“Austerity was always a political choice not an economic necessity” – McDonnell’s full speech

John McDonnell

Below is the full text of Shadow Chancellor John McDonnell’s pre-spending review speech delivered at Church House this morning:

Thank you for coming along this morning.

This is obviously a pivotal moment in British politics. The last 24 hours have revealed the true character of Boris Johnson and, as importantly, the real nature of his politics. It’s exposed in Johnson a deep-seated arrogant sense of entitlement.

Johnson sees himself not as a modern-day Prime Minister, whose authority rests upon the support of a parliamentary democracy. Instead his actions betray that he’s reverted to a much older Tory tradition. He’s a ruler, ruling over the ruled. Democratic practices like parliamentary votes have become encumbrances to the freedom of the ruler. And how dare the broadcast media seek to pose questions and ask for an interview or anything more than a short clip of him grinning.

Under this type of populism, spending reviews are no longer about long term economic planning and management, they become exercises in crude electioneering. They are charades based upon opinion poll politics, aimed not at rising to meet what is needed to invest in our public services but what will garner the greatest short term electoral advantage. So this what we have to come to expect under Boris Johnson.

Politics and government have become a series of cynical, manipulative, short term, electioneering stunts. Nobody is fooled that this is a normal and proper spending review that any normal, strong and stable incoming government would undertake. It’s a one off, one year only, pre-election, panic driven, stunt budget.

In a panic measure, No 10 ordered Sajid Javid to cancel yesterday’s major set piece speech on the economy and instead bring forward his spending round to next Wednesday. This is obviously to be ready for a potential general election in October or November. Taking the whole exercise to a new level of political farce, they have the cheek to refer to the peoples’ priorities.

As someone, who from very early on was christened the Peoples’ Chancellor, I can tell you that these stunt measures not only fail to address the peoples’ real priorities, they demonstrate that the Tories have no appreciation of the peoples’ pain imposed on them by year after year of Tory austerity policies. People see though this exercise as crude electioneering. Ruthless opinion poll politics. It’s straight out of the Lynton Crosby election campaign handbook. You take the top three or four issues that are prioritised in the opinion polls and throw as much and as little money and promises at them that will shift enough votes.

That’s crudely why we have had a number of grandiose announcements from Boris Johnson throughout the last month on the NHS, education and policing. If nothing else, this has proved what we have said all along: austerity was always a political choice not an economic necessity.

For nine years balancing the books was pursued with a single-minded obsession, no matter how much suffering it caused or how many economists said it was wrong and would fail. It seemed from Boris Johnson’s round of spending announcements through the summer that 9 years of austerity had all been for nothing and we had a Prime Minister prepared to borrow with abandon.

Why was this? Was it the dawning reality of what benefit cuts mean to people on the poverty line? The queues at food banks, the thousands reported to have died unnecessarily in the past decade, or the new stories about homeless families forced to live in shipping containers? Had the Tory Party suddenly decided to listen to the mainstream of economic opinion who for years have been saying that austerity is counter-productive? Or to the academics who linked 120,000 excess deaths in the UK to the reduction in public spending?

Of course not. It’s simple political opportunism. Plus the need to sugar coat a no deal Brexit which would rip the heart out of the UK economy. To force through their fantasy of a chlorinated chicken-pushing, NHS-privatising, transatlantic trade deal, Johnson seemed even prepared to admit that 120,000 people died for no reason, sacrificed on the altar of Conservative ideology.

But at least we got there, you might think. We’ve opposed cuts since the day they started, so shouldn’t we be the first to celebrate a big spend budget? The problem is that each spending announcement has soon been exposed as significantly less real new money than the headlines proclaim.

Despite the Tory fanfare around the Government’s NHS announcement, it was soon reported that the majority of the new money for the NHS is not actually new. It was exposed that at least £1 billion of the promised additional £1.8 billion was not new money. The Nuffield Trust described it as more like cash reward for delivering a surplus: “the equivalent of giving someone cash then banning them from spending it, only to expect cheers of jubilation when you later decide they can spend it after all.”

On education, the reports this morning on the reaction of school leaders to the leaked documents suggesting additional funding for schools demonstrate that this has been met with deep scepticism. To quote one head teacher: “Heads will not be hoodwinked by large sounding numbers that in fact merely cover rising costs in areas such as employer pensions and higher pupil numbers. We are not mugs.”

Mary Bousted, Joint General Secretary of the National Educational Union, made it clear that the money promised fell far short of what was needed.

On Policing Boris Johnson promised 20,000 additional police officers on our streets. It was revealed soon after he spoke that a huge proportion of the new recruits won’t be in the frontline and people simply won’t be seeing the extra police officers on the streets that they were promised. Police forces had petitioned the Home Office for extra numbers, with the National Crime Agency and other national forces requesting between 6,000 and 7,000 in total. That would reduce the number available to the Met and other territorial forces to around 13,000.

Whole areas of social need like child poverty, social care, our justice system and local council services do not often figure high in the opinion polls and as result are ignored by Johnson.

So far we have heard nothing to assist local councils who are facing a £3 billion funding gap. Nothing so far to tackle the social care crisis. And on prisons we have also seen promises of “up to 2.5 billion pounds” to be spent on creating 10 thousand new prison places.

