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Key events
Labour won't give full details of its spending plans until final OBR report before election, McFadden says
And here are some more lines from Pat McFadden’s interview with Sky News this morning.
McFadden, the shadow chief secretary to the Treasury, said that shadow cabinet ministers all accepted the need for Labour to take a “responsible” approach to the public finances. That meant they accepted they would not just be able to “spend, spend, spend”, he said. He went on:
That message has come not just from Rachel Reeves and I, but also from Keir Starmer. And, to the credit of the shadow cabinet, I don’t think it’s one that they are resisting or punching back against. I think everyone recognises that responsibility is needed in the public finances.
McFadden said Labour’s spending policy would be governed by the fiscal rules it set out two years ago, which said that the government should only borrow for investment, not for day-to-day spending, and that it should get debt falling in the long term.
He rejected suggestions that Labour’s approach to the public finances amounted to a policy of austerity. “I don’t think we want austerity. But we do want responsibility,” he said.
He said that Labour would not publish details of its spending plans until after the publication of the final Office for Budget Responsibility report before the general election. He said the party needed to know what state the public finances were in before it made commitments. The OBR produces two reports a year, and the next ones will be published later this year, with the autumn statement, and in the spring, with the budget. McFadden said it was possible the next election might not happen until after next year’s autumn statement, when there will be a further OBR report. He said Labour would have to wait until all those “fiscal events” had happened until it knew “exactly what the public finances look like going into the election”. Asked when Labour would reveal its plans, if the election were in October, he said it would depend on whether there was an autumn statement first.
McFadden said Labour would not rule out giving more visas for Indian workers as part of trade deal
Kemi Badenoch, the business and trade secretary, is visiting India where she will be holding talks on the post-Brexit trade deal being negotiated. Kalyeena Makortoff has more on this on her business live blog. She reports:
Badenoch is heading to Jaipur, where G20 trade and investment ministers will be gathering for talks on Thursday and Friday. But reports from the FT (£) and BBC suggest that the UK trade minister will use it as an opportunity to try iron out “some quite significant issues” to the trade deal, which – if its successful - would be a significant feather in Tory ministers’ caps post-Brexit
It is hoped that an agreement could slash costly tariffs on UK exports, including cars and whisky. Meanwhile, India is looking for a deal that would help improve access for its own manufactured goods and services, as well as work visas.
However, both news outlets suggest it’s unlikely that a deal will be struck before prime minister Rishi Sunak attends the G20 Summit on 9-10 September in New Delhi, where he is expected to hold talks with his counterpart Narendra Modi.
In his Sky News interview this morning, Pat McFadden, the shadow chief secretary to the Treasury, said a trade deal could potentially bring big benefits. He said India was about the UK’s 12th biggest trading partner, but that it could be a “huge trading partner”.
Asked whether Labour would be in favour of granting more visas to Indian workers in exchange for trade concessions, he said the party would not rule this out. He replied:
It depends what else is in the pot … You wouldn’t rule it out because you might have other interests that made that sensible. There are goods and services that we want to export to India that could create huge wealth in the UK if we got the chance to do that.
You’ve got to look at these things in the round. You can’t just say, where do we stand on visas without, for example, financial services. Or, for example, whisky exports. What’s in the pot in the round? Take a view of that and ask, ‘Is this deal in the interests of the UK?’ If it is, great. If it’s not, then don’t sign it for the sake of signing one. That’s the principle that should inform trade deals with major economies.
Labour says Tory calls for tax cuts based on better-than-expected borrowing figures pose ‘big risk’ to economy
Good morning. Westminister politics is largely on auto-pilot at this point in August and, for better or worse, most of the political establishment is in “out of office’” mode. But some visceral instincts never take a holiday, and so it was yesterday that, within hours of ONS figures coming out showing the budget deficit for July a bit lower than forecast by the Office for Budget Responsibility (OBR), Conservative rightwingers were calling for tax cuts.
The Financial Times has the best round-up. In their story, Valentina Romei and George Parker report:
Sir John Redwood, a former Tory cabinet minister, said the OBR had been “ridiculously pessimistic” in its forecasts and that Hunt should act swiftly to cut taxes and hold down public spending.
Redwood added that by cutting some businesses taxes — for example raising the VAT threshold for small companies — and reducing energy taxes, the economy could grow faster without fuelling inflation.
Sir Jacob Rees-Mogg, former business secretary, said the data exposed “the continued failure of the OBR” and that the scale of the forecasting gap left scope for tax cuts.
“This would pay for the total abolition of death duties and leave billions to spare — but more importantly it illustrates the mistake of setting policy based on the OBR’s auguries,” he added.
Meanwhile, David Jones, deputy chair of the pro-Brexit European Research Group of Tory MPs, said: “I do think that there is more fiscal headroom now. There is a greater tax take, and that will be augmented by increased savings income as a consequence of higher interest rates.
“That should be converted into personal tax reductions. The chancellor should also be looking to stimulate the economy by reviewing the rate of corporation tax.”
This morning Labour’s Pat McFadden, the shadow chief secretary to the Treasury, hit back. In an interview with Sky News, he said that last year’s “disastrous mini-budget”, which included unfunded tax cuts, should serve as a warning about the dangers of taking an irresponsible approach to the public finances, and he said the borrowing figures for July published yesterday did not change that. He went on:
[The mini-budget] is not an experiment we want to repeat. I was a bit alarmed at hearing Tory calls to repeat it yesterday. I think that’s a big risk for the country – certainly not one that we would adopt.
McFadden said that Labour was not opposed to tax cuts, but that they had to be affordable. He went on:
We saw last September what happens if tax cuts are unaffordable and judged to be unaffordable. And the consequences at that time were booster rockets under mortgage, rates, the Bank of England having to rescue pension schemes and a real rocking of international confidence in the UK economy. So you can’t go down that road unless it’s affordable.
So for us, always, this term – responsibility and stability with the public finances.
To be fair to the government, Jeremy Hunt, the chancellor, was also stressing the need for responsibility yesterday, and playing down the prospect of tax cuts. But, unlike McFadden, Hunt has backbenchers on his own side openly disagreeing with him.
I will post more from the McFadden interview shortly. After that, God knows where we’ll end up – there is almost nothing in the diary for the day – but we’ll find some news somewhere.
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