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| John McDonnell's fiscal responsibility U-turn sends wrong message – Labour MP | John McDonnell's fiscal responsibility U-turn sends wrong message – Labour MP |
| (35 minutes later) | |
| The shadow chancellor, John McDonnell, needs to explain fully his U-turn on voting against the government’s charter of fiscal responsibility, his predecessor, Chris Leslie, has said, arguing it sends the wrong economic message to the public. | |
| McDonnell told the Guardian in an interview during the weekend of the Labour conference that the party would back the fiscal rules despite Jeremy Corbyn having been elected as leader on an anti-austerity ticket. | McDonnell told the Guardian in an interview during the weekend of the Labour conference that the party would back the fiscal rules despite Jeremy Corbyn having been elected as leader on an anti-austerity ticket. |
| But, in a letter to Labour MPs on Monday evening, McDonnell said “matters have moved on” since his initial reaction, citing reports in the past fortnight “highlighting the economic challenges facing the global economy as a result of the slowdown in emerging markets”. | But, in a letter to Labour MPs on Monday evening, McDonnell said “matters have moved on” since his initial reaction, citing reports in the past fortnight “highlighting the economic challenges facing the global economy as a result of the slowdown in emerging markets”. |
| Related: Shadow chancellor makes last-minute U-turn on fiscal responsibility vote | Related: Shadow chancellor makes last-minute U-turn on fiscal responsibility vote |
| The U-turn sparked an angry reaction at a meeting of the parliamentary Labour party at Westminster on Monday. Former cabinet minister Ben Bradshaw declared, within earshot of waiting reporters, that the meeting had been a “total fucking shambles”. | |
| Speaking to the BBC’s Today programme on Tuesday, Leslie – who was shadow chancellor before Corbyn’s election as Labour leader and ruled out serving in a Corbyn-led shadow cabinet – said “to go from one extreme to the other is wrong in economic terms, but also it sends the wrong message”. | |
| He said: “To be fair to John McDonnell, this is a very difficult balancing act, and a very difficult topic. But it’s incredibly important that he’s clear and consistent and explains fully, not just what Labour’s position is, but why he backed George Osborne’s surplus a couple of weeks ago and is now against it apparently.” | |
| The charter requires the government to run a budget surplus within three years during “normal times”, when there is no economic crisis. | The charter requires the government to run a budget surplus within three years during “normal times”, when there is no economic crisis. |
| Setting out his initial position at the Labour party conference last month, McDonnell said he would be advocating voting for Osborne’s plans because he was committed to balancing the books even though he did not agree with many of the charter’s specific objectives. | |
| Some Labour MPs were openly planning to rebel and vote against the charter, including the Treasury select committee member Helen Goodman. There had also been opposition to McDonnell’s stance from the Scottish National party and members of his newly appointed economic advisory council, who were baffled as to how he could square his anti-austerity economics with support for the chancellor’s revised charter. | |
| In the letter sent to all Labour MPs on Monday, McDonnell explained his changed position. He said: “As the nature and scale of the cuts Osborne is planning are emerging, there is a growing reaction not just in our communities but even within the Conservative party. | |
| “The divisions over the cuts in tax credits to working families are just the first example of what we can expect as the cuts in other departments are exposed and the failure to find additional resources to bridge the growing expenditure gap in service areas like the NHS is revealed. So I believe that we need to underline our position as an anti-austerity party by voting against the charter on Wednesday.” | “The divisions over the cuts in tax credits to working families are just the first example of what we can expect as the cuts in other departments are exposed and the failure to find additional resources to bridge the growing expenditure gap in service areas like the NHS is revealed. So I believe that we need to underline our position as an anti-austerity party by voting against the charter on Wednesday.” |
| At the parliamentary Labour party meeting on Monday evening, Labour MPs criticised McDonnell’s approach and complained that there had not been any attempt to consult them about the change. The BBC reported that John Mann MP could be heard shouting at the leadership from outside the committee room. | |
