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George Osborne urges Labour rebellion on fiscal charter vote | George Osborne urges Labour rebellion on fiscal charter vote |
(about 2 hours later) | |
Chancellor George Osborne is urging "moderate" Labour MPs to rebel against their leadership and support his plan to balance the economy in a vote later. | Chancellor George Osborne is urging "moderate" Labour MPs to rebel against their leadership and support his plan to balance the economy in a vote later. |
His appeal follows a fallout within Labour after shadow chancellor John McDonnell said the party would no longer support the proposal. | His appeal follows a fallout within Labour after shadow chancellor John McDonnell said the party would no longer support the proposal. |
The fiscal charter would force future governments to run a budget surplus. | The fiscal charter would force future governments to run a budget surplus. |
Mr McDonnell said he would propose his own charter, but Mr Osborne said Labour MPs should vote with the government. | Mr McDonnell said he would propose his own charter, but Mr Osborne said Labour MPs should vote with the government. |
At the very least, Labour MPs should abstain in the vote, the chancellor added. | At the very least, Labour MPs should abstain in the vote, the chancellor added. |
'New economic paradigm' | 'New economic paradigm' |
A motion seeking approval for the Charter for Budget Responsibility will be put before the House of Commons later on Wednesday. | A motion seeking approval for the Charter for Budget Responsibility will be put before the House of Commons later on Wednesday. |
BBC political editor Laura Kuenssberg said the vote was a "big test" for Labour leader Jeremy Corbyn, with a three-line whip imposed on MPs. | |
The charter would legally prevent future governments from spending more than they receive in tax revenue when the economy is growing. | The charter would legally prevent future governments from spending more than they receive in tax revenue when the economy is growing. |
Having previously said Labour would give it its backing, Mr McDonnell informed a stormy meeting of Labour MPs on Monday that he had changed his mind - and told the party to oppose it. | Having previously said Labour would give it its backing, Mr McDonnell informed a stormy meeting of Labour MPs on Monday that he had changed his mind - and told the party to oppose it. |
Explaining his decision the following day, he insisted he had changed his mind on tactics not economic policy, and pledged to start a "new economic paradigm". | Explaining his decision the following day, he insisted he had changed his mind on tactics not economic policy, and pledged to start a "new economic paradigm". |
Austerity battle | Austerity battle |
Mr Osborne said Labour's U-turn "confirmed they want to go on borrowing forever - loading debts onto our children that they can never hope to repay". | Mr Osborne said Labour's U-turn "confirmed they want to go on borrowing forever - loading debts onto our children that they can never hope to repay". |
"This is not socialist compassion - it's economic cruelty," he warned, claiming that "unsustainable deficits" hurt the poorest in society most. | "This is not socialist compassion - it's economic cruelty," he warned, claiming that "unsustainable deficits" hurt the poorest in society most. |
He said the new fiscal rule would commit governments to "acting responsibly" and keeping the public finances in surplus "during normal economic times". | He said the new fiscal rule would commit governments to "acting responsibly" and keeping the public finances in surplus "during normal economic times". |
"So today, with Labour's economic policy in obvious chaos, I call on all moderate, progressive Labour MPs to defy their leadership and join with us to vote for economic sanity." | "So today, with Labour's economic policy in obvious chaos, I call on all moderate, progressive Labour MPs to defy their leadership and join with us to vote for economic sanity." |
'What's the point?' | |
He said failing that they should at least follow the advice of the former shadow chancellor Chris Leslie and abstain from the vote. | He said failing that they should at least follow the advice of the former shadow chancellor Chris Leslie and abstain from the vote. |
The proposal commits the government to keep debt falling as a share of GDP each year and achieve a budget surplus by 2019-20. Governments will then be required to ensure there is a surplus in "normal times". | The proposal commits the government to keep debt falling as a share of GDP each year and achieve a budget surplus by 2019-20. Governments will then be required to ensure there is a surplus in "normal times". |
Critics have dismissed it as a "gimmick" that will either bind the hands of future governments or have so may exemptions to be pointless - and Mr Osborne himself described similar legislation introduced by former Prime Minister Gordon Brown as "vacuous and irrelevant" in 2010. | |
Stephanie Flanders, of JP Morgan Asset Management, told BBC Radio 4's Today programme if the charter constrained a government's ability to respond to a downturn, "it goes from being silly to downright counterproductive". | |
She added: "If it's not going to constrain behaviour, what's the point of it?" | |
Financial Secretary to the Treasury David Gauke defended the policy, saying it would increase the transparency and accountability of the government's economic plans. | |
"We have to ensure that will build up that buffer, that we bring debt down," he added. |