McDonnell rejects Tory shackles

by Caroline Colebrook

SHADOW Chancellor John McDonnell won over the Parliamentary Labour Party last week to reject Tory plans to pass a law that would tie future governments to create a budget surplus in “normal” conditions.

Previously Labour had supported this measure in order to demonstrate their commitment to sort out Britain’s persistent budget deficits, although using different means to this end. But McDonnell balked last week when Chancellor George Osborne insisted on the measure being passed without debate or any opportunity to amend it.

Effectively it would tie future governments to continue with the Tories’ extreme austerity cuts.

McDonnell consulted with the Parliamentary Labour Party before doing a policy U-turn.

McDonnell said: “There is a significant difference between the charter and the mandate which the Labour Party agreed to support in January in that the Government’s proposal to require a continuing surplus on public sector net borrowing constrains the ability to borrow for future capital investment, a key plank of Labour’s growth strategy and one supported by the great majority of mainstream economists.

“The consistent failure of George Osborne to abide by and achieve his economic targets over the last five years has led to a growing sense of incredulity over the economic basis for the charter process he has adopted.

“Most have interpreted this exercise as little more than political game playing. 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.

“Because the debate on Wednesday is upon an order, we are unable to table a reasoned amendment to make that position clear. Indeed the initial clerk’s advice is that it may not be eligible even for publication.

“I believe that since my initial reaction matters have moved on and we should now vote against the order. The tone of our debate now also has to shift to a much more serious analysis of what our economy is likely to face in the coming year. In the last fortnight there have been a series of reports highlighting the economic challenges facing the global economy as a result of the slowdown in emerging markets.”


The U-turn has resulted in a barrage of media reports about “divided Labour” and internal splits but without a single Labour MP willing to say to camera that McDonnell has got it wrong.

Meanwhile Labour membership continues to increase and members close to Jeremy Corbyn have launched Momentum, a grassroots network born out of the social movement that propelled Jeremy Corbyn to the Labour leadership.

Writing in the New Statesman magazine, Norwich MP Clive Lewis said Momentum’s plans are as “bold as the challenges that confront it. It will organise in every town, city and village to create a mass movement for real, progressive change”.

He added: “It will work with Labour members to transform our Party into a democratic institution worthy of its founders’ original aspirations. A Party with not just the right policies for a general election but ultimately the collective will to enact them in government.

The network’s aims are in keeping with Corbyn’s election campaign to increase internal party democracy. In his article, Lewis was highly critical of what he called “topdown, command and control, monolithic political structures of yesteryear,” which have come to dominate the Labour Party. Lewis also warned of the powerful interests that will oppose Labour under Corbyn, saying the abuse faced by former leader Ed Miliband would “pale into insignificance” by comparison.

And although he is leader of the opposition Corbyn has already had one real impact on Government policy last week when he successfully called on David Cameron to scrap a contract that would have seen the Ministry of Justice provide prison services to Saudi Arabia.

The commercial venture would have seen the trading arm of the National Offender Management Service, JSi, provide development programmes for the feudal Arab kingdom’s prison service. Justice Secretary Michael Gove had also opposed the deal.