Rachel Reeves won shadow cabinet ‘war’ on £28bn U-turn, insiders say

Keir Starmer (Photo: Stefan Rousseau/PA Wire), Shadow chancellor Rachel Reeves Stefan Rousseau/PA Wire; Ed Miliband MP, Shadow Secretary of State for Energy SPhoto: Christopher Furlong/Getty Images)

Shadow Chancellor Rachel Reeves won an internal battle at the top of Labour that resulted in Sir Keir Starmer deciding to U-turn on a pledge to spend £28bn on green investment.

The Labour leader was forced to deny on Thursday that Ms Reeves was running the party’s policy agenda, insisting the two are “in lockstep”, a phrase echoed by a source close to the Shadow Chancellor on Friday.

But party insiders believe Ms Reeves effectively won a months-long Shadow Cabinet “war” in which Ed Miliband was defending the policy until it was finally ditched on Thursday.

Mr Miliband, the Shadow Energy Secretary, has since rowed in behind the policy and said Ms Reeves was “absolutely” clear the pledge to spend £28bn a year on the green growth plan was subject to the party’s fiscal rules not to borrow to fund day-to-day spending and to reduce national debt as a share of the economy.

A source on the Labour left said: “My understanding is it’s Reeves doubling down on the fiscal rules rather than Starmer.

“There’s an element of fiscal rules trumping everything else.”

Another insider suggested Ms Reeves had won an internal battle over the policy because she has the backing of the dominant factions such as Labour Together and Labour to Win, which are seen by some in the party as Blairite.

“The factional machinations inside the party are more loyal to Reeves than him (Starmer). He (Starmer) was always seen as a placeholder to defeat the left and bridge to the likes of Streeting or Reeves.

“He would not win an internal war with her.”

This characterisation was however rejected by a source familiar with Labour Together’s thinking. “Every sensible person connected to the Labour Party is working towards the same goal – ensuring Keir Starmer is the next prime minister so we can be rid of this divided, failing Tory Government and get Britain’s future back,” they said.

A source close to Ms Reeves insisted the Shadow Chancellor was “genuinely in lockstep” with Sir Keir, adding: “The fiscal rules rule, they are the guiding principle because otherwise we are not going to win, and Rachel is responsible for them.”

In an interview with Channel 4 News on Friday, Mr Miliband said: “”In that speech that she [Rachel Reeves] gave at the party conference [in 2021], she absolutely said it [£28bn] was subject to our fiscal rules. She was clear we’re going to meet our fiscal rules. “

He also denied considering resigning.

“Absolutely not,” Mr Miliband said.

“Because the test I apply is: are we going to go into the next election, if we’re the next government, am I going to be able to be the energy secretary who can genuinely say Britain is leading the world?

“Britain is going to move the dial on climate and that is the test.”

Pressed on whether Labour had junked its promises, the Shadow Energy Secretary said: “It will take us longer to achieve what we wanted to achieve, that is correct.

“But what this constituency wants, what people who live in my constituency want is they want good jobs, and this is what green investment offers.

“They want a publicly owned energy company.

“So I feel we will be able to go into this election with a manifesto that is bold, that is transformative, that is radical, that is a massive contrast to the Tories.”