LABOUR must ditch the previous Tory government’s “phoney” fiscal rules to grow the economy, Unite general secretary Sharon Graham has said.
Chancellor Rachel Reeves has committed to have debt falling as a share of gross domestic product (GDP) in five years as part of its self-imposed fiscal targets.
But she refused to rule out debt changes, saying that the “precise details of the fiscal rules” will be published in the Budget in October.
Ms Graham’s comments also follow the Institute for Fiscal Studies pointing out that changing the way debt is measured would allow the government to borrow billions more.
In a column for the Mirror, she wrote: “Labour has a tough deck of cards, but if we are serious about investing in our children, we are going to have to ditch the phoney fiscal rules of the last government.
“If we don’t, we will continue to slide backwards.”
A spokeswoman for Momentum said: “Keir Starmer and Rachel Reeves have thus far failed to make substantive pledges on fiscal policy, leading commentators to highlight the risk of ‘baked-in austerity.’
“Any continuation of austerity will have a catastrophic impact on society and should be stridently opposed by the labour movement.”
Professor Richard Murphy, of Sheffield University Management School, warned that Ms Reeves cannot deliver anything of value for Britain if she remains dedicated to Tory fiscal rules, adding: “She will deliver austerity instead.”
He urged her to swap her “we can can only do what we can afford” mantra to the one John Maynard Keynes wrote for the post-war 1945 Labour government: “We can afford anything we can do.”
“This country can do so much more than it has been achieving, and the government can create the money to make that happen, which also means we can ignore foreign, private equity and PFI finance,” he added.
“The capacity to deliver the transformation of the UK could be created by the working people of this country if only Rachel Reeves loosens the purse strings to let that happen.”
A Treasury spokesman said: “The government is under no illusion to the scale of the challenge it faces, including a £22 billion black hole in the public finances inherited from the previous administration.
“The Chancellor has said her commitment to these rules is non-negotiable and will set out precise details at the Budget.”
