The shadow chancellor had described his u-turn as 'embarrassing'
Out of a sample of 222 readers who were asked ‘was John McDonnell right to reject George Osborne’s fiscal charter?’, 86 per cent said McDonnell had done the right thing, compared to 12 per cent who said he had done the wrong thing and 2 per cent who said they didn’t know.
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The fiscal charter compels the government to achieve a surplus on their budget by 2019/20, and then keep the budget in surplus ‘in normal times’. Its critics say that it binds the government to a tough stance that it may not be able to maintain in the face of an unpredictable economy.
In his speech to the Labour party conference earlier this month, the newly appointed McDonnell said he would vote in favour of the charter and insisted that the party were not ‘deficit deniers’:
“We accept we are going to have to live within our means and we always will do – full stop.”
This initial stance was intended to prove Labour’s willingness to make tough decisions in the name of the economic credibility that many feel has eluded them since they were last in power.
But two days before the vote last Wednesday McDonnell withdrew his support, citing global economic factors and ‘warnings from the International Monetary Fund’s latest financial stability report, the Bank of England chief economist,[…] and the former director of President Obama’s National Economic Council’.
It was a perfect opportunity for Osborne to exploit a party still in disarray after the election of Jeremy Corbyn, and the chancellor’s proposals were passed by 320 votes to 258. Labour MPs who abstained from the vote included Corbyn’s leadership rival Liz Kendall, and the former shadow chancellor Chris Leslie.
During the debate McDonnell himself described the U-turn as ’embarrassing’ five times, but many Left Foot Forward readers were reassured that the Labour party seemed to be sticking by solid principles.
Walter Wiltshire said:
“300,000 Labour members want the policies that Corbyn was voted in on not some Blairite/Tory appeasement.”
“Why should any government tie its own hands hand, just to make a meaningless political gesture? The idea that a government should be legally obliged to run a surplus at all times, and under all circumstances, is simply fatuous.”
Others, like Johnm55 were more critical:
“He is probably correct in rejecting it, because it doesn’t make economic sense. There are circumstances when the government running a deficit is the right thing to do. What he shouldn’t have done was to stand up at conference and announce that he supported it only to change tack two weeks later.”
And for other readers like Cole, the whole saga was just one more reason why Corbyn was the wrong choice for Labour:
“What about the other 9 million people who voted Labour in May? You might think about them – and getting another 3 million or so for Labour to win the next election.”
Ruby Stockham is a staff writer at Left Foot ForwardLike this article? Sign up to Left Foot Forward's weekday email for the latest progressive news and comment - and support campaigning journalism by making a donation today.