LABOUR was in disarray last night after the leadership performed a U-turn and decided to oppose Chancellor George Osborne’s new Budget surplus rules today, leading to claims that the party had been forced into a U-turn by the SNP.
The decision announced at a meeting of the Parliamentary Labour Party has brought tensions to the surface over the left-wing leadership of Jeremy Corbyn and his shadow chancellor John McDonnell with many of the party’s MPs considering rebelling against the new line.
In his conference speech Mr McDonnell had warned that the party had to support Mr Osborne’s Charter of Budget Responsibility or risk being portrayed as “deficit deniers”.
He went on to say that Labour would find a different way of balancing the books by increasing taxes on the rich and big corporations.
But in a dramatic U-turn, Mr McDonnell announced to Labour MPs that the party would not lock itself into Tory spending cuts, saying it would “send the wrong message”.
According to sources he added: “We need to help our comrades in Scotland.”
This was in reference to the SNP’s opposition to the Charter of Budget Responsibility which is seen as underpinning Tory austerity.
SNP Treasury spokesman Stewart Hosie said: “The SNP has been calling on Jeremy Corbyn to join us in voting against the UK government’s budget plans. And while we welcome every vote against austerity, it will count for nothing if Mr Corbyn cannot take his MPs with him.”
Shadow international development secretary Diane Abbott, a close Corbyn ally, dismissed the row as a “process story” and claimed Mr Osborne’s legislation was “gimmicky” and designed to put Labour “in a corner”.
But others vented their fury with former culture secretary Ben Bradshaw walking out of the meeting calling it a “f****** shambles”.
Former shadow chancellor Chris Leslie said Labour needed a “clear and consistent” policy and said Mr McDonnell should instead table a rival motion and abstain on Mr Osborne’s plan, refusing to play his “tactical game”.
Labour MP John Mann, a member of the House of Commons Treasury Committee, said: “It’s rather autocratic if John McDonnell announces one policy consulting nobody, and then within a few days the exact opposite - again consulting nobody.”