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SOPHY RIDGE: Let’s speak now to John McDonnell, Labour’s Shadow Chancellor, about what he wants to see in the budget tomorrow and he joins us now from central London. Hello, thank you for being with us this morning.
JOHN McDONNELL: Morning Sophy. I’m in the pouring rain, the things I do for your programme! It’s wet.
SR: Oh well, hopefully you won’t be suffering for too much longer out in the cold, at least you’ve got an umbrella, that’s what we like to see. Now I want to start off by asking you a bit about what Philip Hammond told me earlier on the show. I don't know whether you managed to watch the interview but he basically said that if we don’t get a deal then he’ll have to take a different approach to Britain’s economy, there will need to be a new budget next year. Now of course we don’t know what will be in that new budget but it could be, as Jacob Rees-Mogg was speculating earlier, it could be tax cuts, it could be something to do with regulation. Is it something that worries you?
JOHN McDONNELL: I found the whole interview really shocking to be honest, I think you did as well looking from your expression. I thought it was absolute complacency … Well I thought there was callous complacency that came across about this week’s budget but also about the future. You spoke to him about Universal Credit and the hardship that people have been threatened with, three million people losing two and a half thousand pounds a year, going to food banks as a result of it and he has barely mentioned it. What we’re saying – and it’s not just me, it’s the National Audit Office, it’s large numbers of charitable organisations and others basically saying halt the roll-out of Universal Credit to stop these people being forced into poverty, halt the roll-out. And I’m saying to other political parties, if he doesn’t halt the roll-out of Universal Credit, we’ve got to vote this budget down, we’ve got to stop him forcing people into poverty in this way. And then when you asked him about Brexit, I was really shocked. He’s gone back to what he said some time ago which is basically he seems to have accepted a no-deal Brexit and he does want us to be like Singapore, a sort of tax haven, which will undermine our manufacturing base and I think put people’s living standards at risk. I was really shocked by the interview, really shocked.
SR: Well to be fair to the Chancellor, he did say that he wanted to see a deal, that that’s something that he was hoping for so I put it to you that if you are so concerned by what the government may do in a no-deal scenario, would the responsible thing for Labour to be doing is to at least have on the table supporting the deal that Theresa May comes back with?
JOHN McDONNELL: I think you misinterpreted this shift that he has undertaken in this last couple of weeks. In that interview he seemed to complacently accept that there’s a likelihood of no-deal. We can’t accept that, we’ve got to ensure that there is a deal and the best way of doing that is Theresa May negotiating a proper deal that protects jobs and the economy and if she can’t do that, she should step to one side because there is too much at risk from a no-deal and if she can’t do it herself, let Labour get on with the negotiations or let’s have that general election and let the people decide.
SR: So just to be clear, would you support a deal that Theresa May comes back with if you think it is the best, or at least a reasonable way of protecting jobs? Because looking at your six tests, I mean one of them is to deliver the exact same benefits as you currently have as members of the single market and customs union, I mean that’s impossible isn’t it, no matter who is in the negotiating seat.
JOHN McDONNELL: Well those tests are basically tests of what they set themselves, this is what they promised us. They said, she said, David Davis said exactly the same benefits so our tests are based upon what the government promised us but we’ve said time and time again, bring back a deal that will protect jobs and the economy and yes, of course we’ll support it but the problem that we’ve got – and we saw it in your interview with Philip Hammond – she’s got people in the Cabinet now, even the Chancellor by the looks of it, who are willing to risk our economy on the base of a no-deal because he has fantasies of us being like Singapore off the coast of Europe, as a tax haven, threatening our manufacturing base and threatening our economy. I found that interview deeply, deeply worrying.
SR: A little bit earlier on you were just saying there about the six tests being based on what the government promised so are you telling me then that Labour is deciding how to vote on one of the most important issues that our country has faced in decades on the basis of something that David Davis once said?
