Predictably, in the run up to the Parliamentary vote on the Fiscal Charter, media attention focused on the fall-out from John McDonnell’s sudden ‘U-turn’ and the way Labour MPs opposed to the Corbyn leadership sought to exploit the situation.
Much of the confusion has arisen from the Shadow Chancellor’s attempt to ‘out Osborne, Osborne’ (his own words) arguing that a balanced budget applied only to current expenditure and that Labour’s emphasis on capital spending would, in sharp contrast to Osborne’s policies, enable the economy to grow generate the extra taxation necessary to reduce debt. But it’s now clear that Osborne’s Charter is intended to apply to all expenditure, forcing McDonnell to backtrack, citing deteriorating economic prospects as the reason for his change of policy. (Not to mention a little pressure from Scottish activists perhaps?)
McDonnell’s performance in the Commons might not have been exactly convincing, but Labour now has the beginnings of a clearer line on economic management, around which it can begin to reshape other policies –those on employment and education and training for example. The charter only applies to ‘normal’ conditions anyway and with another economic downturn on the cards, it’s likely that Osborne will also have to ditch his commitment to ‘living within our means’ as the Neo-liberal argument that the economy should be run like a prudent household, becomes increasingly unsustainable.