The climbdown had been widely anticipated as officials urged the Labour leader Keir Starmer to reconsider the 2021 pledge due to tight borrowing conditions and inflated spending costs.
The prime minister has now claimed that the opposition’s flagship policy is “in tatters” as he pledged to reward working people with tax cuts and said the economy was performing better.
Labour has been heavily criticised by the Conservatives for its green u-turn, with energy security and net zero secretary, Claire Coutinho MP pushing the party to reveal “how they are going to pay for their 2030 target and stop taking families and the country for fools”.
She added: “Labour claim they’ve got all the same policies as on Tuesday, but now it’s all somehow cheaper. This shows Labour don’t have a plan and we know where that will end, higher taxes on hardworking people.”
Speaking to reporters in Westminster earlier in the week, Mr Starmer admitted the party would not reach the £28bn but said the party was still committed to the majority of the outcomes.
He said: “We announced the £28bn two and a half years or so ago, when interest rates were very, very low. Since then, Liz Truss crashed the economy and other damage has been done. [Interest rates] are now very, very high – interest on government debt is already tens of billions of pounds a year.
“We’ve always said we have to be within the fiscal rules and fiscal rules come first.”
Labour officials insist that the party is still committed to green growth and will still prioritise clean energy, job creation and cutting bills, and have said the policies they are keeping would represent £23.7bn of investment over the course of the next parliament.
The move has caused uproar amongst backbenchers and environmental campaigners.
Former adviser to Tony Blair John McTernan said it was “probably the most stupid decision the Labour Party’s made”, while former shadow minister Barry Gardiner, who served in Jeremy Corbyn’s shadow cabinet, told BBC Radio 4’s Today programme that Sir Keir’s u-turn was “environmentally irresponsible” and Labour now risked “being so bland that you stand for nothing”.
Head of politics at Greenpeace, Rebecca Newsom, said without the radical pledge, voters “will start wondering what the Labour party actually stands for”.
In the same Times interview, Mr Sunak pledged lower taxes, saying they were his values and the “values of my party” and hard work “should be rewarded”:
“Actually the best way to express that through the tax system is to cut people’s taxes so when they are working hard they get to enjoy more of the rewards of that for themselves and their family."
The prime minister is set to face one of the most difficult weeks of his premiership, as official figures are expected to show that Britain has entered a "technical" recession and inflation could rise temporarily.
Despite this, the Mr Sunak has continued to talk up his economic policy, saying the UK economy is “a lot better” than people thought it would be when he took office:
"When I got this job people were projecting a year-long and relatively deep recession. Clearly we have avoided that in all circumstances. We have outperformed those expectations”.
He added: “We have outperformed countries like Germany. It’s a lot better than people thought at the time."