Labour swivel in the wind over Osborne’s plan to kill off public debt (and future public investment)?

Is George Osborne’s fiscal responsibility charter an instrument of “the fiscally irresponsible to con the public?” That’s according to George Osborne, when Gordon Brown tried to bring one of his own.

It may have been Brown’s early involvement that confused the shadow Chancellor John McDonnell two weeks ago…

“We will support the charter. We will support the charter on the basis we are going to want to balance the book, we do want to live within our means and we will tackle the deficit.”

Two nights ago however he was confronted by an enraged parliamentary Labour Party, when he ‘pulled a U-ie’ (ie, when he possibly released exactly was going on)…

The Tories for their part are rubbing their hands: they clearly feel they have Labour swivelling on a stick:

The charter lays out a simple, popular idea – that the state should live within its means, and when times are good it should run a surplus to protect itself against a future downturn. Had the rule been in place in the early years of this century, then we would have had a more manageable state when the crisis struck, requiring less drastic trimming, more flexibility to cut taxes to soften the blow on workers and employers, and a rainy day fund to call on if needed. We didn’t, and the pain of the crash (and the years after) was greater as a result. That’s an idea the electorate strongly support.

It is popular as an idea. But in shorter form, forbidding Government to have debt is an unconditional commitment to end publicly owned capital investment in a country’s future. Osborne’s charter would, on the face of it, making public borrowing illegal.

Since debt is a necessary component of investment, the Charter seems to be intended to neuter the public sector from acting as anything other than an enabling framework, with all investment and delivery shipped out to and as the private sector. McDonnell’s contrition was real enough:

I realised as the consequences of the government’s failure to invest in infrastructure and skills, the cuts that are going to start coming now, I realised that people are actually going to suffer badly. And it brought it home to me, and I don’t want the Labour party associated with this policy.”

Bit late John. As one shadow cabinet minister has remarked: “They are finding it is not as easy as it looks.”

Adds: This irreverent take from Dan Hodges describes just how excruciatingly bad this is going down

 

Mick is founding editor of Slugger. He has written papers on the impacts of the Internet on politics and the wider media and is a regular guest and speaking events across Ireland, the UK and Europe. Twitter: @MickFealty