Jeremy Corbyn's close colleague admitted that "we can’t pretend state spending is the answer to everything", but he added that Labour would invest in key areas rather than continue to cut back.
Mr McDonnell added: "My colleague Seema Malhotra is currently looking at the current system of so-called “tax expenditures” – the different get-outs and reliefs provided by the tax system.
"A thicket of different schemes has grown up, costing the taxpayer £110bn a year. Some of this will be justified. But some of it will not be. We’ll look at whether we need to simplify the system so it is fairer to everyone and encourages the growth a fair and prosperous economy."
In response Mr Hands warned hiking spending is "irresponsible". He said: "Great British businesses, big and small, have created jobs and the security of a pay packet for millions of working families. The support the government has offered business is encouraging housebuilders to build affordable homes, supporting entrepreneurs to set up on their own, and helping companies make the investments that will help them create still more jobs.
“Labour’s policy for at least £33.5 billion of extra spending each year is also profoundly irresponsible and confirms that they are a threat to our economic security. It is clear that they have learned absolutely nothing."
Analysis shows that reversing the current programme of spending cuts would leave Labour with a £33.5 billion hole to fill by borrowing more or increasing taxes, amounting to £1,924 per household.
Some of the tax reliefs Mr McDonnell could choose to reverse include gift aid for charities; zero rate VAT on new homes to cut the cost of ownership and research and development tax relief which incentivises companies to develop new technology in the UK.
Source: http://telegraph.feedsportal.com/c/32726/f/579309/s/4d08d899/sc/13/l/0L0Stelegraph0O0Cnews0Cpolitics0Clabour0C121138160CLabour0Eplotting0E140A0Ebillion0Etax0Ebombshell0Ewith0Erelief0Ecuts0Eand0Espending0Ehikes0Bhtml/story01.htm