Labour’s screeching green U-turn completes stunning return to the centre ground

The shadow chancellor Rachel Reeves has reinforced a reputation for prudence matching that of Gordon Brown and New Labour – her latest smart manoeuvre shows an expert hold on the wheel, writes John Rentoul

By drawing attention to Liz Truss’s disastrous experiment with unfunded tax cuts, Rachel Reeves (R) is making the point that the markets will constrain what a Labour government can do (PA Wire)

This is a big moment for the Labour Party. Rachel Reeves, the shadow chancellor, has just completed the seizure of the centre ground of British politics. On the BBC’s Today programme this morning, she abandoned her policy of big borrowing for green investment.

She ingeniously managed to blame the government for the U-turn, saying: “I did not foresee what the Tories would do to the economy – maybe that was foolish of me.” But she accepted that Labour would be unable to borrow as much as £28bn a year in the early years of government and that “financial stability has to come first”.

It has taken a while for this penny to drop. I commented after Jeremy Hunt’s autumn statement in November, in which the chancellor invented a new fiscal rule, limiting annual borrowing to 3 per cent of national income, that if Keir Starmer accepted it, this would mean “Labour’s great big £28bn-a-year green investment plan has gone out of the window”.