Net zero target will cost ‘hundreds of billions’, Labour MP says in leaked recording

A Labour frontbencher has admitted decarbonising the British economy in the long term will cost “hundreds of billions” of pounds in comments that have been criticised by Conservative opponents.

Darren Jones, shadow chief secretary to the Treasury, was recorded earlier this year at a public meeting in Bristol talking about Labour’s £28bn-a-year “green prosperity plan”, which has since been cut back to £5bn a year.

Asked whether £28bn a year was enough to decarbonise the UK economy, Jones, in a recording given to The Daily Telegraph, replied: “No, it’s tiny. Hundreds of billions of pounds we need.”

The Labour MP made clear he was talking primarily about long-term private sector investment, backed up with some state subsidy.

However, the Conservative party on Wednesday jumped on the comments, with Laura Trott, chief secretary to the Treasury, asking what taxes Labour would put up to fund its green plan.

“This is very serious,” she said. “Rather than costing £5bn a year, the man Keir Starmer would put in charge of the country’s money is saying Labour’s flagship policy would mean spending ‘hundreds of billions of pounds’ more than Labour are telling people in public. This is about trust.”

The Conservatives have said reaching “net zero” carbon emissions by 2050, a target that both parties support, would cost hundreds of billions of pounds.

In 2019, when outgoing prime minister Theresa May introduced the net zero target, her chancellor, Philip Hammond, wrote to her, warning the policy would cost more than £1tn.

But the transition to a cleaner economy will require upfront investments, with promised savings coming later down the line.

The Office for Budget Responsibility, the fiscal watchdog, estimated in 2021 that the cost of reaching net zero by 2050 was about £1.4tn, offset by about £1.1tn in savings.

The Climate Change Committee, which advises the government, has estimated the transition to net zero would bring a net 0.5 per cent GDP benefit to the UK by 2035.

James Alexander, chief executive of UK Sustainable Investment and Finance Association, which promotes sustainable investment, argued it was clear that Jones was largely talking about private sector investments, which he said would play a vital role in transforming the economy.

“This is about an economic transition of the economy. It shouldn’t be framed in cost, it should be framed in terms of investment. We can generate billions of investments for different sectors across the UK,” he said, adding this would deliver a more sustainable economy and new jobs.

“This is about huge private sector investment, which is good for the UK economy. At the moment we are losing out on investment to other countries that are prioritising the green transition,” he added.

Other research has argued the cost of failing to transition to net zero will leave the UK at risk of huge economic losses.

A policy brief from London School of Economics’ Grantham Research Institute forecast that under current policies, the cost of climate change damages are projected to increase from 1.1 per cent of GDP today to 3.3 per cent by 2050.

Bob Ward, policy director at the institute, said: “The economic evidence is clear. If the UK wants to avoid the costs in the future of trillions of pounds in damage to lives and livelihoods from climate change impacts, it will need to invest in the transition to net zero emissions.”

A Labour spokesperson said its green plan was “fully funded and fully costed” in part through a tax on the oil industry.

“The policies in the green prosperity plan represent £23.7bn of investment over the course of the next parliament,” they said. “A large part of this will be funded by a windfall tax on oil and gas giants . . . and borrowing to invest. By providing stability and initial public investment, our plan will crowd in billions of private capital over the longer term.”

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