McDonnell pulls out of Labour leadership race

John McDonnell stands aside to give Diane Abbott a fighting chance of making the ballot.

Paul Waugh has the news that John McDonnell has withdrawn from the Labour leadership race after failing to secure enough nominations. It's a principled move by the Labour left-winger and, as I argued yesterday, it's Abbott who has the better chance of making the ballot.

Here's his statement:

I stood for the Labour leadership as the candidate of the left and trade union movement so that there could be a proper debate about Labour's future in which all the wings of the party were fully represented.

It is now clear that I am unlikely to secure enough nominations and so I am withdrawing in the hope that we can at least secure a woman on the ballot paper.

Yesterday I wrote to Harriet Harman to urge her to use her position as acting leader in association with the party's national officers to secure a reduction of the qualifying threshold for candidates to be allowed on to the ballot paper. Regrettably this has not occurred and so I have no other option but to withdraw in the interests of the party.

I know that many Labour activists and trade unionists will be disappointed that their candidate will not be on the ballot. I am urging them to continue the fight for democracy within the party so that in future leadership elections rank-and-file members will be represented by the candidate of their choice.

It's worth noting that he doesn't mention Diane Abbott by name (he's never been a fan), merely stating that Labour should have "a woman" on the ballot paper.

Abbott's chances of making the ballot have improved dramatically, and between them the pair have 27 nominations, just six short of the required 33. But, according to Waugh, only eight of McDonnell's 16 supporters will transfer their votes to Abbott.

That doesn't come as a surprise; many Labour MPs have never forgiven Abbott for her decision to send her son to private school and were unhappy that she entered the contest in the first place and split the left.

Still, with 36 Labour MPs yet to nominate a candidate (you can see a list of them here), it would be wrong to write off Abbott just yet.

Ed Balls has already urged his potential supporters to back an alternative candidate and others may follow.

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George Eaton is political editor of the New Statesman.

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Scotland's vast deficit remains an obstacle to independence

Though the country's financial position has improved, independence would still risk severe austerity. 

For the SNP, the annual Scottish public spending figures bring good and bad news. The good news, such as it is, is that Scotland's deficit fell by £1.3bn in 2016/17. The bad news is that it remains £13.3bn or 8.3 per cent of GDP – three times the UK figure of 2.4 per cent (£46.2bn) and vastly higher than the white paper's worst case scenario of £5.5bn. 

These figures, it's important to note, include Scotland's geographic share of North Sea oil and gas revenue. The "oil bonus" that the SNP once boasted of has withered since the collapse in commodity prices. Though revenue rose from £56m the previous year to £208m, this remains a fraction of the £8bn recorded in 2011/12. Total public sector revenue was £312 per person below the UK average, while expenditure was £1,437 higher. Though the SNP is playing down the figures as "a snapshot", the white paper unambiguously stated: "GERS [Government Expenditure and Revenue Scotland] is the authoritative publication on Scotland’s public finances". 

As before, Nicola Sturgeon has warned of the threat posed by Brexit to the Scottish economy. But the country's black hole means the risks of independence remain immense. As a new state, Scotland would be forced to pay a premium on its debt, resulting in an even greater fiscal gap. Were it to use the pound without permission, with no independent central bank and no lender of last resort, borrowing costs would rise still further. To offset a Greek-style crisis, Scotland would be forced to impose dramatic austerity. 

Sturgeon is undoubtedly right to warn of the risks of Brexit (particularly of the "hard" variety). But for a large number of Scots, this is merely cause to avoid the added turmoil of independence. Though eventual EU membership would benefit Scotland, its UK trade is worth four times as much as that with Europe. 

Of course, for a true nationalist, economics is irrelevant. Independence is a good in itself and sovereignty always trumps prosperity (a point on which Scottish nationalists align with English Brexiteers). But if Scotland is to ever depart the UK, the SNP will need to win over pragmatists, too. In that quest, Scotland's deficit remains a vast obstacle. 

George Eaton is political editor of the New Statesman.