John McDonnell sets out Labour’s “new start” for the City

In a major speech at Bloomberg’s new European headquarters in London on Thursday the Shadow Chancellor set out the next Labour government’s approach to the financial sector.

Let me start by thanking you all for coming today and by thanking Bloomberg for the use of their magnificent new building here in the heart of the City.

Since Jeremy appointed me as Shadow Chancellor three years ago I’ve been touring the City meeting representatives from across the finance sector, asset managers, banks and investors.

Actually it’s nothing new to me because when I was a youngster and chair of Finance on the GLC, effectively the Chancellor of the Exchequer for London, that’s exactly what I would do on a regular basis and established a good working relationship.

For the people I have been meeting over the last two years, if they are readers of some of our more excitable newspapers they expect to be meeting a raving extremist who is about to nationalise their company and send them on a re-education course somewhere up north.

Mind you Mark Carney quoting Marx and Engels the other week has thrown the Daily Mail and others into complete confusion.

I’ve been meeting all these people to explain Labour’s plans and to discuss the important role I want the Finance Sector to play in the transformative programme of the next Labour Government.

At each of those meetings I’ve said the same thing as I will say to you today.

We are completely open and transparent about our plans.

There are some policies that you will like and some of which you will be less enthusiastic about.

I don’t expect some people to be overjoyed at having to pay a bit more in income tax or corporation tax or at the introduction of a Financial Transaction Tax.

But most people recognise with us the need for large scale investment in both our infrastructure and new technology and also in human capital with investment to raise standards in our education system, training and research and development.

And most people agree that a civilised society needs a foundation bedrock of excellent public services.

The key for me is that you become aware of what we intend to do not by rumour or scaremongering by some in the media but by direct engagement and discussion with us. 

Two things you need to be clear about.

First, there are no tricks up my sleeve.

What you see is what you get.

Second, when we go into government, we want you to come with us, alongside representatives from our manufacturers, our trade unions and wider civil society.

There will be a seat at the policy making and policy delivery table for you.

That’s the tone I have tried to engender at the many meetings I have had in the City.

By the end of these meetings we have found that we are generally on the same page.

The participants sometimes are a little surprised when I get carried away and end the meeting by saying “Thank you comrades.”

So I’ve convened today’s conference for this reason.

The need for an absolutely straight conversation between Labour and the City on three things:

What we as the Labour Party are about, What we want from you, And what we as a government will offer you in return.

I would like today to be an important next step in our dialogue.

Today’s discussions will inform the development of our programme in opposition

And help guide its implementation as we go into office. Jeremy Corbyn became leader of the Labour Party because thousands were inspired by his vision.

It’s a vision I share: a vision of a society that is radically transformed, radically fairer, more equal and more democratic.

A vision of a society based upon a prosperous economy, but an economy that's economically and environmentally sustainable, and where that prosperity is shared by all.

I know many of you share our vision of a better society.

But some may question whether a fairer, more equal society is compatible with the growth and prosperity which is needed to underpin it.

I say that those two things aren’t just compatible: they are essentially complementary.

We can deliver those twin goals but it will mean a new relationship between Labour in government, and the finance sector.

What we want from the finance sector.

The next Labour government will be a radical, progressive, intervening government.

Building a high investment, high wage economy will require effective government willing to take a lead.

The lesson of recent decades – including the global financial crisis – has been that a “hands off” approach will not deliver the sustainable, broad-based growth which we need and expect.

In the last few years, the prevailing economic orthodoxy has led to wages lower today than they were eight years ago, and the slowest decade of productivity growth since the Napoleonic Wars.

Though there were clearly other factors, few people now dispute that these economic failures contributed to the vote for Brexit in 2016.

In our manifesto last year we said how we would break with the failed austerity policies of the recent past.

Doing so within the constraints of our Fiscal Credibility Rule clearly means raising greater revenue from taxation.

We said that we will institute a small Financial Transactions Tax, with benefits in terms of financial stability as well as raising much-needed revenue.

Avinash Persaud, whose work inspired our proposals, will be speaking later.

But Labour’s manifesto went beyond raising tax revenue in order to support our struggling public services.

We made it clear that Labour in government will intervene to shape the economy, and that willingness to intervene naturally includes the financial sector.

We published detailed proposals from independent experts – including Ozlem Onaran – for our National Investment Bank and network of regional development banks, to support small and medium-sized businesses and direct economic growth.

Those institutions will be independent of government but mandated to support the government’s policies, and will work with the rest of the finance sector to do so.

Entrepreneurs and financiers alike have spoken to me since then about the difference a National Investment Bank could make, and the appetite for it across the country.

Building on our proposals for a National Investment Bank, in September I committed to setting up a Strategic Investment Board with the goal of increasing and directing investment in the UK economy.

Bringing together Chancellor, Secretary of State for Business and Governor of the Bank of England, the SIB will use the most detailed and up-to-date data available to promote investment and wage growth.

Building on this, I asked GFC Economics to report on the financing of productive investment in the UK and to make policy recommendations.

In December, GFC published their interim report, which you will hear Graham Turner discuss this afternoon.

That report detailed the shockingly low rates of investment in the UK, and detailed how unprepared much of our economy is for the fourth industrial revolution.

There are huge uncertainties about how this technological change will play out, with global forecasts ranging from 800 million new jobs created, to 800 million jobs lost over the next few decades.

We can see some impacts already but the UK is behind other economies in the use of new technology and has the lowest rate of industrial robot usage of any OECD country.

This is hardly surprising when Britain currently takes deposits from manufacturing and technology industries, and lends them to the real estate sector.

If the possibilities of the fourth industrial revolution are to be realised, we will need the financing and financing skills in place to achieve it.

To support this, GFC recommended both new structures and moving some of the functions of the Bank of England to Birmingham, with new offices to be established elsewhere around the UK.

I will receive their final report in the next few months, which will include further recommendations on reform, including to the Bank of England.

Of course, our proposals for reform will never find favour with absolutely everyone.

I make no apology for believing in the need for finance to serve the wider economy rather than becoming the over-powerful master of everything else.

There have always been many people in the finance sector who understand and share that belief.

I’ve been heartened by the number of people from financial institutions who have wanted to know about and help develop our industrial strategy.

And I hope many of you will see the opportunities that our reform proposals bring.

Let me turn now to Labour’s offer of what we in Government can offer the finance sector in return. 

We will provide a stable policy environment based upon long term policy making and patient, long-term investment directed in line with clearly defined policy objectives.

This will be underpinned by our commitment to drive up productivity, economic growth and living standards.

Labour in government will provide the large scale funding needed to equip Britain to meet the challenges of the fourth industrial revolution.

We will radically modernise our ailing infrastructure

Invest in R&D and new technology

And support our growth industries.

All of this will provide the opportunity for you to work with Labour in government to create the prosperous economy we all want to see. 

You will have the opportunity to share in the rewards of that long term investment and can expect a stable return for doing so.

We will ensure those stable conditions by entering into a new relationship to ensure that we rise together to meet the three major challenges facing this sector and the wider economy.

The challenges of Brexit, accelerating technological change and climate change.

Let’s start with the immediate issue of Brexit.

The challenges for British finance are clear, and Labour has been resolutely clear in approaching them.

Within a fortnight of the vote to Leave the European Union, I laid down our five “red lines” for the future negotiations and the eventual deal.

Critical amongst them was the retention of market access for the UK’s financial services.

The right for our financial service companies to win business across Europe, and the reciprocal right for European companies to win business here, remains essential.

We respect the result of the referendum, and we want the best possible deal for Britain as we leave the EU.

That means a deal that protects jobs, living standards, and the broader economy as a priority - not one designed around arbitrary targets on migration.

So we don’t want to be held back by the terms of a deal in supporting new industries here, or providing for stronger environmental and workplace protections than the EU can presently offer.

We have called since the election for a stable transitional period that preserves the existing Customs Union and Single Market arrangements.

And we will seek a final deal that gives full access to European markets and maintains the benefits of the single market and the customs union, with no new impediments to trade and no reduction in rights, standards and protections.

I’ve been concerned to read this week that a barebones deal for our finance sector is now being considered by the EU. 

This is happening because we have a government that places appeasing hardline Brexiteers above winning the best possible deal for this country.

Labour wants a close future partnership with Europe.

That partnership can best be forged if we change the tone of the current negotiations to one based upon mutual respect and mutual interest.

Looking beyond the looming threat of a mishandled Brexit, the pace of technological change poses longer term but equally significant challenges to financial services.

Public Trust and Social Purpose.

There’s no doubt that the impact of Big Data and AI for the existing banks could be substantial.

The Bank of England’s last set of stress tests estimated that existing banks could take a £1bn hit to their profits as a result of fintech innovation.

But that is only a relatively short-term consequence.

The longer-term impact for the sector and for society more generally could be far wider.

Mark Carney has suggested that existing banks could shift to become something more like utilities companies – largely unseen by customers, but providing an essential service.

The potential gains for all sides – the sector and consumers – will only be realised, however, with effective governance and regulation.

Perhaps the greatest single lesson of the last decade in finance is that deregulation of complex and essential activities like financial services will not lead to the best result for society.

That the market, left to its own devices, will not always produce the best possible outcome.

So there is a need today, highlighted by campaigners and experts alike, in addition to developing effective regulation, we also need to build in government support for new finance business models that put social purpose at their centre. 

The potential for large tech firms to move into the banking sector is now very real. 

With their better data know how tech companies are slowly engaging in the banking sector.

Amazon already offers loans to small businesses. 

Ant Financial, using its ties to Alibaba now has 450 million users of its banking and payments system.  

So the change is happening and the combination of big data and finance will force new kinds of ethical questions for regulators, businesses and wider society alike.

Insights derived from big data and Artificial Intelligence, by their very nature, depend on exceptionally complex decision-making processes.

Alongside the gains for efficiency and the creation of new financial products, the new forms of systemic risk associated with Artificial Intelligence and machine learning in finance have been highlighted by the Financial Stability Board.

So we will work alongside you, yes in developing the regulation but in forging the new relationship with finance that will ultimately be needed secure the public’s confidence.

Finally, let me turn to our single greatest challenge, climate change.

This is leading to specific difficulties in our financial services, from the rising costs faced by insurers confronted with increasingly extreme weather, to the costs of moving out of investments in carbon-heavy industry.

The uncertainties are immense – one estimate of the value-at-risk from climate change has put the range at between 4 and 43 trillion dollars worldwide.

It is heartening that many financial institutions have signed up to the recommendations of the Taskforce on Climate-related Financial Disclosures, but concerning major financial institutions globally failing to do enough, with half lacking clear strategies to cope.

The lead taken by the Bank of England here has been welcome.

But to manage this challenge requires real leadership from government – not abdicating responsibility on the environment, as this one has.

We recognise the huge risks climate change poses for our economy and to financial services specifically.

The next Labour government will take an active lead in managing the economic risks of climate change.

We have already announced we will mandate the Office for Budget Responsibility to report on the long-term impacts of climate change on the government’s fiscal position, placing climate change at the centre of our economic decision making.

Sustainable investment will be at the heart of our programme for government and we will work with you to support and develop innovative new funding mechanisms for low-carbon technologies.

I have appointed Clive Lewis MP to my team to lead on environmental economics.

His task is to drive the climate change issue into the heart of Treasury policy making and therefore at the centre of government.

Representatives of the finance sector will be invited to join Clive in the country wide policy tour he will be launching shortly.

So let me reiterate Labour’s central message to you today.

First we recognise the important role the finance sector must play in the transformative programme of the next Labour Government.

Second we commit to working with you as we develop our programme in opposition and implement it in government.

Third we will always be straight with you about our objectives and our intentions.

Fourth we pledge to work with you to overcome the challenges we as an economy and as a society face together starting with a Brexit deal which puts jobs and the economy first, rising to the challenge of fast paced technological change and addressing the threat of climate change.

What we are offering is a new start in the relationship between Labour and the finance sector.

A relationship in which we recognise the potential of a transformed British financial system, at the leading edge of technology, fulfilling a clear, socially necessary role.

Labour will not just rebuild our economy after the damage almost a decade of austerity but we will modernise it.

And you in the City will not only get a good return from the investment you will make in our programme but what we will also deliver for you is a society you can be proud to live in and will provide the quality of life your families desire.

Together we will enable an economic and social transformation of our society that you will be proud to have contributed to.

We know, just as you do, that the only way we can achieve that change, is if we do it together.

So that when we go into government we go in together.


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With so much dirty money around, it’s time to make UK banks clean up their act

John McDonnell Banking Opinion, Guardian, Wednesday 22nd March 2018

The revelations published in the Guardian yesterday about the criminal network that is processing money through major British banks are a damning indictment of the failings of our banking system. For a period of at least four years, shortly after the financial crisis in the early 2010s, Russian criminal interests moved nearly $740m through British banks, including HSBC, RBS, Barclays, Lloyds and Coutts, with HSBC as the largest conduit by far.

They could do this, despite regulations expressly designed to prevent such activity taking place. Yet, when presented with a series of urgent questions, demanding answers and action, the response from the government was astonishingly complacent. A mere week after the self-employment tax U-turn, it is following a path well-worn since 2010 – pathetically easy on the big banks and the super-rich, but tough on those just trying to earn a living.

George Osborne, the then chancellor, intervened directly into a 2012 US investigation into HSBC’s money laundering, emailing the Department of Justice (DoJ) to warn that prosecuting Britain’s largest bank would lead to a “global financial disaster” and “financial calamity”. A later Congressional investigation found that the intervention, by the now new editor of the Evening Standard, “played a significant role in ultimately persuading the DoJ not to prosecute HSBC”.

It was under Osborne’s watch that the bank levy, introduced by the last Labour government to claw back some of the astronomical returns major banks had been making, was phased out, in his first budget after the 2015 election. HSBC had previously threatened to leave the country if its £700m bank levy charge wasn’t reduced, lobbying the government heavily. Osborne’s new tax regime for banks, introduced in summer 2015, instead leant most heavily on the smaller banks that had been looking to break the high street dominance of the big banks, and eased the burden substantially on the biggest institutions with major international interests – happily enough, HSBC was the biggest winner of all.

The current chancellor, Philip Hammond, although appointing HSBC’s former European chief economist as his economic advisor, had claimed he was going to “press the reset button” on economic policy shortly after arriving in office. It is now clear that he is sticking to the same failed Osborne-era austerity policy, married to the same degree of incompetence in presenting his budgets.

He is also showing the same unwillingness to challenge seriously financial practices at our major banks, failing to answer Labour’s urgent question himself and instead sending over an inexcusably poorly briefed and complacent junior minister in his stead.

This failure to challenge bad practices extends even to those cases in which the taxpayer is the major shareholder in a bank. The failures of governance, management and in some cases basic morality at taxpayer-owned RBS are legion. The activities of its “global restructuring group” in grinding viable small businesses into the ground so the rest of the bank could pick off the carcasses were under any circumstances wholly unacceptable. But when this is an institution still 72% owned by the public, and when that institution is seemingly so lax as to allow $113m of laundered cash through its doors, it is adding insult to existing injury.

There are three assurances the government must now give. First, that it will not – as it has in the past – interfere in any potential criminal investigations on the spurious grounds of “financial stability”. The major risk to financial stability is not from investigations intended to clear out criminal activity from our banking system. The risk is from failing to act and to ensure that our major banks are clean and fit for purpose.

Second, all the banks involved claim to have strict internal policies to deal with money laundering, and both the Financial Conduct Authority and the National Crime Agency offer guidance on dealing with suspicious transactions. But yesterday’s revelations make clear that these are not working.

The House of Commons Home Affairs Select Committee found last summer that the “suspicious activity reporting” system, by which banks and other financial institutions could report suspicious transactions, was “not fit for purpose”. Designed originally to handle 20,000 reports, it was collapsing under the weight of over 381,000 suspicious activity reports. The select committee demanded the government replace the current system by the end of last year. This has not happened and there is no indication or timetable given in the government’s own reply to the select committee to suggest that it will.

Third, it is time to cleanse the Augean Stables at RBS. Now that the government has given up attempting to sell its stake in RBS, a new approach must be taken. Having spectacularly missed the opportunity earlier today, the chancellor must now clarify how he will restore public trust and confidence in our financial system.

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The Shadow Chancellor’s response to the Spring Statement


Spring Statement

Let me thank the Chancellor for providing me with an earlier sight of his statement.

I say to the Chancellor: his complacency today is astounding.

We face – in every public service – a crisis on a scale we’ve never seen before.

Hasn’t he listened to the doctors and nurses, the teachers, the police officers, the carers and even his own councillors?

They are telling him they can’t wait for the next Budget. They’re telling him to act now.

For eight years they’ve been ignored by this government.

And today - they’ve been ignored again.

The economic reality

The Chancellor has proclaimed that there is light at the end of the tunnel.

But this shows just how cut off from the real world he is.


Last year growth in our economy was among the lowest in the G7 and the slowest since 2012.


Wages are lower now -  in real terms - than they were in 2010 – and they’re still falling.

According to the Resolution Foundation, the changes to benefits due to come in next month will leave 11 million families worse off.

And – as always - the harshest cuts are falling on disabled people.

Productivity and investment

The gap in productivity between this country and the rest of the G7 is almost the widest for a generation.

UK industry is 20 to 30% less productive that in other major economies.

And why?

Well, part of the reason is that investment by this government, in real terms, is nearly £18 billion below its 2010 level.

Business investment stagnated in the last quarter of 2017.

4th Industrial Revolution

The Chancellor talks about the 4th Industrial Revolution but Britain has the lowest rate of industrial robot use in the OECD.

And the government has put just £75m into its Artificial Intelligence programme – less than a tenth of the US government’s commitment.

Shifting the deficit

The Chancellor has made great play this week of reaching a turning point in reducing the deficit and debt.

It’s a bit rich coming from a Party that has increased the debt by over £700 billion.

This loads the equivalent of an additional £22,000 on every household in this country.

It’s worth remembering that this is the Party that promised to eliminate the deficit completely by 2015, then 2016, then 2020 ...

Bizarrely, his predecessor - now ensconced in the Evening Standard

  • and Blackrock
  • and the Washington Speakers Bureau

has been tweeting about achieving three years late a deficit target that he actually abandoned himself!

The reality is that the Chancellor and his predecessor have not tackled the deficit.

They have simply shifted it onto the public services his colleagues are responsible for.


He’s shifted it on to the Secretary of State for Health and the shoulders of NHS managers, doctors and nurses.

NHS Trusts will end this financial year £1 billion in deficit.

Doctors and nurses are struggling and being asked to do more –

while 100,000 NHS posts go unfilled.

Does the Chancellor really believe the NHS can wait another eight months for the life-saving funds it needs? 

How many more people have to die while waiting for an ambulance?

We are expecting the pay offer to NHS staff shortly – forced upon him by the Labour Party’s and Trade Unions’ campaigns against the pay cap.

Let me say to him: taking away a day’s holiday from those dedicated staff is mean spirited and I ask him now: will he drop this miserly demand?


The Chancellor has also shifted the deficit onto the Secretary of State for Education and Head Teachers – with the first per capita cut in schools funding since the 1990s.

Today the government is even trying to deprive one million children of a decent school dinner.

I am asking the Chancellor and all Conservative MPs if they are serious about ending austerity to vote with us this afternoon to give those children the free school meal they’re entitled to?                                  

Home Office

The Chancellor has shifted the deficit onto the Home Secretary and Justice Secretary.

Crime is rising – yet he’s cut the number of police officers by 21,500 and the number of fire fighters by more than 8500. 

And our prisons and probation service are in dangerous crisis.

Local government

In shifting the deficit onto the shoulders of the Secretary of State for Communities & Local Government –

in reality he has forced this burden onto local councillors –

Labour, Liberal Democrats and Conservatives alike.

I raise again the stark reality of what this means for the most vulnerable children in our society.

There has been a 40% cut in early intervention to support families.

The result is the highest number of children taken into care since the 1980s.

Children’s charities are saying this crisis could turn into a catastrophe without further funding.

And last year 400 women seeking refuge were turned away because there were no places available for them. 

There are nearly 5000 of our fellow citizens sleeping rough on our streets – more than double the number in 2010.

Tragically, last week one of our homeless died – only feet away from the entrance to Parliament.

One million vulnerable older people have no access to the social care they need.

Conservative Councils are going bust.

Many will be forced to hike up Council Tax.

Councils are running out of reserves - as the National Audit Office has confirmed.

I ask the Chancellor: will he listen to Conservative Council leaders?

Like his own in Surrey? Who said – and I quote - 

“we are facing the most difficult financial crisis in our history. The government cannot stand idly by while Rome burns”.

I ask him: how many more children have to come into care? How many more councils have to go bust?

And how many more have to run out of reserves before he wakes up to this crisis and acts?

Missed opportunity

Today’s statement could have been a genuine turning point but it is – depressingly - another missed opportunity.

Austerity is a political choice.

People know that austerity was a political choice - not an economic necessity.

The Conservatives chose to cut taxes for the super-rich, corporations and bankers - paid for by the rest of our society.

They even cut the levy on the bankers in last month’s Finance Act.

We were never all in this together as they claimed.

They cut investment at the very time when we should have been developing the skills and infrastructure needed to raise productivity and grasp the tech revolution with both hands.

And when they have a responsibility to meet the challenge of Brexit -we have a Chancellor who this weekend admitted he hasn’t even modelled the government’s Brexit options.

Today we have the indefensible spectacle of a Chancellor congratulating himself on marginally improved economic forecasts -

while refusing to lift a finger

as Councils go bust -

the NHS and social care are in crisis -

school budgets are cut -

homelessness has doubled -

and wages are falling.

This isn’t a Government that’s preparing our country for the future.

It’s a Government setting us up to fail.




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Summary of John's pre Spring statement


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John McDonnell’s pre Spring Statement Speech


Thank you all for coming this morning.

Next week, Chancellor Philip Hammond will stand up in Parliament and deliver what he and his aides are working very hard to convince us will be a non-event.

The Spring Statement, we are told, will be little more than an update on the nation’s finances.

Let’s see what the Government might claim:

The Chancellor may trumpet small upward revisions to the forecasts for GDP and tax revenues as evidence that the economy is somehow in strong health.

He might decide that a marginal revision to the dire November forecasts for productivity prove, to use his own meaningless analogy, that our economy is “match fit”

Or somehow that we have “turned a corner”.

But there is an air of unreality about all this.

This is a government still committed to the austerity spending cuts the Tories first announced in June 2010.

They seem absolutely blind to the economic evidence and the pain and misery they have caused.

Former Chancellor George Osborne was crowing – actually boasting – about what his austerity plan has achieved, last week.

The occasion was a return to budget surplus on day-to-day spending, three years later than intended.

A three year delay in reaching a target that George Osborne himself had previously abandoned!

So I suspect, if market and other expectations are correct, that Philip Hammond may attempt a small brag of his own when presenting next week’s borrowing figures.

Any boasting will be misplaced. The picture in the official statistics remains as bad as ever under this government:

Britain had the lowest rate of growth last year of any major developed economy, and the government’s own figures show that real wages are still falling.

But these abstract national figures don’t show us the real impact of austerity and economic failure on our communities.

You can see it every day, here in London and across the country.  

It’s the stories of the misery and ruined lives that add up to a national tragedy.

It’s the schools so short of cash that they have to write begging letters to parents for pens and pencils.

The 60% of vulnerable women who sought refuge last year, often in the most tragic circumstances, turned away because of the lack of spaces.

Or it’s the desperate increase in children taken into care because councils can’t provide the early intervention they used to.

It’s when, on Parliament’s doorstep, a homeless man is found dead, just days after he had been applying for work.

This is the sixth largest economy on the planet. London has more billionaires living here than any other city in Europe.

And yet every night on the streets of this city there is another rough sleeper.

So today Labour are outlining our demand on this government to wake up to the scale of suffering austerity is inflicting on our communities and the underlying damage being done to our economy.

This Chancellor could be facing his own Michael Fish moment…

Can you remember when the weather forecaster failed to predict impending storm about to hit our shores?

There are striking analogies with the Chancellor’s head-in-the-sand approach to next week’s spring statement.

Austerity was a choice

But of course there is nothing inevitable about this. Austerity was always a political choice, not an economic necessity.

Nearly eight years ago a Tory led cabinet of which Theresa May and Philip Hammond were senior members, made the political choice to give tax breaks to the wealthy and large corporations while depriving our economy of the investment it needed.

Over £70bn of tax cuts have been scheduled for the richest and the largest corporations – even as social care faces a £1bn deficit and children’s services a £2bn shortfall by 2020.

To inflict this pain and this misery whilst shovelling cash to those who needed it least was the ugly choice made by George Osborne, and now continued by his successor, Philip Hammond.

Economic failure of austerity

We were promised by the Tories that, at the very least, the pain would be over quickly.

And yet it never seems to end. The government’s deficit, which austerity was supposed to remove, was supposed to be eradicated in 2015. Then it was 2016. Then 2017. Then 2020.

At the Autumn Statement last year, Chancellor Philip Hammond suggested it might, finally, be wrapped up by 2025. But the official forecasters think it more likely we will get to 2031 before the deficit is cleared.

There is no serious debate and no serious argument to be had about austerity: debt has increased, productivity has flat lined, wages have fallen, and last year GDP growth was the lowest of any major developed economy. 

It has failed decisively and comprehensively. There is no upside to this. No serious, credible economist can now be found in support of the government’s plans.

Shifting the Deficit

The outcome of nearly eight years of cuts has not been to eliminate the deficit but to shift it onto those who can least afford it.

On to the balance sheets of NHS hospitals who ended last year in millions of pounds of debt and with more than 100,000 patients waiting more than half an hour in ambulances before they could be accepted in A&E.

On to our schools which are now facing the first real-terms per pupil funding cuts since the 1990s

And shamelessly onto the average households who now with increasing debt owe almost £13,000 in unsecured loans.

Perhaps recognising the lack of argument on his side, the Chancellor has chosen to talk down his own Spring Statement as far as possible.

With even commentators at the Financial Times and some of his own backbenchers recommending he move now to repair the damage of austerity, he is refusing to act.

The Chancellor cannot simply stand there, once more, and pretend that the decisions he takes and enforces are nothing to do with him.

He is the Chancellor. It is his responsibility. He has the opportunity to act and provide the funding that our local authorities urgently need.

If he has the room to spend, even against his own misplaced targets, then he must act.

We need a fiscal event next week

Let me be clear, I agree with the principle of a single fiscal event, under normal economic circumstances.

But the reality is that The Autumn Budget was a non-event.

The measures announced were so inadequate and the situation in our communities so severe, that meaningful action is required next week.

There’s a traditional labour movement slogan, that an injury to one is an injury to all. We apply that principle to our current situation.

Labour’s demand: End the immediate crisis in local government

It’s absolutely not good enough to pretend that nothing either can or should be done when spending cuts are depriving local authorities of their ability to provide basic support for some of the most vulnerable in our society.

It is local councils that have been used as human shields to absorb nearly eight years of Tory spending cuts.

Northamptonshire was pushed into effective bankruptcy a few weeks ago, unable to pay for its local services.

3 more Conservative Councils were reported last night to be in crisis.

But experts are warning that is just the tip of the iceberg.

The head of the Local Government Information Unit has described local authorities as “at breaking point”.

The National Audit Office report released yesterday confirms many councils are running out of reserves to draw upon.

New figures now also show that local government has lost 785,000 staff since 2010.

Almost £10m of support has been taking from women’s refuges. Almost a fifth of specialist women’s refuges have been forced to close under the Tories and over 400 women, often with children, were refused a space at a refuge last year.

Over 500 libraries, 300 children’s centres and almost 500 playgrounds either have been or are being closed by this government.

