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John McDonnell rethink on Labour Budget stance prompted by steelworkers' plight

Published 13/10/2015

John McDonnell has decided to vote against plans for the Government to run a budget surplus
John McDonnell has decided to vote against plans for the Government to run a budget surplus

John McDonnell has defended his U-turn over Labour's economic policy, insisting he changed his mind about supporting George Osborne's plans after meeting families affected by the closure of the Redcar steelworks.

The shadow chancellor said he had "changed my mind on the parliamentary tactics" having originally said he would back Mr Osborne's plans for the Government to run a budget surplus.

Mr McDonnell said he viewed the updated Charter of Budget Responsibility as "meaningless" and had intended to "ridicule" it in the debate on Wednesday, but still vote in favour of it.

But explaining the U-turn, which has exposed bitter divisions within the Parliamentary Labour Party about the approach taken by Mr McDonnell and Labour leader Jeremy Corbyn, the shadow chancellor said he no longer wanted to be associated with Mr Osborne's policy.

Although Labour will now vote against the measure, Mr McDonnell insisted "we are not deficit deniers".

He told Sky News: "I haven't changed my mind on that, but I have changed my mind on the parliamentary tactics.

"Originally what I said to people was 'this charter is a political stunt, it is a political trap by George Osborne, it is virtually meaningless, he ignores it himself time and time again, he never meets his targets, so this is just a stunt, let's ridicule it in the debate and vote for it because it's a meaningless vote'."

Explaining his change of stance, which was ridiculed as a "total f****** shambles" following a fractious meeting of the Parliamentary Labour Party, Mr McDonnell said he had been struck by the potential impact of further austerity.

He said: "I went to Redcar and I met the steelworkers and I had families in tears about what's happened to them as a result of the Government failing to act, failing to intervene.

"I came back and I realised, as the consequences of Government's failure to invest in infrastructure, in skills, the cuts that are going to start coming now, I realised that people actually are going to suffer badly.

"It brought it home to me and I don't want the Labour Party associated with this policy."

Shortly after his appointment by Labour's new leader Jeremy Corbyn, Mr McDonnell surprised Westminster by announcing Labour would back George Osborne's proposals for an updated Charter of Budget Responsibility to enshrine in law his target to achieve a surplus by the end of 2019/20 and to deliver surpluses every following year "in normal times".

The announcement last month was designed to confront Tory claims that Labour were "deficit deniers" but led critics to say Mr McDonnell had fallen into a trap which would limit the party's scope for reversing austerity cuts and borrowing to invest.

Labour MP Mike Gapes said there was now "no credible leadership" while fellow backbencher John Mann said the U-turn was a sign that Mr McDonnell was "very inexperienced" and had "had his fingers badly burnt".

Mr Mann, a member of the House of Commons Treasury Committee, t old BBC2's Daily Politics: "It's rather autocratic if John McDonnell announces one policy consulting nobody, and then within a few days the exact opposite - again consulting nobody.

"No consultation with the party, the shadow cabinet or the Parliamentary Labour Party - what kind of politics is it?"

Mr Mann said his Labour colleagues on the Treasury Committee regarded Mr Osborne's charter as "a political gimmick, that was potentially dangerous" and he "hadn't got a clue" why Mr McDonnell had suggested the party could support it.

"Let's be generous to John McDonnell and say he's very inexperienced, he's had his fingers badly burnt and he needs to learn," he said.

Mr McDonnell's predecessor as shadow chancellor, Chris Leslie, said Labour needed a "clear and consistent" policy and said Mr McDonnell should instead table a rival motion and abstain on Mr Osborne's plan.

Mr Leslie warned: "To go from one extreme to the other is wrong in economic terms but also it sends the wrong message to the general public as well. So, to be fair to John McDonnell, this is a very difficult balancing act, it's a very difficult topic, but it's incredibly important that his is 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."

Mr Gapes wrote on Twitter: "There is now no collective shadow cabinet responsibility in our party, no clarity on economic policy and no credible leadership."

Challenged by another user of the social media site to show loyalty to Mr Corbyn - who had been a serial rebel during Labour's years in power - the Ilford South MP responded: "I will show loyalty in the same way as he was loyal to Kinnock, Smith, Blair, Brown, Beckett, Miliband and Harman. Ok?"

Former shadow business secretary Chuka Umunna said he did not know which way he will vote on Wednesday.

Mr Umunna told BBC Radio 4's World at One: "I don't totally understand the position as it is at present and what has changed over the last two weeks.

"I will be listening to the exact reasons that will be spelt out in the House of Commons by the shadow chancellor. I certainly won't be supporting the charter, but as to whether I abstain or vote against, I will make my decision based on the debate tomorrow."

Mr Umunna warned: "One of the reasons we lost the general election was because we didn't have clear messages, and when we did have messages we changed them every month. Never mind what the actual policy is, consistency is absolutely key - there's no doubt about that. And there's also no doubt about the fact that if we want to get into office in 2020 ... we've got to be seen as economically competent."

Following the Parliamentary Labour Party (PLP) meeting in the Commons on Monday night Blairite former cabinet minister Ben Bradshaw declared, within easy earshot of waiting reporters: "Total f******* shambles."

Asked about the scenes at the PLP, shadow cabinet minister Diane Abbott said: "At any given time there were will be a group of MPs in Parliament, of whatever party, who are unhappy.

"I suspect my colleagues, on reflection, will calm down and devote their energies to attacking Osborne and his mismanagement of the economy."

Shadow international development secretary Ms Abbott, an ally of Mr Corbyn and Mr McDonnell, claimed some in the party were still struggling to accept the result of the leadership election.

She told BBC Radio 4's Today programme: "Some people in the party are only slowly coming to terms with the fact that Jeremy won. Once they have come to terms with that, they will be happy."

Ms Abbott hoped that process would take "weeks rather than months".

Shadow energy minister and Corbyn backer Clive Lewis suggested that some Labour MPs were voicing concern because "they are unhappy with the leadership".

The Norwich South MP told World at One: "I'm getting a bit tired of the navel-gazing. It might not have been perfect in terms of the turn-around, but it's happened. I'm happy with the new position - a lot happier in fact - and I just want to go and vote on this and make the case to the public."

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