John McDonnell, Labour Shadow Chancellor 2015-20, argues this budget is the first concrete evidence the government has recognised its political and economic strategy is not working, and gives this administration six months to go further in demonstrating it is a Labour government. He:
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- welcomes scrapping the two child cap
- sees freezing rail fares and reducing energy bills is a first step in recognising cost of living pressures, and
- expresses concern that freezing tax thresholds wipes out many of the budget benefits
JOHN McDONNELL
Just be Labour!
The wave of relief that swept over the Parliamentary Labour Party was palpable when they heard the Chancellor confirm that the two child cap was at last to be scrapped. This is a huge victory for all those Labour MPs and campaigning groups, who fought so hard to lift 500,000 children out of poverty. It was worth staying in the Labour Party to achieve.
Several of my Parliamentary colleagues stood firm and as a result lost the Labour whip simply for voting to get rid of this appalling policy. It was morally right then and, as the Chancellor explained in repeating their arguments today, it is morally right now that this poverty-inflicting policy had to go.
The Chancellor has also been forced to move onto the left’s agenda of controlling prices and taxing wealth. Freezing rail fares and reducing energy bills is a first step in recognising the cost of living pressures facing people. But stopping short and not introducing rent controls and confronting the price gauging by supermarkets on basic foodstuffs will leave families struggling to cope.
The increased taxes on capital gains, dividend income, corporation tax allowances and £3 million properties fall short of an effective overall wealth tax but at least lean into Keir Starmer’s commitment that the heaviest burden will fall on the broadest shoulders.
The problem is that freezing the tax thresholds overall wipes out many of the benefits of the budget. The Office of Budget Responsibility’s analysis forecasts the increase in disposable household income falls from 3% to one quarter %. This means that people’s living standards are at a virtual standstill and for many there will be an ongoing cost of living crisis.
Nevertheless, the budget is the first concrete evidence that the government has recognised its political and economic strategy is not working. The obvious question is why it has taken nearly 18 months for this administration to take the first small steps to acting like a Labour government.
The Chancellor and Keir Starmer have changed tack to secure their positions given the almost desperate dismay that has seized the Parliamentary Labour Party and Labour’s supporters. It is likely that it will buy them time and hold off a threatened leadership challenge for the time being but that threat will come back with a vengeance if in May next year the local elections in England and the elections in Scotland and Wales are a disaster.
This gives this administration six months to go further in demonstrating it is a Labour government. The lesson is: listen to our supporters who have been proved so right on the two child limit, the Winter Fuel Allowance and the disability benefits and who have saved this government from itself.
It wouldn’t take much to raise people’s confidence in a Labour government.
Start by making a commitment now to tackling the grotesque levels of inequality and poverty in our society that no Labour government should tolerate by consulting immediately on the design of an effective wealth tax to be introduced in next year’s budget.This will put the money in people’s pockets that will not just raise living standards but will be the driver of growth in our economy.
The message is clear – just be Labour.
This article first appeared as Just be Labour, 26 November 2025, on Labour Hub
Photos: House of Commons Flikr, John McDonnell website