Record numbers of children are being pushed into care because early intervention funding has been cut. Children’s services as a whole are facing a £2bn deficit.

The head of Action for Children says that, without immediate, additional funding, children’s services are facing a “crisis” that could become a “catastrophe”.

Education budget cuts mean that secondary schools are at risk of losing the equivalent of six teachers over the next five years due to those cuts.

Over a million vulnerable elderly people are left without the care and support they need as care services face a £1bn deficit.

Political choice

There are innumerable personal tragedies behind the raw figures, but this isn’t some natural disaster. It’s the result of direct political choices made by Conservative-led governments to impose austerity, against all sound economic advice.

It should be intolerable for all of us to live in a society like this, where the most vulnerable are the worst affected.

So it is against a backdrop of local services being stretched to breaking point that Labour are demanding money is found in next week’s Spring Statement to address the immediate crisis in local government.

We are calling on the Chancellor, as a bare minimum, to plug the funding deficit in children’s services, social care and domestic violence services.

Inaction under these circumstances would not only be irresponsible but morally reprehensible.

Wider structural economic problems: an economy that’s not working

But the immediate crisis in local government is just the most visible expression of a deeper, underlying malaise.

The truth is that our economy, under this government, is not working for people.

The international figures make this very clear.

The developed world as a whole has not recovered properly from the crash of 2008, but Britain is a clear outlier for poor performance.

Amongst major advanced economies since the crash, in fact, Britain is the only economy where the economy has grown (even if only a little), but wages have actually fallen.

The experience is unique in modern British history. For sixty years, from the Second World War to the financial crisis, rising GDP meant broadly rising living standards. When GDP rose, unemployment came down and wages went up.

That link has now been seemingly broken. It should be no surprise that people express such cynicism in official forecasts and official pronouncements. Why would it matter if GDP goes up or down, if you, personally, are still worse off?

What this means is the old rules of the economy have simply broken down.

London has more billionaires than any ever before – more than any other city in Europe.

But homelessness is at a record high. And what use are a few more of the mega-rich living the high life in London for those parts of the country that have seen good, secure jobs disappear, never to be properly replaced?

Something has gone deeply wrong with how our economy operates.

Broader economic demands: revisit our approach to the economy

So, yes we are calling on the Chancellor to act next week to address the immediate crisis, but more fundamentally to completely revisit our economic approach in order to build the foundations for a stronger future.

Thirty years of deregulation and governments committed to the hands-off, laissez-faire dogma have created a debt-ridden, low wage, low investment economy.

The expansion of financial services has meant piling up wealth in one small corner of the country, and piling up debts in the rest.

Britain has the worst regional inequalities in Europe as a direct result.

And these inequalities are worsened by government decisions – so that London is set to receive more than twice as much transport investment per head than Northern England.

And too often our corporations and financial institutions are fixated on the short-term, immediate profits, at the expense of long-term patient investment.

I’ve asked City economist Graham Turner to report on the British financial system, and make recommendations for its reform.

The findings from their interim report are crystal clear: our major financial institutions are too fixated on the short-term, and on unproductive investments.

We are in the early years of a major technological transformation – the combination of robotics, artificial intelligence, and communications technology in the “fourth industrial revolution”.

Yet the data presented by Graham and his team show that our financial system is funnelling investment money from manufacturing and into property speculation.

This is the exact opposite of what is needed. And if we don’t deliver this investment, we will continue, as an economy and as a society, to fall by the wayside.

Already, productivity growth in Britain is lagging far behind comparable economies.

It now takes a typical British worker five days to produce what a typical German or French worker produces in five.

This productivity gap is the worst it has been for a generation.

Such economic growth that has happened since 2010 has been the result of more hours being worked, not improvements in productivity.

We are reaching the limits for this model for growth.

We need an alternative – based fundamentally on long-term, patient investment.

Labour’s alternative

To deliver this investment, we need more than just a few tweaks to our economic model.

That is why at the heart of Labour’s economic programme is a commitment to radically transform how our economy works and to reshaping old institutions as well building new ones.

This requires an active, entrepreneurial state.

Under this government there is a failure to invest effectively in skills and training – so Labour’s National Education Service will deliver the funding needed for lifelong learning for all, free at the point of delivery.

There is a failure to invest in infrastructure – so our National Transformation Fund will deliver £250bn over a decade into bringing our infrastructure, from broadband to railways, up to scratch.

There is a failure to invest in research – so our industrial strategy will target focused investment in critical, national priorities like renewable energy and Artificial Intelligence.

And to lock those changes in place, we will be looking to bring major economic assets into public ownership – on a more democratic, collaborative basis than was ever done in the past.

We also look to overhaul how our businesses are run, and how they are owned – creating a new generation of high-technology co-operative and worker-owned firms.

Our new Strategic Investment Board linked to our National Investment Bank will act as a focus and centre of expertise for the economy, charged with delivering a major increase in productive investment, focused on the technologies of the fourth industrial revolution.


That’s the bold, transformative vision that Labour intends to build on – a high-technology, high-wage, high-investment economy.

An economy that is radically fairer, more democratic and environmentally sustainable.

A prosperous economy but where that prosperity is shared and enjoyed by all.

Those are foundations on which we must rebuild our economy.

But today we must end the immediate crisis in our public services.

The Government must use this Spring Statement to bring forward measures to end the crisis they have created in our local communities by providing local government with the funding it needs.

To find the funding let’s demand a bit of fairness in our tax system with the reversal of the cut in the Bank Levy and the reversal of the £70bn of planned cuts to Corporation Taxes, and taxes paid largely by the super-rich like Capital Gains Tax.

They can change direction: end the disastrous failure of austerity, and start once again to fund our public services.

I believe we are approaching a moment of real national crisis on this. Essential services simply cannot cope with the strain of spending cuts that have now stretched into their eighth year, with no end in sight.

The Chancellor has to rise to the occasion, next week.

If he cannot do the right thing and change course, he should stand aside for a Labour government that will.

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John on Sky TV Sunday 4th March


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Treasuty Questions


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McDonnell at Resolution Foundation – Labour will tackle the fundamental problems holding our economy back

John McDonnell MP, Labour’s Shadow Chancellor, speaking at the Resolution Foundation this morning, said:

Thank you for the invite to say a few words here today, and for the work of the team at Resolution Foundation in preparing and presenting this research.

It confirms what some of us, frankly, have argued for most of this decade, but whose truth I think is now unavoidable.

The austerity measures pursued by successive governments have been an economic disaster, not only for the performance of the whole economy but – and this should be our primary concern – people’s real living standards.

The analysis presented here confirms that working people, and those on low to middle incomes especially, have suffered the worst decade for living standards for generations – perhaps as far back as the Napoleonic Wars.

The prognosis for the future is similarly bleak, with (at best) a marginal recovery. For many, stagnating living standards

But Resolution Foundation set the title for the discussion of “beating the forecasts”.

In some ways it shouldn’t be too hard to get the better of an economic forecast.

As the great liberal economist JK Galbraith once said, “economic forecasting exists to make astrology look good”. But the argument presented here by the Resolution Foundation, based on the official Office for Budget Responsibility forecasts, is of a different kind.

We’re not dealing here with a short, sharp shock of a recession, or a sudden financial crisis. It’s more like a long-term, chronic illness that the British economy suffers from.

And this illness pre-dates the decision to leave the European Union, although the lack of direction and political uncertainty the Tories’ have brought to that process have unquestionably exacerbated these issues.

On productivity

Even this Government has managed to identify some of the symptoms of the illness, starting exceptionally weak productivity growth.

Steady improvements in productivity, meaning steady improvements in the efficiency of production, have been the motor economic growth for industrial capitalism for over two centuries.

Improvements in productivity over time have led to huge and sustained improvements in the standard of living for most people. It’s the only way, over the longer term, that capitalism can sustain those improvements.

Yet what we have seen, in the UK in particular, is that the crisis of 2008 seems to have led to a slide in productivity, and economic growth.

On falling growth

Its causes are widely debated. For some, like Google’s Chief Economist, Hal Varian, what we see as falling growth is in large part due to a measurement error – we aren’t capturing the value produced by new information technologies properly in our statistics, and so we underestimate the real economic changes happening.

Or as US economist Robert Solow once put it, “How come I can see the computer revolution everywhere – except in the productivity statistics?”

For others, like Robert Gordon, the productivity slump indicates a decline in the fundamental rate of innovation. Other explanations for it can be found, from secular stagnation to the falling rate of profit.

These are big economic questions that we can debate almost endlessly.

On Britain as an outlier

But whatever the causes, one fact is not in serious doubt: Britain is now an outlier for poor economic performance in the rate of measured productivity growth and, most importantly, for living standards.

Amongst major advanced economies since the crash, in fact, Britain is the only economy where the economy has grown (even if only a little), but wages have actually fallen.

The experience is unique in modern British history. For sixty years, from the Second World War to the financial crisis, rising GDP meant broadly rising living standards. When GDP rose, unemployment came down and wages went up.

That link has now been seemingly broken. It should be no surprise that people express such cynicism in official forecasts and official pronouncements. Why would it matter if GDP goes up or down, if you, personally, are still worse off?

But falling real wages for most have sat alongside significant increases in the inequality of wealth since the crash, and, more recently, as Resolution Foundation have shown, rising inequality of incomes.

On rising debt

This has real economic consequences. Households in general paid down their debts in the aftermath of the crash, but more recent years have seen a significant rise in their debts.

This is of a different kind to before the crash, where the sharp increases in household debt came overwhelmingly through increasing mortgages.

Instead, it is unsecured lending on things like car finance and credit cards that has been the driver of growing indebtedness.

So there are three fundamental barriers to improving living standards for working people in Britain: first, that productivity has stagnated; second, that the link between growth in the wider economy and improved living standards has broken; third, that inequality produces financial barriers to prosperity.

None of these fundamental issues can be properly dealt with, I would argue, by redistribution of incomes through taxation and spending alone, of the kind we’ve seen governments attempt in the past.

It made sense when the economy was growing and creating relatively secure, relatively well-paid work.

But those conditions came to an end in the crash of the 2000s. Instead the challenges we now face require us to address the structural failings of our economy.

On funding public services

Yes, the next Labour government is committed to restoring funding to our public services, and we have pledged an £21bn over the Parliament to address the cuts Tories have made from the Work & Pensions budget including £3bn a year for Universal Credit.

We will do so through making sure a fair rate of taxation is paid by those wealthy people and businesses that can afford it.

We also do so by making sure corporations and the wealthy pay their taxes. The Tax Transparency and Enforcement Programme we presented at the last election will be the most comprehensive anti-tax avoidance programme ever implemented by a government in Britain.

Seven years of Tory austerity have dragged our public services to an existential crisis.

The figures for local government are genuinely shocking.

More than three-quarters of local councils believe that local authority funding is unsustainable. One in ten fear that they will not be able to meet their statutory requirements to deliver core services.

It’s not remotely good enough for Philip Hammond to try and sneak through his Spring Statement, due in just over month, without addressing these issues.

I’ve called on him to immediately bring forward the funding needed to place out local authorities onto a sustainable financial footing, for at least the next year.

On structural failings

But we have to look not only at the immediate symptoms of a failing economy, but at their causes.

The failure on productivity is the direct result of a failure to invest.

The economic evidence is increasingly clear, as laid out by the LSE Growth Commission, amongst others.

Since the crash, this economy has substituted the creation of cheap, insecure work for investment in the capital, skills and technology that can create decent jobs for the future.

Ultimately this failure is down to government. It beggars belief that London alone is set to receive half of all new government transport investment made in the whole of England.

There is a deep institutional bias at work here that deprives the regions and localities outside the charmed circle of the City of London of investment.

That, in turn, means great swathes of the country fail to meet their potential.

The next Labour government, through the £250bn National Transformation Fund and its industrial strategy, will deliver investment across the whole country.

And we’ll shift the thinking of government institutions towards the longer-term.

The industrial strategy, centred on broad, social missions, is one part of that.

So, too, will be critical institutional changes like asking the OBR to take account of climate change and environmental damage in its long-term economic forecasts.

We don’t just need a policy change from government – we need the overhaul of institutions, and a cultural change that goes right across Whitehall.

On the private sector

Alongside this, we will deliver an overhaul of corporate governance, changing the incentives for our major corporations to focus more on long-term and social benefits, and less on immediate returns.

That will include looking at ways to improve the representation of workers and consumers on company boards.

We need a clear view on how our economy is changing, and how it is likely to change into the future.

Technological change is accelerating, most obviously in the set of technologies around Artificial Intelligence, Big Data, and widespread automation.

But our legal and institutional structures are failing to keep pace. Britain is lagging far behind other, comparable economies in the use of robotics.

In manufacturing alone, we have the lowest rate of industrial robot use in the entire OECD.

British capitalism invests too little, and relies too much on underpaid insecure work to compensate.

We need new institutions with different priorities for the future. Over the next period, Labour will be laying out its programme for how the benefits of rapid technological change can be shared across society.

We want to see a new generation of co-operative and collective ownership that can properly utilise these technologies for the social good – creating a shared, co-operative Uber, or placing the ownership and control of automation in the hands of the people, not a few corporations.

On financial institutions

To achieve this, we need institutions that are democratic, transparent, accountable, and capable of making decisions for the longer-term.

Unfortunately, decisions about how, where and in what to invest society’s wealth are presently taken by institutions that are too often almost the exact opposite.

Our financial institutions put too much money into short-term, speculative investment, and not enough into real value creation.

As a result, we have the absurd situation where, overall, it is manufacturing and high technology sectors that are financing speculative investments in property and real estate.

This is exactly the reverse of what a healthy economy should be doing. Finance should act as servant, not master, for the real wealth creators.

The final report of the Graham Turner review of the UK’s financial system is due in the next few months, and we will be paying close attention to its recommendations.

The National Investment Bank and network of regional development banks will be one, major step towards this rebalancing our economy.

Graham Turner’s report sits alongside Bob Kerslake’s repot on reform of the Treasury and Prem Sikka’s on HMRC, with a further report to follow o regulation overall.

We have published a first stage report on the National Investment Bank with a further report to follow. The National Investment Bak and network of regional development banks will be one major step towards rebalancing our economy.
And for heavily-indebted households, now growing in number and in an increasingly precarious position as Resolution Foundation research shows, we’ll introduce some common sense measures to lighten the burden.

One part of this shifting the balance of market power in favour of labour – rapidly raising the minimum wage to £10 an hour, and removing the Draconian restrictions on workplace representation.

On beating the forecasts

The programme we intend to present at the next election will represent nothing less than the transformation of the British economy.

Labour will fundamentally change the priorities of government. Successive administrations here have spent too long trying to hammer society to fit the shape of the economy, rather than thinking about how the economy can best address the needs of society.

That will mean changing how government thinks about economic policy – not fixated on growth for the sake of growth, however and wherever it can be achieved – but on meaningful social outcomes, like creating decent, secure work across the country and combatting climate change.

The situation, if the status quo continues, will be dire for working people – of a public realm and public services that is disintegrating; of meaningless, underpaid, and insecure work; and a future that is blighted, perhaps permanently, by the appalling consequences of climate change and environmental destruction.

I believe, Jeremy Corbyn believes, and Labour believe that we can do better than this. These are the forecasts we intend to beat.

The potential is there – to create a society that is radically fairer, radically more democratic, sustainable, and prosperous, where that prosperity is shared by all.

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New analysis from Labour has exposed that household debt servicing costs are officially forecast to jump up by almost a third over the next five years under the Tories.

The data obtained by Labour under a Freedom of Information (FOI) request from the Office for Budget Responsibility (OBR) reveals that from 2018 Q1 to 2023 Q1 forecast household debt servicing costs will rise by 29% and will increase their share of household disposable income by 12%.

In the previous five years from 2013 Q1 to 2018 Q1 household debt servicing costs had fallen by 9% and reduced their share of household income by 23%.

These embarrassing figures for the Government were not published in the Budget in November. It lifts the lid on the wider consequences of sluggish wage growth, which is failing to keep up with rising prices and pushing many working households further into debt.

These new figures show what this could mean for households on average, as it could see their annual debt servicing costs (the interest they pay on their liabilities) soar from £1,983 in Q1 2018 to £2,451 by Q1 2023 – an increase of over £468.

The OBR’s latest forecasts for household debt servicing costs:


Household debt servicing costs (£) billions

£/per household

2018 Q1



2023 Q1



Difference (£):



(Sources: Figures obtained from the OBR via FOI; DCLG table 401 used for number of UK households)

John McDonnell MP, Labour’s Shadow Chancellor, said:

These eye watering increases in the potential costs faced by working families at a time when incomes are being squeezed is deeply worrying.

The Chancellor is not lifting a finger to tackle the growing crisis in wages we face as prices race ahead of earnings for many working households.

We need an urgent change of direction from Philip Hammond as the real burden of debt for households is becoming increasingly heavier while he goes ahead with tax giveaways to the super-rich and big business, and continued austerity for everyone else.

The next Labour government will cap interest on consumer credit, and introduce a £10 per hour real living wage, to help build a high wage, high skill economy for the many and not the few.”



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John McDonnell promises renationalisation of water, energy and rail under Labour

Labour launched a full-frontal attack on the privatised water industry last night, accusing companies of paying out the “scandalous” sum of £13.5bn in dividends to shareholders since 2010, while claiming huge tax breaks and forcing up prices for millions of customers.

The assault by shadow chancellor John McDonnellcame as he pledged total, “permanent” and cost-free renationalisation of water, energy and rail if Labour won power at the next election. The three privatisations in the 1980s and 1990s became hallmarks of the Tory governments of Margaret Thatcher and John Major.

The dramatic intervention – which stunned the companies involved – was the strongest denunciation yet by Jeremy Corbyn’s Labour of the privatisation programme that has become part of the British political landscape of the last 40 years.

The Conservative party and the Confederation of British Industry both condemned McDonnell’s comments. The CBI said Labour’s renationalisation agenda would “wind the clock back on our economy” while chief secretary to the Treasury Liz Truss warned that placing politicians in charge of public utilities “didn’t work last time and won’t work this time”.

McDonnell told the Observer that water companies could not even claim to offer choice to customers but instead operated regional monopolies, and were therefore able to increase prices without the risk of losing out to competitors, as well as “load up debt” while paying out huge dividends to shareholders.

“It is a national scandal that since 2010 these companies have paid billions to their shareholders, almost all their profits, whilst receiving more in tax credits than they paid in tax,” he said. “These companies operate regional monopolies which have profited at the expense of consumers who have no choice in who supplies their water.

“The next Labour government will call an end to the privatisation of our public sector, and call time on the water companies, who have a stranglehold over working households. Instead, Labour will replace this dysfunctional system with a network of regional, publicly owned water companies.”

Citing figures from the National Audit Office, the shadow chancellor said water bills had risen by 40% in real terms since privatisation of the industry in 1989. In 2016-17, the forecast average for water bills was £389 per household. McDonnell claimed that in 2017, privatised water companies paid out a total £1.6bn to their shareholders. Since 2010, the total was £13.5bn.

Michael Roberts, the chief executive of Water UK, which represents private water companies, said McDonnell was completely mistaken: “It’s wrong for Labour to suggest that our water system is broken. Water companies secure capital provided by lenders and shareholders, who need water companies to make a return in order to finance significant improvements to the industry.

“Under public ownership, the water sector in England was starved of cash and standards were poor. Private companies have instead invested heavily to reduce leakage, improve drinking water quality, and protect the environment – and they continue to invest £8 billion each year in even better services. In real terms, bills are roughly where they were 20 years ago and will be falling over the next few years.”

Meanwhile, at a conference on alternative models of ownership in London, Corbyn backed the nationalisation of Britain’s energy system as a way to tackle climate change. He said that “the challenge of climate change and the threat of climate catastrophe requires us to be at least as radical” as the 1945 Labour government that created the National Health Service. Corbyn said that Labour would back a “great wave of change across the world in favour of public, democratic ownership and control of our services and utilities.

“We can put Britain at the forefront of the wave of change across the world in favour of public, democratic ownership and control of our services and utilities,” he said.

“From India to Canada, countries across the world are waking up to the fact that privatisation has failed, and taking back control of their public services,” he added.

The water industry was privatised in 1989, transferring the assets and personnel of the 10 water authorities into limited companies. Capital was raised by floating the companies on the stock exchange, accompanied by a one-off injection of public capital, the write-off of government debt and the provision of capital tax allowances.

Toby Helm, Observer, Sun 11 Feb 2018

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John McDonnell on public ownership

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John McDonnell says Labour will help local councils bring public services in-house

Shadow Chancellor will unveil his party’s new Community Wealth Building Unit, which will nationalise public services and set up new energy companies

Labour is set to offer help to local councils to bring public services in-house, as John McDonnell warns the party cannot afford to wait for power nationally to begin dismantling austerity.

The Shadow Chancellor will today use a speech in Preston to claim that austerity measures have “blighted” communities in Britain and forced councils to cut and privatise public services. 

Mr McDonnell, one of Jeremy Corbyn’s closest allies in Westminster, will also unveil Labour’s new Community Wealth Building Unit that will aim to offer help to councils to nationalise public services and set up new energy companies. 

The organisation aims to bring together councillors, unions and independent experts with experience of delivering frontline services to offer advice to the party’s councillors across the UK. 

In his speech on Thursday, he will say: “The next Labour government will end austerity and properly fund local authorities, instead of cutting back and passing the buck like the Conservatives are doing. But we cannot afford to wait until we are in power nationally.

“There are many creative solutions being used already, like in Preston, and we need to spread this inspiring work around other Labour councils now, so we can bring services back in-house, stimulate the economy and provide decent jobs, extend ownership and control and strengthen local democracy.

“By working together to share these principles where Labour is already in power locally, we can sow the seeds of a country that works for the many, not the few.”

Mr McDonnell said the new unit will build on the experience of Preston City Council, which he said had returned almost £200m to the local economy, supporting more than 1,600 jobs, by using the city’s institutions and local government contracts to keep money in the local economy.

Ashley Cowburn Political Correspondent Independent 8th February

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John McDonnell's Tax Return 2017

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Be afraid, Tories – even the Davos elite now fancies a bit of Corbynism.

John McDonnell was a guest speaker because, unlike his rivals, he has a plan for ending the global economy’s structural woes

The UK’s business leaders are not, on the whole, committed Corbynites, but last autumn their political centre of gravity started to shift. At the CBI’s annual conference in November, the warmest applause went not to Theresa May but to her rival on the opposition benches. After the Labour leader’s speech, the measured reaction of one captain of industry – “These are great aims. But how will they be paid for?” – reflected the perhaps surprisingly pragmatic response of British business to the prospect of a socialist government.

Few corporations are keen on taxes or regulation, but all will welcome the state investing £250bn in infrastructure and research and development, as well as billions more on education. They are also grateful that Labour has maintained its position as the party of soft Brexit.

John McDonnell’s series of emollient conversations last year with City executives – his “cup of tea offensive” – seems to have worked.

But this morning Corbyn’s key ally presented a less rosy picture when he spoke at the World Economic Forum. Although he wanted guests there to know he’s a man they can do business with, he also made clear that they don’t have much of a choice. “Out there, beyond the Davos compound, many people feel the markets are rigged against them,” he told his audience. “There is an anger building that you have to deal with.” As he warned on Wednesday: “Change is coming either way.”

The shadow chancellor has been invited to Davos because the global elite know he has got a point. “Business … needs to have a societal tone,” admitted John McFarlane, chairman of both Barclays and financial services lobby group TheCityUK, last year. “Ordinary people have spoken out and they are finding it hard.” He concluded, in his interview with Reuters, that Labour’s confidently leftist general election campaign had been “bang on”.

You might think that the forces of global capital really should be a bit more consistently antagonistic towards a party “for the many, not the few”. But consider what motivates the people who were sitting in McDonnell’s Davos audience.

A minority of those who were there – the hedge fund types – are professionally obliged to focus not on grand political questions, but on short-term prospects. Even if they suspect their margins might feel a little pressure from Labour’s redistributive plans, they are principally concerned with identifying how they would make a profit in any likely scenario.

However, different concerns occupy the archetypical guest at the WEF, one of those who might happily chat with Bono and the Gateses in the hot tub after a long day of seminars. They hope a brief spell of social democracy will save capitalism from itself, just as it has several times in the past century.

McDonnell’s long-term goal of a democratic economy is very different to that of WEF ticket-holders, but evidently the conditions for a truce are promising, hence the invitation to Switzerland. The change in tone from business a few months ago was a sign that ideology and power were rearranging themselves.

The save-capitalism-from-itself crowd hopes Labour and other leftists can cure some of globalisation’s pathologies, social and economic. Since the 1980s and 90s, privatisation has prevented the state interfering, as the free marketeers see it, in what is supposedly the realm of business: creating value.

But as has been elaborated by economist Mariana Mazzucato, the state often leads the way in incubating innovation. Many high-growth areas, from computing and the internet to biotech and nanotechnology, have been identified by the state, supported for years and even made commercially viable by it, long before venture capitalists or big corporations got involved.

Consequently, in the UK’s heavily privatised economy, growth and living standards have depended not on creating value but on merely extracting it, on borrowing from the oil producers of the Middle East and the manufacturers and industrialists of south and east Asia. This global imbalance precipitated and shaped the crash of 2007, and since then the Tories’ response has been to encourage more of the same, so that our economy is still overheated with private debt. Free market policies haven’t just made Britain violently unequal: they have made our economy unstable.

Labour’s manifesto last year offered a solution. Government borrowing will have to increase, but if the state pulls its weight as an investor and an entrepreneur, stimulates growth and helps to rebuild industry and manufacturing in the UK, Britain can become a value creator once more.

This is implicitly acknowledged when even mainstream Tory MPs such as Sajid Javid, Nick Boles and Tom Tugendhat demand an end to austerity or when May starts talking of her “industrial strategy”, a vaguely Keynesian phrase all but banned since 1979. Those Tories know Labour’s economic plans are not just popular: they provide a response beyond keeping calm and carrying on.

Few at Davos or in the City will have agreed with every word spoken by the shadow chancellor today, but they are pragmatists. After McDonnell met BlueBay Asset Management in November, the $57bn hedge fund cut its short positions against sterling in half. Previously, its managers had been betting against the pound, but they explained that they had liked what they heard from the shadow chancellor. Indeed, they publicly dismissed fears that if British voters put Labour into office currency speculators might sabotage sterling.

McDonnell’s appearance at the WEF confirmed not only that his solutions sound attractive far beyond his voter base, but also a more pragmatic message: the global elite knows he and Corbyn may enter government very soon, and that by 2022 they could well have been joined by a President Mélenchon and a President Sanders. McDonnell’s rivals at Westminster, and around the world, should be worried.

Richard Power Sayeed, Guardian Davos 2018 opinion

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John speaking from Davos

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John McDonnell: I'm in Davos to tell the elite they are held in contempt

The UK shadow chancellor, John McDonnell, has used his debut appearance at the World Economic Forum to warn leaders of global businesses that they are held in contempt by ordinary voters who have struggled through a decade of austerity.

Interviewed by the Guardian in Davos, McDonnell said he found the euphoria in Davos about the modest pick-up in world growth shocking, adding that those running big corporations were guilty of complacency.

“You get the feeling that they are cut off in their compound from what people on the outside are feeling,” he said. “There is an ecstatic reaction to a turn in the economic cycle that was inevitable. They don’t understand the deep alienation.”

McDonnell’s criticisms of business, and his policies such as higher corporate taxes and renationalisation, mean that, as with Donald Trump, his decision to attend raised a few eyebrows.

The shadow chancellor said he came in order to tell a few home truths on the “avalanche of discontent and resentment out there”.

