Shadow chancellor's address to party
McDonnell: ‘We will stick by Osborne targets’
The controversial left-winger is keen to build Labour’s credibility on the economy and will unveil plans to support Mr Osborne’s fiscal charter unveiled in the budget in July.
It commits the government to delivering an overall surplus by 2019-20 and to running an overall budget surplus in “normal times”.
Mr McDonnell said: “We will support the charter on the basis we are going to want to balance the books, we do want to live within our means and we will tackle the deficit.”
The charter sets out to eliminate a budget deficit of just under 5% of national spending by the 2019/20 tax year, and running budget surpluses thereafter.
He wants a broader remit for Bank of England and will say he understands the need to bring deficit under control.
However, Labour’s support will fall short of backing the Government’s austerity programme. Labour wants to stimulate the economy by borrowing on the bond market to invest in infrastructure.
“Our basic line is we are not allowing either middle or low earners or those on benefit to have to pay for the crisis. It is as simple as that,” said Mr McDonnell.
He will target tax avoidance and pledge to scrap the benefit caps.