Charter for Budget Responsibility

Debate between John McDonnell and Jim Cunningham

Wednesday 20th July 2016 Commons Chamber

[John McDonnell]

I remind the hon. Gentleman that under his own Government’s fiscal rule, the deficit should have been completely eliminated last year, and debt should have dropped but it has increased. I will send him a reading list.

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

When the Prime Minister was first elected last week, she said that she would govern for the many and not for the few. However, in response to questions today about the fact that poverty is affecting many people in this country, she gave the usual answer, which was that we have to have a strong economy. That suggests that she is departing from what she said in Downing Street a few days ago. Does my hon. Friend agree that this has been the longest recession resulting from punitive measures since the second world war? The second world war lasted for six years; this has lasted longer. It is brutal and it is punishing the needy in society.

[John McDonnell]

I was trying to take heart from the fact that when she spoke in Downing Street, the Prime Minister recognised just how divided Britain is between the wealthy and those at the sharpest end of the austerity measures. I was hoping that that would be translated into an acknowledgement today that the fiscal rule must go.

--- Later in debate ---

[John McDonnell]

Good try. Initially last year I thought the fiscal charter was so ludicrous that I was just going to rubbish it or ignore it. Then, as people remember, I made a U-turn because I thought we could defeat it, because we had virtually all the Labour party and others demonstrating that it was ludicrous. We predicted that every target set in the fiscal charter would be missed, and we were right. The Labour party is an anti-austerity party. We will campaign against austerity, but more importantly now, we are campaigning for a long-term future plan of investment.

I think we are winning the argument right across the piece. As I said, from partners in industry and across the political parties—even in the Conservative party now, as we saw in the leadership campaign—there are voices calling for hundreds of billions of pounds of investment. We are winning that argument. The problem is now that we need decisive change from Government with regard to the fiscal rule; otherwise Britain will remain on hold.

[Mr Jim Cunningham]

I am sure that one of the things that my hon. Friend learned, as I did, during the referendum was that, as I mentioned, the British people have had enough of austerity. They want politics to change. They want investment. Some of my hon. Friends have mentioned the areas of investment. It is important that we learn the lesson of the referendum—that people have had enough of austerity.

[John McDonnell]

Many voted to leave on the basis that they and their towns and regions felt left behind as a result of seven years of austerity, which have brought about high levels of poverty, lack of investment, and low-paid jobs and insecure jobs. As a result, I think there was an expression of anger in the referendum about a whole range of issues. People were saying to the Government, “We’re not satisfied with your performance, we’re not satisfied with the way we are being governed and we want change.”

UK Economy

Debate between John McDonnell and Jim Cunningham

Wednesday 29th June 2016 Commons Chamber

[John McDonnell]

It proves the chaotic nature of the market at the moment.

Let me look ahead. Most major forecasters have revised their expectations of future growth sharply downwards. There is a major loss of capacity and the potential for permanent damage to the UK’s growth prospects cannot be ruled out. We await an official assessment from the Office for Budget Responsibility, as the Chancellor announced in his statement on Monday morning. I think that an initial assessment should be given sooner rather than later, but ongoing close monitoring would be welcome, with regular reports to Parliament to ensure that that is happening. There is a prospect that the OBR will report at least a serious worsening in the public finances.

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

What assessment has my hon. Friend made of the Chancellor’s statement a couple of days ago that taxes might have to go up and be followed by further cuts? Is not this a further infliction of austerity on the British people?

[John McDonnell]

I shall come on to that later in my speech. I want to deal with the implications of the Chancellor’s statement on Monday for future Budgets, if I may. In a situation like this, it is essential to introduce some clarity. There is great uncertainty, both for those fearing for their jobs and those worried about the volatility of the financial markets over the last few days. It is up to us—I mean the whole House—to secure some clarity and a clear sense of direction in our debate.

Let me clarify why the referendum result has led to this situation. There were warnings that a vote to leave would produce this shock. Economic forecasting is, as we know, not an exact science, even at best, but every forecaster with any credibility pointed towards a significant negative shock from a leave vote. The main disagreements were about the size of that shock, and I have to say that the warnings should have been heeded. It was irresponsible of those campaigning for leave not just to gloss over them, but to make the claim that a leave vote would lead only to warm sunny uplands. The truth is that the shock is already significant and could rapidly worsen if action is not taken.

We welcome the Governor of the Bank of England’s commitment to take steps to extend liquidity provision to banks if necessary, and to stand ready with further measures. We welcome the fact that the Chancellor has been in urgent consultation during the weekend with those in the financial services industry and our international partners. We will support measures to stabilise the markets and dampen volatility, but with the firm caveat that these measures—this was the point made by my hon. Friend the Member for Coventry South (Mr Cunningham)—should not impose costs on households or small businesses. Despite his earlier statements, the Chancellor has ruled out his previous contractionary emergency Budget until the fiscal position is made clear, and this is to be strongly welcomed.

To move forward, we have to be honest in our assessment of the current situation if we are to ensure that the correct remedies are agreed for the future. We do not share the Chancellor’s assessment, as he knows, of the broader economic picture. His claim that the roof was fixed while the sun was shining belies the reality. The leave vote is having a greater impact because the roof has not been fixed, as we saw in the Office for Budget Responsibility’s assessment of the UK’s fiscal position that was published alongside this year’s Budget.

European Union Referendum Bill

Debate between John McDonnell and Jim Cunningham

Tuesday 16th June 2015 Commons Chamber

[John McDonnell]

I thank my hon. Friend for bringing me back into order. That is exactly my point. If we are to have any chance to shape the Prime Minister’s negotiations with other European leaders, this is our opportunity. I want to place on the agenda what is happening with TTIP. I want the Prime Minister to address that in his discussions, and when he reports back to the House and the country about the way forward, I want him to detail the achievements he has made, to open up the transparency and openness of those negotiations.

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

My hon. Friend makes an interesting point. In the discussions in Europe in relation to some of the subjects that he has just mentioned, there is also the issue that the Government will negotiate about matters such as wages and terms and conditions, which affect people in this country. We have not had a lot of debate about that, either.

[John McDonnell]

This debate has allowed us to place some of those issues on the agenda. The major issue with TTIP is that the Prime Minister, until now, has not seen it as particularly relevant or important to give us a direct report on those negotiations, so those negotiations have remained secret. Therefore, the purpose of my amendment, which I will not press to a vote, is to identify it as an issue on which we need a report. That will help to ensure, to echo the point made by my hon. Friend the Member for Luton North (Kelvin Hopkins), that in the referendum, people can make a decision based on the consequences of further European membership for the concrete aspects of the treaty that will affect their lives. My hon. Friend the Member for Coventry South (Mr Cunningham) made exactly that point. This will affect labour rights, including working conditions, health and safety, and wage levels.

In addition, TTIP could affect the ability of a sovereign Government of this country to make a decision on policy. I give just one example that we have debated in the past. I want to ensure that there is no further privatisation and that some services that have been privatised are brought back into public ownership—for example, the railways. If TTIP goes through, a sovereign Government could be prevented from implementing those policies. I want the Prime Minister to go to Europe and say, with regard to TTIP, “On the issue of the referendum I want to ensure that we maintain the sovereign right of this Chamber to take a decision that its Government can then implement without undue interference from transnational corporations who can then head off to arbitration panels meeting in secret.”