Shadow chancellor John McDonnell has warned that expected Budget spending increases will not be “anywhere near” the scale required to reverse eight years of austerity under the Conservatives
In a speech ahead of Chancellor Philip Hammond’s annual financial statement on Monday, Mr McDonnell poured scorn on the idea that the economy could enjoy a “Brexit bounce” if the Government secures a deal with Brussels.
He said that if the Tories were to end austerity as Prime Minister Theresa May promised in her party conference speech in Birmingham, they needed to acknowledge the scale of the damage caused by the cuts introduced since they came to power in 2010.
He pointed to a calculation by the Institute for Fiscal Studies that simply halting planned cuts in departmental spending would cost £19 billion by 2023, while a further £7 billion was planned in welfare cuts.
“It is clear that none of the planned expenditure announcements in the Budget will go anywhere near the scale needed genuinely to end austerity,” he said.
“The real end of austerity is not just halting future planned cuts. It’s also reversing the cuts inflicted on our community by the Conservatives over the last eight hard years of austerity.
“Eight years of Tory austerity have undermined much of the social fabric of our society and is putting our future at risk. Faced with this scale of damage inflicted on our community, we need decisive action to end and reverse austerity, not some vague promises for the future and a few financial conjuring tricks.”
Mr McDonnell warned that a “temporary bodge” over Brexit would do nothing to ease the concerns of investors worried about the lack of economic certainty.
He said Mr Hammond – seen as the leading supporter in the Cabinet of a business-friendly “soft Brexit” – had to take his share of the blame for the problems in the negotiations.
“His failure to stand up to the fanatical no-dealers in Cabinet and in his own party makes him as culpable as the Prime Minister for this unholy mess that is putting our economy at risk,” he said.
“It is no use him trying to stand on the sidelines, throwing out the occasional statistical analysis from the Treasury, when it was him who was among the first to publicly threaten a no deal.
“A temporary bodge to get the Prime Minister and him through the next couple of months with no permanency to the deal will not alleviate the fears of investors and business leaders. Far from a Brexit bounce, we will see an ongoing draining of future resources from our economy.”
“They are big. We have said what we would do is we would have a fair taxation system and that will enable us to fund the public services because we cannot go on the way we are,” he said.
“It will require increasing taxes. We have said we will increase income tax on the top 5%, we will reverse some of the corporation tax cuts, we will crack down on tax avoidance and tax evasion.
“So we have said honestly there would be an increase in taxes.”