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John McDonnell dismisses George Osborne 'stunt' over budget charter Labour facing rebellion over opposition to government budget rules
(about 7 hours later)
Shadow chancellor John McDonnell says George Osborne's call to Labour MPs to rebel and back his planned government spending rules is a "stunt". The Labour leadership is trying to contain a rebellion among MPs over its opposition to government spending rules - with a Commons vote being seen as a test of Jeremy Corbyn's authority.
Mr McDonnell acknowledged he "most probably" had confused his MPs after a U-turn on the Tories' policy - but he said the position would be made clear. Labour says it will vote against the Charter for Budget Responsibility, requiring governments "in normal times" to spend less than they get in tax.
The Charter for Budget Responsibility says "in normal times" governments should spend less than they get in tax. The opposition originally said it would back the charter but changed its mind.
Labour says it will oppose the move when MPs vote on it this evening. It is thought up to 30 MPs could defy the leadership by abstaining.
Mr McDonnell said his party's approach, and the thinking behind the U-turn, would be made clear in the Commons when the charter - which his party calls a "gimmick" - is debated. Shadow Chancellor John McDonnell has acknowledged he "most probably" had confused his MPs after a U-turn on the Tories' policy earlier this week but said the position would be made clear when the debate starts at about 19:15 BST.
"We have had to change position on a couple of issues but we will clarify everything," he added. The BBC's assistant political editor Norman Smith said the actual number of rebels was likely to be lower than 30, but said it was an "important moment" for Jeremy Corbyn in terms of his ability to impose his authority on the party and turn Labour into an unashamed opponent of austerity.
On Mr Osborne urging "moderate" Labour MPs to back his plans, Mr McDonnell said: "I don't think anyone will rise to it they'll see it for what it's worth - just as another stunt," adding that he was focused on a "serious economic debate". The SNP and Lib Dems have also said they will vote against the fiscal charter, details of which were set out in July's Budget, but it is still expected to be approved by MPs.
'Economic cruelty'
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 force future governments to run a budget surplus - which involves spending less than they receive in tax revenue - when the economy is growing.The charter would legally force future governments to run a budget surplus - which involves spending less 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 Parliamentary tactics, not economic policy, and pledged to draw up Labour's own charter to create a "new economic paradigm".Explaining his decision the following day, he insisted he had changed his mind on Parliamentary tactics, not economic policy, and pledged to draw up Labour's own charter to create a "new economic paradigm".
What's George Osborne proposing?What's George Osborne proposing?
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". Speaking on Wednesday, Mr McDonnell said his party's approach, and the thinking behind the U-turn, would be made clear in the Commons when the charter - which his party calls a "gimmick" - is discussed.
"We have had to change position on a couple of issues but we will clarify everything," he added.
Mr Osborne has urged "moderate" Labour MPs to either back the government or at least abstain, claiming 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".
He said Labour MPs should at least follow the advice of the former shadow chancellor Chris Leslie and abstain from the vote. Labour's change in policy was played down by shadow home secretary and former leadership contender Andy Burnham.
The change in policy was played down by shadow home secretary and former leadership contender Andy Burnham.
"We've come through a leadership election where everyone's taken different positions, and it's messy and the party needs time to regroup," he said."We've come through a leadership election where everyone's taken different positions, and it's messy and the party needs time to regroup," he said.
Mr Burnham said the new leadership needed time to "find its feet", adding that Labour would take a "clear stand" against George Osborne in the Commons vote later.Mr Burnham said the new leadership needed time to "find its feet", adding that Labour would take a "clear stand" against George Osborne in the Commons vote later.
The UK has run a budget surplus in 12 years since 1948. But a number of Labour MPs, including Jamie Reed, Chris Evans and former shadow chancellor Chris Leslie, have said they will not support the leadership.
The UK has run a budget surplus in only 12 years since 1948.
Critics have dismissed the charter 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.Critics have dismissed the charter 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".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.