“Why did I come? Firstly, I got an invitation and I thought this was the time to check just what the discussions were, what the assessments being made by individuals were and what the feelings were about the future. Secondly, to deliver a message that people need to look at things like the result of Brexit and address the issues that caused it,” he said.

“Davos is what I expected. It embodies the criticisms I have made of it in the past. I don’t think the people here have any comprehension of the contempt in which they are held.”

McDonnell said the corporations represented at Davos had been getting away with “industrial-scale tax avoidance” while ordinary people struggled. “They just don’t get it. It’s the system and it needs to be changed,” he said. He said the big auditing companies should have the equivalent of a doctor’s Hippocratic oath so that they did not encourage firms to avoid tax.

 “Ten years after the crash, after 10 years of austerity and 10 years of paying their taxes and seeing public services cut, people have had enough.”

The shadow chancellor believes the pick-up in economic growth has allowed discontent to surface. “In the depths of the recession people concentrated on survival,” he said. “When the cycle turns and people are told the sunny uplands are before them, that’s when people get alienated, angry.”

McDonnell called for an international pledge among progressive governments to introduce a financial transaction tax (FTT) to begin to address the inequalities of the global system and restructure the global economy.

Labour put an FTT in its 2017 manifesto and has committed to spend 50% of the proceeds on aid. “Other countries should follow our lead,” McDonnell said. “We don’t have to wait for a global agreement. We don’t have to wait for a complicated structure. We can protect public services and provide money for development.”

Asked what his message was to Davos, McDonnell said: “Pay your workers a living wage. Make sure workers are properly represented and have a say, a share in the profits and a share in the ownership. Individual company directors here in Davos have the chance to take a lead.”

McDonnell expressed enthusiasm for a basic income, an idea much debated in Davos in the light of the disruption to labour markets expected from the growth of artificial intelligence.

The shadow chancellor said: “There are technological developments that will change the nature of work. The question is whether the developments are used for the intensification of exploitation or whether the benefits are shared with workers.”

UK business leaders in Davos have privately been expressing concern about Labour’s plans to renationalise the railways, the Royal Mail and the utility companies. McDonnell says he is not surprised that there is opposition, and dismissed a report from a rightwing thinktank that the plan would cost £176bn.

“Of course they are having a go, because we are serious about it and it has popular support,” he said. “Detailed work is going on apace.”

Larry Elloitt, Guardian, 26th January

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John McDonnell warns of 'social avalanche' unless global economic rules are rewritten

Speaking ahead of his first visit, the Shadow Chancellor said if the ‘Davos few stand in the way of change that’s needed, they risk raising the price they pay’

John McDonnell has warned of a “political and social avalanche” unless the global economic rules are rewritten ahead of his first visit to the World Economic Forum in Davos.

Referring to the global elite gathered in the Swiss ski resort as the “Davos few”, the Shadow Chancellor warned: “If they stand in the way of the change that’s needed, they risk raising the price they pay. Change is coming either way.” 

Mr McDonnell, who is one of Jeremy Corbyn’s closest allies, said that many attendees to the World Economic Forum have been “patting themselves on the back” as international growth figures have started to rise.

But they should be worried,” he warned. “In the real world, outside the Davos bubble of Alpine restaurants and chalets, the global economic system they have built isn’t working for billions of people.”

“And just as Davos faces the risk of an avalanche this week, growth for a few risks a political and social avalanche unless there is fundamental change to our rigged economic system.” 

It is the Shadow Chancellor’s first visit to the annual event, with his name appearing on the speakers list alongside world leaders including Donald Trump, Angela Merkel, Emmanuel Macron and Theresa May. 

Before leaving for her trip to Switzerland on Wednesday, the Prime Minister joked in the House of Commons: “Who knows, I might even bump into the Shadow Chancellor while I’m there.” 

A source close to the Shadow Chancellor said Mr McDonnell will be in Davos to campaign on social justice and global inequality issues, alongside NGOs, to “speak truth to power and give a voice to the voiceless

“People are not going to put up with it,” Mr McDonnell added. “In the depths of a recession people focus on getting by. But when they are told things are getting better and see no evidence of it in their own lives, they begin to demand real change.

“In country after country people have suffered a decade of austerity since the crash of 2008. They know austerity was a con trick when they see that the wealth of the super rich has doubled and banks and corporations have been rewarded with tax cuts.

“Ordinary people have worked hard to dig us out a slump they didn’t cause, as they have been forced to accept low wages and long hours while paying off the costs of the crisis with their taxes. 

“What did they get in return? Their public services cut and sold off, soaring pay and bonuses at the very top and tax dodging on an industrial scale, exposed by the Panama and Paradise papers.”

Setting out Labour’s vision for an alternative, he continued: “Real change to the system is Labour’s mission, one we share with parties and movements all over the world. The real wealth creators – that means all of us, not just those with offshore bank accounts – must share in the prosperity we all create.

“To achieve that, we must launch a global drive against tax dodging and financial secrecy, for democratic control over our economy and to protect our planet.”

Ashley Cowburn, The Independent, 24th January 2018

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John talking to Andrew Marr 21st January 2018

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John McDonnell’s interview with Nigel Nelson, Political Editor of the Daily Mirror 20th January

Shadow Chancellor John McDonnell says if he had the job at No.11 he’d unveil his plans this Wednesday to save the National Health Service.

If John McDonnell was Chancellor he’d unveil an emergency Budget on Wednesday to save the NHS .

A desperately-needed £5.1billion would go straight into the health service to end the winter crisis.

The money would come from the top five per cent of income earners.

And there would be enough left over to avert cuts in frontline services for the rest of the year.

That, said Mr McDonnell in an exclusive interview, is what Philip Hammond should be doing now. And he could count on Labour’s support if he did it.

The shadow Chancellor added: “Health Secretary Jeremy Hunt is being blamed for this crisis. But the root cause is the Chancellor.”

Health bodies The King’s Fund, Nuffield Trust and The Health Foundation all estimated a funding gap of £4billion.

Mr McDonnell said: “Every health expert said that was what was needed.

“And we thought Jeremy Hunt would win that ­argument in Cabinet and Philip Hammond would have to deliver.”

But in his November Budget the Chancellor stumped up only £1.9billion, leaving the NHS £2.1billion short.

Since then hospitals have been deluged with patients.

In the past eight weeks 100,000 people were stuck for more than 30 minutes in the back of ambulances – double the safe handover time.

A quarter of those languished in hospital car parks for more than an hour as bed ­occupancy hit 94.9 per cent, 10 per cent higher than the ­recommended safety level.

Mr McDonnell said: ­“Families are in distress and NHS staff working longer hours are at their wits’ end. The cause is lack of funding. People realise we need to pay more for our NHS but it has to be done in a fair way.

“We would ask those who earn the most to give a little more.”

In Mr McDonnell’s NHS Emergency Budget 95 per cent of working people would see no change in their taxes.

Beer would not go up, nor would ­cigarettes. The shadow Chancellor’s NHS Budget would be just that.

A budget solely for the NHS.

It would see those earning more than £123,000 a year paying 10 per cent more income tax – 50p in the pound.

Those on salaries of more than £80,000 would be asked to cough up 45p. Combined together, that would raise £4.7billion a year.

Mr McDonnell would also hike insurance premium tax on private healthcare to 20 per cent to bring it in line with the VAT rate. That would give him £406million and bring the total up to the £5.1billion he needs.

Mr McDonnell said: “Things are so bad the Chancellor must do something immediately. The NHS has never gone through anything like this before. And the flu epidemic has not really hit yet.”

The Shadow Chancellor rejects calls for a specific NHS tax as his plans will provide the funding the health service needs. He has done the figures and over five years a Labour government could pump in an extra £37billion, an average of £7.4billion each year.

There is an expectation that the NHS will muddle through this crisis as it does every year and breathe a sigh of relief when Spring arrives.

But Mr McDonnell warned: “Some people are not going to muddle through because they will die in hospital ­corridors. It’s absolutely heartless.

The NHS is staggering from crisis to crisis and I don’t know how much more the staff can take of this pressure.

“They’re leaving the health service because they can’t cope any more and that really worries me.

“A large number of wealthy people recognise this and would be proud to pay their taxes to fund the NHS. And we should thank them for it.”

Nigel Nelson Political Editor 20 JAN 2018

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The Carillion scandal must bury the rip-off PFI dogma for good

The Tories still can’t see the utter failure of outsourcing. Only a Labour government will demolish this sordid economic model.

This week 20,000 Carillion workers and many more in the supply chain have had their livelihoods put at risk. The responsibility lies with this shambolic Tory government and mismanagement by Carillion’s fat-cat bosses.

The collapse of Carillion, embarrassing for a government that had championed the company and awarded it contract after contract, represents another significant blow to the “private knows best” economic dogma.

Nothing has come to symbolise the worship of free-market solutions – often against all the evidence – more than the persistent belief that key public services would be better provided by profit-seeking companies. As the journalist Robert Peston put it, the collapse of Carillion represents the definitive end of a 25-year love affair with the private provision of public services.

The end of the affair has revealed some unedifying details about some of the participants in it: the apparent reliance by Carillion’s management on “low-balling” bids to win them, then sweating suppliers and workers to squeeze a profit; Chris Grayling’s insistence on awarding Carillion the HS2 contract even after its first profit warning; David Cameron’s decision to appoint Carillion’s chairman, Philip Green, as an adviser on corporate responsibility

The former chancellor George Osborne declared as recently as 2014 ​that the deal he signed to help Carillion win business in Dubai was a key part of the coalition’s “long-term economic plan”. Since Osborne left parliament, the firm he now advises reportedly took out bets on Carillion’s downfall. And yet in his Evening Standard editorial Osborne preferred to pass responsibility to civil servants, rather than the elected politicians who signed off deals with Carillion.

It’s hard to imagine a more perfect example of the grubby nature of the Tory establishment than a career that goes from signing off deals with Carillion, to advising a company that has sold their shares, to using your media platform to blame the people who worked under you.

Of course, Osborne is not alone at the Treasury in his commitment to Carillion. At Treasury questions, Liz Truss confirmed that the Treasury signed off on spending decisions. The chancellor, Philip Hammond, is among those who need to account for why Carillion continued to be given contracts even after it was clear the company was in trouble. That is why I called for a full public inquiry so that we can get to bottom of this matter.

Jeremy Corbyn and I have long opposed and campaigned against the privatisation of core government services. It’s many years too late, but hopefully the government will finally admit the utter failure of its economic model and its consequences for public services.

Since Corbyn became leader of the Labour party, he has put decisive opposition to the private finance initiative (PFI) and outsourcing at the centre of our plans for an efficient and accountable public sector.

It’s why Andrew Gwynne, the shadow communities secretary, announced that the next Labour government would make delivering local services in-house the default option.

It’s why Corbyn said from the start that we would sign no new PFI deals when in government.

And it’s why I announced last September that we would move to bring existing deals in-house by taking ownership of the special purpose vehicles to deliver savings for the taxpayer.

The government could move now to bring an end to the scandalous rip-off of outsourcing. It could refuse to allow PFI projects to pay dividends to offshore fund shareholders, for example – with nearly half of all PFI contracts owned by nine offshore funds, that would be a significant start.

Or it could recoup dividends paid out by construction firms that have admitted participating in blacklisting trade unionists, which includes Carillion.

It was never true that private was always better. But the obsession with outdated dogma, and a cosy relationship between a handful of powerful people, means this sordid love affair between big business and the public purse has gone on far longer than it ever should have.

As Corbyn said on Monday: this scandal represents a watershed moment. We need to put an end to the rip-offs and failures of the outsourcing model.

And we need a Labour government committed to delivering much-needed investment in public services through an accountable and transparent funding structure. If the Tories won’t wake up to the reality of the changing economic landscape, it’s time they stood aside and let us take over.

Guardian Opinion Tuesday 16th January 2018

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John's New Year Message

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John's Christmas Message

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John McDonnell on Sky News


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John McDonnell's response to the Budget November 2017


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John McDonnell hosts the Charter of the Forest New Economics Conference in Lincoln 11th November

John Mc Donnell hosted an economic conference on Saturday 11th November at Lincoln’s Bishop Grosseteste University. The event marked the 800th anniversary of the signing of the Charter of the Forest in Lincoln, which is home to one of the two surviving copies. The Charter was intended to ensure that people had access to the Commons – the cultural and natural resources available freely to everyone - for subsistence by guaranteeing commons rights to food and fuel.

Over the next few weeks the Labour Party New Economics webpage will be updated with a page on the Charter of the Forest conference at Lincoln. Further information on the workshops will be available on that page in early December.

The event formed part of a series of conferences that Labour’s Shadow Treasury team are organising around the country, hoping to broaden access and raise the level of debate around economic issues.

John  addressed the conference on Labour’s plans to bring back key industries into public ownership. The conference also heard from Professor Guy Standing and local MP Karen Lee on co-operative ways of working, land ownership and the plunder of the commons.

Other speakers highlighted public ownership as a force for good and encouraged us to question the role that common ownership could play in achieving a democratic and effective economy.  

Workshops focussed on

·         The first workshop looked at public ownership and the Labour Party’s commitment to more democratic ownership structures to ensure our economy can deliver for the many not the few. The workshop focussed on Water, Rail and the Royal Mail and discussed how public ownership could deliver lower prices, more accountability, greater investment and a more sustainable economy.

·         The second workshop looked at the role of co-operatives, social enterprises and self-organised groups and platforms in moving towards a new economy fit for the 21st Century.  Europe has seen the emergence of a ‘commons movement’ with local people coming together to run social centres, town energy networks, and develop social platforms that mutually support workers

·         The third workshop looked at new concepts of land ownership and government. The UK has some of the most concentrated land ownership in the western world, much of it shrouded in secrecy. The workshop explored how land ownership is both a key driver of inequality and a cause of degradation of natural resources.

Summing up, John invited Guy Standing to discuss a draft Charter of the Commons for the 21st Century. This well received by conference delegates.


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New Economics Conference on Charter of the Forest Lincoln 11th November 2017

The Labour Party will host an economic conference on Saturday 11th November at Lincoln’s Bishop Grosseteste University from 11am – 4pm. The event will mark the 800th anniversary of the signing of the Charter of the Forest in Lincoln, which is home to one of the two surviving copies. The Charter was intended to ensure that people had access to the Commons – the cultural and natural resources available freely to everyone - for subsistence by guaranteeing commons rights to food and fuel.

The event forms part of a series of conferences that Labour’s Shadow Treasury team are organising around the country, hoping to broaden access and raise the level of debate around economic issues.

To register please click here

The Shadow Chancellor, John McDonnell MP, will address the conference on Labour’s plans to bring back key industries into public ownership. The conference will also hear from Professor Guy Standing and local MP Karen Lee on co-operative ways of working, land ownership and the plunder of the commons.

Speakers will highlight public ownership as a force for good and encourage us to question the role that common ownership could play in achieving a democratic and effective economy.  

Workshops will focus on

Public Ownership and the Labour Party’s commitment to more democratic ownership structures to ensure our economy can deliver for the many not the few. The workshop will focus on Water, Rail and the Royal Mail and discuss how public ownership could deliver lower prices, more accountability, greater investment and a more sustainable economy.

The role of co-operatives, social enterprises and self-organised groups and platforms in moving towards a new economy fit for the 21st Century.  Europe has seen the emergence of a ‘commons movement’ with local people coming together to run social centres, town energy networks, and develop social platforms that mutually support workers

New concepts of land ownership and government. The UK has some of the most concentrated land ownership in the western world, much of it shrouded in secrecy. The workshop will explore how land ownership is both a key driver of inequality and a cause of degradation of natural resources.


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John's speech to the Labour Party Conference 2017


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Public sector pay cap is provoking real anger, says John McDonnell

John McDonnell has accused Theresa May of “almost provoking” public sector workers into more industrial unrest by failing to take action to address years of pay restraint.

The shadow chancellor said he had not seen this level of anger among health workers, civil servants, teachers and others in more than 20 years, and said people had “had enough” of struggling to get by.

He dismissed a Downing Street hint that steps could be taken to address the concerns, warning that ministers were likely to pick out certain groups of workers for help rather than fully lifting the 1% cap that has been in place for seven years. He said such a policy would amount to “divide and rule”.

They’ll choose individual targets which they think they can buy off. They think they can buy off the public’s anger about some of these issues but others they will leave alone – and they are some of the lowest-paid workers,” he said.

“If you look at the health service, they might do something for nurses, because they’ve lost so much pay, but what about some of the ancillary workers, some of the lowest paid?”

Asked whether there was likely to be an increase in industrial unrest, McDonnell replied: “Inevitably. If they [the Conservatives] don’t do something, inevitably. It is almost as if they are provoking it.

“And I think you’ll find across the health service and teaching there will be people acting in solidarity – they are provoking real anger.”

McDonnell said he had been shocked by what he had found at picket lines in recent months. “I’ve not felt the anger being expressed for 20 years.”

McDonnell also said Labour had celebrated May’s recent suggestion that she was “not a quitter” and would lead the Conservative party into the next general election.

“It was a wonderful announcement. The best thing she could have possibly done. It boosted support for the Labour party overnight and caused absolute disarray in the Conservative party,” he said. “You can’t walk down a corridor in this place without seeing a group of Tory MPs plotting.”

McDonnell joked that he would approach the MPs and “try to get odds” about who might replace the prime minister.

Speaking from his office in parliament as MPs returned from the summer break, he said he was preparing to make May’s life difficult as her government attempts to get a series of legislative measures through parliament.

In particular, McDonnell said he wanted to target the finance bill, which returns to parliament on Wednesday, and expose the government’s failure to crack down on possible tax avoidance by non-domiciled residents – so-called non-doms.

“They are going to do a lot of spin around non-doms – what they are doing is defining non-doms, giving them up to 15 years living here, but at the same time they are not including offshore trusts,” he said.

“So it is inevitable what will happen: the offshore trusts will be used as vehicles. They will say how wonderful the bill is. But it’s smoke and mirrors.”

McDonnell said he wanted to show the “stark contrast” between Tory policies relating to the rich and to those struggling to get by. “For the wealthiest they are saying they are doing something but actually they are protecting them. And at the same time what are they doing to some of the lowest-paid workers in the country?”

He said the Labour party wanted to place the issues of debt, low pay, lack of business investment and insecurity on the agenda.

He said May’s government was in disarray. “The thing about governments is you have to maintain momentum, knowing what you are going to do, and if they’ve dumped most of their manifesto, all that leaves room for at the moment is squabbling over Brexit and publicity stunts like this budget will be over the pay cap.

“That vacuum is then filled by conspiracy and plotting and that is what is going on.”

McDonnell played down suggestions that his party’s conference would be dogged by splits including over rules about how to elect the next leader.

“We’ll still be the warm family we’ve always been,” he joked, before adding: “I think the atmosphere’s transformed since the general election. During the election campaign itself we were pretty united. Conference will be quite exciting; I think the atmosphere will be tremendous.”

But he said there would be no triumphalism. “We didn’t win, but we’ve got to win. I think conference will be serious: we could be in government soon, so let’s talk about how we’re going to govern.”

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In Conversation With John McDonnell - Edinburgh Fringe 2017

Low Down

Straight talking and an awful lot of common sense from this down to earth, pragmatic politician.


Would that I could report that it was a solid wall of red that greeted John McDonnell as he bounded on to the stage at the New Town Theatre.  But this Liverpool supporter peers out instead onto a smudge of grey and pink, a mix of Labour diehards and younger, more curious potential supporters.  And it’s in the latter that McDonnell sees the potential for growth in the party that he and Corbyn have, as it transpires, somewhat serendipitously come to lead these past two years.

Pairing McDonnell with that volcano of a comedian, Susan Morrison, proved a master stroke as well.  He is instantly at his ease, charmed, as we all are, by her infectious enthusiasm and clever wit and by her gentle but nonetheless penetrating questions.

McDonnell has done things the hard way, that’s for sure.  Brought up in a Liverpool tenement before his parents decamped with him to the deep south and London, he worked his way through a series of tough shop-floor jobs in manufacturing (that gives you a clue as to the era he hails from), then doing a degree via night school before landing a job as a researcher in the National Union of Mineworkers, at the time headed up by Joe Gormley.

McDonnell’s entry into politics was, like a lot of things in his life, a bit of a chance happening – the withdrawal of a candidate for a seat in the now defunct GLC led him to being nominated and elected as a replacement.  Within twelve months he was in charge of the council’s finances (enough said on that!) just as colourful “Red Ken” Livingstone was taking the capital by storm in the early 1980’s.

Following his election to Westminster, McDonnell kept his counsel for around twenty years on the backbenches as Labour morphed into New Labour and Tony Blair took the party to the promised land – well, to three election victories and a massive financial crisis anyway.

A decade post-Blair and we’re back to old, or original, Labour as the left once more hold the trump cards, or at least enough of them to be able to determine the hand they want to play.

I went to this event, part of New Town Theatre’s interesting “In Conversation With” series, expecting to be bombarded with a series of leftist-Labour sound bites and calls for the re-nationalisation of just about every remaining part of British industry.  Instead I listened to a politician who appeared at ease with himself and his audience, who had a nice sense of self-deprecating humour, who listened as well as talked and who answered each question to the best of his ability with a range of compelling and persuasive arguments that didn’t, as far as I can best recall, contain a single sound bite or party message.

McDonnell sounded so worryingly believable that I wondered whether we’ve entered an era where things really could be different, where politicians start listening to the often valid points being made by an increasingly disenchanted electorate.  Is the country on the verge of turning to people like Corbyn and McDonnell who have at least had real jobs and who have demonstrably put principles before ambition for some time now in politics?  Could Corbyn and McDonnell actually become neighbours in the foreseeable future?

I’m not totally convinced.  There has always been a tendency on the part of the Labour left to promise everything to everyone and expect someone else to pay for it.  But in McDonnell I detected a pragmatism, a desire to build for the long term, a genuine wish to get out and listen to people, all good omens given that he would be the man in charge of the purse strings in the event that Corbyn defies the odds and gets elected.

This was a one-off appearance as part of the “In Conversation With” series but McDonnell is well worth seeking out to listen to when he is able to engage with a live audience (as here) and where an increasingly polemic main stream press is largely absent or silent, or, in this case, both.

Published August 12, 2017

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John McDonnell's interview with Heather Stewart, Guardian 18th August

John McDonnell is sunk deep in a leather sofa in a corner of the bustling cafe bar of Norwich Playhouse, clutching a mug of tea. The shadow chancellor has taken a break from his regular holiday boating on the Norfolk Broads with his wife and a revolving cast of other family members to pop into the city for a chat.

It’s no secret that many of his colleagues view McDonnell as controlling, and see him and Jeremy Corbyn as fossilised relics of a politics they thought was consigned to the past. But the 65-year-old, a veteran of many picket lines who cut his teeth in his 20s working with Ken Livingstone in the lefty bastion of the Greater London Council, argues that the economic impact of the financial crash and its aftermath have become a fertile breeding ground for his brand of political radicalism.

“What the Labour party manifesto appealed to, I think, is people’s sense of insecurity,” he says. “They’ve had seven years of hard, hard austerity – their wages are worth less now than before the recession. The public services they rely upon have been cut to shreds, some of them are in absolute crisis. Even where they’re doing everything right, our young people are now clobbered with debt.”

The moment is ripe, believes McDonnell, for a fightback. “All those securities they’ve had have been stripped away. When you’re in the depths of a recession, that isn’t the time when people want to challenge the system, they’re too busy trying to survive. It’s when they’re told we’re coming out of a recession, growth is returning, and they’re not seeing the benefits of it, or they’re not seeing them quick enough.”

Restored by his break and from a visit by his five grandchildren, McDonnell appears relaxed, expansive and magnanimous. But when parliament resumes in the autumn, he says Labour must exploit Theresa May’s weakness ruthlessly – including by striking up alliances with disgruntled Tory backbenchers on individual issues.

“Individual backbenchers are coming back from their constituencies and confronting the same issues as the rest of us: people who can’t get a roof over their heads. There are food banks in Tory constituencies now; the pay isn’t rising enough to cope with inflation; there are high levels of household debt. They’re coming back thinking: ‘We’ve been at this seven years now and it hasn’t worked.’ We’ve got to divide them as much as we can; force the agenda about all those issues; and then use the parliamentary system to expose their position, and force as many votes as we possibly can.”

Senior Conservatives, liberated from the dominance of May’s advisers, Fiona Hill and Nick Timothy, are starting to think aloud about economic reform – and Philip Hammond is expected to use his autumn budget to provide some relief, including for public sector workers. But McDonnell believes it will be too little, too late. “A little bit of money isn’t going to work any more; the occasional sop isn’t going to work any more. I think they’ve boxed themselves in, because of their austerity programme.Never underestimate the Tories’ ability to cling on to office,” he says, “but they’ve put themselves into a position where a little bit here and a little bit there won’t work any more.”

McDonnell, a serial rebel who stood against Gordon Brown in 2007 to prevent him inheriting the premiership uncontested, and drew up an alternative budget every year Labour was in power, is regarded by many in his own party as more ruthless and Machiavellian than his longtime comrade-in-arms, Corbyn. Some believe he would rather stir up a revolution on the streets than win a peaceful victory at the ballot box.

The early months of the Corbyn project were often characterised by a bunker mentality, which appeared to be vindicated when they had to fight off mass frontbench resignations and a leadership challenge from Owen Smith. Just five months ago McDonnell described the leadership as being in a “360-degree struggle to survive” in the face of relentless attacks from the “New Labour establishment”.

McDonnell says he wants September’s party conference in Brighton to focus on ways of bringing the party’s near 600,000 members more closely into policymaking – though some see that agenda, too, as a way of tightening the left’s grip. “Rather than battles at Labour party conference over detailed constitutional amendments, it’s more important to get this year a real discussion about how this party becomes a social movement. How do we use that fantastic resource of those members?”

Yet even if clashes on the workings of the party’s internal machinery can be avoided, and despite the warm glow of the election campaign, Labour remains deeply riven over an issue McDonnell barely mentions for the first three-quarters of an hour today: Brexit. Days after the fresh crop of MPs took their seats in Westminster in June, 49 Labour MPs defied the whip to vote for an amendment to the Queen’s speech, tabled by backbenchers including Chuka Umunna, calling for the government to fight to retain membership of the customs union and the single market.

Earlier in the year, there was widespread soul-searching, and a series of high-profile resignations from the frontbench, when the leadership chose to back the government’s article 50 bill – and many MPs told their constituents they would fight for a soft Brexit.

McDonnell, like Corbyn, is a longtime Eurosceptic in the mould of Tony Benn, regarding the EU as a project geared more to the interests of financial elites than ordinary workers. During last year’s referendum, he and Corbyn backed the party’s decision to stay in but they rarely joined in with the enthusiastically pro-EU Labour campaign run by Alan Johnson, promoting instead a more sceptical message of “remain and reform”, alongside figures including former Greek finance minister Yanis Varoufakis.

Now, he urges his party to step back from what he calls “arcane” arguments about which EU institutions Britain will remain a member of in 2019 – and think instead about the practical benefits they want the new relationship with the EU27 to deliver. “The problem is, it’s become theological,” he says. “Whatever I say, I either get condemned as a hard Brexiteer, if I’ve stated an obvious fact – or I then get condemned for selling out the referendum. It’s like angels on the head of a pin. The bottom line for me, is the new relationship we have with Europe should be designed on the basis that we can implement our manifesto.”

On the free movement of people, for example, he would support any solution that would end the undercutting of wages: something he believes is possible without pulling up the drawbridge. “We’ve always defended freedom of movement in principle; but [it] cannot be on the basis that it undermines standards of living in this country – and therefore we address that issue in a practical way.” This could be done, he says, by measures to stop the exploitation of workers, better enforcement of the minimum wage and making sure public services are funded well enough to cope with new migrants to an area.

