Labour has slashed more than £100 billion from its flagship plan to boost spending on green energy projects.
A ‘Warm Homes Plan’ to insulate 19 million homes in 10 years has been scaled back to 5 million in 5 years as part of the climbdown.
The shadow chancellor announced in 2021 that a Labour government would spend £28 billion a year over the course of the next five-year parliament - a total of £140bn - on projects to tackle climate change.
Reeves watered that down last summer by announcing that the spending target would not be reached until the second half of the parliament.
It has now been confirmed that the £28bn figure has been dropped entirely, and that the party plans to spend £23.7bn over five years instead - which is just £4.7bn a year and a reduction of £116bn from what was originally announced.
Nearly £11bn of that will come from an extension of the windfall tax on oil and gas company profits, with the rest of it being borrowed.
The climbdown follows months of speculation that the £28 billion figure was being ditched, and comes in the face of Tory claims the spending spree would lead to tax rises and send interest rates soaring.
Starmer said the £28bn commitment was being “stood down” because Liz Truss had “crashed the economy”, while Jeremy Hunt plans to spend any spare Treasury cash on tax cuts ahead of the election.
He said: “If the government says ‘we’re going to max out the credit card’, that’s a real problem.
“We’re going to inherit an economy that’s very broken and we have to adjust to the circumstances.”
Despite the scaling back of Labour’s original plans, Starmer insisted the party was still committed to delivering a zero-carbon electricity system by 2030.
A publicly-owned Great British Energy company will also be set up with a start-up fund of £8.3bn.
Meanwhile, a £7.3bn National Wealth Fund - with the private sector providing £3 for every £1 of public cash - will invest in electric vehicle production, clean steel and carbon capture and storage.
However, the scaling back of the party’s original plans have been condemned by some Labour MPs, other political parties and green campaigners.
Mike Childs, head of policy at Friends of the Earth, said: “By seriously watering down its warm homes plan, the Labour Party has turned its back on the people who most urgently need these essential upgrades – the many millions of low-income households suffering from living in poorly insulated homes.”