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Labour facing rebellion over opposition to government budget rules Labour facing rebellion over opposition to government budget rules
(about 1 hour later)
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.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.
Labour says it will vote against the Charter for Budget Responsibility, requiring governments "in normal times" to spend less than they get in tax.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 opposition originally said it would back the charter but changed its mind.The opposition originally said it would back the charter but changed its mind.
It is thought up to 30 MPs could defy the leadership by abstaining.It is thought up to 30 MPs could defy the leadership by abstaining.
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.
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.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.
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.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.
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, shadow chancellor John 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?
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.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. Opening the debate in the Commons, Chancellor George Osborne said the UK must "live within its means" and help equip the UK economy to withstand future economic shocks, arguing that if the UK could not manage to get control of its deficit and debt by 2019, after nine years of successive growth, when would it be able to do this.
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". He accused Labour of being "profligate" and wanting "to spend money we don't have and borrow for ever".
"This is not socialist compassion - it's economic cruelty," he warned, claiming that "unsustainable deficits" hurt the poorest in society most. "It is not a political gimmick to have sound public finances," he said. "I tell you what is a political gimmick - coming out on the eve of your conference with some policy suggesting you support what we are doing and two weeks later turning up in the House of Commons and voting against it".
He said the new fiscal rule would commit governments to "acting responsibly" and keeping the public finances in surplus "during normal economic times". Former shadow chancellor Chris Leslie, one of those Labour MPs who has said he will abstain, told MPs that the party "should not set its face" against a surplus but said the proposal would not give Mr Osborne sufficient room for manoeuvre in the event of a downturn.
Labour's 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.
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.
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.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".