This consummate outsider, who has been advocating the same radical economic ideas from the sidelines of British political life for a generation, genuinely believes he could be about to win power. “We’re working on the basis that the government could collapse at any time,” he says. “We’ve got to do everything we possibly can to divide and demoralise them, and push that collapse, because that’s coming. But do that in a way that demonstrates that we are an alternative government, ready to go in.”

“People now understand what Jeremy Corbyn is as an individual. I think he’s won people’s respect. I think he’s grown in the job as well. People need to be absolutely clear about where we’re taking the country.”

To that end, he will be asking every shadow ministerial team to turn their own section of the manifesto into a detailed “manual for government” – even drawing up draft legislation to implement key policies. “It was the manifesto for an election. What we do now is we take each of those policies, we turn them into a working document which is a manual for implementation. You draft that manual in detail, you draft legislation and have it on the shelf ready to go.”

Repeatedly describing himself as a “bureaucrat”, he says his own team have been out and about in the City, offering reassurance that their policies would not destabilise the economy – and obviate the risk that nervous investors would react with panic to a Labour victory at the polls.

“The issue for us is to stabilise the markets before we get into government, so there are no short-term shocks,” he says. “We’re sitting down with people in the City – asset managers, fund managers and others. I’ve been to the London Stock Exchange. I’ve said: ‘Look, if I believed half the stuff in the Daily Mail about myself, not only would I not vote for myself but I’d be terrified as well. But let me reassure you, this is what our plan is.”

He says he will be asking veterans of previous Labour governments to offer their advice to what is still a relatively young, inexperienced shadow cabinet of Corbyn loyalists, stripped of some of its more experienced heads by the walkouts of last summer. (He makes no suggestion, however, that any of those with ministerial experience will be invited back into the fold.)

He talks at length about policy – on social care, a hint on heavier property taxes and tackling the housing crisis. Some serious thinking is going on in the party over the summer about how to capitalise on Labour’s popular manifesto. And it is clear that McDonnell, with his sights on entering government, is integral to that project.

Later in our chat, a cafe customer comes over to shake McDonnell’s hand. She introduces herself as Ruth, a lapsed Labour member whose faith in the party has been restored by Corbyn’s leadership. McDonnell urges her to rejoin. Perhaps an even more unlikely political idol than Corbyn himself, McDonnell is clearly enjoying this unexpected fandom, late in life.

“We gave people a bit of hope,” he says. “We won’t hold on to that feeling of hope unless we can go back to them and say, ‘That hope has a secure foundation’.”

But he believes the Tories’ precarious position means Ruth won’t have long to wait. “Their time is over. They’ve had seven years to turn this economy around, seven years to turn this country around and they’ve failed. The reason they’re frightened of us is because we’ve exposed them. We’ve exposed them as incompetent failures. We’ve exposed them for what they are.”

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John McDonnell hits back at Blair’s criticism of Labour’s Brexit policy

The shadow chancellor, John McDonnell, has hit back at Tony Blair’s criticism of Labour’s Brexit policy, accusing him of being out of touch with ordinary people.

The Labour leadership has dismissed a call by Blair to leave open the option of Britain remaining a member of a reformed European Union.

The former prime minister said in an article that the election of Emmanuel Macron as French president had opened up the prospect of real change in Europe, which could enable Britain to stay in the bloc.

The Labour leader, Jeremy Corbyn, said the party respected the outcome of last year’s referendum vote to leave, while McDonnell insisted there was no desire to reopen the divisions over Brexit.“

Speaking at a strike rally for low-paid hospital workers in east London, McDonnell said Labour was confident it would be able to negotiate continued access to European markets after Brexit.

He said the result of the referendum had to be respected and that what most “ordinary people” now wanted was a Brexit that would protect the economy and their jobs.

“We believe we can achieve that traditional British compromise of bringing people back together again,” he said. “That is what we need now. What we don’t want is to have divisions in the country again.

“To be frank, Mr Blair hasn’t really listened to the nature of the debate that is going on in the pubs, the clubs and school gates.”

McDonnell’s comments were echoed by the Brexit minister Robin Walker, who called Blair “out of touch”.

“The majority of British people voted to leave the EU. The majority of MPs, including Blair’s own Labour party, voted to trigger article 50,” he said.

“By calling for the will of the people and parliament to be overturned, Tony Blair is demonstrating once again that he is out of touch.”

Blair said his contacts with senior European figures had convinced him the EU was ready to change and that the option of Britain remaining a member should be left on the table.

In an interview with BBC Radio 4 Today, he said: “This is a completely changed situation in Europe. I’m not going to disclose conversations I’ve had within Europe, but I’m not saying this literally on the basis of a whim.”

Nicola Slawson Guardian 15th July 2017

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Third runway at Heathrow airport has been postponed again

Reacting to the news that the final vote in the House of Commons on building a third runway at Heathrow airport has been postponed again until 2018, John McDonnell said:

“Instead of kicking the decision into the long grass as they have done for the last 7 years, the government should show some leadership and scrap the plans altogether.

“The result of the General Election means a third runway at Heathrow looks increasingly unlikely to ever be built.

“London has a very serious air pollution problem and building a third runway at Heathrow is incompatible with meeting our air pollution targets.

“My constituents face losing their homes, jobs and livelihoods. We won’t stop campaigning against this runway until the plans are scrapped once and for all.”


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John McDonnell speaking at the anti austerity march 1st July 2017


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The Shadow Chancellor opens the Queen’s Speech Debate on the Economy and Jobs

This is a Queen’s Speech devoid of content which offers no solutions to the pressing issues facing Britain today. I have been in the House now for 20 years, never have we seen such a threadbare scrap of a document as this Queens Speech.

Despite being promised in the Conservative manifesto, we have heard no plans for legislation to end the triple lock. We have heard nothing about legislation to end winter fuel payments. We have heard no legislative plans for the so-called dementia tax. Nothing of the policy to take food from the mouths of infants and younger primary school children. Even the flagship grammar schools policy seems to have been ditched from the Queen’s Speech.

This could have been the Queens Speech that ended austerity once and for all. It certainly doesn’t. So we have a government that can’t feed our people, can’t house our people or protect our children and older people from poverty. It cannot ensure that when people go to work they earn enough to live on. And it can’t maintain our basic public services. That’s a government that doesn’t deserve to remain in office.

This is a Queen’s speech which is devoid of any serious measures to address the economic challenges facing this country and the pressures ordinary people and our public services are under. Austerity continues to impact on our schools, health services, emergency services and peoples living standards.

This Queen’s Speech does nothing to solve our problems. It confirms a Government isolated from the real world in which our people live. Labour’s amendment today sets out the alternative our country so desperately needs.

The full debate can be accessed by clicking

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Shadow Chancellor John McDonnell’s commenting on the Tory-DUP deal, said:

The price of Theresa May's political weakness is now becoming clear. The same Conservative Party which spent the recent election campaign saying there was no money available for the crisis in the NHS and schools has now found at least £1 billion to buy a Parliamentary majority, with some reports suggesting it could be as much as £2bn.

As this is additional spending beyond that laid out in the Spring Budget, the Chancellor must now come forward with an explanation as to how it will be funded. In the context of a forecast increase in Government borrowing this year, the public must be told whether this additional spend will be funded through spending cuts elsewhere, additional tax rises or more borrowing.

There are also important questions to be answered about the implementation and fiscal consequences of devolving corporation tax, VAT and Air Passenger Duty, as well as what this could mean for other devolved administrations.

 Let’s call this grubby deal what it is: this is a straightforward political bribe to desperately prop up Theresa May in office.

This Tory-DUP deal is clearly not in the national interest but in May's party's interest to help her cling to power."

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John McDonnell Speaking to Sky News Ahead of the Queen's Speech



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John McDonnell’s response to Philip Hammond’s Mansion House speech.

mansion_house.jpg.pngThe chancellor has made clear this morning that the message remains the same – austerity will continue. The Tories have learnt nothing from the general election, and the last seven wasted years of economic failure. The Conservatives have no understanding of the depth of suffering, stress and insecurity their long austerity regime has caused.

And we have seen the chancellor again trying to distance himself from the position of his prime minister on Brexit. It just shows further disarray at the top of government. The fact that there is clearly such a serious split between Number 10 and 11 is very worrying and only helps to undermine our country ahead of the Brexit negotiations.

It further shows just how weak a position Theresa May is in. And raises the serious question of: how can she negotiate Brexit when her own chancellor is so publicly disputing her position on Brexit and briefing against his own cabinet colleagues?

The truth is that the government’s spin of over a “hard” or soft “Brexit”, is just a smokescreen to paper over the cracks of the divide at the very heart of this Tory government. The reality is that they are really planning a Brexit for the few by turning our county into a tax haven off the coast of Europe, which diminishes workplace rights and undermines working people’s living standards.

Labour has called from day one for the Chancellor to act on gaining assurances over our stake in the EIB [European Investment Bank], and it has taken him a year to raise a finger; and now he has, all he is offering businesses in our country in way of support to mitigate any risks from the loss of this resource is a drop in the ocean from the actual support they will really need.

Only a Labour government will secure a Brexit for the many that will put jobs and the economy first, and ensure that working families and small businesses are protected from any challenges our country faces after leaving the EU.

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John McDonnell's interview with Sophy Ridge on Sunday



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John McDonnell challenges government on Grenfell Tower fire


John McDonnell MP, Labour’s Shadow Chancellor, commenting on the Grenfell Tower fire, said:

“The tragic fire that occurred on Grenfell Tower must never be allowed to happen again. The lessons of Camberwell, Shepherds Bush and Southampton have not been learned, and it is the responsibility of government to provide solutions.

“The Government must now as a matter of urgency lift the housing revenue account borrowing cap to free councils to undertake the urgent retrofitting work required on all existing housing stock found not to meet required safety standards. 

“Councils must also be given the power, as Labour’s housing manifesto pledges to do, to borrow to invest in council housing on the scale necessary to allow all those living in homes deemed to be unsafe to be properly rehoused.

“The next Labour Government will take any and all steps required to address the critical housing crisis in our country. Labour have pledged to invest to build over a million new homes over the course of the next parliament. Within five years, our manifesto commits to building at least 100,000 council and housing association homes a year for genuinely affordable rent or sale.”

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Hayes and Harlington General Election result 2017 for John McDonnell


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Labour calls for public ownership of the railways, Royal Mail, water and energy


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John McDonnell on anti racism at the launch of his election campaign


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John McDonnell at Young Labour East London Event



It was inspirational to participate in the event last night in East London with Young Labour -  bringing figures from across the entertainment sector to show that young people will not be cowed by those who use terror to divide communities and silence them.

More generally, young people have paid a heavy price for the Conservative Government’s austerity failure.

It is no surprise therefore that there is a resurgence of youth engagement in politics – a phenomenal 453,000 young people signed up to vote on the final day of registration alone.

Labour will not let the Tories hold young people back.

That’s why Labour

will build a National Education Service, abolish university tuition fees and reintroduce EMA.

build a million new homes, stand up to unfair landlords and reintroduce housing bene t for under-21s.

will ensure young people get access to mental health services - including counselling services for all children in secondary schools.

will introduce a Real Living Wage of £10 an hour for all by 2020 and ban zero-hours contracts.

stand up against racism, sexism, homophobia and ableism, and will fight to remain part of the Erasmus programme so young people can study abroad.

will lower the voting age to 16 years old.

Every young person has potential that should be realised and a voice that must be heard!

#ClaimYourFuture #StandUpYouth

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Statement from John McDonnell on Manchester Bombing

Last night's horrific attack in Manchester was a barbaric act of terror that has left all of us shocked to our core but resolute in our determination to stand together in solidarity with the people of Manchester. The terrorists seek to divide us but we will stand together.

It is hard to imagine what the victims' families must be going through, but all our sympathy, support and solidarity is with them today and in the coming days and weeks.

Our thoughts also go out to the police, fire and ambulance staff who worked through the night in the most difficult of circumstances. The emergency services have once again done us all proud and should be given all the support they need to do their job.

The reaction of the people in Manchester and beyond has shown the spirit of the city, coming together to offer help and support, whether it was somewhere to stay for the night for those trapped in town, or a car ride back to loved ones, or queuing to give blood.

Attacks like this are intended by the murderous cowards who launch them only to divide us. Manchester has shown us this morning that they will not succeed.

We urge anybody with information relevant to the investigation to hand it to Greater Manchester Police. We urge the whole community to offer their full support to the police and intelligence services as they take action to protect us.

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John McDonnell debates with Damian Green on the Andre Marr Show



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John McDonnell on the Andrew Marr Show



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John McDonnell - Birminhgam



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John McDonnell visits Lincoln



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John McDonnell debate challenge to Philip Hammond



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John's Nomination Form


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John McDonnell’s Election Launch

john_launch.JPGJohn McDonnell launched his election campaign at the Labour Hall in Pump Lane, Hayes on Saturday to a crowded audience. As well as local supporters, there were groups from across London who wanted to help John in the same way that he has supported them over the years.

Mick Cash General Secretary of the RMT gave a rousing talk about the labour movement and pointed out how the election will be won on the doorstep.

Mark Serwotka, General Secretary of PCU spoke passionately about the role of the welfare state - the NHS, education, benefits, housing local services and how Labour will get it right and stop privatisation.

Ali Milani, Vice President of the National union of students spoke about the real enthusiasm he has seen from students in that they now can see real opportunities and for the first time they believe they have a Labour Party they can fight for.

Selma James the co-author of The Power of Women and the Subversion of the Community, co-founder of the International Wages for Housework Campaign, and coordinator of the Global Women's Strike spoke about the women's movement and how a vote for John was a vote for us all.

All speakers expressed their gratitude for the support John had consistently given them throughout his time as an MP.

Helen Lowder, Chair of the CLP reminded us of how hard we have all worked over the years in campaign after campaign election. She also pointed out that talking to people on the doorstep about labour’s common sense policies would resonate with the people and win them over to vote labour and to get the message out with kindness and compassion.

John thanked everyone for their support and particularly, Helen who has done such an amazing job of running his constituency office. John talked about community socialism and how the Labour Party through policies for the launch_canvas.jpgpeople would transform the nation into a fair and just society with wealth for everyone.

After some refreshments, a mass canvas took place in the Botwell ward. The response on the doorstep was supportive of the labour party and the work that John has done over the 20 years he has served his constituents both in the community and in Parliament.

It was a good day which lifted everybody’s spirits.

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Local MP John McDonnell out campaigning in Hayes already for General Election

Local MP John McDonnell spent the first Saturday of the 2017 General Election campaign on the Railway Estate in Hayes following up on a walkabout inspection on the estate he undertook a few weeks ago.


John will be out campaigning regularly in the Hayes and Harlington constituency until Election Day on the 8th June in the community in which he has lived for 40 years and has brought up his family in.


Two of the key Labour Party policies he will be drawing attention to are Labour’s plans to build council housing to tackle the local housing crisis and the need to fully fund our NHS and protect the NHS from being privatised under the Tories.


John said: “I have been highlighting the environmental problems residents are experiencing on the Railway Estate. After my walkabout inspection a few weeks ago I planned a public meeting for residents to revive a residents group on the estate. Even though the election has been called I didn’t want to let local residents down so I will be hosting the meeting as promised next Tuesday.


I will be out on the High Street in Hayes and knocking on as many doors as I possibly can over the next 6 weeks to hear from residents what the priorities are for Hayes and Harlington.


Labour in government will build council housing again to put an end to this Tory housing crisis and ensure our kids have somewhere they can afford to live. We will ensure our NHS is fully funded and the threat of privatisation by the Tories is lifted.”

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John McDonnell MP asks the Chancellor to apologise to the British people for the utter failure of this Government’s economic policies and for the pain he has inflicted on this country

This morning, the Prime Minister called a general election. She has blamed Brexit, she has blamed our European neighbours, she has blamed the parties on these benches, but the real truth is that after seven wasted years of economic failure under the Tories:

• They have failed to close the deficit
• They have added £750bn to the national debt
• Pay is falling behind prices
• 4 million children are growing up in poverty
• Our schools are in crisis
• Our prisons are in crisis
• There's more people than ever on NHS waiting lists
• More families are homeless
• More elderly people are not getting the care they need

We need a Labour government to rebuild and transform Britain.

I’m delighted to be standing again as the MP for Hayes and Harlington. It’s a real privilege to represent our community in which I have lived for 40 years and brought my family up in. I’ve worked hard for my constituents in Parliament for the last 20 years and I hope to be elected again to continue this work.

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Labour launches Pensioner’s Pledge Card

Coventry.jpgSpeaking today (Wednesday 12 April) on a visit to an arts and crafts exhibition at Age UK Coventry’s Craft and Computer Centre, John McDonnell, the Shadow Chancellor and Debbie Abrahams, Shadow Work and Pensions Secretary, launched Labour’s Pensioner’s Pledge Card. 

The Pensioner’s Pledge Card lays out Labour’s four promises to protect older people in our communities:

  • Protect pensioner incomes by legislating to keep the Triple-Lock on state pensions up to 2025

  • End Tory unfairness on the women’s pension age, compensating those worst affected

  • Protect the pensions of UK citizens living oversea

  • Keep the Winter Fuel Allowance and free bus passes for pensioners 

Alongside the pledge card, Labour will publish new analysis from the House of Commons Library showing pensioners will be at least £650 better off by the end of the next parliament from keeping the triple-lock. 

Highlighting an increase in pensioner poverty over the last year, Labour will also commit to compensating women worst affected by the Government’s speeding-up of the state pension age; protecting pensioner benefits and protecting the pensions of UK citizens living abroad. 

John said “ I am delighted to be launching this pledge card that will inform many elderly people in our communities that Labour is not only promising to stand up for pensioners; but is determined to ensure they keep the hard-won entitlements they currently hold. 

It’s a national scandal that pensioner poverty is rising and the Tories are refusing to commit to keeping the triple-lock or compensate women worst affected by the speeding up in the state pension age. 

Only a Labour Government will stand up for pensioners and protect them throughout the next parliament.” 

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Libor rigging – schools, hospitals, local councils all potential victims – Shadow Chancellor demands compensation for public bodies

Local councils, NHS hospitals and schools engaged with PFI contracts, derivatives linked to Libor and day-to-day borrowing could be large scale victims of Libor rigging.

Yesterday, Shadow Chancellor, John McDonnell MP, called for the Chancellor to establish a public inquiry into the scandal. He is today demanding an independent assessment of the losses to public bodies and that where losses are identified as a result of Libor rigging, they must be made good by the banks.

Revelations by the BBC's Panorama programme concerning the involvement of the Bank of England and senior officials from major banks in the rigging of the Libor index raise urgent questions for the Bank of England and the Government:

- Did senior Bank of England officials, in allegedly applying pressure to banks to lowball their reported borrowing rates, act with or without the knowledge of Treasury officials and ministers?
- Was the Bank or Treasury aware of the potential costs to public authorities as a result of lowballing?
- How many public bodies have losses arising from their purchase of Libor-linked derivative products, and what are the scale of those losses?

John McDonnell MP said:

"This is now a matter of utmost concern that gets to the heart of failings in our banking system. Did senior officials at the Bank of England, with or without government encouragement, knowingly cause public bodies like NHS hospitals, schools and local councils to suffer potentially major losses?

My concern is that local councils, NHS hospitals, and schools could have paid a huge cost for the Libor rigging scandal. We need to know exactly what went on, what was the impact on public finances and who was responsible. Above all else if local councils and other public bodies suffered losses then the institutions responsible should pay them back for those losses."


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John McDonnell Criticises Government Tax Changes

Labour research reveals that the Tories’ tax changes that came into effect on 1 April will see £2.5 billion in tax giveaways alone handed out to big business and a wealthy few in 2017/18.

The figures also reveal that by 2022, Tory Tax giveaways that came into effect on 1 April could total around £20 billion, which includes over £2 billion in corporation tax giveaways to big corporations like Google in the next year alone.

These changes will take place at the same time as the Government goes ahead with billions of pounds’ worth of cuts to low income working families on in-work benefits.


John said: “This April the Tories are taking working families for fools by thinking they can hand out billions of pounds in tax giveaways to big business and the super-rich and expect no one to care, while at the same time cutting in-work benefits to the low paid.

“These figures show the true priorities of Theresa May and Philip Hammond. They refuse to ensure that big corporations like Google pay their fair share, while they are handing out huge tax giveaways worth billions, and cutting the incomes of low paid people in our country.

“Only Labour will create a fair tax system: one in which all big businesses pay their fair-share and working families are supported by ending the tax giveaways at the top, bringing in a £10 an hour Real Living Wage by 2020, and reversing the cuts to in-work benefits.”

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John McDonnell MP, Labour's Shadow Chancellor, commenting on a series of ONS economic releases today, said:

Today’s data exposes the underlying weaknesses of the UK economy and highlight the concerns Labour have been raising for some time.


Growth is modest and led by consumer spending. Production and construction were broadly flat in January and the service sector saw a decline in output.  


With business investment falling for the first time since 2009 and a squeeze on real wages and consumer spending because of rising inflation, is it clear that consumer spending alone will not be able to power the economy indefinitely.


Working people in Britain face difficult times ahead. So far, the Tory Government has been remarkably complacent in addressing the serious structural weaknesses of the UK economy. 

Only Labour, with a proper industrial strategy, and a plan for a high-investment, high-skill and high-wage economy will confront the challenges facing the UK economy and deliver for working people

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John McDonnell MP, Shadow Chancellor Comments on Banks ‘dirty money’

John McDonnell, responding to the Guardian revelations that some British banks were involved in the laundering of hundreds of millions of pounds from Russian criminals, said: 

This scandal needs to be investigated in full by the National Crime Agency, and the government must ensure they have all the resources and support needed. Britain cannot be a haven for the criminals of the world who are looking to hide their money. 

It’s deeply disappointing that there are British banks involved in yet another banking scandal as the actions of a few shouldn’t overshadow the hard work of the thousands of employees in the sector who will have had nothing to do with this case. But it appears that some of these big banks haven’t learnt the lessons of the past, and are clearly not doing enough to clamp down on financial crime and money laundering. 

The government’s overall approach to the banking sector is one that has seen them handout billions in tax giveaways that favour the big banks over the challenger banks, and pursue a ‘light touch’ approach to regulation that borders on a return to the bad old days before the crash. Now we know the date for when Article 50 is to be triggered, we need clarity from the government that this scandal is not a glimpse into the future of what a Tory Banker’s Brexit will resemble. 

It is scandals like this that only further support the case for Labour’s Tax Transparency Enforcement Programme to ensure that there are no more hiding places for the super-rich to dodge paying their taxes, or to hide proceeds of crime. If the Tories will not act to clamp down on such acts, then the next Labour government will make them a thing of the past.

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John McDonnell MP, Labour's Shadow Chancellor, responding to the Government's u-turn on its £2 billion NICs rise in the Budget last week, said:

This is a humiliating reversal for the Chancellor forced upon him by Labour’s opposition. His authority is now shredded after just one Budget, and he tore up a manifesto commitment to do it.


We welcome the Government's decision to finally listen to Labour's calls made in Jeremy Corbyn’s Budget response along with those of business groups like the Federation of Small Businesses to not go ahead with an unfair £2bn tax rise on low and middle earners. But they should never have been placed in this position to start with, and now we face yet another Tory Budget only a year on with a blackhole in the billions. In 2015, we had the tax credit shambles. In 2016, we had Personal Independence Payments reversal. Now in 2017 we have the u-turn on National Insurance Contributions.

There will be millions of working people who are now breathing a sigh of relief, but it is the Chancellor who should be holding his breath as this episode throws up urgent questions that he and the Cabinet must now answer. 


Did the Prime Minister or the rest of the Cabinet, who must have seen the Budget in advance and known this measure was to be implemented, raise their concerns with the Chancellor before he announced it, worrying millions of families? It was in the weekend papers before the Budget so they can't say they were unaware it was to happen.

This is also the second year we have had a Tory Budget with a black hole in it worth billions. This is not acceptable. What will he do to fill the shortfall in a Budget he delivered less than a week ago without pursuing unfair tax increases or further cuts to public services? As the Budget will still see working people £1,400 worse off under the Government.


On the day the Brexit Secretary has admitted that he hasn't looked into the costs of the Prime Minister's negotiating strategy, this is yet more proof that there is disarray at the top of a government clearly making things up as they go along.

We need answers from the Chancellor and accountability at the top of government. In no workplace would such practices be allowed to continue, and it should not be allowed from those responsible for the public finances. Labour’s new roundtable on self-employment will bring together business organisations, trade unions and self-employed groups to lay out a serious and realistic strategy to provide a fair deal for the self-employed at a time of major labour market changes. We are proud to be the party of working people, small businesses, and the self-employed.”

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John McDonnell MP, Labour’s Shadow Chancellor, responding to the Budget, said:

Philip Hammond has used his first Budget to claw £2 billion in tax on those self-employed who are on low and middle incomes. But he continued to boast about the £70 billion worth of tax giveaways at the top announced by his predecessor.


Labour will oppose this unfair £2 billion sole traders tax on the self-employed low and middle earners. 


Rather than provide the funding that would end a social care crisis in which 1 million vulnerable people go without adequate care, or calling an end to the state of emergency in our NHS, the Tories are doing next to nothing and don’t seem to recognise the scale of the crisis they have created.


The Tory rigged economy continues for households in our country, who face being £1,800 worse off by the end of the forecast period, and if you are on the National Living Wage by the end of this parliament you face a 25p per hour cut.


This Budget does not address the problems created by seven years of Tory failure, and it has failed the fairness test for women who will be hit by a cuts in public services, and the national living wage.


Instead of equipping our country for Brexit, he is building our economy on sand, and the little he has announced today will mean we are less prepared for the challenges we face outside of the EU.

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John McDonnell's interview with Andrew Marr


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John McDonnell's Pre Budget Speech 2017


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What does the Leadership of the Labour Party Stand For EL4C Video

Very good video from Ealing Labour 4 Corbyn. 


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Labour caught in struggle to survive media attacks, says John McDonnell

Anushka Asthana and Heather Stewart

Friday 3 March 2017 19.34 GMTLast modified on Friday 3 March 2017 22.01 GMT

jmcd_4032017.jpgJohn McDonnell says that the Labour leadership has been embroiled in a “360 degree struggle to survive” in the face of repeated
attacks in the media and anonymous briefings.

In an interview with the Guardian, the shadow chancellor said his team had been involved in a daily battle against critics who have “been coming at us”, making it more difficult to get the message about their policy ideas through to the public.

He claimed that powerful figures were determined to destroy a socialist Labourleader who wanted to radically transform society and shift power to the people.

“So that’s exhausting: you spend your time having to rebut stuff continuously,” he said, singling out oligarchs that own newspapers as well as the Guardian.

In a wide-ranging discussion before Wednesday’s budget, McDonnell also said:

  • Labour’s byelection loss in Copeland had left the party looking “over the cliff edge” and that now was the time to step back and unite.
  • Jeremy Corbyn should have been widely praised for his strong leadership in placing a three-line whip on Labour MPs to vote for article 50, arguing that failing to do that would have meant a “Ukip MP in Stoke at the moment”.
  • Philip Hammond ought to place the vast bulk of an extra £12bn expected to be available as a result of strong tax receipts to plug a gaping spending gap in social care and the NHS.

McDonnell said the chancellor would have to “dig himself out of a hole” over changes to business rates that triggered a backlash among Conservative MPs on Wednesday. He argued that challenges for hospitals, councils, prisons and schools ought to be the priority. “Public services are collapsing around his ears,” he said.

