Why Labour's drive for economic growth risks a green backlash

Independent

19-04-2025

On the face of it, the government's shake-up of planning rules to boost housebuilding and infrastructure projects makes sense and should encourage economic growth. The Office for Budget Responsibility fiscal watchdog has acknowledged it in a rare piece of good news for Rachel Reeves.
Yet there is another side to this story. The government's narrative is that it is on the side of the 'builders' and taking on 'the blockers' holding the country back. A chief villain is 3,500 environmental regulations. When ministers published a review of these rules this month, they promised 'no more bat tunnels' – a reference to the infamous £100m tunnel in Buckinghamshire for the HS2 project.
But, not for the first time, Labour's rhetoric was not matched by reality. The review, by Dan Corry, who headed the Downing Street policy unit under Gordon Brown, opposed the 'bonfire of regulations' pro-growth campaigners wanted, instead calling for the rules to be streamlined to avoid needless duplication. Crucially, Corry found: 'We have only rarely had instances suggested to us where development was stopped by environmental regulation alone.'
You wouldn't have known that from the spin with which the government launched the report. It garnered headlines by promising to cut 'archaic green tape' harming growth. Ministers insist their planning shake-up is a 'win, win' that will both protect nature and grow the economy.
Indeed, Corry suggested the current system is not working for either. But green groups fear the playing field has been tipped decisively against the natural environment even though the UK has a poor record on protecting it.
Ministers claim a new nature restoration fund, allowing builders to finance nature projects away from the site being developed, will enhance the natural environment more quickly. That is doubtful: many schemes will take years and some things, like ancient woodlands, are irreplaceable.
The green lobby is right to be worried. Reeves recently summoned the heads of bodies including Natural England and the Environment Agency and warned them they would be abolished or merged unless they put growth first. 'The regulators are on notice; they have got a year,' one Whitehall insider told me. It seems the Treasury wants to water down targets set by the previous Conservative government to improve nature by 2030 by turning them into vaguer aspirations.
There's a parallel battle going on over net zero. As part of the government-wide spending review, Whitehall whispers suggest the Treasury wants to cut the £8bn budget of GB Energy – a blow to Labour's promised green energy revolution. Some Labour figures are pressing Keir Starmer to lift the government's ban on issuing new oil and gas licences in the North Sea, which would be a huge U-turn.
There's a whispering campaign against Ed Miliband, with some Starmer allies wanting him moved out of his job as energy secretary at the next cabinet reshuffle. Miliband allies point to figures showing the net zero economy is growing three times faster than the overall economy. The 'go for growth' lobby counters that the current planning regime holds up green infrastructure projects like wind farms.
True, Labour will be judged on its record on growth and living standards at the next election rather than the number of bats or newts. Yet some Labour MPs worry that the government risks throwing out the baby with the bath water and provoking a 'green backlash' from voters.
Although Downing Street strategists view Nigel Farage's Reform UK as the main threat to Labour, Starmer's party has lost more support to the Green Party and the pro-environment Liberal Democrats since last year's election than to Reform. Climate change and the environment was the third most important issue why people backed Labour last year after the cost of living and the NHS, according to More in Common.
Some 44 per cent of 2024 Labour voters say slowing action against climate change would be a deal-breaker that would stop them voting for the party. Labour's stance on green issues could alienate young adults in particular. The Greens are already in second place behind Labour among 18-24 year-olds.
Starmer aides insist the next election will be decided in the North and Midlands red wall, which explains the PM's recent shift to the right to combat Farage who, like Kemi Badenoch, opposes the 2050 net zero target.
However, there are growing rumblings of concern inside Labour that it is ignoring the threat to its left flank. These critics point out the party's wide coalition last year includes middle-class, southern 2016 Remainers, as well as voters in the red wall. Many Labour MPs have small majorities; one estimate suggests a 1.5 per cent swing to the Lib Dems would take enough votes from Labour to allow the Tories to win 80 seats without raising their own support.
Diluting Labour's green credentials, as the party is now doing, will make such a swing more likely. As one Labour backbencher put it: 'We shouldn't ditch our environmental commitments to take on Reform. We can't ignore the green vote.'