Corbyn faces Labour rebellion on economic policy

Jeremy Corbyn is facing the biggest test of his authority so far as Labour leader following a dramatic U-turn on the Government's economic policy.

Furious Labour moderates have refused to say whether they will obey the party whips in a crunch Commons vote on the Government's updated Charter of Budget Responsibility.

Following a stormy meeting of the Parliamentary Labour Party (PLP), MPs angrily complained that their economic policy was in disarray and the party and had "no credible leadership".

Shadow chancellor John McDonnell had said just two weeks ago they would vote for the charter, which he dismissed as a "stunt" and a "trap" by Chancellor George Osborne designed to enable the Conservatives to paint Labour as "deficit deniers"

But at Monday's gathering of the PLP at Westminster, Mr McDonnell stunned MPs by saying they should now vote against the charter, which requires governments to run budget surpluses in "normal times" when the economy is in good shape.

The announcement was greeted with open derision by some MPs while even among those who had been unhappy at the prospect of voting for the charter, there was anger at the way the abrupt about-turn had been handled.

It raises the prospect that a significant number of MPs could defy a three-line whip and abstain in tonight's vote in what may be the first significant rebellion of Mr Corbyn's leadership.

Mr McDonnell - who played down the U-turn as little more than a change of "parliamentary tactics" - said that he would spell out his thinking in more detail in the debate on the floor of the House.

His position was dismissed as a "total f****** shambles" by former cabinet minister Ben Bradshaw, while other MPs indicated that they could withhold their support from the leadership in the Commons division.

Former shadow chancellor Chris Leslie and former shadow business secretary Chuka Umunna were among those who expressed unhappiness at the situation in which they found themselves.

Challenged on Twitter to show loyalty to Mr Corbyn, senior backbencher Mike Gapes retorted: "I will show loyalty in the same way as he was loyal to Kinnock, Smith, Blair, Brown, Beckett, Miliband and Harman. Ok?"

The exchange underlined the difficultly Mr Corbyn - a serial rebel when he was on the backbenches - now faces in imposing discipline on his MPs, many of who bitterly resent his election as leader.

Mr Osborne was quick to exploit the Labour leaders' discomfort saying the party had shown it wanted "to go on borrowing forever", loading debts onto future generations which they could never hope to repay.

"This is not socialist compassion - it's economic cruelty," he said.

"With Labour's economic policy in obvious chaos, I call on all moderate, progressive Labour MPs to defy their leadership and join with us to vote for economic sanity.

"Failing that, they should at least follow the advice of the former shadow chancellor abstain."

Before the charter debate, Mr Corbyn will face David Cameron across the despatch box for the second time as leader at Prime Minister's Questions.

It is expected that he will repeat his tactic from his first appearance of putting questions submitted by members of the public.