The shadow chancellor, Rachel Reeves, has delayed plans to borrow £28bn a year for a green prosperity fund under a Labour government, as a result of the poor economic backdrop.
Reeves, who is keen to demonstrate fiscal responsibility, said Labour would now “ramp up” to the annual £28bn plan by halfway through a first parliament.
She said she could not have predicted the market crash caused by the former prime minister Liz Truss’s plans for unfunded borrowing for tax cuts last autumn, which created the difficult economic backdrop.
“No plan can be built that is not a rock of economic and fiscal responsibility … I will never play fast and loose with the public finances,” Reeves said on Friday.
She told BBC Radio 4’s Today programme her fiscal rules would be non-negotiable, so Labour would move to the £28bn green investment gradually rather than immediately if the party wins the next election.
Reeves said she was “on the same page” as Keir Starmer, the Labour leader, and Ed Miliband, the shadow energy secretary, regarding the need to scale back the ambition of the plan.
Reeves unveiled the plan to spend £28bn a year on climate measures two years ago, promising to be the UK’s “first green chancellor”, and it remains the party’s biggest spending pledge. Labour has already committed to using parts of the fund for a range of green schemes, including £60bn to pay for home insulation and £8bn to invest in green industries.
The Guardian revealed this month that shadow cabinet ministers had asked Reeves to expand the fund’s green mission and use it to pay for a series of capital spending projects, such as housing or transport infrastructure.
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Reeves had indicated to colleagues there would be no additional money to pay for major infrastructure spending, leaving shadow ministers battling to claim a share of the green fund for their own projects.
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