Austerity must be ended not postponed, Labour will tell the Chancellor

Shadow Chancellor John McDonnell will set out three key tests for next week's Autumn Statement - including that Philip Hammond 'end the giveaways to the few'

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The Chancellor’s promise to “reset” economic policy because of Brexit will fail if austerity is merely postponed, Labour will warn today.

Shadow Chancellor John McDonnell will set out three key tests for Philip Hammond ahead of what is expected to be a landmark Autumn Statement next week.

Delivering a speech in London, Mr McDonnell will demand a proper “end to austerity” – rather than the pain of the cuts being stretched deep into the next decade.

He will also call for U-turns on controversial cuts for low-earners and sick and disabled people, calling on Mr Hammond to “end the giveaways to the few” instead.

And he will urge the Chancellor to finally tackle the deepening crisis in the NHS and in social care, which are both threatened by further cuts.

Mr McDonnell will say: “Those tests are based on what we need as a country.

“We need a credible fiscal framework that supports Brexit, we need actual support for those in work on low and middle incomes and we need secure and properly funded public services.

“We want to see an end to austerity, with the NHS and social care properly funded and ESA and Universal Credit cuts reversed. We want to see an end to tax giveaways for the wealthy.

“And we need a serious commitment from government to invest across the whole of our country.”

Otherwise, Mr McDonnell will say, the Chancellor will be guilty of a “change of rhetoric” only, leaving the priorities – tax giveaways for the wealthy, cuts for the poor – unchanged.

And he will urge Mr Hammond: “I hope he leaves the gimmicks on the shelf alongside George Osborne.”

Expectations have grown of a significant shift away from Mr Osborne’s policies on 23 November after the Chancellor said a new plan was needed to “fit the circumstances Britain now has”.

Even before Theresa May became Prime Minister in July, she said her Government would no longer seek to reach a budget surplus by 2020, as Mr Osborne pledged.

Last month, Mr Hammond warned of “a period of turbulence and uncertainty" in the wake of the Brexit vote, with a new economic policy required to meet the challenge.

He is also under pressure from business leaders to bolster faltering business confidence in the wake of both the Brexit vote and Donald Trump's US election success.

However, the aim is still to wipe out the deficit – implying spending cuts continuing through the next decade, according to some experts.

In the speech, Mr McDonnell will also accuse the Government of a “shambolic” approach to Brexit, which risks hitting workers in the UK.

And he will highlight reports of a rift between Mr Hammond and his Cabinet colleagues, claiming the “weak” Chancellor has been isolated over his determination to avoid a hard Brexit.

Mr McDonnell will say: “The CEO of Nissan probably knows more about our Brexit negotiating position than the Chancellor.

“Britain cannot afford a weak Chancellor who cannot find his voice, when our country faces the biggest economic challenges for a generation. It's time he steps up to the task and stands up to his Cabinet colleagues.”

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