“In the real world, all of a sudden, NHS in crisis, patients on trolleys, social care nightmare, school budgets cut for the first time since the 1970s, prisons in riots. You look across the whole of the public sector and it’s imploded”.

People were “suffering out there”, McDonnell said, worse than anything he had seen in 30 years in politics, adding that 79% of austerity measures were still to come and that 86% of them hit women hardest.


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Shadow Chancellor’s speech to the Engineering Employers’ Federation

eef.jpgWe are meeting just a few weeks ahead of the Budget and, more significantly, perhaps just a few weeks from Article 50 being signed and Britain beginning the process of leaving the European Union.

Labour voted to give the government authority to begin that process, but we have not handed them a blank cheque. The next two years or more will involve intense negotiations and scrutiny of the government and other positions. But more than this, I believe they will involve a significant national conversation about the kind of society and economy we want to live in.

Amongst all the many interpretations of the vote to Leave the EU, it is clear to all sides that it was a vote for change. The status quo is no longer an option. We have to now do things differently from the past.

That means a recognition once more that securing the prosperity of our manufacturing sector is the key to securing the prosperity of the wider economy. Labour will place support for our manufacturing sector at the centre of its approach to Brexit, and at the heart of its economic policymaking.

Current failures

It was obvious even before the Brexit vote that our economy was not functioning as it should. Productivity growth has stagnated. Since the crash, it has been too easy for some employers to substitute cheap labour for capital investment. The result has been a proliferation of jobs – but a collapse in wages. Real hourly pay is still 10% below its level of a decade ago.

Mark Carney, governor of the Bank of England, has called this a “lost decade” for living standards. It is unprecedented in British history – at least since the industrial revolution. And with prices set to rise as the fall in the value of the pound feeds into the economy, the squeeze on living standards will get tighter and tighter.

It’s Labour’s belief that if we are to going to prosper as a country after Brexit, we need a sharp change in economic direction. If we are to create a fairer and more prosperous economy after Brexit, manufacturing will have to have a central place. It is manufacturing that reliably creates the well-paid, secure jobs– and not just concentrated in a few hotspots, but spread throughout the country.


Because we have reached the end of the line for the old economic model.

For many of those communities who voted Leave, it has been thirty years of neglect and decline. Of seeing solid jobs in manufacturing and industry replaced by work that is too often insecure and poorly-paid. We shouldn’t tolerate a situation any longer where a few, privileged centres grow at the expense of the rest of the country.

The decade since the financial crisis has drummed home this point. The crisis was centred on the catastrophic failures of a few, London-based institutions. Management was poor, and regulations failed to work as they should. The bonuses paid out by major financial firms didn’t end up spent in Stoke or Hull. They stayed in London. But when the bubble burst, the whole country had to carry the losses.

The profits went to a few. But the pain of austerity has been felt by the many. The injustice of this should be apparent. Parts of the country that had never been part of the good times during the bubble were now being asked to cover the costs. They have paid, and paid again, for nearly seven years.

It should be no surprise that for many in those forgotten places took the chance to give the whole system a kick. That kick contributed to the Brexit vote.

Like yourselves, Labour campaigned to stay in the EU. We argued that the risks of an exit, particularly under this government, were too great. However, the vote was to Leave. Labour respects that decision as a fundamental democratic choice.

But it is essential we fight for the best possible Brexit – one that protects jobs and living standards above all else. People voted to Leave the EU, but I don’t believe they voted to lose their job, or trash the economy.

So we have insisted, as soon as the vote was declared, that the government observe clear red lines in its negotiations with the EU. These are to protect jobs and living standards.

It’s essential instead that we develop a broad national consensus on how the negotiations should be conducted.

If we believe that manufacturing is essential to securing a fairer and more prosperous economy after Brexit, that consensus on negotiations should place the needs of manufacturing at its centre.

Single Market access

Labour is absolutely committed to securing the fullest possible access to the Single Market for goods.

The case for a comprehensive free trade agreement with the EU that would continue to allow manufacturers here to access European markets at minimum cost is overwhelming.

The damage done not only to the markets for final output, but to extended, Europe-wide supply chains from a failure to secure this deal could be enormous. UK manufacturers are tightly connected to European supply chains.

Of the goods and services we export, twenty three percent of their value is accounted for by the imports needed to make them. This is far higher than for countries like Japan or the US, where just 15% of export value depends on imports.

Imposing tariff barriers would tear up those extended supply chains. It could mean a sharp increase in costs for manufacturers, hampering British competitiveness.

Yet the government, and government ministers, appear to believe they can, if pushed, simply walk away from whatever deal is on the table in favour of the fallback option of the WTO.

Not only are the costs, particularly to manufacturers, likely to be high, negotiation over WTO schedules will still entail a lengthy process of discussion with the EU and others. As a negotiating position, these attempts to play hardball simply do not work. It’s a bluff, and it will be seen as such across Europe.

Far better to adopt the approach that, whilst the UK has voted to Leave, we want the best possible relations with our European partners to continue. It will be a different relationship, of course. But it cannot be one based on mutual distrust.

Later this week, Labour will be hosting a conference in London of European social democratic parties to discuss Brexit and the EU. A process of discussion and mutual agreement where possible is far better than the phony tough posturing adopted by this government. That’s the approach to negotiations we favour.

It’s on the basis of a recognition of mutual interests that we can secure the best possible access to the Single Market for goods. There will be trade-offs, of course.

But if the aim is to protect jobs and living standards in the UK, the widest possible Single Market access for goods is the best available outcome. And that applies for the whole of the manufacturing sector. Labour does not believe in creating special deals for favoured parts of the economy. So we need a trade deal that works for the whole of manufacturing.

Any future deal with the EU should seek to keep tariffs on goods where they are presently: zero, as in the existing Customs Union arrangements. There is no good case to be made in favour of tariff walls between European countries, at similar levels of development, particularly where supply chains might be placed at risk.

We recognise that with more than half the UK’s exports now going to the rest of the world, whatever opportunities exist to strike specific deals would also need government to deal with the risks of leaving the Customs Union. We should maintain a sense of realism about the immediate possibilities.

Signing comprehensive Free Trade Agreements will be a long process, since it is essential to get the details right. Government ministers should not encourage illusions that quick deals will be best for Britain. It is more important to get the right deal, than to get a quick deal.

We want a future trading system that will allow manufacturers the freedom to establish their own supply chains and open new markets, whilst protecting jobs and rights in the UK. And as part of that freedom, Labour will continue to support the right of British manufacturers to employ whoever they think is best for the job.


EU migrants have made and will continue to make a huge contribution to this country. In particular, we know that many of you rely heavily not only skilled workers from across the Continent, but also on less skilled labour. The ability for manufacturing employers to tap into this pool of labour is an obvious strength for them. But the right to freedom of movement that creates this strength will be directly challenged by Brexit.

Labour backs fair rules and reasonable management of migration in the best interests of the economy and society. They have attempted to use EU migrants as bargaining chips in Brexit negotiations. As a bargaining position, the government’s posturing makes little sense.

There are 1.5m British citizens resident in the rest of the EU whose rights in turn can be put on hold. Our European partners understand this and will not be swayed by attempts at tough talk from London.

The sooner the situation is resolved with a clear and unambiguous statement that EU migrants currently resident here will have their rights protected, the sooner the negotiation process can move on. That’s not only the principled position to take. It’s also popular. And it’s economically the most sensible, since it guarantees those currently in work can remain in work, and plan for the future.

Industrial strategy

The challenge in Brexit is not only in how we approach the negotiations. It is also in how we transform the operations of our domestic economy. It has been pleasing to see some movement in this government’s rhetoric on the economy over the last year.

The recognition that a modern industrial strategy should be central to how governments conduct economic policy is very welcome. The recent green paper, unfortunately, fell far short of what was required. It offered plenty of evidence of the need for a strategy – some of it damning. The major global trends are now clear.

After years of declining manufacturing employment across the developed world, “re-shoring” is now well established. One in six manufacturers now report bringing some production back to the UK. It is clear why this is happening.

Proximity to major markets and access to skilled labour are both prerequisites for manufacturing success today. But the economies that are navigating this switch are those with governments prepared to properly support their manufacturing sector.

When the steel crisis broke out last year, governments across the developed world moved quickly to intervene. The US increased some tariffs on Chinese steel to 266%. Germany increased its subsidies. Italy nationalised a producer. At the EU level, attempts were made to impose tariff barriers against the dumping of cheap steel.

In all these cases, governments recognised the need to move swiftly and defend a foundational industry. It is simply not possible to run a modern, developed economy without a steel industry. And whilst the crisis in British steel has eased, significant uncertainties remain.

A comprehensive industrial strategy would place steel and other foundation industries like chemicals at its centre. It’s no longer good enough, post-Brexit, for governments to hide behind State Aid rules as an excuse for shoulder-shrugging.

This government, like others in the developed world, should be prepared to intervene to support essential production. That means action on procurement to sustain supply chains and create markets, using government’s own purchasing power to buy domestic steel and industrial products. But it’s not just defending existing and essential industries. It means supplying the cheap, long-term loan finance that meet the potential of our smaller firms.

That’s why Labour is committed to setting up a National Investment Bank and regional development banks, charged with delivering financing to small and medium-sized firms in particular. The inability of smaller firms to access the finance they need for growth has held back their potential.

And the concentration of lending by our existing financial system in London has meant the rest of the country has lagged behind. Labour will correct this bias. We want to see smaller firms, especially in manufacturing, across the whole of the country.

We can build on the success that is already out there and develop a ‘British Mittelstand’: high-investment, high-productivity smaller firms that provide high-quality employment in those sectors where we have the greatest potential, like high-value added manufacturing.

There is the potential here, as the fourth industrial revolution gets underway, for a manufacturing renaissance that can transform the potential not of those places and regions already succeeding, but of those areas that have been left behind for too long.

Training and skills are an essential part of that. Over a third of manufacturers are still struggling to recruit because applicants lack the relevant qualifications.

We have supported the Apprenticeship Levy because we recognise that high-quality training requires funding. But like you we have raised concerns both about how it has been applied and, more generally, about the quality of training provided.

There are steps to be taken here in tightening up the provision and monitoring of apprenticeship training, including ensuring the new Institute for Apprenticeships and Technical Education is up and running promptly.

More generally, the approach from government has to recognise that vocational and more academic training enjoy a parity of esteem. There is no place in a modern economy for the old blue collar versus white collar distinction. This isn’t simply a point about equality. It’s a hard-nosed recognition of the fact that advanced manufacturing requires advanced skills.

Labour is developing its own industrial strategy as part of our new economic offer. The response to the consultation has been overwhelming, and positive. As we move forward and develop policy, we want to make sure you are involved at every step of the way.


This years’ Budget, due in just a few weeks, could be an opportunity for government to address the concerns of our manufacturing sector. Unfortunately, the signs so far are not promising.

A small amount of additional funding was pledged for public investment by the Chancellor at the Autumn Statement. This was not even close to matching the levels required to drive up research and development spending to the levels of successful advanced manufacturers like Germany or Sweden. And it scarcely undid the damage of the £1bn real-terms cuts in R&D spending the previous Chancellor had allowed.

Labour is committed to achieving the OECD target of 3% of GDP spent on R&D, from all sources. We’re committed to keeping in place those mechanisms that help the private sector, like R&D tax credits. And we’ll make good any loss in EU funding for research, whilst pushing for a deal that maintains essential Europe-wide research and safety arrangements, including UK membership of Euratom.

But we also recognise that serious, long-term commitments to research and especially on the development and application of scientific research will require public funding. That commit to invest goes further.

Broadband provision in Britain remains inadequate for a modern, developed economy. It has to be considered an essential part of modern infrastructure. Labour has committed to the delivery of a fully-fibre optic broadband connectivity, across the whole country.

As part of our commitment to investment, we will in government deliver the funding needed to accelerate fibre to the premises, prioritising areas of clear business need.

Business rates

The business rates system is frankly a mess. The revaluation of rates has been exceptionally poorly handled, landing unfair and unsustainable increases in business rates on smaller businesses.

The instability of periodic, sudden revaluations creates instability that is debilitating for many businesses. Rates need to be adjusted in a way that gives business more predictability.

The current system penalises businesses for investing in the machinery and other capital that our economy desperately needs is self-defeating and out of line with other countries.

This is the very opposite of what a tax system should do. The clamp down on appeals is unfair as leaves businesses without recourse when rates are valued unfairly.

The government have repeatedly cut corporation taxes while leaving our business rate system in disarray. This disproportionately helps the largest businesses and harms the smallest.

Labour is calling for an overhaul of business rates to help manufacturing. We’ll be bringing forward our own proposals ahead of this year’s Budget.


The years ahead will be challenging for this country, but they will also contain opportunities. But if we are to take them we cannot settle for the status quo. If we want to continue to prosper as a society, and make sure that prosperity is more fairly shared, the old rules of the economy have to be written.

Manufacturing will be central to that transformation. It is where the high-quality, secure, well-paid jobs will be found.  It is the lever by which we can lift all parts of the country into sharing wider prosperity. It will need a government prepared to intervene and support the sector. Where a renaissance in manufacturing can deliver prosperity for all.

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John McDonnell MP, speaking at the Open 2017: Platform Cooperatives conference at Goldsmiths University in London today, said:

“The discussion of the challenges for the modern world of work posed by the so called ‘gig economy’ are nothing new. They represent an age-old threat to diminish the hard-won workplace rights, terms and conditions offered by full-time employment.


“However, as technology changes so too does the nature of the threat to job security in the new world of work. That is why it’s exciting to see the ideas and the discussions on how we can help build the economy and society of the future that secures sustainable, well paid jobs. 


“Rather than running away from innovation and technological advances, we need to see where we can use them to adapt to the challenges they may present to full-time work. 


“The power that these changes in technology give us all is the ability to pool our collective talents and skills and produce wealth not just for the benefit of a tiny handful at the top, but for all of us. It can help us mitigate the potential growth in the ‘Uberisation’ of the workplace.


“Digital technology means there is no longer a convincing reason to allow the wealth of society to be taken by a tiny elite, instead of shared for the many. The old rules about the supposed efficiency of the free market and the private firm are being rewritten right in front of us.


“That’s why the next Labour government will be completely committed to fixing our rigged economy and promoting the co-operative ownership of the wealth we produce, doubling the size of the co-operative sector. We’ll support the development of platform co-operatives instead of allowing new technologies to be exploited for the benefit of an elite few.


“The new National Investment Bank and network of regional development banks will be tasked with supplying the funding to help support a new generation of co-operatively owned Ubers and Airbnbs.”

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John McDonnell MP, welcoming the publication of Labour’s independent Kerslake Review into the Treasury this morning, said:

 “I welcome this report, which has been produced by some of the leading experts in our country who have worked closely with the Treasury. Labour will be responding in full in the coming weeks to the review.


"Labour asked Sir Bob Kerslake to head up a review into the Treasury because we needed to have a serious and thorough examination of one of the most important pillars of government, and the cornerstone of economic policy making in our country.


"The Treasury is our most important economic policymaking institution, but one that has been criticised by some for its approach and attitudes.


“This review will help shape Labour's economic policy, as well as being a first important step in setting a new direction for the Treasury in the 21st Century. The views of the former head of the Civil Service are ones that should be taken on board right across the economic and political spectrum in our country.


"As Sir Bob has made clear, we need the Treasury in the 21st century to be not only able to meet the big challenges of the day such as Brexit, but also one that focusses on all corners of our country, so that no one and no community is left behind. Therefore, I am deeply concerned that the review has raised this as areas which need reform.


“Given the severe challenges that our economy and our country face in the coming years, it is vital that we have a Treasury that is up-to-speed and is able to match them. The next Labour government will need to deal with many of these challenges, with what by then could potentially have been 10 years of Tory economic failure, and it will fall to us to ensure that the Treasury is ready and properly equipped for the 21st century.


“I am are deeply grateful for the contribution from all the independent members of the review’s panel, who represented many different fields of expertise, and who gave up a considerable amount of their time to take part. And I would also like thank Sir Bob Kerslake for his time, energy and expertise in producing this report for Labour.”


Lord Kerslake, former head of the Civil Service, who headed up the review, said:


“The Treasury is a small but very powerful department. To make the most of its very capable staff, it needs to fundamentally change both what it does and how it does it. It should focus on its core economic and financial roles and work in a much more open and collaborative way. The impact of Brexit reinforces this need for change”.

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Labour sets up 'working group' to investigate universal basic income, John McDonnell reveals

independent_article.jpgLabour has set up a “working group” to investigate the radical idea of a basic income and will report back on its conclusions before the next general election, John McDonnell has said.

In an exclusive interview with The Independent the Shadow Chancellor appeared to signal his desire to bring basic income in the party’s manifesto. The concept involves overhauling the welfare state and ditching means-tested benefits in favour of unconditional flat-rate payments to all citizens.

During the summer of 2016 Mr McDonnell, who has been the MP for Hayes and Harlington since 1997, suggested he could “win the argument” on basic income within the Labour party but now he intends to publish a report on the idea with Guy Standing, one of his economic advisers and a founding member of Basic Income Earth Network – established in 1986 to encourage discussion on the topic around Europe.

Speaking about the idea – floated by Benoit Hamon during the socialist primaries of the French presidential elections – Mr McDonnell added: “Interestingly, [Narendra] Modi’s government has brought forward a report in India as well about the need to develop basic income ideas and again see how they can implement it over a period of time. All of a sudden it’s become… an idea whose time may well have come.

“We’ve set up a working group,” he added.  “Jonathan Reynolds in my team is now leading on that. We’re working with Guy Standing, one of our economic advisers. What we’re going to do with that again is bring forward a publication and then tour around the country and have discussions with people around that. It’s interesting – the winds have sort of taken in the sails of basic income at that moment.

Asked whether he thought it was still a credible idea, he replied: “We’re exploring it. We think there are elements of it that we can bring forward as first steps towards a basic income that people can support”.

“I was involved in the early campaigns many years ago on the development of child benefit – at that point in time there were all sorts of anxieties about whether you could bring forward a benefit for everybody that wasn’t based upon an assessment of need and we won the argument. I think child benefit is like one of the foundation stones of a future basic income.

His comments come before he appeared alongside his long-time comrade Mr Corbyn in Liverpool on Saturday to launch a series of regional economic conferences, aimed at addressing the regional investment imbalance in the economy. “It’s pretty stark what’s been happening over a period of years especially under this Government, is the lack of investment particularly in the North,” Mr McDonnell added. He’s anxious over what he describes as a potential “bankers’ Brexit” – a deal at the expense of the wider economy for a special settlement to be done with the City of London.

He also vowed to deliver a “Crossrail for the North” with a series of major upgrades to east-west transport links. A new “High Speed 3” rail link would transform the economy of northern England, creating 850,000 additional jobs by 2050.


Ashley Cowburn, independent, 5th February 2017


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Labour's first regional economic conference takes place in Liverpool

At Labour's first Regional Economic Conference in Liverpool I set out how the next Labour government will close the gap in public investment between the North and the South. The day was hugely successful with  substantial participation from delegates. There were good common sense ideas and discussions in the workshops.  If you would like to contribute to the plan on line please click here. 



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Local MP Calls for Action to Refurbish Local Heritage Building – The Dower House, Harlington

dower_house.jpgLocal MP John McDonnell said “7 years ago, after a failed planning application, the Dower House was severely damaged. Seven years on the Dower House remains derelict and despite the local council’s talks with the owner, no remedial works have been undertaken.

This once beautiful historic building remains an eyesore and at risk of further deterioration. Local residents and I have written to the owner calling upon him to start work urgently on refurbishing this once beautiful building which is an important part of our local heritage”

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Labour will fight against May's 'reckless Brexit', says John McDonnell

John McDonnell, the shadow chancellor, has promised that Labour will fight against Theresa May’s pursuit of a “reckless Brexit” after the party was whipped in favour of giving her the power to trigger article 50.


Jeremy Corbyn’s closest ally said the party would not give the prime minister a “blank cheque for what others call a hard Brexit and I think is a reckless Brexit”.


“We are all uncomfortable with the position, we campaigned to remain, but we are democrats and have respect the will of the people,” he told BBC Radio 4’s Today programme on Thursday.


McDonnell said Labour would come together as a party to shape Brexit, after 47 MPs defied the party whip to vote against triggering article 50, which begins the formal EU exit process.


He also hinted that the party may not sack more than a dozen junior frontbenchers and whips who voted against Brexit, even though three shadow cabinet ministers resigned.


McDonnell said Labour had not decided how to whip the final vote on article 50, but the party would not block Brexit, raising the possibility of abstentions.


Diane Abbott, the shadow home secretary, who avoided the vote on Wednesday night because she was ill, has previously said the position would be reviewed before third reading in the House of Commons.


Even the former chancellor George Osborne acknowledged that the battle over the direction of Brexit would begin after the parliamentary vote, McDonnell said.


“What we are going to fight for in the coming period is to regain the future based on a thriving economy, jobs protected, a constructive relationship with Europe and the rest of the world, the protections of workers rights, environmental regulations, consumer regulations; all those benefits we got from the EU we want to preserve, but we want to tackle some of the perceived disbenefits that motivated people to vote leave,” he said.


The shadow chancellor also highlighted the rebellion among the pro-EU Liberal Democrats. Two out of the party’s nine MPs abstained, while the rest voted against the bill.


He was speaking as May prepared to publish a white paper later on Thursday morning, which will set out in more detail the government’s plan for Brexit.


No 10 will be hoping the document satisfies would-be Conservative rebels who could threaten to back opposition amendments if they feel there is not enough parliamentary scrutiny of the process.


The legislation is still highly likely to pass through parliament and make it into law, allowing May to meet her self-imposed deadline of triggering article 50 before the end of March.


Rowena Mason, Guardian, Thursday 2nd February

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John McDonnell Tax Return 2016

Last year I published my tax returns for 2015 as I felt it was important for politicians to show transparency.

This year I am doing the same and my full Tax Return can be viewed by clicking the link below.

John McDonnell's tax return 2016




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John McDonnell MP, commenting on the Public Affairs Committee (PAC) report:

Commenting on the Public Affairs Committee (PAC) report on HMRC's tax collection efforts from high net worth individuals, which shows that the very wealthy are receiving preferential treatment, said:

"This latest report from the PAC shows how the Tories have run a rigged economy where the super-rich pay less and less in tax while earnings for average working households are still below their level of a decade ago. It's a national disgrace that the amount lost in tax from a super-rich elite under the Tories would be enough to help end the crisis in social care.

"Labour will call time on the super-rich tax-dodgers and give HMRC the legal and staff resources it needs to close the tax avoidance loopholes and scams. We'll stop the Tories using the excuse of Brexit to turn Britain into a tax haven off the coast of Europe, and build an economy that leaves no-one and no community behind."

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John McDonnell MP, speaking after the vote on the revised Charter for Budget Responsibility, said:

charber_for_Fiscal_Responsibilities.jpgThis is not a Charter for Budget Responsibility, it’s a ‘Charter for Alternative Facts’, as the Chancellor has tonight abolished the OBR’s ability to determine when a negative shock occurs. This represents a lack of confidence by the Chancellor in his ability to reach his own targets, as well as a rowing back of the welcome principles the OBR was created for – impartiality and credibility of fiscal policy.


Instead of less scrutiny by the OBR, Labour would like to see more, such as our call for the Chancellor to give power to the OBR to assess short-medium term policy decisions on health spending. Given the last six years of Tory underfunding in our NHS alongside the Government’s denials of the resulting crisis, we need to restore not diminish the public’s faith in the Government’s spending plans.


Under this new charter the OBR will assume the role of bystander rather than arbiter of whether or not the economy is facing a negative shock. This is a huge power grab by the Chancellor, as it means he can decide when and what such a “shock” will be, and therefore he can suspend his rules when he likes, and make up his targets as he goes along.


This Charter also continues with the practise of lumping infrastructure spending in with day-to-day spending, meaning that there will be insufficient scope for investment in our economy, which could hinder growth and therefore our ability to reduce the national debt.


Despite all the rhetoric of “pressing the reset button”, the Autumn Statement has shown that there would be a continuation of austerity cuts to public services. There is still no more money for the NHS and social care crisis, or for ESA and Universal Credit recipients facing cuts.


Labour’s Fiscal Credibility Rule would provide the adequate level of investment our economy needs, underpinned by independent oversight coming from both the MPC and a beefed up OBR, which would report to parliament and not the Treasury.”






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British Airways strike: Shadow chancellor John McDonnell backs latest BA cabin crew walkout

John McDonnell spoke at a Unite rally as a second, three-day strike of Heathrow staff began

ba_strike.jpg“Onwards to victory”: the rallying cry of Fidel Castro was deployed in unusual circumstances this morning, at a rally of striking British Airways cabin crew at a football ground near Heathrow.

The staff, who work for BA’s Mixed Fleet operation and are members of the Unite union, have begun a second strike in protest against what they describe as “poverty pay”. The stoppage will continue until midnight on Saturday.

The strikers held a rally at Bedfont FC, a football ground beneath the flightpath. Some had exchanged their normal uniforms for T-shirts reading “Dreamliner crew” on the front and “Binliner contract” on the back.

Another message read: “I was exploited by Willie” — a reference to Willie Walsh, chief executive of BA’s holding company, IAG. Mr Walsh was boss of British Airways in 2009-10, during a long and bitter cabin crew dispute. 

All cabin crew who have joined BA since that dispute ended are in Mixed Fleet. They are employed on inferior terms to their longer-serving colleagues, and operate a range of short- and long-haul flights from Heathrow.

Services from Gatwick, London City and Stansted are unaffected.

The shadow chancellor, John McDonnell, addressed the rally; the Labour MP’s constituency includes the airport. He accused BA’s management of “bloodymindedness” and described the strikers as “the heroes and heroines of our movement”.

The strikers were told that bus workers, dockers and hospital workers are being asked to contribute to a hardship fund to help BA cabin crew.

The union claims many cabin crew are reporting for duty while unfit, rather than lose the £3 per hour allowance they earn while working.

In addition, says Unite, some staff are sleeping in their cars at the airport because they cannot afford the petrol to drive home and back to work the following day.

Last week hundreds of Mixed Fleet cabin crew went on strike for two days. BA cancelled 44 flights and chartered aircraft and crew to cover 28 more.

In a statement ahead of the latest strike, the airline said: “We will merge a small number of our short-haul services at Heathrow, resulting in the cancellation of only one per cent of our total scheduled flights across the three days.

“Customers affected will be able to fly slightly earlier or slightly later.”

British Airways has cancelled 12 flights on Thursday, in the shape of round trips to Aberdeen, Bologna, Dusseldorf, Hamburg, Hannover and Oslo. It plans to cancel another dozen departures on Friday. Saturday, which has a lighter flying programme, will be unaffected.

Three aircraft belong to Titan Airways have been chartered by BA to cover for other flights.

Gareth Theobald, a member of Mixed Fleet and a union rep, said: “Our message has never been about grounding planes.”

He said that crew would typically pay £300-£400 per month on food in overseas locations where they night-stop.

British Airways rejects Unite's contention that average earnings for Mixed Fleet crew are £16,000 annually. A spokesperson for the airline said: "Their pay and reward is in line with cabin crew at our competitor airlines. New cabin crew in their first year working full time at British Airways will receive more than £21,000 based on pay, allowances, incentive and bonus."

One in five of the recruits for Mixed Fleet last year were from other UK airlines. 

As the strike got under way, Heathrow Terminal 5, BA’s main base, was quiet; passengers on the cancelled flights had been contacted in advance and offered alternative departures or refunds.

