THE Labour Party’s biggest remaining promise is a Green Prosperity Plan, promising to spend “£28 billion per year” investing in green jobs and insulation. That sounds like a big offer. But what does it say in the small print?

Shadow chancellor Rachel Reeves’s plan is modelled on Joe Biden’s Inflation Reduction Act. Looking at Biden’s scheme gives us clues to what will happen with Reeves’s plan.

Biden’s Inflation Reduction Act (IRA) is a trimmed-down version of his original “build back better” plan. That was an ambitious, New Deal-style mix of social and economic investment.

It would have put billions in public money into the US’s physical infrastructure — roads, electric transport, broadband — and also its social infrastructure: free nursery and college education and extending public healthcare.

Biden, a centrist Democrat, made this turn left because the Democrat establishment was scared of Trump. “The Donald” was close to beating them in an election; his promise to “make America great again” might have been bullshit, but was still more attractive than the standard centrist Democrat offer to merely tinker with the system.

Biden realised that only borrowing some of Bernie Sanders’s agenda could definitely beat Trump.

The US Establishment is also worried about long-term US decline, worries exacerbated by strains the Covid pandemic put on the US economy, so less resistant to some state-directed investment and a splash of economic nationalism.

Democrats are still going to be Democrats, so a tiny right-wing Democrat rump blocked and trimmed Biden’s “build back better” into his current IRA.

Biden’s IRA is still more substantial than Democrat offerings for decades. It will spend $391bn on energy and climate change investment — with grants and tax breaks for all kinds of “green” manufacturing, insulation and so on. The IRA also has some direct “social” investments, like three years expansion of the Affordable Care Act — which, in absence of a universal health service, funds some public healthcare.

Rachel Reeves explicitly modelled her Green Prosperity Plan on Biden’s work. In her speech this January to the Fabians, Reeves highlighted how the “Biden administration’s IRA has galvanised green energy in the United States.”

Her deputy Pat McFadden argues “right now in the United States, job opportunities and investments throughout the country are being driven by the IRA” so Britain needs to do the same.

Reeves likes Biden’s plan. She will have also liked the fact that some of the top bankers and corporate types she met at Davos are less resistant to this kind of state-directed investment than they used to be. But that doesn’t mean it will be a done deal if and when she becomes chancellor after Keir Starmer becomes PM in 2024.

There are four reasons to worry Reeves’s Green Prosperity Plan might be less than promised.

Firstly, Biden’s plan relies on taxing and standing up to corporations and the rich: it increases corporate taxes and forces “Big Pharma” to reduce drug prices. By contrast, Reeves keeps promising not to increase taxes on corporations, apart from very selective short-term “windfall taxes.” Reeves crawling to corporates could easily hobble her plan.

Secondly, there is a big question of political direction. Biden sought to co-opt the “insurgent” Democrat left. Of course, there were limits: Biden picked the entirely pointless Kamala Harris even over the moderately left Elizabeth Warren as his “veep”– a choice which limited his reform agenda. But Sanders is a respected member of the Democrats, his policy agenda cherry-picked by Biden.

By contrast, Reeves and Starmer are desperate to distance themselves from any trace of Corbynism, chucking out popular policies in favour of a hot and heavy embrace of the corporate class.

A Labour Party defining itself largely by not being left-wing is much less likely to be able to — or even want to — stand firm if some City interests resist any regulation or taxation associated with her Green Prosperity Plan.

Thirdly, there is ambiguity about the plan itself. Will Labour invest £28bn of public money in green industries and measures?

Their plan says: “Our Climate Investment Pledge will transform our economy” by “investing £28bn of capital into the green economy for each and every year over this decade, with strategic public investment attracting private sector investment.”

Does this mean £28bn of public cash? Or a much smaller amount of public “seed” money to attract a greater amount of private investment?

I asked Labour for clarification and got no reply, which makes me think it is probably the latter. This raises another danger. If we are going into public-private partnerships on big investments there is a big chance the public sector will get the risk, and the investors the reward.

When investments go tits-up (a technical finance term), the state will be forced to bail out failure. When investments make big money, the spivs will run off with all the cash. This is not a theoretical problem, it is what happened with the infamous Private Finance Initiative.

Fourthly, it is striking that all of Reeves’s plans are really for “funds” rather than solid social institutions. There will be a “national wealth fund” — and GB Energy looks more like an investment fund than an actual energy producer.

There is nothing inherently wrong with Labour setting up state investment funds to finance productive, socially valuable businesses. The 1945 Labour government did this with the very successful Industrial and Commercial Finance Corporation (ICFC), which invested in Britain industry. The experience of the 1930s showed Labour that the City would not invest in Britain like this without state intervention. But the ICFC was founded alongside many durable social institutions, including the NHS, the welfare state and nationalised industries.

A “fund only” approach is easier to overturn — like the “green investment bank” launched by David Cameron and quickly privatised. It may be that the Labour right sees this fund-based approach as a good way of levering themselves into future corporate jobs and providing Peter Mandelson’s clients with easy opportunities. But it is an approach more easily blown off course.

The actual size and shape of Labour’s Green Prosperity Plan is very much up for grabs. Only consistent political pressure can make sure it is a big environmental investment, not a small career assister for a few Labour hangers-on.