In a shock reversal, Labour is to vote against the government’s proposed charter for budget responsibility.

The charter, flagged before the election, would commit the government by law to balancing the books within three years – provided there is no global crisis. It would also solidify the principle of a welfare cap and formalise the duties of the office for budget responsibility (OBR).

Labour’s shadow chancellor John McDonnell had previously said Labour could vote for the document. Some backbench Labour MPs were nervous about the party being seen to oppose fiscal discipline, while McDonnell himself had intended simply to ridicule the charter as irrelevant.

Today, in a letter to Labour MPs, McDonnell has reversed his former stance and called for the party to oppose the charter, whilst publishing its own alternative document.

The letter says:

“In the last fortnight there have been a series of reports highlighting the economic challenges facing the global economy as a result of the slowdown in emerging markets.

“These have included warnings from the International Monetary Fund’s latest financial stability report, the Bank of England chief economist, Andy Haldane, and the former Director of President Obama’s National Economic Council, Lawrence Summers.”

Labour had planned to move its own alternative to the charter, and to table amendments, but I understand both these possibilities have been ruled out by the clerks of the Commons.

McDonnell says:

“I believe that we need to underline our position as an anti-austerity party by voting against the charter on Wednesday.

“We will rebuff any allegation of being deficit deniers by publishing for the debate our own statement on budget responsibility. We will set out our plan for tackling the deficit not through punishing the most vulnerable and decimating our public services but by ending the unfair tax cuts to the wealthy, tackling tax evasion and investing for growth.”

The move follows the SNP’s announcement this weekend that it will vote against the charter and publish its own alternatives.

The move is set to be debated at a PLP meeting tonight.