Labour
cannot descend into infighting at this critical moment
A Brexit vote is a
disaster for the economy. My party needs to rally now in defence of
working people and their families
John McDonnell
Friday 24 June 2016
19.47 BST
The Brexit vote has
delivered the most enormous shock across the political system. And as
the resulting market turmoil demonstrates, it is creating an enormous
economic shock too. The greatest danger we face is that this event,
under this Conservative government, will be felt across the whole of
society and fall most heavily on the most vulnerable.
It is impossible to
understand this vote without recognising that huge numbers of people
in our country have been let down, repeatedly, by successive Tory
governments. While high finance has been allowed to run rampant, our
historic industrial areas have been starved of investment. Secure,
well-paid jobs have ebbed away, to be replaced by insecurity,
zero-hours contracts and poverty wages. Many there feel, rightly,
ignored and cast aside by the Westminster political system.
The campaign to
leave made three claims to the disenfranchised. First, they claimed
that pressure on public services and the lack of jobs was caused not
by Tory governments imposing austerity and failing to invest, but by
migration alone. We understand people’s concerns and will work to
address the real insecurity that lies beneath them. But the leave
camp’s second claim, that exiting the EU would be a simple solution
here, was quite wrong.
And third, they were
convinced by those on the leave side, including Boris Johnson, who
said there would be no economic consequences from a decision to
leave. Every reputable economist and economic institution warned the
shock would be substantial. I don’t doubt that Boris Johnson and
others knew this full well. The biggest danger here is that the shock
will be felt most in those communities least able to withstand it. We
should not let the leaders of leave shrug off their responsibilities
here.
George Osborne has
already threatened an emergency budget in the event of a vote to
leave, doubling down on austerity and reversing his manifesto
promises not to raise income taxes and VAT. There is no economic
justification or mandate for this. Sixty-five of his own MPs have
refused to support it, and Labour will oppose him every step of the
way.
Labour and the whole
labour movement will need to rally now in defence of working people
and their families. That means immediately scrapping George Osborne’s
fiscal surplus target for 2020. It has no support in the economics
profession and Osborne’s desperate efforts to achieve it have
resulted in the misery of spending cuts and the short-sighted
slashing of vital investment. If a recession breaks, as forecasters
now predict, maintaining spending will be essential to help avert an
even deeper downturn than necessary. This will also mean abandoning
the third pillar of the fiscal charter the government pushed through
only last year: a comprehensive failure of economic policy within 12
months.
When an overwhelming
consensus now exists on the necessity of public investment to support
weakened economies – from the CBI to the TUC to international
organisations such as the IMF and the OECD – it was clearly
mistaken for the chancellor to pursue major cuts in investment, which
is now scheduled to fall until the end of the decade.
Under current
circumstances, with shockwaves still being felt, it is critical that
the government is prepared to bring forward shovel-ready investment
projects – not only to create jobs today, but to lay the secure
foundations for the future economy. Investment spending should be
targeted on those areas of the country that have most suffered from
neglect and long-term decline under the Conservatives. We should no
longer tolerate a situation in which some privileged areas of the
country receive the lion’s share of public investment.
These are uncertain
and dangerous times for all of us. Labour must be at the forefront of
putting forward an alternative to the present economic mess, which
makes unity more important now than ever. At a time of such economic
uncertainty, with the Tory party split clean down the middle, Labour
members and voters will not forgive us if we descend into infighting
and introspection only a year after Jeremy Corbyn won his landslide
victory as our leader.
The current
Conservative administration has piled failure on failure. Its
economic legacy will be the continuing devastation of communities
across the country, the shoddy low-paid jobs it has created, and now
the shock of Brexit. Together we can, and now must, do better than
this.
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