Jeremy Corbyn’s economic polices would leave the poorest worse off, Labour’s Shadow Chancellor warned today as he vowed not to serve under the left-winger.
Attacking Mr Corbyn’s support for increased quantitative easing, Chris Leslie claimed it lead to a rise in inflation which would hit the poorest hardest.
Speaking to the Independent yesterday, Mr Leslie attacked the "starry-eyed, hard left” view of economics espoused by Mr Corbyn.
Richard Murphy, a director of Tax Research UK who has hugely influenced Mr Corbyn's economic strategy, called Mr Leslie's claims an "absurd analysis".
This morning, the Shadow Chancellor called on those opposed to Mr Corbyn to attack his policies, not his supposed inability to win a General Election, in the Labour leadership race.
Speaking on BBC Radio 4’s Today programme, Mr Leslie also confirmed he would resign from the Shadow Cabinet if the Islington North MP became Labour leader.
He said: “I think there is a yearning for big, bold and radical policy but unfortunately for those who are unenthused you have to now confront what is the choice on offer here.
“Take, for example, this suggestion that there should be the people’s quantitative easing – in other words, the Bank of England should be able to just turn on the printing presses and magically deal with all the public service and public investment needs that we have.
“Of course, at one level it sounds fantastically easy: if there’s a shortage of money, print some more; the difficulty is if that then provokes higher inflation, if that then means interest rates go up, who will pay the price for that? It’s the poorest and those on the lowest incomes who already find the cost of living very difficult. And I think it’s that sort of issue we now need to confront.”
In a blog on his website, Mr Murphy was scathing in his criticism of Mr Leslie's claim.
He wrote: "Printing money is not inflationary when there is a shortage of money in the economy. If Chris Leslie is not aware of it, and I suspect he is not, all money that exists in our economy is created either by bank lending or by the government printing it. Those are the only options that are available.
"And, when there is too little money we risk getting deflation, which is pretty universally recognised as posing a threat to economic well-being because of the risk that it creates that people will stop spending, whether on business investment, or on household goods."
Mr Corbyn is now favourite to win the Labour leadership contest, despite initially struggling to get the required number of MPs to support his nomination.
His rise in popularity has led to many in the centre of the party to prophesise that Labour will spend years out of power in an echo of the lurch to the left taken in the early 1980s.
Mr Leslie, who is one of eight current Shadow Cabinet ministers named by the Sunday Times yesterday as refusing to serve under Mr Corbyn, said: “We now have to scrutinise the policies.
“Let’s have that debate. We want to now, instead of just saying what would be electable or not electable, get into the detail, think through the consequences of what will happen.”
Mr Leslie’s comments come as leadership contender Liz Kendall, seen as coming from the Blairite wing of the party, launched the next stage of her campaign today.
The Leicester East MP, currently the outsider, said the five causes she will fight on are: Ending inequality from birth; Eliminating low pay; Building a caring society; Sharing power with people; A future of hope for young people
Writing in Monday's Independent to launch the campaign, Liz Kendall MP said: "After a traumatic defeat, it’s understandable that people want to reach out for a radical option that appears to offer hope for party and country alike. But Jeremy Corbyn doesn’t have a monopoly on hope. And his solutions based on conventions of the past won’t help us win the national conversation in the years ahead. Quite the opposite.
"And those who have so far failed to provide a coherent alternative to either the politics that lose us the last election – or the politics of the 1980s – must also show that they have a clear idea of what they want Britain to look like in the years ahead.
"We must offer a realistic prospect of that new nation we wish to build, not the false hope of policies that are neither realistic nor electable. The scale of the challenge we face demands boldness and radicalism. A timid offer to the British people isn’t the alternative.”