| Corbyn’s spokesman confirmed that the economic policy change had been agreed without a collective meeting of the shadow cabinet – instead, McDonnell rang individual shadow cabinet members. | |
| “I think it’s important to be clear and consistent about these things,” said Leslie, adding: “John is the person who needs to explain his change of heart on this particular issue. | |
| “I personally think it would be very regrettable if Wednesday’s debate turned into a discussion about why John McDonnell changed his mind rather than focusing on the shortcomings of George Osborne’s strategy. | |
| “[Wednesday will be] John’s first test against George Osborne and I think it is very important therefore that the Labour frontbench is extremely clear about where we stand … I can’t explain why John went in favour of supporting and voting for George Osborne’s strategy.” | |
| Related: John McDonnell: the loyal Corbyn ally whose rebelliousness could cause a stir | |
| Leslie said Osborne’s charter of fiscal responsibility was about playing politics and urged McDonnell to adopt the position taken by the previous Labour leadership and abstain on the vote. “I think it would be a better thing not to engage in the game-playing with George Osborne but to put down our own motion.” | Leslie said Osborne’s charter of fiscal responsibility was about playing politics and urged McDonnell to adopt the position taken by the previous Labour leadership and abstain on the vote. “I think it would be a better thing not to engage in the game-playing with George Osborne but to put down our own motion.” |
| The shadow international development secretary, Diane Abbott, said the party was now in the right place to oppose Osborne’s mismanagement of the economy and that McDonnell would be explaining his decision to parliament on Wednesday. | |
| “We are in the right position now,” she said. “It is a position that most of the [parliamentary Labour party] is comfortable with and, I think, all of the party members.” | |
| Abbott, a key ally of Corbyn and McDonnell, said Osborne’s charter was purely political and designed to “put [Labour ] in the corner”.She said: “At any given time there will be a group of MPs in parliament in whatever party who will be unhappy. I suspect my colleagues on reflection will calm down and devote their energies to attacking Osborne and his dismantlement of the economy.”She added: “Some people are only slowly coming to terms with the fact that Jeremy won. Once they’ve come to terms with that they will be happy.” She said she hoped it would take them weeks rather than months to accept Corbyn’s leadership. | |
| In his letter to MPs, McDonnell said he had initially regarded Osborne’s charter, and the votes in the Commons approving its wording, as “little more than political game-playing” by the government. | In his letter to MPs, McDonnell said he had initially regarded Osborne’s charter, and the votes in the Commons approving its wording, as “little more than political game-playing” by the government. |
| He added: “In my initial public comments and in my speech to Labour party conference, I made it clear that we had no time for these political games and would move on to a serious discussion about the future of our economy, including a review of our economic institutions. At that stage, my approach was to show the inherent weaknesses of the chancellor’s approach, the charter and its various get-out clauses. | He added: “In my initial public comments and in my speech to Labour party conference, I made it clear that we had no time for these political games and would move on to a serious discussion about the future of our economy, including a review of our economic institutions. At that stage, my approach was to show the inherent weaknesses of the chancellor’s approach, the charter and its various get-out clauses. |
| “I suggested we vote for it nevertheless in support of the principle of tackling the deficit, but to demonstrate that our approach would not involve austerity measures and we would seek to exclude capital investment from its severe and arbitrary constraints.” | “I suggested we vote for it nevertheless in support of the principle of tackling the deficit, but to demonstrate that our approach would not involve austerity measures and we would seek to exclude capital investment from its severe and arbitrary constraints.” |
| Osborne said on Monday night: “Labour’s economic policy has lurched from chaos to incredibility. Two weeks ago, they said they were going to vote for a surplus – now we know they want to keep on borrowing forever. That would be a grave threat to the economic security of working people.” | Osborne said on Monday night: “Labour’s economic policy has lurched from chaos to incredibility. Two weeks ago, they said they were going to vote for a surplus – now we know they want to keep on borrowing forever. That would be a grave threat to the economic security of working people.” |