McDonnell challenges Hammond to spell out how he will end austerity

Labour is challenging Philip Hammond to set out how he will end austerity in his Budget on Monday, with claims that it could cost up to £50 billion.

Shadow chancellor John McDonnell set out his own vision for big spending commitments matched by a “fairer” tax system targeting the rich and businesses.

His comments come after Theresa May used her annual Conservative Party conference speech in Birmingham to herald an end to the era of austerity which followed the 2008 global financial crash.

Mr McDonnell challenged the Chancellor to use his Budget speech to explain what the Prime Minister’s commitment means.

He told BBC Radio 4’s Today: ““If the Prime Minister is promising the end of austerity, let’s have an honest debate about that.”

Simply saying “no further cuts” could cost around £26 billion, he said, but “if you want to stop the cuts and then start reversing them it will be more than that – we are calculating at least £30 billion, most probably up to £50 billion”.

Setting out Labour’s own plans, Mr McDonnell was challenged about the Institute for Fiscal Studies’ assessment that he was making “huge” spending commitments.

“They are big,” he acknowledged. “We have said what we would do is we would have a fair taxation system and that will enable us to fund the public services because we cannot go on the way we are.”

Highlighting the need to address the squeeze on police budgets, he said: “We can’t go on like that, we can’t have a community unsafe because of austerity measures introduced by this Government, so we have got to address that.”

Mr McDonnell defended Labour’s approach: “It will require increasing taxes. We have said we will increase income tax on the top 5%, we will reverse some of the corporation tax cuts, we will crack down on tax avoidance and tax evasion.

“So we have said honestly there would be an increase in taxes.”

In a speech later on Thursday, Mr McDonnell will urge Mr Hammond to use his Commons statement to take “large-scale action” to address the damage caused by Tory cuts rather than falling back on “vague promises” or “financial conjuring tricks”.

He will say the Chancellor needs to begin his Budget statement with an acknowledgement that the policies pursued by the Tories since they came to power in 2010 had failed.

For the Conservatives, Treasury Chief Secretary Liz Truss said: “Since the Labour Party wrecked our economy, we’ve got the deficit down while investing record amounts in public services and keeping taxes low.

“Labour’s plans to spend £1,000 billion and make business the ‘enemy’ would crash the economy all over again and, just like last time, working people would pay the price.”