Back at Bedfont FC, striking cabin crew were dispatched to picket lines around the airport. The shadow chancellor said they were the first group of workers he had seen who fixed their make-up before joining a picket. 

The strikers left with the revolutionary message of Che Guevara ringing in their ears: the struggle continues.

Peter Kavanagh, Unite’s London & Eastern regional secretary, told the cabin crew: “This is going to be potentially a long struggle, a hard struggle.”

The Independent, Simon Calder Thursday 19 January 2017

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John McDonnell calls for NHS funding audit as winter crisis deepens

NHS funding levels should be checked by the government’s budget watchdog amid public distrust of the figures and a worsening winter crisis in hospitals, John McDonnell has said.

The shadow chancellor wrote to Robert Chote, head of the Office for Budget Responsibility (OBR), asking him to look at NHS funding levels, as doctors warned that the shortage of resources in health and social care has created a crisis.

There have been a number of calls from Labour and the Liberal Democrats for an independent auditor for the NHS. But McDonnell called on the existing OBR to see if it could establish the truth about public spending on the NHS.

The level of NHS funding has become hotly contested amid claims that cuts to social care have been causing unprecedented pressure on hospitals and further controversy over the government’s claims to be putting in another £10bn a year into the health service by the end of this parliament.

“It has become clear that Labour’s warnings of a looming winter crisis in the NHS were not heeded,” McDonnell wrote to Chote. “And we have seen in recent days that the British Red Cross has now had to describe the ongoing situation as a humanitarian crisis. The response from the prime minister at the weekend was to play down this situation despite the volume of continued complaints from frontline NHS staff.“I strongly believe that this is leading to widespread public distrust in the government’s presentation of the level of funding and support for the NHS and social care. Therefore, it seems that now is the time to assess further enhancing the role of the OBR, and add additional responsibilities to your organisation.”

He suggested there should be an “annual standalone report that assesses short-medium term policy decisions made on health spending by the government, that takes into account the analysis you already do on the long-term trends and drivers of health spending.”

On Monday night, frontline doctors issued an unprecedented warning that patient safety was at risk at many A&E units across the NHS because hospitals are overwhelmed.

The health secretary, Jeremy Hunt, told the Commons in an emergency statement that hospitals may have to cancel operations and outpatient appointments so that staff can concentrate on the sickest patients.

GPs may also be drafted in to help hospitals cope with record demand for medical care. He also provoked controversy by suggesting the four-hour treatment target should exclude people who waste time by presenting with minor ailments.

The Royal College of Emergency Medicine said a substantial number of A&E departments were falling significantly short of the four-hour standard – but Hunt said that as many as 30% of those turning up were neither an urgent case nor a genuine emergency.

The college, which represents doctors in emergency care, warned: “In our expert opinion, when an emergency department falls below 75% against the four-hour standard, it shows a significant level of overcrowding and begins to put safety at risk. Present figures suggest a substantial number of departments are falling below this level.”

The college believes that one in four A&E units are at risk of offering poor care, citing delays in assessing patients and administering pain relief.

In an emergency statement prompted by reports of intense pressure at A&E units around the NHS in England, Hunt said that the four-hour waiting time had to be revised to remove non-urgent cases.

“This government is committed to maintaining and delivering that vital four-hour commitment to patients,” Hunt said. “But since it was announced in 2000 there are nearly 9m more visits to our A&Es, up to 30% of whom NHS England estimate do not need to be there. And the tide is continuing to rise.

“So, if we are to protect our four-hour standard, we need to be clear it is a promise to sort out all urgent health problems within four hours, but not all health problems, however minor.”

NHS Providers, which represents hospital bosses, welcomed the change as “potentially helpful” in relieving the strain on A&Es.

But Jonathan Ashworth, the shadow health secretary, said: “Is he now really telling patients that rather than trying to hit the four-hour target, the government is now rewriting and downgrading it?”

Guardian 10th January Rowena Mason and Denis Campbell

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John McDonnell calls for 'radical federal UK' as Labour shifts ground on union.

UK Labour shadow chancellor John McDonnell has called for a "radical federal" UK.

The move would signal a major change in the UK Labour Party's position when it comes to the constitutional settlement in Britain.

The Sunday Herald has also learned that other senior figures in Jeremy Corbyn's shadow cabinet are also looking at formally adopting federalism as party policy.

Last night, McDonnell, Corbyn's closest ally, gave the clearest indication yet that Labour will legislate for the UK to become a federal state if it wins the next General Election.

Speaking to the Sunday Herald, McDonnell said: “I believe there is immense potential in developing a radical federal structure [for the UK].”

Meanwhile, former London mayor Ken Livingstone told the Sunday Herald he was "certain" Labour under Corbyn would embrace federalism. Livingstone also stated his own support a federal UK - which would be the most radical shake-up of the UK's constitution since devolution.

The left winger, who was also elected twice as London mayor, said that he was convinced Corbyn and McDonnell would promote federalism as an alternative to both Scottish independence and the status quo of the Union.

Livingstone said: "I'm certain that they will. John McDonnell like me came into politics from local government to make sure that wealth and power are fairly distributed across all regions."

Federalism - a policy so far only embraced by the Lib Dems at UK level - would see national parliaments in Scotland, Wales and Northern Ireland have power over all legislative matters except foreign affairs and defence.

Scottish Labour leader Kezia Dugdale has also backed federalism. In a major speech in London last month, she said the UK needed “a new political settlement” to stop an erratic and uneven distribution of power between its regions and nations.

Dugdale said the UK should be transformed into a federal state with Scotland taking control over fisheries, farming and social rights now covered by EU laws. Former Labour Prime Minister Gordon Brown backed a similar package.

Speaking this week, Dugdale said: "I have proposed a federal solution, where every nation and the regions of England could take more responsibility for what happens in their communities – while firmly safeguarding the redistribution of wealth across the UK."

UK Labour's national elections coordinator Jon Trickett is understood to be examining a radical policy package for the party at Westminster to deliver a federal British state if it wins the 2020 General Election.

Trickett, who is Corbyn's lead on constitutional issues, is a strong supporter of devolution to the UK regions as a former leader of Leeds City Council and an MP for Hemsworth in West Yorkshire.

He has also held talks with figures in Scottish Labour on how the party could use a federal structure for the UK to promote a left-wing agenda by the redistribution of wealth through the parliaments in Edinburgh, Cardiff and Belfast, as well as the English regions.

Livingstone, commenting on the proposals, said such an agenda for the party north and south of the Border would "help" it to develop an alternative to Scottish independence and the status quo of the union.

Speaking to the Sunday Herald, Livingstone said: "There are about a dozen places that would benefit from federalism, including the Welsh and Scottish Parliaments. It would help, but the fact is people voted against independence.

I support Jeremy [Corbyn] because he's got ideas about moving away from a society where the 10 per cent control most of the wealth. The SNP poses itself as of the left and talks left, but it definitely doesn't act in the same way."

Livingstone, who served as a Labour MP in London for 14 years, also claimed federalism would make it less likely that any region of the UK can be dominated by "little elites".

He said: "I've always been in favour of devolving power to whatever region we're talking about. If you look at America or Germany, states and regions have real local recognition unlike in the UK where all the power is sucked up by Whitehall.

"I've advanced the devolution approach all my political career. If you'd had north east and north west regional parliaments or assemblies they would have got massive investment. So federalism absolutely. We need it as people in regions in all parts of the UK are being excluded by little elites."

However, Chris Stephens, the SNP MP for Glasgow South West, said independence would make it easier to deliver social justice than federalism.

Stephens, the SNP's trade union and workers' rights spokesman at Westminster, said: "The clear difficulty with federalism is that there appears to be a lack of enthusiasm for it elsewhere in the UK.

"In terms of autonomy on issues such as employment law and workers' rights, independence remains the best option for those seeking a different approach to the Tories and their current hatred for trade unions and progressive politics." 

Andrew Whitaker, The Sunday Herald, 8th January 2016

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John McDonnell MP, Shadow Chancellor, commenting on the IFS report which shows that the most well off will see their inheritance increase, said:

This report's warning that wealth inequality is set to rise is deeply worrying. It further highlights why this is the wrong time for the Tories to go ahead with £2.3billion worth of inheritance tax giveaways that would at most benefit 63,000 estates.

The Chancellor should not be pushing ahead with policies that could contribute to an increase in wealth inequality and further reward those already well off in our country, especially at a time when many of our public services such as the NHS are being hit with cuts that have led to rising waiting times and bed shortages.

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Interview with Annabelle Dickson

John recently did a couple of interviews with Annabelle Dickson which were published on the Eastern Daily Press on the 17th and 19th December 2016. The articles provide some very good information on John's position across a range of topics nationally but also focusses on his links with East Norfolk and some memories of his life there. The first is entitled: 'East Norfolk’s special place in the heart'. The second is called: 'Brexit must be based on what drove the vote to go'.

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John McDonnell accuses Philip Hammond of handing Britain’s biggest banks a rebate by not reversing cuts to the bank levy.

John McDonnell, the shadow chancellor, has accused Philip Hammond of failing to cancel a “tax giveaway” by his predecessor to Britain’s biggest banks, worth more than £1bn this year.

In his summer budget after the 2015 general election, the then chancellor George Osborne announced deep cuts to the bank levy, which was introduced after the financial crisis and charged according to the size of banks’ balance sheets.

Big banks, including HSBC and Standard Chartered, which felt penalised by the levy, told him that they could move their headquarters outside the UK.

Osborne announced phased cuts in the levy over the parliament and made up the shortfall in revenue by imposing an 8% surcharge on banks’ corporation tax, which falls on all lenders, not just the largest.

McDonnell said by failing to reverse the cuts in the bank levy in November’s autumn statement, Hammond was handing the big banks a rebate taxpayers could ill afford.

The latest forecasts from the independent Office for Budget Responsibility, published alongside the autumn statement, showed revenue from the bank levy at £2.7bn for the current financial year, instead of the £3.8bn expected in March 2015, before the general election.

“Philip Hammond tried to sneak out the fact that he has continued this cut in the bank levy, which will provide big banks with a tax giveaway larger than under even George Osborne.

“The fact that we are seeing such a large handout to the biggest banks in our country at a time when we are seeing cuts to our schools, NHS and a funding crisis in our care service is truly shameful.”

McDonnell, who is the closest ally of Labour leader Jeremy Corbyn, will make a major speech on economic policy this month and hopes to draw a clear dividing line with the Conservatives by showing that he would take on vested interests as chancellor.

He recently made a series of spending pledges to protect pensioner benefits, including the costly triple-lock guarantee (that pensions rise by the same as average earnings, consumer price index or 2.5%, whichever is highest), in an effort to win over elderly voters.

Labour also wants to show that it will fight to avoid a “bankers’ Brexit” – protecting the interests of the City at the expense of ordinary taxpayers – though it has said it would like to see the continuation of “passporting”, the regime allowing UK-based banks to trade throughout the EU.

A spokesman for McDonnell said Labour would reverse the cuts to the levy and would be unlikely to remove the corporation tax surcharge, because it came alongside a series of cuts in the corporation tax rate which had reduced big corporations’ tax liability.

When the government announced that policy, the Treasury minister Harriet Baldwin told MPs: “It means that the overall rate of corporation tax will be slightly lower for banks than it was in 2010.”

Britain’s competition watchdog, the Competition and Markets Authority (CMA), warned that the shift to the corporation tax levy would reduce the advantages of the tax system for smaller banks trying to break into the market. So-called challenger banks told the CMA they expected to be paying up to £123m more in tax between them by 2020-21 as a result of the changes.

“The overall effect, compared with the pre-2016 position, is that the tax advantages of smaller banks including new entrants have been reduced as a result of the changes to the bank levy and the introduction of the CTS [corporation tax surcharge]. Therefore, any effect that these tax advantages had in offsetting the barriers to entry and expansion such banks face are likely to be reduced,” the CMA said.

A Treasury spokesperson said: “The government is clear that banks, like all businesses, must pay the right amount of tax. The reform of the bank levy was announced alongside the introduction of a new 8% surcharge on bank profit. Together, the levy and the surcharge are expected to raise over £18bn from banks over the next five years.‎”

McDonnell also called for Hammond to abandon “deeply unfair” cuts to the corporation tax rate, saying the money could have been used to fund teachers, nurses and police officers.

The rate has been reduced from 28% in 2010 when David Cameron became prime minister, to 20% and will fall to 19% in April under plans to reduce it to 17% in 2020. The cuts will be worth almost £15bn a year to businesses by 2021 and Labour claims this is equivalent to employing 12,000 nurses, 10,000 police officers and 10,000 teachers full-time every year for a decade.

McDonnell said: “We have known for a long time that the Tories’ cuts to corporation tax have cost the exchequer billions and today we have laid bare what this means for our public services.

“Labour is calling on the government to reverse these deeply unfair tax giveaways and start properly investing in our vital public services.”

Heather Stewart, The Guardian, January 2 2017

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John McDonnell says emergency funds could solve social care crisis

John McDonnell, has today written to Philip Hammond offering cross party support to solve the social care crisis in our country, which this Christmas sees a million elderly people not get the care they need.


Under the Government’s spending plans outlined in the Autumn Statement there is £27 billion of potential additional spending available. This would be more than enough to cover the £1.9 billion funding gap in the social care system next year.


Labour is offering support to the Government if it releases this funding.


In his letter to Philip Hammond, John McDonnell has offered his support “in finding an immediate funding solution for the social care crisis this winter” and has pointed out that they could provide the support he will “still be able to meet his “own target for deficit reduction, set at 2 percent of GDP in 2020-21.”


This letter follows on from the one that Jeremy Corbyn sent at the weekend calling for an urgent meeting to discuss emergency support for social care.

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Labour will guarantee pensioner incomes beyond Brexit

pensioners.jpgLabour is today giving a guarantee to pensioners and those approaching older age that we will guarantee their incomes regardless of the Tories' shambolic handling of Brexit. 

John McDonnell MP, the Shadow Chancellor, and Debbie Abrahams MP, the Shadow Work and Pensions Secretary, on a visit to Southwark Pensioners Centre, South London, have given a firm commitment to pensioners in Britain that the next Labour government will protect the triple-lock and pensioner benefits such as the TV license, bus passes and winter fuel allowance. 

John McDonnell said "After six wasted years of Tory economic failure that has seen some have to wait longer to receive their pension, and those in work approaching retirement having to work longer with earnings stagnating, Labour won’t let them face further uncertainty or reductions income. 

"The OBR and Bank of England are projecting inflation to rise in the years ahead and with the Tory government all over the place on Brexit, there is too much uncertainty for those on fixed incomes such as pensioners. 

"Philip Hammond refuses to give this guarantee to our country's elderly population, or stand up to Tory politicians calling for the triple-lock to be scrapped.  

"Those older people who voted for Brexit did not vote to see their incomes threatened as a result. Labour is instead committed to protecting pensioner incomes in our country, and we will provide the certainty that this government refuses to whether it is on the state pensions or the crisis in our care service. 

"It is only a Labour government that can make an economic success of Brexit, so that no one and no community is left behind." 

Debbie Abrahams MP, Labour’s Shadow Secretary of for Work and Pensions, said: 

“This Government is abandoning older people. They are failing to protect existing Defined Benefit pension agreements, failing to guarantee the triple-lock and failing to act on the injustices placed upon WASPI women by their chaotic state pension age equalisation.” 

“Labour has already committed to extending pension credit to provide support to hundreds of thousands of the most vulnerable WASPI women, now we are committing to guaranteeing the triple lock under our watch. 

“When taken with our plans to defend the NHS, and end the Tory crisis of social care it is clear that only a Labour government will guarantee a dignified living standard for older people.” 

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Hundreds attend public meetings on Heathrow expansion

Residents flocked in their hundreds to two public meetings held by local MP John McDonnell last week to voice their concerns about the proposed third runway at Heathrow. (1)


At a meeting held at Harlington Baptist Church Hall on Thursday 8 December, around a hundred locals spoke about the threat to Harlington that a new runway would bring, such as being situated at the end of the runway, bringing unbearable new noise levels to the village, whilst around 200 West Drayton residents packed the main hall at Yiewsley & West Drayton Community Centre on Friday 9 December. At this meeting the message from local residents concerned increased traffic congestion and the toxic pollution levels that would result from the area being brought closer to the border of the expanded airport, with the new boundary just 200 metres from some West Drayton residents.


John McDonnell, Labour MP for Hayes and Harlington, said:

heathrow_1.jpgThe message from these public meetings couldn’t be clearer: local residents are going to fight this runway all the way. A third runway at Heathrow is undeliverable and I believe we will stop it from ever being built.

“I’m also fairly certain that the legal action from a coalition of local authorities will be successful. The decision by this Government to build a third runway was shameful and remains a huge threat to local residents who face losing their homes, schools, community centre and village life. And when you add in the air pollution, noise and climate change concerns then it becomes even more obvious that this runway makes no sense.” 


Jackie Clark-Basten, Chair of Stop Heathrow Expansion, who spoke at the meeting, said: “Heathrow heathrow_2.jpgexpansion would not just have a devastating effect on Harmondsworth, Longford and Sipson. As we heard at the two public meetings, the impact is far greater, bringing new noise misery for residents of Harlington as well as toxic air pollution levels for West Drayton residents and a traffic nightmare for all local areas. I am confident that this runway will never be cleared for take-off.”



More public meetings are expected in Hayes in January.

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John McDonnell joins Jeremy Corbyn at pop-up food bank outside Parliament

unite_food_bank.jpgJohn McDonnell, Shadow Chancellor joined Labour leader Jeremy Corbyn MP on Wednesday outside Parliament at Unite’s Hope not Hunger pop-up food bank to take a stand against hunger. 

Figures released on Friday 2nd December revealed that during December 2015, The Trussell Trust’s foodbank network provided 133,734 three day emergency food supplies to people in crisis; 56,779 of these went to children.  

The call comes with the launch of Unite’s Hope not Hunger Christmas appeal which has already raised thousands of pounds in donations for Trussell Trust foodbanks from union members across the country.  

John said: “It’s a disgrace that we have a Government at the moment who can’t even feed its own people. “One million food parcels were given out last year by the Trussell Trust alone which is a very alarming situation.” 

Len McCluskey, Unite General Secrerary, said: “No person should have to choose between heating and eating this Christmas but without the support of local foodbanks up and down the country many thousands will. 

“Holiday food is good, but foodbanks also need the basics that we take for granted like toilet rolls, toothpaste and toothbrushes, deodorant, shampoo, winter coats, gloves, scarves and Christmas presents for the kids.”



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John McDonnell visits RSPCA clinic to launch Christmas appeal

rspca.jpgJohn McDonnell visits charity’s clinic to meet staff and animals as they get ready for Christmas

A deaf kitten in desperate need of a loving home was one of a number of animals who greeted John McDonnell when he visited the Hillingdon, Slough, Windsor, Kingston & District Branch of the RSPCA to help launch their Christmas appeal. 

The Labour MP for Hayes and Harlington and Shadow Chancellor was given a tour of the branch’s Hillingdon Clinic and nearby charity shop on Friday (2 December) where he learned more about the vital work done to help animals in the local area. 

Irene Hansford, who is chair of the RSPCA branch, said she was pleased to have the chance to showcase the work they do as she explained they need to raise more than £9,000 each month to carry out work at their busy clinic. 

She said: “Mr McDonnell joined us for a tour around the clinic and charity shop as he endorsed our Christmas appeal where we hope to raise money and encourage donations of food and bedding to help the animals in our care. 

“He was very interested in the fact local people who cannot afford private veterinary fees can access subsidised care for their pets. 

“Ouroverhead costs are the same as same as a private practice, but we only charge a fraction of the costs. This means we have to work very hard all year round to make sure we raise the money we need to carry out this work and are reliant on regular donations and support from local people. 

While visiting the clinic the parliamentarian learned more about the need for more volunteers to help lend a hand and even met with a nine week old deaf kitten called Autumn who is looking for a loving home where she can be kept inside and safe from traffic. 

Little Autumn, who was found dumped at just five weeks old, is one of more than 70 cats being cared for by the branch who are looking for forever homes.  

John praised the work of staff and volunteers at both the RSPCA in Hillingdon and across England and Wales and also agreed to work with the RSPCA to ensure the new Government licensing legislation on pet sales and dog breeding, due to be agreed in 2017, will provide the best animal welfare standards and will reduce many of the problems the RSPCA faces on a daily basis.  

John said: “I had a fantastic visit to the RSPCA last week to help launch their Christmas appeal. The staff and volunteers at the Centre do an excellent job all year round looking after all the animals and it was a pleasure to drop in to support the work that they do.”

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John McDonnell MP calls for justice for Human Rights Day

To celebrate International Human Rights Day On Saturday, John McDonnell, Labour MP for Hayes and Harlington and Shadow Chancellor took part in Amnesty International’s largest annual letter writing campaign at a reception in Speakers’ House in Westminster Palace.


Amnesty’s Write for Rights encourages people around the world to send personal messages of support to people behind bars, or whose lives are in serious danger.


Year after year Amnesty sees successes from its global letter-writing campaign.  Last year thousands of people across the world wrote messages of support for Albert Woodfox – the longest-serving isolated prisoner.  Albert had spent a staggering 43 years in solitary confinement. In February this year, after thousands of letters of support Albert was freed.


This year one of the people Amnesty is campaigning for is British-Iranian charity worker Nazanin Zaghari-Ratcliffe. Nazanin was arrested at Tehran's airport and has been sentenced to five years in prison on unspecified 'national-security-related charges'. Amnesty is calling for Nazanin's immediate and unconditional release.


Nazanin’s husband Richard Ratcliffe attended Amnesty’s human rights reception, where he appealed to MPs and Amnesty supporters to continue to support and campaign for his wife. 


Former Al Jazeera foreign correspondent Sue Turton, who had been charged and tried in absentia in Egypt, after being falsely accused with eight of her colleagues of aiding and abetting the Muslim Brotherhood, also attended and spoke at the reception.


Sue Turton said:


“Locking up a journalist who is asking too many questions can scare others into self-censorship clearing the way for further abuses to be committed with impunity.


“There has never been a greater need for balanced, well-researched journalism….but those of us who go into conflict and war zones need to know someone has our backs.”


John McDonnell, Labour MP for Hayes and Harlington, said:


“As a Member of Parliament, I know all too well the power of the pen, and the impact that can be achieved when many voices rally around one call. I am hoping that my message, and those of others sent during Amnesty’s Write for Rights campaign, will send a clear message to governments that the world is watching and human rights must be respected.” 


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John McDonnell MP, Labour’s Shadow Chancellor, commenting on the speech by the Governor of the Bank of England in Liverpool last night, said:

The Governor has made an important intervention in the discussion about the future direction of our economy. He is right to point out that there have been losers as well as winners from free trade.

We are going through a lost decade in earnings growth, as the Governor highlights, and the fundamental crisis of productivity will not be solved without major government investment, backed up by an industrial strategy, that can deliver growth in high potential new areas like renewable technology.


The Governor hits the nail on the head in calling for societies to redistribute the gains from trade and technology and to educate and empower its citizens.

Labour in government is committed to tackling the challenges outlined by the Governor of rising inequality, low wage growth, and driving up Britain’s productivity growth so that no-one and no community is left behind.

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John McDonnell MP, Shadow Chancellor’s response to the House on the Autumn Statement:


 Mr Speaker


Today’s Statement places on record the abject failure of the last six wasted years and offers little hope for the future.


The figures speak for themselves: growth down; wage growth down; investment down.


The deficit target, failed. The debt target, failed. The welfare cap, failed.


The verdict could not be clearer.


The so-called “long term economic plan” has failed.


As the Treasury’s own leaked paper revealed, they knew it had failed before the referendum result was announced.


And we now face Brexit, the greatest economic challenge of a generation, unprepared.


The new Chancellor acknowledged the failure himself in October, when he promised a “reset” of economic policy.


So today we expected a change of direction after those six wasted years.


Instead we’ve seen further cuts to earnings for those in work through cuts to Universal Credit and a living wage increase that is lower than expected under the previous Chancellor.


This is a new Conservative leadership with no answers to the challenges facing our country following Brexit and no vision to secure our future prosperity.


Labour respects the decision of the British people to leave the European Union.


But the chaotic Tory handling of Brexit threatens the future prosperity of this country.


The Chancellor must now do the right thing for British workers and businesses.


He must insist on full, tariff-free access to the Single Market.


He and the Treasury know that’s what will give the best deal for jobs and prosperity here.


It may not be in the Chancellor‘s nature but in the national interest I urge him to stand up to the Prime Minister and the extreme Brexit fanatics in her Cabinet.


If he stands up for British businesses and jobs in fighting for Single Market access he will have our full support.


But after six wasted years, wages are still lower than 2008.


Self-employed people are on average paid less than a generation ago.


Six million people are earning less than the Living Wage.


Too many people are having to worry about buying school uniforms, affording a family holiday, or even just paying the rent or mortgage.


We’ve had a month of briefing from the Party opposite on those people who are called “just about managing”.


To the Party opposite, these people are just an electoral demographic.


To us, they are our friends, our neighbours, and the people we represent.


Let me tell you why they are “just about managing”.


It’s the result of Tories imposing austerity on an economy that couldn’t bear the strain.


We’ve seen productivity stagnate.


But there’s nothing in this Autumn Statement on the scale needed to overturn those six wasted years.


If the Chancellor really wants to make a fairer tax system, he can start by bringing back the 50p rate for the very richest.


And its familiar hollow rhetoric from the Tories on tax avoidance when they have cut resources at HMRC.


Resources available to HMRC today are around 40 per cent less than they were in 2000.


The Chancellor has frozen in-work benefits at a time when food prices are rising and we don’t expect wages to keep up.


But we need an economy that is fundamentally more prosperous and where that prosperity is shared by all.


The increases in the National Living Wage announced today are lower than expected and leave the lowest paid workers still earning less than they need to live on.


So I ask the Chancellor to adopt a Real Living Wage level, as Labour has pledged to do, and abandon his predecessor’s empty rhetoric.


Regrettably, the Chancellor is still going ahead with some of the cuts to Universal Credit.


Thanks to pressure from all sides of this House he is offering to soften the blow.


We don’t want the blow softened, we want it lifted altogether.


Today’s changes will leave a single parent on the average wage £2,300 worse off.


These are people working hard to deliver for their families and the Government is betraying them.


As for people with disabilities put through the ordeal of the discredited Work Capability Assessment, who are trying to get themselves ready to return to work ‘just about managing’, yes, they still remain in the Chancellor’s firing line, cutting £30 a week from their support.


Those that are “just about managing” rely upon our public services.


They send their children to local schools.


They depend on their local hospital.


They rely on local council services like cleaning their streets, tending to their parks, and opening their libraries.


But the reality is our public services are just not managing.


Today, the childcare that parents rely upon remains underfunded, as the Public Accounts Committee has reported.


I would like to also pay tribute to the Honorable Members for Swansea East and Erith and Thamesmead for their important work in bringing the issue of child burial fees to public attention.


I ask the government to do the right thing on child burial fees and reconsider making funding available for families in these desperate circumstances.


Councilors from all political parties are reporting that they are at a tipping point in the provision of social care.


The previous Chancellor cut nearly £5 billion from social care meaning over one million people who need care aren’t getting it.


They’re not even just about managing. They got little help today.


We called for additional support for social care.


But the funding being provided is only a stopgap measure.


Our social care system will not be secure without long-term funding.


Tonight, many elderly people will remain trapped in their homes, isolated, and lacking the care they need because of continuing cuts to funding.


You can’t cut social care without hitting the NHS.


The supposed £10bn funding allocated is a restatement of an earlier commitment.


