Mcdonnell plan ‘will cost £270bn in interest’

Shadow chancellor’s claim that increasing national debt would ‘pay for itself ’ rejected by campaigners

JOHN MCDONNELL’S borrowing plans would cost the taxpayer £270billion in debt interest alone over the course of just one five-year parliament, new research suggests. The shadow chancellor’s extra spending proposals would mean a Labour government borrowing £330 billion, adding to the £1.8trillion of current national debt.

Debt interest payments would add up to more than £270billion, according to the analysis undertaken by the Taxpayers’ Alliance. It calculated the figures based on the interest rate on government debt forecast over the period.

It comes after Mr Mcdonnell said any increase to the national debt would “pay for itself” and refused to answer questions about figures for his borrowing plans in a radio interview last week because MPS had “ipads and advisers” for that. John O’connell, chief executive of the Taxpayers’ Alliance said: “The shadow chancellor’s claim that borrowing plans would ‘pay for itself ’ is entirely wrong. Spending pledges in his manifesto, even when taking into account revenue raised from proposed tax hikes, would cost Britain more than £270billion in debt interest payments over the parliament.

“Britain is up to its neck in debt, yet politicians of all parties continue to make extraordinary spending pledges that puts huge pressure on taxpayers.” Mr Mcdonnell apologised yesterday if he came across as arrogant in the interview on BBC Radio 4’s Today.

Speaking on ITV’S Peston on Sunday,

Mr Mcdonnell said: “What I was trying to do is not get dragged down into an argument which prevents people realising that we actually do need to invest.”

He went on to say: “The point I’m making, and I’m sorry if I annoyed people, the point I’m making is I didn’t want the argument around a relatively low figure of what it would cost to undermine the real argument, which is this, that investment, as you know, wisely invested in our infrastructure, tackling our productivity problem, growing our economy, pays for itself.”

Mr Mcdonnell was asked about an Institute for Fiscal Studies figure, which suggested the additional interest would be around £2billion a year, minus any nationalisation projects. “I can’t predict it. I’m being straight with you here,” said Mr Mcdonnell in reply.

Separately, Barry Gardiner, the shadow international trade secretary, refused to say when the deficit would be eliminated under Labour. He insisted it would be foolish to predict the economy in 15 years’ time. The Office for Budget Responsibility suggested this week that the budget deficit will not be wiped out until 2031.

Liz Truss, Chief Secretary to the Treasury, said: “Labour can’t say when they’d eliminate the deficit because with their eye-watering borrowing binge, they never would. And their shadow chancellor – the man who doesn’t do numbers – again refused to come clean on how much that borrowing would cost taxpayers.”

There is an old political maxim that to govern is to choose. Within inevitable budgetary limitations, the spending choices of ministers should be dictated by the national interest, not partisan or electoral considerations. This is especially so where the defence of the realm is at stake, since the first duty of government is to ensure the security of the nation’s borders and its citizens.

Seven years ago, the Coalition embarked on a security and defence review that was almost entirely Treasury-driven and owed little to the strategic needs of the country. The aim was to save money by cutting the military and diverting any savings to other programmes. We argued then that this was short-sighted, almost a dereliction of duty. Yet the same process is under way once again.

Defence chiefs are alarmed at proposals to reduce the Army still further from its current full-time strength, the lowest since Waterloo. There is also a proposal to pare back the Royal Marines and sell off amphibious ships. One junior defence minister, Tobias Ellwood, a former regular soldier, has threatened to quit if the cuts go through. Recentlyretired senior officers told the Commons defence select committee earlier this month that the Armed Forces are at breaking point and could not withstand another budget shock. They said the Army is 20 years out of date, the Navy underfunded and the RAF at the edge of its engineering capacity.

There is always an element of special pleading when it comes to spending in any area, not least on the military. But the choices of successive governments to scrimp on defence while substantially increasing other budgets, such as foreign aid – even if it does have a soft power rationale – are no longer sustainable, if they ever were. Sir Michael Fallon, until recently Defence Secretary, is intending to speak out now he is no longer bound by the constraints of office, including on whether the UK’S Nato commitment to spend two per cent of national wealth on defence is sufficient given the nature of the threats.

Liam Fox, the International Trade Secretary and a former Defence Secretary, yesterday hinted that a compromise could be reached before the Whitehall review concludes at the end of the year. But that suggests the military may still have to accept some serious cuts that could jeopardise their operational capabilities still further. Given the choice, that is not an option that any Conservative government should take.