John McDonnell has sought to reposition Labour as the party of fiscal discipline and competence, using a speech ahead of next week’s autumn statement to contrast the government’s “failed” austerity approach with his own party’s focus on investment.

Public spending did not mean a haphazard approach to the public finances, the shadow chancellor said in a wide-ranging speech which also took in Brexit, the election of Donald Trump and cuts to social care.



“There are no easy options,” McDonnell said of a planned Labour approach. “There is no proverbial magic money tree.”

The party needed “an absolute and unbreakable commitment to fiscal discipline” in government, he said, adding: “There is nothing leftwing about running an excessive deficit. There is nothing progressive about running up excessive debts.”

McDonnell reiterated his call for the chancellor, Philip Hammond, to use the autumn statement to formally announce an end to an approach of austerity, calling it “a political choice, not an economic necessity” made by Hammond’s predecessor George Osborne.

“We said austerity will suppress growth; wages won’t recover; the country’s infrastructure will fall apart,” he argued. “They said don’t worry, most of the cuts will fall on welfare.

“We have all been failed by the Conservatives’ economic programme. Six wasted years of spending cuts instead of investment. For ordinary people, six years of low pay and high rents; six years of zero-hour contracts and job insecurity.”

McDonnell said Hammond would “have to admit that the Conservatives have failed in every task they set themselves” on the economy, including controlling the deficit, reducing overall debt, increasing wages and improving productivity and investment.

The sacrifices of austerity were made in vain, McDonnell said. “They were made at the altar of the political conceit that said for as long as you could pose for the cameras in a high-vis jacket, it didn’t matter that actual manufacturing employment was still falling.”

Labour is calling for Hammond to reverse austerity by stopping planned cuts to universal credit and other social security, improving funding for the NHS and social care, and investing properly.

McDonnell called for more geographically equitable government investment, saying the sum spent per person in London was 12 times that seen in the north-east. While big projects such as HS2 were needed, he said: “We can’t just ask those in left-behind Britain to stand and wave at the trains as they go shooting past.”

Trump’s victory, coming after the Brexit vote, had “underlined the point that the old rigged economy working just for those at the top has failed”, McDonnell said.

He warned: “After Donald Trump’s victory we understand the price for failure. When decade after decade the rich get richer and the ordinary people see their incomes stagnate, something snaps.”

McDonnell attacked the US president-elect’s plans: “The Trump plans to increase infrastructure spending serves as a smokescreen to cut taxes for those at the top and to deport migrants. At the same time as spending more on infrastructure, he wants to put jobs at risk by deregulating finance and encouraging speculation.

“We need genuine progressive investment that supports everyone, and not one that divides our society and hurts our economy.”