John McDonnell: No need for trade-off between care and HS2

Labour's shadow chancellor John McDonnell has argued that now is not the time for further austerity, as he insists the country can afford to look after its elderly and invest in crucial transport schemes.

Shadow Chancellor John McDonnell

Speaking to the Yorkshire Post ahead of tomorrow’s Budget, Mr McDonnell acknowledged concerns about the scale of the social care crisis as he called on the Chancellor to make full use of a forecast £12bn windfall to plug the funding gap.

However, he denied suggestions of a binary choice between investing in care and investing in expensive infrastructure projects like HS2, arguing that a healthy economy is capable of supporting both.

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But he stressed that a shake-up of the country’s tax system is a crucial factor to achieving this, hitting back at critics in the party who last week described his tax policies as “unworkable”.

Philip Hammond is under significant pressure to unveil extra funding for health and social care when he addresses the Commons tomorrow afternoon, following months of lobbying by MPs and councillors.

Three leading health foundations have estimated that rising demand will leave an already-squeezed adult social care sector facing a £1.9 billion funding gap this year, with the amount potentially rising to £2.5 billion by 2019/20.

There are reports that the Chancellor is prepared to announce an extra £1.5bn tomorrow – but for many this will not go far enough.

Recent weeks have seen growing calls for a “rethink” of spending on schemes like HS2, with the Labour leader of Wakefield council suggesting the money would be better spent on “spiralling” care costs.

However, Mr McDonnell, who has repeatedly argued for large-scale investment in Northern transport, argues that an “either, or” approach is neither necessary nor desirable.

He claims that if the Government took a tougher stance on tax evasion and avoidance, as well as cracking down on inefficiency and poor management on projects like HS2, there would be sufficient funding for both.

“If [Philip Hammond] stopped giving away taxes to the rich and the corporations... we’d be able to afford the social care that we need,” he told this paper.

“It can’t be an either or, because you have to invest for the future... transport and infrastructure links are absolutely critical in the North.”

Following last month’s OBR forecasts of a £12bn boost in tax receipts, Mr McDonnell has also challenged the Chancellor to use the Budget to allocate the full amount to health and social care.

He stated that families are “imploding” under the burden of caring for their loved ones, and the Government must produce a “significant injection of money”.

He has also responded to criticisms voiced by his own MPs in relation to his alternative budget proposals, including calls for anyone earning over £1m to publish their tax returns.

The policy was attacked for being “unworkable” and failing to “resonate” with Labour supporters, but Mr McDonnell denied that it could prompt further accusations that the party is “anti-aspirational”.

“Quite the reverse... It’s part of the aspiration that [people] earn more, therefore they pay more into the system and they should be proud of doing it,” he said.

“There’s an increasing lack of faith in the taxation system, because of tax evasion and tax avoidance on an industrial scale. One way to tackle that is... to be more open and transparent.

“I’m proud I pay my taxes because at the end of the day, it’ll mean the next generation is taught in a decent school, the health service will be provided and people will have decent pensions.

“That’s the culture we’ve got to develop.”

The senior Labour frontbencher and Corbyn ally went on to state that the party has no regrets over the publication of the leader’s tax returns - despite subsequent claims it was inaccurate.

He said it was “unfortunate” that a number of reporters “didn’t understand it and... mis-reported it”, but he welcomed the fact it had stimulated debate about tax transparency.

He also hinted at a return to the Shadow Cabinet for the Norwich MP Clive Lewis.

Mr Lewis resigned last month in order to oppose the three line Whip on the Article 50 vote, but Mr McDonnell said he hoped the former Shadow Business Secretary “will be back with us soon”.