The shadow chancellor also attacked “media outriders using trite journalistic tactics” in an article in the Guardian, after a series of interviews where he said he would not engage with how much extra it would cost to service public debt under Labour.
McDonnell said the questions about the costs of debt were an attempt to “sow fears over the costs of state investment” and called the economic argument bogus.
“By focusing on the cost of government borrowing (currently close to an all-time low, thanks to tiny interest rates) rather than the enormous social and financial returns on investing that money, the right creates a narrative that investment costs society rather than benefits it,” he said.
Labour has pledged to invest £250bn over a decade in transport, communications, housing and research, which McDonnell said would bring Britain up from the bottom of OECD tables for investment to around the average level of investments.
McDonnell said there was an assumption that investing was not productive – “the belief that government borrowing is akin to burning money”.
“This is nonsense used to support the economic approach that has led our country to this pass,” he said. “Very clearly, government investment can and should be used to support economic growth.”
McDonnell said that Labour was prepared to make a positive public case for more borrowing, if it was to invest. “Labour intends to take on, and win, the argument on investment,” he said.” It is at the centre of our economic debate.”
He said the meaningful question was about “whether that investment is wise, given the costs – rather than presuming that only costs exist.”
McDonnell has clashed with presenters in various interviews after Wednesday’s budget after he attacked the chancellor, Philip Hammond, for continuing with spending cuts.
Asked by BBC Radio 4’s Today presenter Mishal Husain how much extra it would cost to service public debt under Labour, McDonnell would not give a figure, saying extra borrowing would “pay for itself”.
The exchange came after McDonnell admitted he did not know how much the UK was paying to service current debt, during an interview with the BBC’s Daily Politics. “That’s why we have iPads and that’s why we have advisers, etcetera,” he told Husain.
On Sunday, McDonnell said he did not mean to sound arrogant when he declined to discuss the figure, but said he wanted to elevate the level of debate about Labour’s fundamental economic principles.
“What I was trying to do is not get dragged down into an argument which prevents people realising that we actually do need to invest,” he told ITV’s Peston on Sunday.
“I didn’t want the argument around a relatively low figure of what it would cost to undermine the real argument, which is this. That that investment, as you know, wisely invested in our infrastructure, tackling our productivity problem, growing our economy, pays for itself.”
McDonnell said he could not predict a figure for the cost of the extra borrowing, when asked about the Institute for Fiscal Studies projection that additional interest would be around £2bn a year. “I can’t predict it. I’m being straight with you here,” said Mr McDonnell in reply.
“I can’t tell when we go into government what that rate will be,” he said. “What I can say is that the rates are at historic lows, this is the time to borrow.”
Shadow international trade secretary Barry Gardiner also told the BBC’s Andrew Marr show it would not be possible to predict when a Labour government would eliminate the budget deficit, after the Office for Budget Responsibility suggested this week suggested it will not be wiped until 2031.
“Anybody who wants to forecast what our economy is going to be like in 2031 here, 14, 15 years ahead of that date, when we have not even determined what the Brexit negotiations are going to look like, would be foolish,” he said.
Gardiner said Labour would ensure the deficit would be reducing within five years and that the deficit would be less of a burden with a faster growing economy.
Speaking after McDonnell’s interview on ITV, chief secretary to the Treasury Liz Truss called Labour’s plans “an eye-watering borrowing binge” and said it would never eliminate the deficit.
“Labour would saddle future generations with a mountain of debt, meaning higher taxes and fewer jobs,” she said. “Once again, ordinary working people would pay the price.”
Separately, Labour also highlighted figures showing the so-called Google Tax aimed at multinational corporations will have raised £700m less than forecast by 2020-21.
Shadow Treasury minister Jonathan Reynolds said: “The chancellor needs to get a grip of tax avoidance. It’s not fair that large multinationals are not paying their fair share yet benefiting from the billions in corporation tax giveaways Philip Hammond is continuing.”
This article was written by Jessica Elgot, for theguardian.com on Sunday 26th November 2017 16.30 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010