Chancellor admits Treasury's costing of Labour's energy efficiency plans may not be correct

The chancellor alleged today that Labour’s policy to insulate all British homes would cost more than double what it has budgeted for. ITV News Political Editor Robert Peston challenged those calculations in an interview with Jeremy Hunt

The chancellor has conceded that the Treasury's £12-15 billion calculation for Labour's plan to improve energy efficiency across millions of homes may not be correct.

Labour previously said the package of measures would cost a maximum of £6 billion a year while bringing down the cost of bills for households across the country, subject to Labour’s fiscal rules.

The Treasury on Wednesday published a five-page costing of Labour's plan - perhaps the first proper tax-and-spend salvo in a general election campaign that could continue for 10 months.

It alleged that the opposition's policy to insulate all British homes would cost more than double what Labour has budgeted for.

Labour immediately dismissed the government's calculations as "ludicrous" and "bogus".

In an interview with ITV News Political Editor Robert Peston, Mr Hunt appeared to acknowledge the cost may not be as high as estimated by officials, even as he defended the costing.

Peston challenged the assumptions that Treasury officials were given by the chancellor’s aides when making the calculations, in particular that a Labour government would not means-test any grants given to homeowners or share the costs with energy companies.

When it was put to the chancellor that the assumptions were unrealistic and therefore the Treasury calculation was too high, Mr Hunt admitted to ITV News that “even if it’s not double the £6 billion, it is still a very big chunk of a £28 billion spending spree”.

“We’re saying this is not the time to go back to square one," he said. "This is a huge sum of money.

"We follow what Labour say themselves they would do. But the point is, it’s going to be expensive.”

Labour has rejected the assumption that “all installations are Exchequer-funded”, with the party stressing the plan would involve a mixture of grants for low-income households and low-interest loans for others.

A party spokesperson said: “This costing is ludicrous and uses bogus assumptions. They have costed someone else’s policy, not Labour’s.”

It also noted that the description of it as an “uncapped, fully Exchequer-funded, undifferentiated model” does not fit with the party’s policy.

The document was nonetheless seized on by the Tories, with Rishi Sunak attacking Labour leader Sir Keir Starmer over the policy at Prime Minister’s Questions.

The chancellor was also asked whether the prime minister was wrong to engage in gender politics at prime minister's questions when the mother of the murdered trans schoolgirl, Brianna Ghey, was in the Commons.

Mr Hunt defended the prime minister's trans jibe by saying Mr Sunak "was talking about the fact that Keir Starmer has changed his position on that as on many other issues" but that "everyone has been incredibly struck by the courage and resolve of Brianna's mother".

The Treasury's analysis is also not the first time the opposition has clashed with the government over policy costings.

Catherine Haddon, from the Institute for government think tank, said such costings was a “long-standing convention” but also a “political tool”.

“Costing opposition policies has happened since at least the 1950s. It’s very much a political tool.

“The Treasury only do the calculations based on assumptions about the policy which have to be given to them by ministers or special advisers.

“It’s a long-standing convention,” she said in a post on X.

Former Treasury permanent secretary Lord Macpherson suggested in a post on X that such costings should be ignored.

He said: “Over the next 9 months, we will have to [tolerate] many an ‘official Treasury’ costing of Opposition policy.

“Since time immemorial, whatever the party in power, these costings have had little if any credibility. Political advisers determine the assumptions. #rubbishinrubbishout”.

A government spokesperson said: “The costing of opposition policies is a long-standing exercise governed by a set of guidelines in place over successive governments.”

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