Labour would not spend any money preparing for no deal

Labour would not spend a penny preparing for a no deal Brexit, shadow chancellor John McDonnell claimed today.

The comments will leave Labour open to the charge it could be blackmailed by Europe if it were running the Brexit negotiations.

Theresa May has insisted Britain must be ready to walk away from the talks without a deal or there is no incentive for Brussels to compromise. 

Mr McDonnell’s remarks also came as he called for the Chancellor to push up government spending on public services by £17billion a year.

The Treasury has already spent £250million on no deal contingency plans and is prepared to spend hundreds of millions more if necessary.

But Mr McDonnell insisted today it would ‘waste resources’ because Labour would not countenance failure to secure a good Brexit deal. 

He told the BBC Radio 4 Today programme: ‘What we have said all the way along is that we think we can get a good deal.

‘That means we don’t have to waste resources on preparing for a no deal.’

Asked whether that meant that Labour would not set money aside for the task if the party was in power, he replied: ‘We don’t think we need to set money aside because we can get a good deal which will maintain tariff free access, allow our economy to grow and work in a new collaborative relationship with our European Union partners, our European partners.

‘The reason that the Government is having to set money aside no matter what the sums are is because a number of them in that Cabinet are planning for a no deal.

‘Some of them want us to be a tax haven off the edge of continental Europe and are willing to sacrifice our manufacturing base. We are not willing to tolerate that.’

Theresa May (pictured in Downing Street yesterday) has insisted Britain must be ready to walk away from the talks without a deal or there is no incentive for Brussels to compromise.

McDonnell also said a Labour government would spent an additional £17billion a year as he called for an ’emergency budget’ to alleviate the crisis in public services.

He said the money should go on the NHS, education and local government, and ending the public sector pay cap.

‘Now is the time to borrow while interest rates are so low,’ he said.

Chief Secretary Liz Truss claimed Mr McDonnell’s plans would put the economy at risk 

However the Govenrment warned that Labour’s plans would meaner higher taxes putting the economy at risk.

Treasury Chief Secretary Liz Truss said: ‘The shadow chancellor has today admitted Labour would borrow billions more and hike up taxes to record levels.

‘The costs would rack up and up, putting economic growth at risk and hitting ordinary working people in the pocket.’

Mr McDonnell said Labour would put an end to tax giveaways to wealthy corporations while raising £6.5 billion through clamping down on tax avoidance.

‘This is a wealthy country, one of the richest in the world. But that wealth is held in too few hands, and spent for too little purpose,’ he said.

‘Even as they have been cutting public services to the bone, they have been offering huge giveaways to the mega-rich and giant corporations.

‘Tax cuts introduced for both since 2010, including corporation tax and capital gains tax, will cost us over £70 billion over the next five years. Every single penny lost in these tax cuts means less money for our public services.’ 

Mr McDonnell’s dismissal of spending on ‘no deal’ prompted fury among Tory Brexiteers, many of who believe a no deal Brexit is looking increasingly likely.

Peter Bone, the Conservative MP for Wellingborough and prominent Leave campaigner, told the Telegraph: ‘Anyone looking objectively would see that there probably isn’t going to be a deal and I think it is highly unlikely.

‘We have to prepare for a no deal situation and some of us think that no deal is far preferable to anything that we have heard from the EU so far.

‘The idea that Her Majesty’s Opposition is not preparing for something that is a significant possibility is totally irresponsible.’