, said the UK should come up with a version of Joe Biden’s $369bn (£290bn) Inflation Reduction Act, which has provided support to a range of technologies including electric cars and renewable power.

Speaking from Davos, Reynolds warned that the UK risked losing business to the US if it did not commit to a significant plan of its own, even as some around the Labour leader said it would risk damaging the party in the polls.

As Labour officials race to finalise the main manifesto commitments in time for its 8 February deadline, the fate of its green prosperity plan remains one of the main unanswered questions.

Reynolds’s comments will bolster the arguments of those who have urged Starmer not to drop it in the face of a sustained Conservative attack.

Reynolds said Biden’s act was “probably the most significant disruption to investment capital markets in 40 years – a greater impact than the pandemic and the global financial crisis … we’ve got to respond to that. We’ve got to increase our competitiveness, we’ve got to understand there’s a huge offer there from the US.”

Labour officials will meet this week to discuss the £28bn promise, and further meetings are planned between shadow ministers in the coming weeks.

Some in the shadow cabinet believe the policy, launched in 2021, should be ditched given that the UK faces much higher borrowing rates and Labour is desperate to avoid making unfunded spending commitments.

However, others say the policy is the party’s main economic and environmental offer to voters and that dropping it will only intensify accusations that Starmer cannot be trusted to keep his promises. Like Reynolds, they make the point that the UK could lose business to the US if it fails to come up with its own version of the US act.

“What’s so significant about the Inflation Reduction Act is, they have