If that sounds like a bold and radical new policy, you might want to compare it with the 2017 press release where Justice Secretary Liz Truss announced the government’s commitment to create up to 10 thousand new prison places or the press release four months earlier also announcing 10,000 new prison places. You might even remember this bold new announcement from when it appeared in the Conservatives’ 2017 election manifesto.

Since when the Justice Committee has highlighted how little progress has been made, maybe because the MoJ was forced to raid its capital budget, switching hundreds of millions of pounds into day-to-day running costs budget instead. It doesn’t take long pulling at the strings of these so-called new announcements before they start to unravel.

Sajid Javed has also announced that he is adhering to Phillip Hammond’s fiscal rule. This is a fundamental admission that austerity is certainly not over. So if ending austerity isn’t actually on the government’s agenda, what might we see instead?

The PM has talked about raising the national insurance threshold. If it was brought in line with the income tax personal allowance the Institute for Fiscal Studies has estimated that could cost 17 billion pounds a year, with the biggest beneficiaries being those at the top of the income distribution. That comes on the top of income tax changes in the last four years that have benefited higher rate taxpayers three times as much as basic rate taxpayers.

There has also been talk of cutting fuel duty, something which – now we know the real cost of petrol to the taxpayer who has to clean up the mess it causes – amounts to another huge subsidy to the fossil fuel industry and undermines any commitment to tackling climate change. This is money which could be spent incentivising drivers to switch to electric vehicle, or invested in improving the infrastructure to support them.

And just as important as where the Government spends money is how it spends that money. Will the roll-out of broadband be incentivised, for example, by taxpayer handouts to the Prime Minister’s friends at Virgin and Sky? And will any new money for the NHS end up in the pockets of the US-based healthcare companies who are champing at the bit to get stuck into the UK?

If the Prime Minister and Chancellor were genuinely interested in ending austerity and changing Britain for the better, here’s just some of what we could expect in the spending review and budget:

  • We might see them commit to eliminating in-work poverty, as Labour has done.
  • We might see a real strategy for tackling homelessness, or funding to give mental health parity of esteem with physical health in the NHS.
  • We might see the cuts to local government budgets reversed.
  • Or significantly more money for further education colleges to invest in the skills people need after leaving school – colleges which have seen their funding slashed by a fifth since 2010.
  • Or the government stopping the Universal Credit rollout that is causing misery and hardship for so many.

Of course hanging over the spending round is the reality of the threat of a no deal Brexit. Already billions of pounds have been spent on preparations for no deal that could have been spent on our much needed and hard pressed public services.

We have a Prime Minster who has been willing to vote through year after year of austerity, causing the deaths of thousands and misery for millions, then tear that up overnight if it might help him force through a no-deal Brexit nobody voted for.

His friends in the newspaper editorial offices might fall for it, but make no mistake about it: we won’t. We’ll be scrutinising every pound of cuts to see if they’re going to be reversed next year and if the media are doing their job, they will too. To see whether the Sure Start centres are reopened. To see whether the Universal Credit roll-out is stopped. To see whether the social care crisis is ended, rather than just postponed with another short-term handout.

The new Prime Minister seems to have dazzled some people with his boosterism and clowning. If you enjoys clowns my advice is go to the circus, don’t put them in No 10. He tells us all to be more optimistic whilst labelling as “doomsters” those who don’t fall for his routine.

Try telling that to children who have just spent the summer scavenging in binds for food – according to the Childhood Trust – because they can’t afford to eat without free school meals. Or those being housed in shipping containers due – according to the Children’s Commissioner for England – to a shortage of affordable housing, cuts to Universal Credit and the housing benefit freeze.

Telling the truth about the poverty created by the Conservatives isn’t “running Britain down”. And solving those problems won’t come from crossing our fingers, hoping for the best, and trusting the Tories with our public services. The long-term future of our country will be determined in the next few months potentially in an early general election.

Just as Labour has won the argument against austerity, I believe we will win the general election committed to really ending austerity. Of course Brexit will dominate. But we must never allow it to blind us to what else is going on outside the Westminster bubble. Too many people’s lives and livelihoods are at stake for us to do that. This spending round also lasts for only one year and is a one off. Our front line public service professionals are making it clear that they need a level of long term, stable funding that meets the needs of our community not election gimmicks.

Nobody is asking for a blank cheque but what they fear under Johnson is that this Spending Round is a bouncing cheque, where the one-year pre-election spending promised lasts only as long as the election campaign, especially as the impact of a no deal Brexit hits.

At a time when the economy needs certainty and long term planning all the evidence points not to a serious Spending Round but to an election stunt, inadequate, and insecure, lasting as long as an election campaign.

In the coming weeks as move towards what appears to be an inevitable general election we will be setting out our own policy programme to transform our country and the lives of our people. Just as the 2017 Labour Manifesto gave people a sense of hope, I am sure that our new exciting programme will provide people with a genuine sense of optimism.

We are looking forward soon to be undertaking our own, 5 year long term, Spending Review comprising the greatest investment in our public services and physical and social infrastructure in the history of his country.

Rest assured you will all be invited.

Thank you.

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