McDonnell says Tories should “drop the spin” over off-course economy

John McDonnell has urged the Tories to “admit the truth” over their handling of the economy, after an internal briefing document showing that the Government is “unlikely to bring deficit reduction entirely back on track” was mistakenly posted online.

Labour’s Shadow Chancellor said that the document revealed why Philip Hammond has been reluctant to be more specific about his Government’s “fiscal discipline”, and told the Tories to come clean.

The briefing, marked “sensitive: for internal use only”, was accidentally published on a government website and says that a continuing run of “disappointing data” is leading to “slow deficit reduction”. It was likely intended for ministers and Treasury civil servants, and it states that: “For the year to date the deficit is £2.3bn lower than last year; at a fall of 4.8%, well behind the 27.0% reduction forecast.”

Responding to the findings, McDonnell said:

“Philip Hammond today refused to mention the Government’s fiscal targets over the last six year, instead the Chancellor today referred vaguely to “fiscal discipline”. This internal Treasury document shows why.

“It refers to ‘a run of disappointing data’ and the unlikelihood of getting deficit reduction ‘back on track’, officially confirming the Tory failure on the economy.

“Now we’ve had it from the official civil servants it’s time the Tories came clean. They should drop the spin and admit the truth: they are failing on the public finances and working people are paying the price.”

The leaked document illustrates how borrowing is up on last September by £1.3bn, and further to that £2.1bn above market expectations. The slow deficit reduction is primarily blamed on central government receipts shortfalls, which at 3.6% is below the 5.9% required to meet budget forecasts. This is because of lower tax contributions, as a result of lower bonuses and slower wage growth.

The document states that Britain faces a growth in debt interest spending of £900 million, and a bill from the EU of £700 million, a 25.9% growth compared with the same period last year. The idea that this increased bill from the EU was delayed until after the referendum was rejected by the treasury.

The Chancellor is aiming for a budget surplus by 2020.