This article could have been headlined ‘Guardian misrepresents Labour policy – shock’, except it’s no shock that the Guardian has been playing silly beggars with its headlines.
The headline under which the following quoted material was published was ‘John McDonnell: Labour will match Osborne and live within our means’ – which presents a false picture of the left-wing Shadow Chancellor supporting George Osborne’s extreme-Conservative plans for the economy.
In fact, McDonnell has made it clear that he has no intention of supporting the methods Osborne claims will balance the books – and quite right too, because they won’t.
Osborne has been lying to the public for more than five years, claiming that he can balance the books by cutting spending. Instead, he has been ensuring that the books will not balance, because government spending cuts means a reduction in government income as well – as any economist worth half a farthing will tell you.
McDonnell is confident that he can support Osborne’s fiscal charter because it commits the UK government to delivering an overall budget surplus by the financial year 2019-2020 – the last year of the current Parliament. On his current policies, Osborne isn’t going to make it.
Let’s repeat that: Osborne will not balance the budget by 2019-20, using his current economic policy plans.
Instead, McDonnell would invest money in the economy, ensuring that the UK grew its way out of deficit and debt. This is, in fact, the only way to do it. If he puts the money into areas with high fiscal multipliers, he’ll do all right.
To the possible surprise of some on the left, McDonnell will announce that Labour MPs will be expected later this autumn to vote for the chancellor’s fiscal charter unveiled in the budget in July.
It commits the government to delivering an overall surplus by 2019-20 and to running an overall budget surplus in “normal times”. The shadow chancellor said: “We will support the charter. We will support the charter on the basis we are going to want to balance the book, we do want to live within our means and we will tackle the deficit.”
But McDonnell makes clear that he takes a radically different approach to the austerity measures of the Tories, whose deficit reduction plan is achieved mainly through spending cuts, as he says that Labour would ease the burden on low- and middle-income earners.
Labour would also stimulate economic growth by borrowing to invest in infrastructure projects, McDonnell said. “We will tackle the deficit but the dividing line between us and the Tories is how we tackle it. Our basic line is we are not allowing either middle or low earners or those on benefit to have to pay for the crisis. It is as simple as that.”
If you’re asking what a fiscal multiplier is, you haven’t been paying attention for the last five years and have a lot of reading to do
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