But the Health Select Committee described this £10bn claim as “misleading and incorrect”.


The real amount is less than half that claimed.


We have 3.9 million people on NHS waiting lists. More than ever.


Many of those 3.9 million people are waiting in pain, and they got no relief today.


Across the country, hospitals are facing losing their A&Es, losing their maternity units, losing their specialist units.


This Tory Government is failing patients and failing dedicated NHS staff.


It is the first time healthcare spending per head has declined since the NHS was created.


I fear there will be a crisis in funding and care over this Christmas.


The NHS cares for us – we should care for the NHS.


Members of this government have also overseen the biggest real terms cuts in education for four decades.


One pound in every seven has been cut from FE colleges budgets.

Conservative policy has saddled a generation of students with a lifetime of debt.


How can the Government seriously talk about supporting a 21st century economy when they are planning to pour tens of millions into the failed 20th century policy of grammar schools?


The Chancellor has announced today that he is scrapping “pay to stay” proposals and letting agents’ fees.


This U-turn is a victory for Labour’s campaigning against both the ‘tenant tax’ and lettings agent fees.


The Chancellor has spoken of the “dream of homeownership” for the young.


Nothing announced today is of the scale needed to suggest it will remain anything other than a dream.


The hard facts are these.


The Government of which he was a member built fewer homes than at any point since the 1920s.


There are now a third of a million fewer homeowners under 35.


The Chancellor could have delivered today the scale of investment required to build the homes we need and create a new generation of home-ownership.

He failed.


The Chancellor has failed to address properly this government’s most consistent shortcoming.


His predecessor cut public investment to the lowest it had been since the 1990s.


Instead of delivering the ambitious investment this economy needs, across the whole country, the Chancellor has failed to recognise the scale of the challenge.


He also risks repeating the mistakes from last year, with the National Flood Resilience Plan failing to provide the protection our communities need.


Just one in five of the projects in the investment pipeline are under construction and there are £82bn of shovel-ready projects still delayed.


The infrastructure gap between London and the rest remains unbridged.


London was scheduled to receive 12 times the public investment per head of the north east of England.


But the £1.1bn of investment in transport is a reannouncement.


The Oxford-Cambridge rail link is significantly delayed against Network Rail’s original planned completion date of March 2019.


No new ideas here, just a promise to deliver what they have previously failed to deliver on.


The “Fourth Industrial Revolution” will not be delivered on delays and old news.


At last, the Government has realised its mistake and now talk about an industrial strategy.


But it isn’t enough to change a few Ministerial titles.


This government and the Chancellor need to deliver.


But we’ve yet to see the proposed green paper on industrial strategy that was promised over the summer.


This same government that now talks up high tech oversaw £1bn in real terms cuts to science funding in the last Parliament.


The OECD recommends that developed countries should be spending 3 per cent of GDP on science.


On what we’ve heard today, the new spending will lift our expenditure from under 1.7 per cent of GDP, to a mere 1.8 per cent.


It’s the same familiar story for business.


The Chancellor is continuing the race to the bottom on Corporation Tax.


Whilst continuing the cuts to public services, the Chancellor is cutting taxes for big business.


We now know it’s not headline tax rates that encourage long-term investment from businesses.


Business investment has been revised down every year.


What encourages business investment is knowing they have access to skilled workers, to world-class infrastructure, and to major markets.


Today’s grim economic forecasts show the challenge ahead.


The Chancellor admitted, over the summer, that it was time for a change of course.


He has now had to abandon his government’s fiscal charter with its failed hard surplus target.


Labour warned that a hard surplus target lacked the flexibility to adapt to economic circumstances and the capacity to allow investment.


The Chancellor’s U-turn today demonstrates how right we were.


Mr Speaker


Only weeks ago, the new Prime Minister offered the hope of change.


The Chancellor offered to “reset” economic policy.


Today we’ve seen the very people the Prime Minister promised to champion betrayed.


The Chancellor has failed to break with the economic strategy of austerity.


The country remains unprepared and ill-equipped to meet the challenges of Brexit and secure Britain’s future as a world-leading economy.


After all the sacrifices that people have made over the last six years, I fear today’s Statement has laid the foundations for more wasted years.


Only a Labour Government will deliver on the ambition and vision to rebuild and transform our economy so no-one and no community is left behind.

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Shadow chancellor uses the Autumn Statement Opposition Day Debate to force vote on reversal of ESA and UC cuts

“That this House notes with concern the £3.4 billion reductions to the work allowance element of universal credit and the £1.4 billion reductions to employment and support allowance; calls on the Government to reverse those reductions; and further calls on the Government to reintroduce detailed distributional analysis for the Autumn Statement and all further Financial Statements, as was done between 2010 and 2015.”

I want to explain the genesis of the motion I and my honourable friends have tabled for today’s debate.

Traditionally we would seek to hold an Opposition Day debate and use it to have a wide ranging debate second guessing and commenting on what we predict is to be contained in the Autumn Statement. This year we want to try something different.

 A radical break with that tradition because next week could be the last chance to head off what is shaping up to be a harmful disaster for many low earners and vulnerable people in our society.

So we have taken two significant issues that are contained in the budget plans announced earlier this year by the Chancellor’s predecessor and which the new Chancellor has the ability and opportunity to intervene upon and reverse.

The first is the plan to cut universal credit and Employment Support Allowance.

And for the later debate, the issue of funding social care.

In withdrawing the ESA and Universal Credit proposed cuts, the new Chancellor would dramatically beneficially impact upon the lives of many, many of our fellow citizens who are low earners but also through their disability often the poorest and most vulnerable in our society. We want to see today if we can assemble across the House a moral coalition of pressure that can decisively influence the Chancellor to think again. I believe and certainly hope that we can.

So the appeal to Honourable Members today and in the coming week is to do all we can to prevail upon the Chancellor to halt the policy of cuts to Universal Credit and ESA contained in the budget introduced by the former Chancellor and planned to come into effect in April next year.

Before I come to the grounds for this appeal to the Chancellor, it’s important to understand the origins of these proposals to cut these lifeline benefits.The origins lie in the mistake by the last Chancellor to impose a fiscal framework on his colleagues that was simply impractical given the economic circumstances we were facing and were about to face.

If the fiscal framework is wrongly set and importantly is so inflexible that it cannot reflect the realities and challenges of the economy, then decisions on both tax and spending equally fail to reflect and meet the economic realities.

In this instance the fiscal framework imposed by the former Chancellor was so inflexible and unworkable that it totally failed to meet the economic targets he set it. But also as vitally important, the former Chancellor’s fiscal framework imposed unrealistic constraints on his colleagues’ departments that are undermining their ability to achieve their policy goals.

On the government’s own economic metrics, the fiscal frame work has failed.

Its targets were to eliminate the deficit by 2015. The deficit remains at over £45bn in the first six months of this financial year alone.

Its target was to reduce debt. Debt now stands at £ 1.7 trillion and has increased over the last 6 years by £740bn.

Its biggest failure has been to ignore the needs of the real economy by using the fiscal framework to constrain investment.

The result is a failure to invest on the scale needed to modernise our economy and consequently stagnating productivity.

In the face of all the evidence that the fiscal framework was not working, not achieving its targets. the decision to then set a target for the framework to not just to eliminate the deficit but to produce a multi billion pound surplus by 2019/2020 demonstrated how for the former Chancellor politics was overriding sounds economics.

The result of the then Chancellor setting targets even more removed from reality meant that he imposed upon his colleagues the task of scrambling round to find a scale of cuts that in many instances undermined what chance they had to implement the policies upon which they were elected or which had been longstanding ambitions.

This was nowhere more evidenced than in the Department for Work and Pensions.

For the Treasury to demand cuts to Universal Credit that would take on average £2,100 out of the incomes of people who are doing all that is asked of them, working all they could to come of benefits, bringing up their families, contributing to society, this just flew in the face of all that the Universal Credit system was meant to be about.

The same is said of the cuts of nearly £30 a week to Employment Support Allowance. This is a significant cut to the incomes of disabled people who are also doing all that has been asked of them, seeking to find work to lift them off benefits.

I understood at the time when the then Secretary of State, the Right Honourable Member for Chingford and Woodford Green resigned. He rightfully objected to a further burden being placed upon the social security budget especially at a time when new long planned systems were at the early stage of introduction.

I understood then his sense of frustration and understand now why he and many of his Honourable Friends are calling upon the new Chancellor to look again at this burden being placed upon the welfare budget and the threat it imposes to the successful roll out of universal credit and the policy of supporting disabled people into work.

But these planned cuts are more than a threat to the implementation of policies long advocated and indeed cherished by many members opposite. More importantly they are a threat to the livelihoods, living standards and quality of life of millions of many low earners and of some of the poorest and most vulnerable people in our communities.

The government has sought to judge itself on its own set of economic metrics – eliminating the deficit, reducing debt, adhering to a cap on welfare spending. And on all of its own metrics it has failed. But there are an alternative very basic set of metrics upon which you judge a government.

It’s whether a government can ensure its population is adequately fed, decently housed, kept warm in winter and has sufficient income through employment or a support safety net to have a quality of life.

From our privileged position in this House before we consider any cuts to the basic support low earners and disabled people receive, I firmly believe that we have a moral duty to fully appreciate the plight of many of our fellow citizens and the impact any changes forced upon them could have. There are some basic facts that we need to face up to that depict the harsh reality of the lives of so many members of our community.

Nearly 4 million of our children live in poverty. The scandal is that 2/3s of them live in families where someone is working.Thanks to low wages and zero hours contracts, and often forced or often bogus self employment, the promise of work lifting you out of poverty is a broken promise for many.

If a basic responsibility of government is to ensure that its population are adequately fed and housed, well it’s failing. One million emergency food parcels were given out by food banks last year to families that haven’t sufficient income to feed themselves and the latest reports confirm the numbers are rising. 200,000 children will be dependent on a food bank to get a decent meal this Christmas. One survey reported that more than 20% of parents had regularly not eaten themselves so that their children could eat. Others report a frequent choice forced upon them between eating and heating.

On the duty to ensure people are adequately housed, failing. Rough sleeping has doubled. The equivalent of 100 households a day are evicted from rented homes, a near record 40,000 in the year to date. 1.2 million are stuck on council housing waiting lists and in my own constituency tonight families will be sleeping in beds in sheds rented out to them.

As for responsibility for disabled people, as the UN report concisely summed up the government “has systematically or gravely violated the rights of disabled people.” Independent research suggested that government efforts to push people off claiming disability benefits have driven 590 people to suicide in three years.

Three years ago I lead a debate following the presentation of the WOW petition highlighting the call for an overall impact of the government’s policies on disabled people. I cited then the immense human suffering caused by the brutal implementation of the Work Capability Assessment and the latest round of cuts to benefits and care services. I cited examples of people who tragically had taken their own lives in despair following the WCA and penalisation by sanctions imposed on them. We now know that the suicides were not isolated examples but have been in their hundreds. And we now know that between 2011 and 2014 over 2000 people assessed as capable of work died before they could take up that work.

Surely we have to learn the lessons from all this evidence. Surely one lesson is that is you impose further cuts on people already struggling, not only will you increase the deprivation and suffering people endure but many will see no light at the end of that tunnel and will despair. The WOW debate was simply to ensure that the impact of any decisions on benefits were properly assessed.

Is a supposed post truth environment evidence based policy making still worth aiming for.

That is why it is critical that the government also restores the distributional analysis of its proposals. But not just to publish the distributional analysis, but to publish one that is intelligible and usable. The Chancellor’s predecessor, before scrapping the analysis entirely, took to publishing figures that disguised the real impact of his policies. That accusation is not mine, but that of one of his old colleagues, the former Chief Secretary to the Treasury [the former member for Inverness, Nairn, Badenoch and Strathspey]. So if the Treasury is now to try and restore public trust, it must not just let the House know when it will publish the distributional analysis. It must make sure the figures are published clearly and without any attempts to massage or spin the numbers. Only in this way can we be able to test the fairness and equity of policy proposals.    

When these cuts were first introduced they reflected a grotesque unfairness at introduction of these cuts when cutting taxes to some of wealthiest and to corporations. Reversing just some of those tax cuts as Resolution Foundation has pointed out could render these cuts to benefits unnecessary. The last Chancellor also had a penchant for absorbing budget gaps at times.

So there is a real opportunity for the Chancellor to live up to the Prime Minister’s spoken commitment to tackle social injustice.

It has been claimed the Chancellor will be resetting the fiscal framework in next week’s autumn statement. This will allow him the flexibility he needs to reverse these cuts.

I appeal to Honourable Members across the House to help us lift this threat of further cuts from these families and disabled people.

We have a week in which to achieve this. We can start today by supporting this motion.

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John McDonnell MP, Labour’s Shadow Chancellor, speaking at Dragon Hall, London, today said:

dragon_hall.jpgIt’s great to be in Dragon Hall, where there’s a real life example of how changing technology can provide huge new opportunities to young people especially .I think it’s important today that we remember the reasons for hope, and look to the future. That is why I came into politics – because I could see how we could live in a society much fairer and better than the one we live in. 

But as I watched Donald Trump win the American election on Wednesday I, like many of you, felt real concern. His was a victory won with the rhetoric of division. Coming on the back of Brexit it is a wakeup call not just for the parties of the left, but for everybody who believes in science over superstition; merit over inherited wealth; paying your taxes instead of dodging your taxes. Like Brexit it was a vote driven, in part, by discontent with what the economy delivers. Dead town centres; job deserts; stagnant wages – and the constant feeling that the basic things we rely on – our jobs, our savings, our homes – are not safe.  

So today I want to tell you what Labour is going to do, as the Tory Government struggles to get a grip of the chaos it’s injected into the Brexit process. 

We need a government able to take five steps. 

First, place the public finances on secure foundations for the future.

Second, end the cruelty of the spending cuts programme.

Third, invest in the long-term to create secure, well-paid jobs.

Fourth, reform our tax system so the richest pay and the rest don’t shoulder the burden.

And fifth, lay out a clear plan and a vision for our country after Brexit. 

New Chancellor Philip Hammond is presenting his first Autumn Statement next week. Philip Hammond has promised it will be a “reset” of economic policy. That’s welcome news, if it’s true. The old policy was wrong and didn’t work. If only somebody had told them. Well, we did. We said austerity will suppress growth; wages won’t recover; the country’s infrastructure will fall apart. They said – don’t worry, most of the cuts will fall on welfare. 

The film I, Daniel Blake brought home with exceptional force some of the cruelty of what that means. But it’s not just those on the sharp end. We have all been failed by the Conservatives’ economic programme. Six wasted years of spending cuts instead of investment. For ordinary people, six years of low pay and high rents; six years of zero hour contracts and job insecurity. They’ve given up on the national interest because they have failed, and failed badly. 

Philip Hammond will have to admit that the Conservatives have failed in every task they set themselves. They failed to bring the deficit under control. It was supposed to have been eliminated by 2015. They failed to bring down the government’s debt. It’s now 1.7 trillion. They failed to restore wages, they failed on productivity, they failed on investment. They failed because at every step of the way there was a Conservative Chancellor who put rhetoric ahead of the hard economic facts. 

He chose austerity, when he could have chosen investment. Worse yet, he chose spending cuts at the same time as cutting taxes for large corporations and the wealthy. Austerity was a political choice, not an economic necessity. And now, because that choice has failed all of us, the economic facts are brutal. This is an economy sliding down the league table. It is an economy with the largest foreign debt of any major developed country. It is an economy where investment remains £50 billon below the levels reached before the crisis. It is an economy where productivity increases, the fuel of growth, have ground to a halt even as other large economies race ahead. 

And worst of all, it is an economy where after all the sacrifices of spending cuts and stagnant wages and zero hour contracts - the government debt burden continues to rise and the government deficit remains stubbornly high. There is no other way to say it. Those sacrifices were made in vain. 

They were made at the altar of the political conceit that said for as long as you could pose for the cameras in a high-vis jacket, it didn't matter that actual manufacturing employment was still falling. The million queuing at the foodbank didn't matter. The lost decade for wages didn't matter. That cuts to vital investment didn't matter. 

The Tories want you to forget George Osborne but I want to you to remember what he did in detail. Because he not only failed on every target he set himself – he plunged Britain’s hard pressed communities into such a state of neglect that they reached for the option of a break with Europe.  This year his Budget fell apart, leaving Labour to pick up the pieces. We forced through reverses to the cuts in disability benefits. And we will continue to oppose unnecessary spending cuts that have created so much hardship for so many. 

Next week we will see a Tory Chancellor admit that he has not met any of the targets in the 2010 Conservative Party manifesto. There’s been a change of rhetoric but the priorities remain the same. The tax giveaways to the wealthy remain.  Just as the cuts to the poor and the vulnerable remain. The Tories failure on the economy precedes the referendum, and they will try their best to convince us otherwise, but no one will believe them. Even their own leaked Treasury documents admit it. 

So we will set out tests for next week’s Autumn Statement. Those tests are based on what we need as a country. We need a credible fiscal framework that supports Brexit.  We need actual support for those in work on low and middle incomes. And we need secure and properly funded public services. We want to see an end to austerity, with the NHS and social care properly funded and ESA and Universal Credit cuts reversed. We want to see an end to tax giveaways for the wealthy.

And we need a serious commitment from government to invest across the whole of our country. 

Labour’s Fiscal Credibility Rule remains intact while the Tories’ fiscal charter lies in tatters.  It further highlights we are the only party with an expert-designed fiscal framework that can strengthen our economy and protect the public finances. It will be part of how we judge the fiscal rules that the Chancellor announces next week. They need to be robust and flexible enough to deal with any potential downturn from Brexit, and they must not be political tricks to catch cheap headlines.  I hope he leaves the gimmicks on the shelf alongside George Osborne. 

Let’s talk about the first step in turning our economy round. I want to be absolutely clear about this, as I have been before. Those on the left have a duty to be scrupulously honest about the economic tasks in front of us. There are no easy options.  There is no proverbial magic money tree. We can only deliver the high-quality public services that our communities want and need when we have a high-quality economy that can pay for them. 

That means an absolute and unbreakable commitment to fiscal discipline on the part of any future Labour government. There is nothing “left-wing” about running an excessive deficit. There is nothing “progressive” about running up excessive debts. A government has an absolute responsibility to manage the money it is entrusted with by the people it serves.

That means being transparent about how we intend to manage it. 

So for Labour that means not thinking about how to spend money until we have shown how to earn it. That is the absolute commitment built into Labour’s Fiscal Credibility Rule which I announced in March. We drew this up with world-leading economists because we wanted to bolt into place the rock-solid foundations needed for a government that is determined to transform this economy for the better. It says that a Labour government will only spend what it earns, but that we will invest for the future. 

We'll bring the deficit down in a way that does not compromise our public services, or jeopardise our shared prosperity. Every single spending commitment we make, to repair our NHS or to deliver an education system that will meet the aspirations of this country, will fit inside this Fiscal Credibility Rule. If a commitment does not fit inside the Rule, it will not be made. 

To oversee the operation of our Fiscal Credibility Rule, we will make sure the Office for Budget Responsibility reports to Parliament, rather than to the Treasury. We’ll make sure fiscal and monetary policy work together, with clear rules for when monetary policy does not function. Every penny we spend will be earned, and every penny accounted for.  This is what a responsible government would do. 

To take responsibility, Philip Hammond now needs to get a grip.  Philip Hammond now must come clean to the British people. He, like his Cabinet colleagues, supported George Osborne's calamitous economic choices. Worse, as Shadow Chief Secretary to the Treasury, he helped draw them up. He cannot duck his responsibilities, but he can at least attempt to undo the damage. That means no more targets that cannot be met. 

He needs, instead, to set out how he will place the government's own finances on the stable foundation that was so lacking from his predecessor. Abandoning George Osborne’s fiscal framework was the right decision, since the framework had failed so abysmally. But in typical fashion, the Conservative leadership have tried to put the blame for their shift on Brexit. They'll blame anyone and anything instead of accepting their responsibilities. 

We know Brexit will create challenges, but those challenges are harder to meet because after six wasted years under a Conservative Chancellor we have an economy that has been chronically weakened. The Tory leadership need to stop looking for someone else to blame, and start taking responsibility. 

The Autumn Statement this year must set out a new fiscal framework. It has to be based on sound economics. So like Labour's Fiscal Credibility Rule, it should make clear the distinction between day-to-day spending, and investment. And like Labour's Fiscal Credibility Rule, it should build in enough flexibility to allow a government to bring day-to-day spending in balance without damaging the economy. 

Yet on current evidence they appear content to settle for the steady management of decline.

The government has been content to drift through the first months after the referendum. They have placed a great burden on the Bank of England to see us through their own failure to plan. 

I want to pay tribute here to the Governor and to those at the Bank. When the Chancellor was nowhere to be seen, the Prime Minister resigned, and assorted Tory Brexiteers simply walked away from the mess they helped create. It was the actions of the Governor and the Bank of England that were there to offer the necessary support to our economy. And yet their reward has been noises off from the Tory Party elite about the alleged failings of the Bank. Yet the simple truth is that if monetary policy has been exceptionally loose this last six years, it is only to compensate for the exceptionally tight fiscal policy. 

As the consensus amongst economists now says, imposing austerity on an economy battered by the financial crisis of 2008 was self-destructive. It was fortunate that the Bank of England responded appropriately to ensure the economy did not simply drop into extended depression. The Bank's actions were not cost free. I share those concerns about the consequences for inequality that follow from the version of Quantitative Easing that has been applied. But it was the Bank that had to deal with the calamitous economic decisions by the Conservatives running the Treasury. Without the foolish and destructive dash after fiscal targets that could never be met, the Bank would not have had to rely on monetary policy to the extent that it did. 

You think the Conservatives would be more grateful. Instead we have heard idle chatter from some quarters about removing the Bank's independence. At a time of economic uncertainty, not just here but across the world, we would trifle with the Bank's independence at our peril.

It is a hard-won economic asset for this country. So I want to repeat a point I have made already: under Labour, the Bank of England's operational independence will be sacrosanct. 

It is up to the government of the day to give the Bank its mandate. But it is up to the Bank, and the Bank alone, to achieve it. We will not allow a return to the days when Conservative Chancellors would deliberately slash interest rates just ahead of an election to create a boom, only to drive them back up again once the election was over. The public servants who run the bank are drawn from the very top of the global talent pool. We will not allow a cabinet drawn from the dregs of a Tory government to place the blame for their failures on the bank. 

On the second step, we have to now make different, and better, choices than to impose spending cuts on the scale the Conservatives attempted. 

The economy is growing.  We can use the proceeds of that growth more fairly. If we allow the economy to grow, there is no need to make cuts to the in-work benefits that millions rely on.  The majority of those in poverty are also in work, and depend on the lifeline of in-work benefits to compensate for poverty pay. The government can’t claim to be for working people, and be cutting the earnings of those who work. The planned cuts to Universal Credit must be reversed, and reversed in full. 

And there is no need for us to make spending cuts to the lifeline of some of the most vulnerable. Those who can’t work through no fault of their own, whether through illness or disability, should not be targeted for punitive measures. This seems, to me, to be fundamental to a decent and humane society. 

Let’s remember what austerity has meant in human terms. Nearly 90 people a month are dying after being found fit for work by work capability assessments. This is a direct consequence of the decision, taken by a Conservative Chancellor, to impose the biggest and most destructive spending cuts seen in this country since the 1930s. The scale of what is happening is almost beyond belief. It should shame all of us when a United Nations report published last week finds that our own government has “systematically or gravely violated the rights of disabled people.” We are better as a society than that. And we should demand better from our government. 

Every planned cut to Employment Support Allowance must be reversed, just as George Osborne reversed his planned cuts to the Personal Independence Payment. But wherever the cuts have landed, they have caused hardship. 

Our local councils are now so hard-pressed that they are in danger of failing their statutory duties. That is what six years of devastating cuts have done. And it’s been the poorer authorities that have borne the brunt of it. Spending cuts for the poorest local councils are five times bigger than those for the richest. Local councils have stretched every last penny as far as they can go for six years. But now they’re at breaking point.  Local authority leaders say they simply cannot bear another year of spending cuts. 

Social care provision is in crisis. Across the country, care providers are facing bankruptcy. Due to local authority cuts, some care workers have had to slash their visits to elderly and disabled people from 30 minutes to 15 minutes.  That's 15 minutes to make somebody dinner, give them a bath, help them take their medication, change their bedsheets and any other help that they might need. In some places, councils have had to consider reducing visits to as little as ten minutes. Over a million people in need of care are receiving no formal help. 

The NHS is being left to pick up the pieces. The hidden costs of cuts to social care appear as the intolerable strain now being placed on our National Health Service. Three major health foundations have called on the government to make good the deficit in social care. 

As we reach the winter period, bed blocking has reached a new high for the sixth successive month. Older people being left stranded in hospital wards by Tory cuts to social care. The government must provide the £2.5billion needed to stabilise the system. 

We are on course for food bank usage to reach the highest it’s been for its 12 year history this year.  In the run up to Christmas, almost 200,000 children will be relying on a food parcel to get a decent meal.  Food banks increasing, the NHS at breaking point and a housing crisis threatening to spiral out of control. 

Under the Tories, rough sleeping has doubled. The equivalent to approximately 100 households a day are evicted from rented homes, 40,000 in the year to date. And 1.2 million people remain stuck on council housing waiting lists. A Government that cannot feed or house its population and cannot ensure our children do not live in poverty is a Government that does not deserve to exist. 

If we place the government’s finances on a firm footing, we can build the world-class public services people want. That means taking a serious approach to tax reform, the third step in turning our economy round. 

Labour will reform HMRC, ending staffing cuts and making sure it targets the tax dodgers who are failing to pay their fair share. Our Tax Transparency and Enforcement Programme will permanently close the loopholes and the scams the tax dodgers use to duck the taxes the rest of us have to pay. It’ll insist on transparency from the tax havens, to stop the super-rich hiding their wealth and ducking their taxes. And as we lay out our programme of tax reform, we’ll show how the burden of taxation can be shifted away from working people whose real-terms pay has fallen and towards those with the broadest shoulders. 

We know the world is changing.  Advances in technology are reshaping our economy. They are changing how, and where we work. Manufacturing jobs are returning to the UK, looking for highly skilled labour and access to major markets. Digitisation is bringing the design and productions sides of manufacturing closer together. Smaller, faster companies are being established to take advantage of these opportunities. They mean the old rules are being rewritten in front of us. 

For decades, the belief held that the global free market alone would deliver rising prosperity.

Since the financial crisis of 2008, that rule has been torn up. Successful economies today are those with governments prepared to intervene for the common good. They provide vital support for new industries, and sustained investment for the established. Good business doesn’t need no government. Good business needs good government. Good governments don’t, in a panic about job losses, make secret deals with big employers.

They make serious, long-term commitments alongside business to deliver jobs and growth across the whole economy in just the way my colleague the Shadow Business Secretary is now laying out. 

This is our fourth step, delivering an industrial strategy and investment. With our shared values at its heart, we can deliver an industrial strategy that will focus on meeting the real needs of society, and rebuild and transform our economy. That means bringing together and working with all sides in our society – the businesses, the customers, and the workers – to develop a clear vision and plan for the future. 

Labour will offer a New Deal with Business. We’ll offer businesses the education and training their workers need, and the infrastructure they are crying out for, and in return we’ll ask them to pay their fair share. 

Labour’s vision places investment at the centre. Every part of our country has talent and potential. Every person living here deserves to see their own potential realised. But decisions taken by this Conservative government do not reflect that. 

The value of planned investment per person in London is more than twelve times the planned investment in the North East.  We need to bring every part of the country up to the level of the best in its transport, its housing, and its communications. We’ll create hundreds of thousands of secure, well-paid jobs across the whole country. 

