Mark Carney: spending cuts have been "a drag on growth"

The Bank of England governor tells MPs what George Osborne doesn't want you to hear.

The most politically significant moment during Mark Carney's apperance before the Treasury select committee came when the Bank of England governor stated that "fiscal adjustment" (spending cuts and tax rises) "has been a drag on growth". 

This might appear to put him at odds with George Osborne who in his speech on the economy earlier this week, derided the "fiscalists" who claimed that the cuts had been more damaging than expected. But the Tory Treasury Twitter account has responded by stating that Carney's comments are "consistent" with Osborne's argument that the OBR's 2010 fiscal multipliers (which measure the effect of cuts and tax rises on growth) were not too optimistic. 

The Treasury did, however, refuse to concede that the cuts had, at least to some extent, depressed growth. As David Cameron was reminded by Robert Chote earlier this year (when he suggested that austerity had not hit output), the OBR's multipliers assume that "every £100 of fiscal consolidation measures reduce GDP in that year by around £100 for capital spending cuts, £60 for welfare and public services, £35 for increases in the VAT rate and £30 for income tax and National Insurance increases". Fiscal consolidation is estimated to have reduced GDP by 1.4 per cent in 2011-12 alone.

Cameron and Osborne are understandably reluctant to admit that the cuts mean growth has been lower than in normal circumstances. It allows Labour to argue that a less aggressive deficit reduction plan would have enabled higher levels of output. Which explains why you can expect Ed Balls and Ed Miliband to leap with glee on Carney's quote and the Tories to try and act as if they never heard him. 

Mark Carney, governor of the Bank of England, during a press conference following an address to business leaders in Nottingham on August 28, 2013. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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Benn vs McDonnell: how Brexit has exposed the fight over Labour's party machine

In the wake of Brexit, should Labour MPs listen more closely to voters, or their own party members?

Two Labour MPs on primetime TV. Two prominent politicians ruling themselves out of a Labour leadership contest. But that was as far as the similarity went.

Hilary Benn was speaking hours after he resigned - or was sacked - from the Shadow Cabinet. He described Jeremy Corbyn as a "good and decent man" but not a leader.

Framing his overnight removal as a matter of conscience, Benn told the BBC's Andrew Marr: "I no longer have confidence in him [Corbyn] and I think the right thing to do would be for him to take that decision."

In Benn's view, diehard leftie pin ups do not go down well in the real world, or on the ballot papers of middle England. 

But while Benn may be drawing on a New Labour truism, this in turn rests on the assumption that voters matter more than the party members when it comes to winning elections.

That assumption was contested moments later by Shadow Chancellor John McDonnell.

Dismissive of the personal appeal of Shadow Cabinet ministers - "we can replace them" - McDonnell's message was that Labour under Corbyn had rejuvenated its electoral machine.

Pointing to success in by-elections and the London mayoral election, McDonnell warned would-be rebels: "Who is sovereign in our party? The people who are soverign are the party members. 

"I'm saying respect the party members. And in that way we can hold together and win the next election."

Indeed, nearly a year on from Corbyn's surprise election to the Labour leadership, it is worth remembering he captured nearly 60% of the 400,000 votes cast. Momentum, the grassroots organisation formed in the wake of his success, now has more than 50 branches around the country.

Come the next election, it will be these grassroots members who will knock on doors, hand out leaflets and perhaps even threaten to deselect MPs.

The question for wavering Labour MPs will be whether what they trust more - their own connection with voters, or this potentially unbiddable party machine.