Budget Resolutions

Debate between John McDonnell and Jim Cunningham

Tuesday 30th October 2018 Commons Chamber

[John McDonnell]

My hon. Friend is right. Yesterday we needed serious action to address the bias against high streets, which has led to so many empty shops. Instead we got legislation that will help turn shops into flats.

We then had a huge media presentation about an online tax being introduced: it was said that £400 million will be found from this online tax in a few years’ time. At the weekend the Tax Justice Network said the top five tech companies have avoided £5 billion-worth of tax.

My second concern about the austerity debate is that if we understand and appreciate what people have been forced to go through with austerity, only callous complacency could drive us to inflict those policies on people. Yesterday the Chancellor’s speech, with references to “Labour’s recession,” demonstrated that he is trapped in a time warp of a political propaganda exercise by the Tories of a decade ago. [Interruption.] I thought they would like that one. Let us be clear: the financial crash was the result of greed and speculation, and a lack of regulation that goes right back to the 1980s. Austerity was always a bad idea.

[Mr Jim Cunningham (Coventry South) (Lab)]

Like my right hon. Friend, I heard the Chancellor try to blame the last Labour Government for the recession, but in actual fact the previous Chancellor said a couple of months ago that it was not the Labour Government’s fault; it was the whole system’s fault, starting with Lehman Brothers in America. We should get the facts right.

[John McDonnell]

I always said George Osborne would get it right one day.

The consensus among economists, and the evidence of recent history, is absolutely clear. The worst possible response to a recession is for a Government to cut their own spending. In a recession, the Government should be there to support businesses and households. Instead, at the moment when Government support was most needed to help people back on their feet, Conservative Chancellors chose to impose the most severe spending cuts in generations. They did not have to, and they should not have done.

The Tories were warned that austerity would lead to slower growth and lower wages, and it has. The economic experts the Tories chose to ignore were proved right. Growth since the financial crisis, under Conservative Chancellors, has been the slowest after any recession in modern times. Real weekly average earnings are still lower today than they were in 2010. The Resolution Foundation reports this morning that real wages will not have fully recovered until 2024.

Ten years after the crash, we should be clear about the causes of the financial crisis. The Chancellor seemed confused on that point yesterday. It was not the deficit that caused the crisis; it was the crisis that caused the deficit. It was a crisis—[Interruption.] They don’t like to hear the truth. It was a crisis that resulted from the casino economy that the Tories helped construct right from the 1980s and supported every step of the way.