Early decisions taken by the Labour leadership “tied” the party’s hands “unnecessarily”, John McDonnell has said.
The former shadow chancellor and frontbench colleague of the prime minister insisted the “strictures we placed upon ourself need to be re-examined.”
Speaking to BBC Radio 4’s Today programme, McDonnell said that imposing cuts to create further fiscal headroom wiped out by recent market moves would be “politically suicidal” and undermine the support on which Labour got elected.
The government must “see through” the market turbulence, he said.
The comments come as Reeves battles to meet her fiscal rules after a surge in borrowing costs, fuelling speculation of more cuts and/or tax rises.
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Market moves have seen Reeves’ £10 billion of fiscal “headroom”, allowed for in the autumn budget, squeezed significantly. The chancellor has also appeared to rule out further tax rises, telling the Confederation of British Industry (CBI) conference in November last year that she would not be “coming back” for more.
McDonnell, who had the Labour whip withdrawn last year after voting for a king’s speech amendment urging ministers to scrap the two-child benefit cap, also suggested the government should “look to the Bank of England to intervene if necessary”.
McDonnell said: “I think the scene was set to a certain extent before the election, when we didn’t really have a thorough and open debate about the state of the economy and the options that we had available to us.
“I wouldn’t have ruled out the increases in income tax and wealth taxes on the wealthiest in society the way it was, and I wouldn’t have ruled out increasing corporation tax, so we sort of boxed ourselves in to a certain extent.”
He also warned that the electorate will “have to be protected, otherwise I’m afraid we’re looking at a level of disillusionment which then turns people towards, unfortunately, Reform, and I think that would be a disaster for the country.”
McDonnell said: “Even in the election campaign itself, I think decisions were taken that tied our hands, particularly around where we would raise our resources…
“I actually think that the earliest decisions taken not just by Rachel Reeves but by Keir as well, I think tied our hands unnecessarily… we’re now in a different position in government, and these strictures we placed upon ourselves need to be re-examined, in particular how we redistribute wealth in our country.”
Josh Self is Editor of Politics.co.uk, follow him on Bluesky here.
Politics.co.uk is the UK’s leading digital-only political website. Subscribe to our daily newsletter for all the latest news and analysis.
Source: Politics
