Budget Resolutions

Debate between John McDonnell and Victoria Prentis

Tuesday 30th October 2018 Commons Chamber

[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.

[Victoria Prentis (Banbury) (Con)]

The right hon. Gentleman asked us to give our personal history: I was a proud public sector employee for 17 years and I take issue with the way that Labour wrecked the economy and spent money we did not have. Would he like to tell us how he proposes to pay for his current funding system?

[John McDonnell]

Here is an answer: it is called a fair taxation system.

It was the ideology of neoliberalism that said markets were always right, that regulation was simply a barrier to growth, and that, ultimately, greed was good. The financial system this ideology helped design collapsed 10 years ago, and it was Conservative Chancellors who took the political decision to force working people, not the bankers, to pay the price for it.