McDonnell: Don’t inflict more austerity to pay for another corporation tax cut

John McDonnell has warned against imposing more austerity on the British public to pay for a massive tax cut for businesses amid the “shambolic” process of Brexit.

The shadow Chancellor said the failed strategy delivered by George Osborne had already helped to deliver an “I Daniel [Blake] society” – a reference to a Ken Loach film showing the impact of spending cuts on a struggling joiner after he suffered a heart attack – without prompting an increase in business investment.

McDonnell spoke out after it emerged that chancellor Philip Hammond could take the radical option of halving corporation tax from the existing rate of 20 per cent if talks over Brexit talks fail to deliver a free trade deal with the remaining EU nations or to give City firms access to the European market.

“People say we have not got any cards. We have some quite good cards we can play if they start getting difficult with us. If they’re saying no passporting and high trade tariffs we can cut corporation tax to 10 per cent,” a source told the Sunday Times.

Yesterday McDonnell criticised the possibility of another corporation tax cuts, which was lowered several times by Osborne.

“This is the last thing the Tories should be calling for after six years of failure to meet their own deficit targets and their under investment in our country, which has resulted in our economy being now so vulnerable to Brexit,” McDonnell said.

“The Chancellor should learn from the mistakes of his predecessor and not repeat them with more unfunded tax breaks as part of their shambolic Brexit plans.

“The cost of the Tory tax giveaways in the last parliament to big corporations has been paid for by huge cuts to our public services and benefits creating a crisis in care provision and for many the experience of an “I Daniel” society. At the same time there has been no positive effect on increasing business investment as corporations sit on billions of earned income.

“Labour wants our country to work with our European neighbours to clamp down on tax avoidance and not engage in a race to the bottom in corporation tax rates, in order that we can raise the revenues we need to rebuild and transform Britain so no one and no community is left behind.”