JOHN McDONNELL: No, I’m saying what the Prime Minister herself said in the Commons because she repeated exactly what David Davis said, giving those assurances. What we are saying very, very clearly – and Jeremy Corbyn said it at the Labour party conference – we want a deal that would protect jobs and the economy. If the Prime Minister brings that back we will support it but you know as well as I do, it’s almost impossible to get this through either her own Cabinet or her own party and certainly not through Parliament by the looks of it because the DUP exercise a veto over all matters. What we need now is proper negotiations and I say again, if this Conservative party can’t do it because they are in such disarray, step to one side and let the Labour party come forward to do the negotiations in the interests of the country because we believe we can secure a deal that would protect jobs and the economy overall. The last thing we need now are these threats from Philip Hammond or others that they are willing to prepare for a no-deal.
SR: Okay, now of course I’m sure Philip Hammond would say it is the responsible thing to be preparing for no-deal but I’m keen to talk to you about austerity as well, Theresa May …
JOHN McDONNELL: He seems to want a no-deal by the looks of it.
SR: Theresa May promised an end to austerity, Philip Hammond said in the interview we are now at a turning point, so do you believe that by tomorrow austerity is going to be over?
JOHN McDONNELL: Of course not. Well there’s a test, isn’t there? Theresa May has announced austerity is at an end, well let’s see in this budget. Let’s see actually if we are going to get all the money the health service needs. He has announced 20 billion but we’ve been told by the experts, the Health Foundation, that that simply isn’t enough, that’s a standstill budget. In fact, we now know the health service has got something like £11 billion in the red a lot of that money will be taken up by just covering past deficits. You mentioned schools, head teachers are …
SR: How much would it cost the Conservatives?
JOHN McDONNELL: Well we’ve said already, we put our budget forward last year in the general election, £49 billion worth of investment in our public services overall, paid for yes, by increases in taxes on the top 5% of earners and cutting back on corporations tax giveaways and tax giveaways to the rich, that would be a start and we would invest in our economy and grow our economy in a way which could afford our public services. What I found absolutely amazing in your interview as well is his complacency about schools, there are 18,000 schools out there at least that are having budget cuts. We’ve got teachers and head teachers marching on Number 10 because of the cuts that are occurring in their schools at the moment. Head teachers are sending out begging letters. I thought the whole interview around the public services as well was completely complacent, cut off from the real world that most people are experiencing out there.
SR: You were just outlining there some of Labour’s measures that you have already outlined – so Corporation Tax, increasing Income Tax for the 5% - and you described it as the start because ending austerity would cost more than that wouldn’t it, so where are you going to find the money from?
JOHN McDONNELL: Well we’ve said that’s our first stage budget that we’d introduce when we go to the last general election. When the next general election is announced we’ll publish a new manifesto, it will be fully costed and yes, we’ll invest to grow our economy and do you know, that’s the problem with austerity. It was wrong from the beginning, as soon you introduced austerity from 2010 onwards you held the economy back so as a result of that you delayed the recovery and that meant wages started – well wages were cut for most people and they still are and at the same time our public services, well our social fabric, was being undermined. What this is by the Prime Minister in particular is an acceptance that actually austerity has failed and people are not going to put up with it anymore. That’s why we need investment in our economy to grow the economy so that we can afford the public services we need and the basis of a fair taxation system.
SR: I just want to nail you down on figures because this is important. According to reports this week you said it would cost around £108 billion to end austerity, is that right?
JOHN McDONNELL: We said this is what the cuts have amounted to over the last ten years. It’s the scale and we wanted to point out to the government …
SR: Are you going to reverse them?
JOHN McDONNELL: Well yes, we are going to start the process off of making sure we have a fair taxation system, invest in our public services and do you know the best way of reversing austerity is investing in our economy, the thing this government has failed to do. Business investing now is stagnating, government investment cut back and as a result of that, you know, in the first six months of this year we had the lowest growth in our economy since 2011, last year the lowest growth in our economy in the G7. If you don’t invest, you don’t grow the economy and as a result of that you can’t invest in your public services. We are going to have a fair taxation system to enable us to pay for our public services in that way, enable us to invest in our economy, grow the economy and in that way everybody will share in that prosperity.
SR: Okay, Labour’s John McDonnell, thank you very much.