Chancellor of the Exchequer George Osborne
Chancellor of the Exchequer George Osborne addresses the Conservative party conference on 5 October 2015 in ManchesterGetty

The Chancellor George Osborne has urged Labour MPs to vote with the government and support the Conservatives' fiscal charter in the aftermath of a series of blunders by the Labour leadership over their opposition to the policy. The chancellor looked to capitalise upon Labour's mistake as he called on opposition MPs to support "fiscal sanity".

In a surprise U-turn, shadow chancellor John McDonnell announced Labour would withdraw their support for the fiscal pact on 12 October, identifying Osborne's plans as an economic trap. This was not, however, before Labour walked straight into it.

"A fortnight ago, Labour told voters they were ready to back our plans. But now, they have confirmed they want to go on borrowing forever - loading debts onto our children that they can never hope to repay. This is not socialist compassion - it's economic cruelty," said Osborne.

"As Labour's Great Recession showed, those who suffer most when governments run unsustainable deficits are not the richest but the poorest. So today, with Labour's economic policy in obvious chaos, I call on all moderate, progressive Labour MPs to defy their leadership and join with us to vote for economic sanity," he added.

Labour shadow chancellor John McDonnell
Labour shadow chancellor John McDonnell has been criticised for the party's U-turnGetty

The chancellor's policy will commit the government to running a budget surplus by 2019/20. Osborne has said the fiscal charter will foster more prudent economic planning. McDonnell, contradicting his previous position, has said the plan will lead to unnecessary spending cuts.

Through its indecision over the fiscal charter, Jeremy Corbyn's leadership team has managed to alienate both sides of the party, both those who wish to see Labour improve its economic credentials and those who want the party to take a stronger anti-austerity line.

The Scottish National Party has capitalised at the expense of Labour, positioning itself at first as the only political block with anti-austerity credentials, and then the only party to provide consistent opposition to the government.

Stewart Hosie MP, SNP Deputy Leader and Economy spokesperson said: "No-one could have been in any doubt about the intention of this Government when the Charter for Budget Responsibility Summer Update was published.

"It was to target a surplus by 2019/20 and continue to run a surplus thereafter. It was to prevent investment in infrastructure projects and it was to make ordinary people in the real world pay the price of these ideological choices. This is austerity of choice not of necessity. It is right wing Tory ideology and it is wrong," he added.