Diane Abbott
Diane Abbott has defended John McDonnell's U-Turn over George Osborne's fiscal charter Getty

Diane Abbott has attempt to laugh off a major economic U-turn by Labour after the party's shadow chancellor reportedly infuriated Labour MPs by deciding to vote against George Osborne's fiscal charter. The draft legislation would force all future UK governments to run a budget surplus – a move John McDonnell supported until 12 October.

The shadow chancellor told Labour's parliamentary party (PLP) that he would now oppose the bill when it is debated in the House of Commons on 14 October. Some Labour MPs were apparently furious, with one honourable member reportedly describing the situation as "shambolic".

But Abbott, Labour's shadow development secretary, claimed on 13 October that the change in policy was something the party's MPs were "comfortable with" and Osborne had "brainwashed" the media over what was little more than a "process story".

"I think we are in the right position to oppose Osborne's mismanagement of the economy," she told BBC Radio 4's Today Programme. "We have always been a Keynesian party and this decision, to reject Osborne's gimmick, sits squarely and firmly in the Keynesian tradition. We are in the right position now – it's a position that most of the PLP is comfortable with and all party members."

The incident will likely give Labour moderates more ammunition to attack Jeremy Corbyn with after the Labour leader committed himself to a "new politics". Mike Gapes, the Labour MP for Ilford South, did not hold his frustration back on social media site Twitter.

"There is now no collective shadow cabinet responsibility in our party, no clarity on economic policy and no credible leadership," the 63-year-old said in reaction to Abbott's morning interview.

The SNP has seized on the rift and accused the party of being in "chaos" over Osborne's fiscal charter. "They can't even organise themselves to vote against Tory cuts," said Stewart Hosie, the party's economy spokesman.

"The SNP has been calling on Corbyn to join us in voting against the UK government's budget plans. And while we welcome every vote against austerity, it will count for nothing if Corbyn cannot take his MPs with him.

"If that is what happens it will underline even further the fact that Labour is a deeply divided party incapable of standing up to the Tories – and that the SNP are the only serious opposition at Westminster. Once again Labour is a party in chaos, and is deeply divided on the issue of austerity as with so much else."