Labour’s 'bonkers' Net Zero plans to cost taxpayers nearly £800bn, warns tax expert

Labour’s “bonkers” Net Zero transition will saddle British taxpayers with an eye-watering bill of almost £800 billion, a UK-based tax consultant has claimed.

Bob Lyddon was speaking after shadow minister Darren Jones admitted the green plans would cost “hundreds of billions” in an audio clip leaked yesterday. Prime Minister Rishi Sunak challenged Labour leader Sir Keir Starmer on the issue during last night's BBC debate.

The founder of Lyddon Consulting Services has pored over Labour’s commitment to “make Britain a clean energy superpower” by achieving the Net Zero target by 2030.

He told Express.co.uk: “We already know that Labour’s originally expressed intention of spending £28bn per annum over 5 years on Net Zero and doing that by outright borrowing. That would have been a spend of £140bn over the life of the Parliament.

“Now it becomes clear that Labour have not dropped that intention, but will tap ‘private finance’, meaning a re-run of PFI, where most of the money is borrowed and there is hardly any equity, like InvestEU.”

In accordance with Labour’s Fiscal Plan, the equity would be injected into the economy via the two new quangos Labour is planning to create - Great British Energy (£1.7bn) and the National Wealth Fund (£1.5bn).

Of this £3.2bn, £2.4bn will be borrowed, Mr Lyddon pointed out, with just £0.8bn – 0.6 percent of the whole – being money “the UK really has”.

The two quangos were likely to issue guarantees or commitments to buy shares in the privately owned companies which will build the green energy capacity, as well as lending into the schemes, Mr Lyddon pointed out.

He continued: “The £140bn would be based on £0.8bn of real equity and £2.4bn of (borrowed) equity, showing up in the UK national debt.

“That is not how the cash is raised however. If we infer that Labour plan to replicate InvestEU in terms of the structure and the arithmetic of how the money is raised, we come to £140bn exactly, based on the how InvestEU multiplies the capital of the European Investment Fund, and the assumption that Great British Energy with its equity of £1.7bn will play the same role.”

Referring the the aforementioned EU scheme on which he says Labour’s plans are modelled, Mr Lyddon said: “€7.4bn of capital was enough for the European Investment Fund to issue €76bn of guarantees and commitments to buy shares to InvestEU projects at the end of 2021. The ratio of capital-to-guarantees to commitments is 1-to-10.27. “

Using the same metrics, equity of £1.7bn could enable Great British Energy to issue £17.4bn of guarantees and commitments to buy shares (1.7 x 10.27).

That in turn would enable a total of £140bn of finance to be raised and spent on green energy projects (17.4 x 8.05).

Therefore the £140bn would be raised from £17.4bn, consisting of private parties who put up the capital; £9.8bn in loans from the National Wealth Fund; £112.8bn in loans from other private parties, possibly members of Defined Contribution pension plans, Mr Lyddon argued.

He added: “Of course, what this does not tell you is how much UK consumers and businesses end up paying.”

Referring to the approach adopted by Tony Blair’s government in the 1990s, he explained: “For that we can look at New Labour’s PFI. £50bn of capital expenditure translated into £278bn of cost through to 2053, a ratio of expenditure-to-cost of 1-to-5.56.

“On the same measure our total bill for Labour’s Net Zero Transition will be £140 x 5.56 = £778bn.

“Labour’s plans, which they won’t admit to openly, are bonkers in themselves and a disaster for all British families. Like with their PFI splurge, we will be saddled with huge payments for decades.”

In a recording obtained by the Telegraph, an audience member at a Bristol meeting told shadow treasury minister Mr Jones even £28 billion a year was not enough to decarbonise the economy.

Mr Jones replied: "No, it’s tiny. Hundreds of billions of pounds we need."

Labour’s manifesto states: “We have tremendous untapped advantages: our long coast- line, high winds, shallow waters, universities, and skilled offshore workforce combined with our extensive technological and engineering capabilities.

“With a serious industrial strategy and a genuine partnership between the public and private sectors, we can make Britain a clean energy superpower.”

It adds: “Labour will take decisive action to seize this economic opportunity. We will shape markets, and use public investment to crowd in private funding.

“At the heart of our approach will be our Green Prosperity Plan where, in partnership with business through our National Wealth Fund, we will invest in the industries of the future. Our plan will create 650,000 jobs across the country by 2030.”

Express.co.uk has contacted the Labour Party for comment.