An odd one too, but interesting all the same:
McDonnell is at great pains to calm these fears with frequent meetings soothing City and business people. I asked him what he could do to stop the rich panicking. “We are open and transparent about our plans. Is there something up our sleeve? No. Yes, we will tax the top 5% more – we’ve said exactly how much. But we are not imposing capital controls. I have never mentioned capital controls.” He has laid out his iron rule, the same as Brown’s: no extra spending over the cycle, except for capital investment.
The standard mantra is that the capital spending will pay for itself. Government borrowing costs are lower than private sector, the returns from the investments will more than cover the interest bill. Sure, that assumes that government can build to time and budget - not something ever actually shown by any British government ever - but that is the claim.
So, if there’s to be no extra spending then why do taxes need to rise?
What McDonnell is actually saying is no deficit over the cycle. Which is also what Brown promised, Ha Ha, to find that he had to constantly redefine the cycle in order to keep to it.
So, where’s this confusion come from between extra spending and a deficit? That’s because this is Polly Toynbee attempting to comment upon matters economic.
Government spending more is one thing, the deficit only rises if they don’t also raise taxes to pay for that spending. Ms. Toynbee doesn’t get this - which is roughly all we need to know about Polly’s comments upon any matter economic, no?
Do note this is that same Polly who insists that taxes must rise to pay for the lovely extra spending she would like to see. But she still can’t make the connection between that and her claim here.