Jeremy Corbyn faces a major test of his leadership today as the government’s fiscal charter will be voted on in the Commons. John McDonnell has U-turned and decided the party will oppose the bill but plenty of Labour MPs are expected to rebel by abstaining on the vote. Although the bill will pass without Labour's support, the size of this rebellion will reveal how poisonous the atmosphere among Labour MPs has become.
The U-turn has made Labour look like a bit of a joke. The shadow chancellor has tried to explain why he has changed his mind but the question remains: why did he back the charter in the first place? One group who could have advised him not to was McDonnell’s council of seven economic advisers — including economists Joseph Stiglitz, Thomas Piketty and former adviser to Gordon Brown Danny Blanchflower.
Blanchflower popped up on the Today programme to defend McDonnell – arguing that he is up to the job, despite the mess he's made of this situation:
'Well of course he is, this is early days. Policy making is messy, it takes some time to work out what you’re going to do and we’ve heard eventually – it has taken sometime I agree – the right decision has been put in place to oppose the Chancellor’s, as you call it, political game. A stunt that has no place in economic policy. What we need is flexibility, not silly rules that have no obvious economic benefit.'
But if it was obvious to Blanchflower, why wasn’t it to McDonnell?
'I don’t know the answer to that. The economic advisers certainly have a view that austerity isn’t the appropriate thing to be doing right now or in the past.'
So, does McDonnell ever bother consulting his highly-touted advisers? Blanchflower said it has always been the view of the advisers that Labour should not support the charter and reject austerity, but political implications might have affected the shadow chancellor's judgement:
'Perhaps it was a surprise but as I said, economic policy is messy, there’s clearly political things going on. I think the right decision has now been reached but we look back at the recession and we realise that flexibility is all – tying yourself to a silly rule that nobody is going to obey makes absolutely no sense, now that the economy is slowing.'
The fiscal charter is a case study of the damage Corbyn’s New Politics will do to Labour. Yes, they may have got there in the end but it was an unnecessary distraction. Blanchflower and his comrades may have a point that Osborne's charter is a ‘silly stunt’ but Labour’s ineptitude over backing/rejecting the bill is what most people will remember. Instead of holding the government to account over policy, Labour is caught up in its own internal process struggles, frittering away both political capital and the will of the general public.