Labour Economic Policy In A 'Muddle,' Concedes Party Economic Adviser Ahead Of Crunch Vote

Shadow Chancellor John McDonnell making his keynote speech to the Labour Party annual conference in the Brighton Centre in Brighton, Sussex.
Shadow Chancellor John McDonnell making his keynote speech to the Labour Party annual conference in the Brighton Centre in Brighton, Sussex.
Gareth Fuller/PA Wire

Labour is in a "muddle" over its economic policy, one of the party's high profile economic advisers has conceded ahead of a Commons vote that will be a key test of Jeremy Corbyn's authority.

Ann Pettifor, director of Prime Economics, said shadow chancellor John McDonnell's u-turn on whether to vote for George Osborne's fiscal charter had been "pretty messy".

She also said that the seven-person advisory council put together by Corbyn and McDonnell had yet to have a meeting with the leader and shadow chancellor.

McDonnell surprised many in September by announcing Labour would support the Conservative Party's move to put into law the rule that government's should run a Budget surplus "in normal times".

However on Monday he performed a sharp u-turn reversing his position and telling Labour MPs to vote against it - to the confusion of many backbenchers. Veteran Labour MP Ben Bradshaw described it as a "total fucking shambles".

McDonnell admitted today that Labour MPs had been left confused by the change in position.

Pettifor told BBC Radio 4's World at One programme on Wednesday afternoon it was the "right decision" to oppose the fiscal charter but added: "I only wish he had come to it earlier."

She said: "It is the right decision but this charter is not just a stunt, it a piece of very flimsy piece of parliamentary procedure. It has no legal basis and constitutional basis and can be overturned at the whim of any chancellor, including this chancellor."

"Clearly what John McDonnell was doing was thinking about the politics of it an the politics of it Mr Osborne is trying to frame the Labour Party as being reckless with finances.

"I don't know how politics works and it does sound to me to have been pretty messy. But Mr Corbyn was elected on an anti-auesterity mandate and I think his supporters would have been very disappointed if John McDonnell had supported a pro-auesterity mandate.

"It's a new Opposition so they have been in a muddle but thank goodness they have made the right decision."

Pettifor later tweeted that the new Labour leadership team was "facing huge issues and extraordinary pressures".

Shortly after his leadership victory Jeremy Corbyn named economists David Blanchflower, Mariana Mazzucato, Anastasia Nesvetailova, Thomas Piketty, Joseph Stiglitz, Simon Wren-Lewis and Pettifor as advisers.

However Pettifor said the group had yet to have a formal meeting with the leader or shadow chancellor and had not been consulted on the fiscal charter.

"We were invited not by the shadow chancellor, but by the leader, Jeremy Corbyn, and it's for John McDonnell to convene the meeting and he has not done so so far," she said.

Pettifor said while, given the intensity of taking over the party, it was not surprising a meeting had not yet been held, the seven had written to Corbyn to ask for one soon. "We are being called on the media, we would really welcome a meeting with him," she said.

"Clearly they have a million things on their plate they are having to deal with the PLP and the media and it is all pretty intense and therefore not surprising a formal meeting with a bunch of advisers has not been set up," she added.

Osborne has moved to exploit the internal-Labour confusion by urging Opposition MPs to vote with him at this evening's vote.

McDonnell denied the policy was in "chaos" and dismissed the Chancellor's appeal to disgruntled Labour MPs to rebel. "Oh that's an Osborne stunt, isn't it really? I don't think anyone will rise to it. They'll see it for what it's worth: just another stunt," he told a BBC reporter.

"We are trying to get on to serious economic debate today, not those sort of stunts any more." Asked if the late shift in stance had confused MPs, he conceded: "Most probably, yes.

He added: "We have had to change position on a couple of issues but today we'll clarify everything."

Osborne said Labour had shown it wanted "to go on borrowing forever", loading debts onto future generations which they could never hope to repay. "This is not socialist compassion - it's economic cruelty," he said.

"With Labour's economic policy in obvious chaos, I call on all moderate, progressive Labour MPs to defy their leadership and join with us to vote for economic sanity. Failing that, they should at least follow the advice of the former shadow chancellor: abstain."

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