This country has an enormous potential in the renewables industries of the future, but we’re not reaching it because we have a government that is failing us. We have the natural resources and the engineering heritage to become a world-leading supplier of clean technology. Backed up by an industrial strategy, we’ll lead the drive to decarbonise our economy and create the jobs of the future. 

As part of that investment in future prosperity, the next Labour government will commit to funding tidal lagoon technology, supplying millions of homes with secure, low-carbon electricity for the next century.   

It’s the investment that government can deliver that will rebuild and transform those communities that have been left to fall by the wayside. 

It’s the investment in education that government can deliver that will make sure our young people have the skills they need to get the good jobs they deserve. 

It’s the investment in housing that government can deliver that will ensure all our families have safe, secure, decent home to live in. 

It’s the investment in superfast broadband that will give our smaller businesses the capacity to succeed in a changing world. 

It’s the investment in research that government can deliver that will give our scientists and engineers the capacity to develop and apply the technologies that can transform this society. 

That means a commitment to sustained increases in government research funding, alongside continued support for private sector researchers. The next Labour government will aim towards the OECD target of 3 percent of GDP a year on all research, and we can start by doubling government spending on energy research. If we want every part of our country to prosper, as we should, we have to make sure every part of our country has the capacity to succeed in a changing world. 

After Donald Trump’s victory – we understand the price for failure. When decade after decade the rich get richer and the ordinary people see their incomes stagnate, something snaps. 

I hope to see from Philip Hammond a commitment to deliver investment not just in a few hotspots, favoured by the Treasury and benefiting the lucky few, but a real commitment of resources to every part of our country. With the costs for government investment at close to the lowest they have been in history, now is the time for government to commit to invest – as we have long argued and as the Chancellor’s Cabinet colleague, the Chief Secretary to the Treasury has now accepted. And those resources that government can commit shouldn’t just go on the big-ticket projects, important as they are. 

It’s not enough to only build a high-speed rail line to connect the places that are already successful. We can’t just ask those in left-behind Britain to stand and wave at the trains as they go shooting past. It’s government that needs to provide the resources for our local communities to invest in what they need to succeed. It’s central government that can provide the scale of investment we now need, after decades of underfunding. But it’s our local communities and our regions that need to take back control of their own economic destinies. 

The alternative is the disarray we can now see from this Government. They can’t tell us their negotiating position for Brexit, and they’ve delayed telling us how they intend to deliver an industrial strategy. They have no coherent plan for Brexit and no coherent vision of how our country will prosper. That is why we see a government in stasis as its shambolic approach to Brexit extends into every aspect of government. 

But the reasons it’s shambolic is because the closed-minded Brexit the Tory establishment want deep down is one the British people do not. They have the wrong ambitions for our economy, and the wrong ambitions for Brexit, which means they will continue to undermine the ambitions of working people.  It also means we will be left with a Brexit that works only for bankers and the rich, instead of one that's based on fairness and works for the rest of us.

Labour has argued for a Brexit that prioritises jobs, prosperity and the public finances. The source of this chaos stems from weakness at the very top of government. 

According to reports just this weekend, the Prime Minister and Chancellor are too busy fighting each other than fighting for an ambitious Brexit deal for Britain. We appear to have a Chancellor who is slapped down by his Prime Minister when he makes an announcement, and ignored by her as she sets his economic policy for him. According to other reports he is also isolated by his Cabinet colleagues to such an extent that it seems he has to read about the Brexit negations with the rest of us in the newspapers. The CEO of Nissan probably knows more about our Brexit negotiating position than the Chancellor. Britain cannot afford a weak Chancellor who cannot find his voice, when our country faces the biggest economic challenges for a generation. It’s time he steps up to the task, and stands up to his Cabinet colleagues. 

Donald Trump’s victory in America has underlined the point that the old rigged economy working just for those at the top has failed. But the Trump plans to increase infrastructure spending serves as a smokescreen to cut taxes for those at the top and to deport migrants. At the same time as spending more on infrastructure, he wants to put jobs at risk by deregulating finance and encouraging speculation. 

We need genuine progressive investment that supports everyone, and not one that divides our society and hurts our economy. That is why people in western democracies who have been left behind are rejecting it.

While Labour supported remaining in the EU to protect workers’ rights, we cannot hide from the fact that too much of the EU also had aspects of the old model, putting the interests of big business over ordinary people. Labour accepts the referendum result as the voice of the majority and we must embrace the enormous opportunities to reshape our country that Brexit has opened for us. In that way we can speak again to those who were left behind and offer a positive, ambitious vision instead of leaving the field open to divisive Trump-style politics.

This means we must not try to re-fight the referendum or push for a second vote and if Article 50 needs to be triggered in parliament Labour will not seek to block or delay it. To do so would put us against the majority will of the British people and on the side of certain corporate elites, who have always had the British people at the back of the queue.

The question of what Brexit means will be fought in the months and years through the negotiations and in the next election when we will define what a post-Brexit Britain looks like. It is time we all were more positive about Brexit, Labour wants to see an ambitious Brexit Britain.

And the British public know that only a Labour government can make an economic success of Brexit, as we are the only party prepared to make the hard choices, and invest seriously to grow a post-Brexit Britain we can all be proud of. 

But the Conservatives are turning Brexit into a shambles - a shambles of indecision, a split cabinet, an attempt to sideline parliament and keep the British people in the dark. While this circus is under way, something deadly serious is happening: sterling has fallen – and that means, in the next year, many of us will be caught in a vice between rising prices and frozen pay. 

So it is more than time for a reset. It’s time for a re-think. It means ending the misery of austerity spending cuts. It means placing the government’s own finances on a secure footing for the future. It means investing for this country’s future. It means addressing the squeeze in living standards. Above all else, it means saying that instead of Conservatives’ Brexit shambles, with special favours for some but nothing for most, we have a clear plan for how this country will build on its potential. 

We have the alternative – and it is now more than ever, with the nationalist right surging everywhere, that we, in Labour would just ask people to consider. Labour is ambitious for Britain. But the Conservatives have given up. They have MPs resigning not just from Parliament, but from the Party. The Treasury is fighting with Number 10. There’s no plan for the future and no prospect of finding one they can agree on. Tory elite is squabbling amongst themselves instead. They’ve lost sight of the bigger picture. 

To make a success of Brexit, we need to lay out an alternative vision of our economy, our society, and our country. The status quo is no longer an option.  That, above all else, is the clear signal from the vote to Leave the European Union. Labour respects that vote and will support the signing of Article 50. But we do not believe that it was a vote for maximum disengagement with the biggest market in the world. 

We are insisting on full, tariff-free access to the Single Market for our businesses because this is the best way to protect jobs and living standards here. This must include provision for our financial services sector, as part of a deal for the whole economy. But as we leave the European Union, we need an alternative vision of our economy that places our shared values at its heart. 

We want an economy that works for the benefit of all. We can’t live by the old rules any more. And we don’t have to. It’s time to rewrite the rules. Invest and innovate to create the decent jobs we need. Re-set the global system so it works for everybody, not just the rich. That way we can unleash the power of hope not hate.

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After labour Party Conference I returned to my childhood street in Liverpool.



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John McDonnell: Neoliberalism has run its course – let's build an inspiring, modern alternative

After four decades, the economic consensus is crumbling. What can politicians do next?

Theresa May’s speech to the Conservative party conference in early October seemed to mark a clear turn in economic policy. It was condemned by the right-wing Institute of Economic Affairs as “an alarming attack on free markets” and by the Adam Smith Institute as “the opposite of pragmatic”. The Institute of Directors felt compelled to point out that “business leaders are not pantomime villains”.

Here was the Conservative Party, the historic party of British capitalism, picking a fight with British capitalism. The agenda of recent years – City-friendly, in thrall to fiscal tightening, with an active monetary policy  is being challenged, in rhetoric at least. The prospect of a “hard Brexit”, with potentially terrible consequences for jobs and living standards, is causing great concern in the world of business.

More fundamentally, the whole political and economic settlement of the past 40 years is potentially under threat. As the new Chancellor, Philip Hammond, told Bloomberg TV on 6 October: “We have a problem – and it’s not just a British problem, it’s a developed-world problem – in keeping our populations engaged and supportive of our market capitalism, our economic model.”

Students of recent history would generally agree that the economic model of Western democracies changed fundamentally from the 1970s onwards. The crises of that decade gave way to a great shift in the balance of power towards capital and away from labour. The rules of the game were rewritten to favour a rhetoric of free markets and small states, and the reality was corporate power and wealth inequality.

For some, this created opportunities. For others, it led to decline or even post-industrial devastation. On balance, there were enough winners, over successive decades, to tilt parliamentary democracies towards acceptance of the new order. Social-democratic parties accepted the new economic rules, even if they insisted on smoothing off the rougher edges.

It is becoming clear that neoliberalism – as these rules have become known – has run its course and cannot deliver the rising living standards that were supposed to be the hallmark of modern economies.

Since the global financial crisis in 2008, ultra-loose monetary policy has been needed across the developed economies. In the UK in particular, stagnant wages for the lower-paid sectors have been supported by in-work benefits, whose costs to the Exchequer have been rising.

Now, the political and financial limits of this course are being reached. The Brexit vote sounded a death knell for our economic and political settlement of the past few decades. On the left, the temptation for some may be to celebrate. After all, we have called insistently for more public investment and economic intervention, alongside policies such as worker representation in boardrooms and clamping down on tax avoidance.

The change in rhetoric by the government has been portrayed as “Conservative tanks on Labour lawns”. But this cliché gets it wrong: it is when your opponents start using your arguments that you know you are winning – as Margaret Thatcher recognised when she claimed New Labour as her greatest achievement.

The breach between the Conservatives and capital does not necessarily herald an improvement in the fortunes of the left. If it is replaced instead by an inward-looking, xenophobic autarky, prepared to sacrifice the living standards of its citizens in the desire to please the most virulent anti-immigrant tendencies of the right, the organised left and the people we exist to represent will be worse off, as will all those who favour a free and open society. If Ukip wins, we lose.

It is only 18 months since David Cameron’s re-election as prime minister. So how has this shift in thinking come about so quickly? Central bankers are understandably reluctant to concede that they are running out of tools to support the economy, but many others have been prepared to say it for them. With interest rates across the West at record lows, some of the brightest minds have been discussing ideas that would have been deemed cranky a generation ago: “helicopter money”, negative interest rates and digital currencies.

The obvious alternative – expansionary fiscal policy – has been out of political favour. But the challenges we face are far greater than those which could be addressed by government spending, even ignoring any Budget constraint. Countries that have undertaken less austerity face many of the same problems as we do.

Over the decade since the global financial crisis, living standards for most people have barely recovered. In the UK, real hourly wages have declined by more than 10 per cent since 2007. Precarious jobs and zero-hours contracts have become the norm in huge sectors of our labour market.

The system of tax credits and other in-work benefits has helped cushion the blow for many. But if wages are not rising, increased spending on tax credits needs to be paid for from tax revenues: Osborne’s attempted tax-credit cuts last autumn were a warning sign. This in turn will require levels of growth not seen since the crash. The same could be said for our NHS, which is facing an urgent funding crisis, as are many other public services.

As the labour market has hollowed out, with a few well-paid jobs at the top, overwhelmed by large numbers of poorly paid, insecure jobs at the bottom, our tax base has narrowed. There are limits to asking those who have experienced falling real wages to pay more, and the global super-rich have found it all too easy to treat taxes as an optional extra.

But responding to the politics of the recent past is not a viable option. We must acknowledge that the model that New Labour relied on to fund public spending increases is broken.

Wolfgang Münchau wrote recently in the Financial Times about the decline of European social-democratic parties, partly as a result of their failure to offer alternatives. It could be added that the assumptions that they were built on for 20 years are crumbling.

We do not have the option of relying on steady growth, driven by services and, in particular, finance. One of the sharpest shifts within the productivity figures is how the financial sector has gone from being a key contributor to productivity growth to a drag on it since the crisis.

At the same time, a nostalgic return to the postwar consensus is similarly impossible. Infrastructure rebuilding, the remnants of the British empire, a dramatically different political context and rapidly rising productivity drove wage and tax increases that transformed our society, thanks to the Attlee and Wilson governments.

Now, trend productivity is lower in the UK than in most G7 countries. According to researchers at the Bank of England and elsewhere, underlying growth has been in decline for some time: at least since the start of the 2000s, well before the crash. By some measures, it has been in slow decline since the 1960s. Government investment can – and should – help address this, but state investment cannot compensate fully for sluggish private investment demand.

The underlying reasons are uncertain. Talk of “secular stagnation” has come back into fashion, thanks to the US economist Larry Summers. This is where increased savings and a decreased desire for investment drive “neutral” real interest rates to impossibly low levels.

Politicians who correctly identify the problems often miss the target by placing the blame on central banks. Research from the Bank of England and the Federal Reserve Bank of San Francisco suggests that global real interest rates haven’t just been low since the financial crisis, but have declined significantly over decades, and are likely to remain low thanks to factors such as demographic change.

If true, this poses significant challenges for an economic model that has increasingly relied on monetary policy for macroeconomic stability. It also puts into context the complaints of politicians who seek to blame central bankers for the consequences of low interest rates, while refusing to take responsibility with fiscal policy.

There are several potential explanations for the long-term difficulties we face. The economist Robert Gordon of Northwestern University has written about “the end of growth”, as the stream of productivity-enhancing innovations of the past century and a half – world-changing inventions such as the internal combustion engine, better plumbing, the internet – dries up. Alternatively or additionally, the IMF has recently pointed to the overhang of debt that built up after the global financial crisis. This has refused to come down, a situation not helped by persistently low inflation. Janet Yellen, the chair of the board of governors at the Federal Reserve, recently hinted at the possibility that insufficient demand could harm potential supply-side growth.

Beyond the mainstream, post-Keynesians have spoken of the need for wage-led growth: one of the contradictions of resurgent capital has been to push down the purchasing power of the working population, limiting the scope for consumption growth. Meanwhile, Marxian economists blame the increasing role of capital in production for persistently low rates of profit in the real economy, resulting in lower investment and slower growth.

What can politicians do, if economists can’t agree what the problem is? I have said that we need to offer answers soon, and I tentatively suggest that these need to be in three areas.

The increasing automation of jobs, reduced dependence on carbon fuels, artificial intelligence and the so-called gig economy have provoked understandable anger among many workers whose jobs are under threat. More generally, concerns about the effect on the labour market are widespread: either threatening mass unemployment or a significant shift towards low-productivity, low-paid jobs.

This need not be the case. In a society where the benefits of technological advancement are shared, productivity gains can be made to work for the benefit of all. It requires original thinking – one possibility is a universal basic income – to suggest how we can make a society with less demand for medium-skilled labour become wealthier and less polarised.

Future automation is likely to hit service-sector jobs, while the fusion of digital technology with manufacturing in the “fourth industrial revolution” is creating new demand for highly skilled labour. This will demand a major policy response if we are to harness the potential of this.

Second, if we are to meet the needs of those who need health care, pensions and social security, we will need to find ways to tax wealth more effectively. Not just because it is fairer than taxing labour, but because our tax base has shrunk. And as more of the economy now goes to capital owners, taxing a fair share of this is essential to affording the public services that we want.

Finally, none of this is sustainable in the long term unless we change the ownership of this capital. Through new forms of democratic and small-scale ownership, such as employee-owned firms, and by sharing the ownership of society’s assets more broadly, we can reduce the need for redistributive intervention, while increasing society’s power to choose the future direction of our economy and address the urgent demands of climate change.

These issues are confronting left-wing political parties across the West. In the UK, we are now at a crossroads. We cannot afford to let out a sigh of relief at the end of Osbornomics. There is no guarantee that what comes next will not be worse.

We cannot allow our politics to degenerate into a fight between an inward-looking, regressive xenophobia and the failed economic liberalism of recent history.

Nearly 40 years on from Eric Hobsbawm’s warnings about the future of the labour movement, we have the opportunity to put an end to neoliberalism with a modern, inspiring, collective economic alternative. If we don’t offer a credible alternative, someone else will, and the results will be ugly.

Of course our immediate priority is to hold the government to account during the negotiations over Brexit, but at the same time we must be looking ahead to rethink how our economy works. I want the Labour Party to be at the centre of that, and I want as many people to be part of that conversation as possible: through our policymaking structures and at our forthcoming public national and regional economic conferences.

To coin a phrase: change must come. But what type of change, and for whose benefit, is up to us to determine.

The New Statesman, 03 November 2016

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Public Meeting on Third Runway

Dear Resident, 

Public Meeting on Third Runway

Heathrow School, Harmondsworth Lane, Sipson UB7 0JQ

 31st October at 7.30 pm


I am writing to invite you to a public meeting I have convened to discuss the Government's announcement to support the construction of a third runway at Heathrow airport.

The final decision will not be made until next year following further consultations and it is almost certain that there will be legal challenges to the Government's position.

It is vitally important that residents are fully informed of the consequences of a third runway, the process from here and how best to protect their interests.

I hope that you will be able to attend the meeting and I look forward to seeing you then.

Best wishes,

John McDonnell MP

Member of Parliament for Hayes & Harlington
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Only a Labour Government can make an economic success of Brexit

John McDonnell MP, Labour’s Shadow Chancellor, today gave a keynote speech at the Institution of Mechanical Engineers (IMechE) in London, where he made the argument that only a Labour Government can make an economic success of Brexit, as the Conservatives are not prepared to do the economic heavy lifting that is required to prepare our economy for leaving the EU.

He also said that the British people did not vote for a “Bankers’ Brexit”, which is all the Tories are offering as they look to cut special sweetheart deals for big business and bankers, whilst ignoring manufacturers and SMEs.

He set out his economic plans to rebuild and transform Britain, so that no one and no community is left behind, by taking back the economic levers of power that the EU currently have at their disposal, such as the reform of state aid rules and an end to enforced privatisation and deregulation, as part of the negotiations for a new relationship with the EU.

The Shadow Chancellor emphasised the importance of working with our European neighbours constructively to clamp down on tax avoidance and not threaten them with a race to the bottom in low corporation tax rates.

Mr McDonnell also warned that the Tories will try to strike a Brexit deal in which they create a TTIP-like agreement that allows privatisation through the backdoor.

In his speech today John McDonnell MP said:                                                

Theresa May has shown that she will change her mind on a major constituency matter like Heathrow. When she used to say she was: “firmly against plans to build a third runway at Heathrow..." as she knew her constituents would be “devastated”. 

She now talks of the “benefits of a new runway”. 

So can we say she won’t decide that Brexit means a Bankers’ Brexit at the expense of the rest of the overall economy? 

Just check the deleted web pages on her own website as a sign of her commitment. 

If she is willing to turn her back on her constituents to satisfy the Conservative establishment, then how can we take on blind trust that she will seek a Brexit deal that benefits everyone in our country and not just Tory special interests?

And nor can we trust Philip Hammond to speak for Britain in striking a deal. Just look at his record.

In 2013 when he was Transport Secretary and dealt with the Thameslink trains contract when it came to British workers fighting for their job, he chose to award a contract to an overseas country regardless of the job losses.

And his excuse? He was worried not about those workers losing their jobs, but upsetting Eurocrats.

Whether by design or by default, this Shambolic Brexit will end up where the Tories always end: looking after the few, not the many. Already, Tory Cabinet ministers are looking to cook up special deals for their friends in the City of London. While Tory backbenchers want to attack hard-won workplace rights. They want a “Bankers’ Brexit”, in the interests of an elite few, not the majority. They'll cut a deal for finance, but ignore our small businesses and manufacturers.

Labour will fight for all our businesses to have Single Market access, not just the favoured few. Let me be clear, those who have voted Conservative are not the same as the Tory establishment. Like me, you will have friends who have voted Conservative. They don’t want a Bankers’ Brexit any more than I do.

The simple truth is that the Tory establishment cannot be trusted to make a success of Brexit. They want to take control for themselves, not the many. They want to turn Britain into a Singapore of the North Atlantic. Not because they want to match the huge public housing provision that country offers for the many. But because they want to match the low taxes for the few.

The Tories would want to strike their own TTIP deal that would keep in place the backdoor privatisations of our NHS, and they would run down our hard-won employment rights.

Labour in government is the only party that would be prepared to take the necessary measures to make a success of Brexit.

Labour is committed to serious investment in our country that would make sure our economy can power through the stresses of Brexit, and help us rebuild and transform our country so no one and no community is left behind.

Labour is also the only party of government that has the necessary fiscal framework that will underpin it so we can take control of the public finances. We are also committed to making sure that Brexit works for everyone not an elite few. The Tories want to cut special deals for bankers, and cut taxes for big multinationals.

Labour would work with our European neighbours to protect our key industries like steel, and broker deals with the EU to make sure big multinationals like Google pay their fair share in tax. We will put the national interest first. The Tories will put their vested interests first.

Labour will take back the economic levers of power currently in the hands of the EU, such as over state-aid rules, and return them to the people.

Not a Bankers’ Brexit for the lucky few, but a People’s Brexit for the many.

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John McDonnell vows to keep fighting against 'devastating' third runway at Heathrow

Shadow chancellor John McDonnell has vowed to continue campaigning against government plans for a third runway at Heathrow and labelled them as 'devastating'.

The Hayes and Harlington MP has publicly campaigned against the runway and has vowed to persist 'so it never sees the light of day'.

He highlighted that up to 10,000 people could be removed from their homes, as well as an increase in air pollution and noise levels.

Releasing a statement via his Twitter account today, Mr McDonnell said: “I’ve campaigned against this runway for over 30 years and in that time Heathrow have never managed to win the argument for expansion which still remains the case today

“Nothing has changed. Building a third runway would be devastating for local residents who face losing their homes, schools, community centre and village life. It also remains a disaster for air pollution, noise levels and our effort to tackle climate change.

“4000 homes face the prospect of either being demolished or rendered unliveable by air pollution and noise. This means 8 to 10 thousand people being forcibly removed from their homes. We have not seen anything on this scale in our country’s history.

“I’ll continue to support my constituents in campaigning against this runway so it never sees the light of day.”

Mr McDonnell will host a public meeting on Heathrow’s third runway plan at 7.30pm on Monday 31st October at Heathrow Primary School.

Rob Guest, Hillingdon Times 25th October

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Labour’s economic policies more popular than the Tories’, new poll finds

As the dust from party conferences begins to settle, a new YouGov poll shows strong public support for Labour’s economic policies under Jeremy Corbyn’s leadership. But it also reveals a striking disconnect between support for policies and support for parties on specific economic issues.  

Despite a focus on the economy by Corbyn’s summer leadership campaign and Labour’s party conference last month, many voters appear unaware of the party’s stance on key economic issues. The survey asked respondents to identify policy positions that most closely matched their view in two broad areas: taxation and spending on the one hand, and public/private ownership on the other.  

With regard to taxation and spending, 45% of people support Labour’s anti-austerity platform (reversing the government’s planned spending cuts and increasing tax for the wealthiest). This compares to just 13% who support the current levels of cuts, and 22% who think the cuts should continue but be scaled back.  

On the subject of public/private ownership, 58% of people oppose any form of private sector involvement in the NHS while 51% support some degree of public ownership of the railways, mirroring Labour’s position on these issues since Jeremy Corbyn became leader. 

However, when asked which party “currently has the best policies on taxation and spending”, 30% identified the Conservatives compared to 16% for Labour. Even on “overseeing the balance between public and private ownership”, more people thought the Conservatives have the best policies (24%) compared to Labour (16%). 

Dr Justin Schlosberg, Chair of the Media Reform Coalition which commissioned the poll said “There is a worrying disconnect between the economic policies that many voters support and the parties they associate with those policies. We feel that much of the media have been more preoccupied with dismissing Jeremy Corbyn as ‘unelectable’ than with seriously reporting on the policies he represents. Since the economy is often the issue that wins or loses general elections, it is imperative that journalists now give due attention and scrutiny to the economic alternatives put forward by the official opposition, as well as other anti-austerity parties. This is not about a failure of communication on the part of Labour so much as a failure of nerve on the part of a great swathe of the news media. Without a change in approach, our democracy is in deep crisis”.

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John McDonnell; The Tories’ best business policies are our ideas.

The CBI and 100 business leaders are warning the consequences of a Tory “Hard Brexit” will cause massive damage to our economy and to business. This Government is prepared to sacrifice our living standards and scapegoat migrants to satisfy the right wing of their own party. Instead of proposals to publish divisive foreign worker lists, thankfully now abandoned by Amber Rudd, we need to show that Britain still remains open to attracting workers who bring many benefits to our economy.


Our policies are popular – even with the Tories At the same time, the Tories are trying to claim our ideas on investing in the economy to promote growth, and employee representation on boards to reform corporate governance. Given these polices are proving popular, Labour’s task now is to step up and become a Government-in-waiting.


Our plans for a National Investment Bank would help to create jobs and wealth while delivering the modern infrastructure which employers and others tell us we need. We’ll be designing an industrial strategy that can deliver growth right across the UK. We’ll be strengthening trade union rights to redress the balance of power, and designing a welfare system which is better able to support the self-employed.


Low pay must be a priority But most urgently of all we need to tackle the scourge of low pay in the economy the Tories have created. It simply cannot be right that over half of all those in poverty are in work, and it will only get worse as the Government’s cuts to Universal Credit leave millions worse off. Decent pay is not just fundamentally right: it’s good for business, it’s good for employees, and it’s good for Britain.


That’s why I announced recently that the next Labour Government will bring in a real Living Wage. An independent review body – not whatever government is in power at the time – will calculate what is needed for people to live on: and current forecasts are that this is likely to be over £10 per hour by 2020.


Of course some businesses will struggle, at least initially, to pay everyone this higher rate. Small and medium sized enterprises in particular may worry that they can’t afford it; which is why our Living Wage Review Body will also advise us on where and how we can provide businesses with support that this historic step forward in improving living standards won’t impact on employment. Decent pay is not just fundamentally right: it’s good for business, it’s good for employees, and it’s good for Britain.


We can win the argument again The minimum wage was one of the greatest achievements of the Labour Government elected in 1997. Though the Tories threatened it would cause mass unemployment, working together we proved them wrong and won the argument. Working together, we can defeat them again and deliver radical solutions to make millions of hardworking people in Britain better off. Together we can rebuild and transform Britain so that nobody and no community is left behind.


Inews: Monday October 10th 2016

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John McDonnell MP, responding to reports that a “hard Brexit” could lead to the treasury losing up to £66 billion a year in tax revenues, said:

Losing access to the single market would be devastating for jobs, livelihoods and our public services yet the Tory government are prepared to take this desperate step, despite being warned by their own experts of the consequences.


"The British people voted to leave the European Union and all sides must respect that decision, but what they certainly didn't vote for was economic misery and the loss of jobs.


"The Tories should be sticking to their manifesto promise and fighting tooth and nail for access to the single market. Instead they are abandoning Britain's clear national interests by putting narrow party political concerns first.


“It's time for Theresa May's government to show some responsibility and stop playing political games when our future as a country is at stake."

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John McDonnell MP’s comments on Facebook’s published tax:

Yesterday Ebay were accused of not paying their fair share in tax and today Facebook have been accused of the same thing. To ordinary taxpayers this looks like multinational companies playing by different rules to the rest of us.

"The Tories have dragged their feet for years on tackling tax avoidance which has created a climate where multinational companies think they can do what they want and not pay their fair share in tax.

The Tories should adopt Labour's Tax Transparency and Enforcement Programme which would stop the dodgy deals and finally put an end to tax avoidance.

There is nothing less patriotic than trying to get away with not paying your taxes."

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John McDonnell MP, Labour’s Shadow Chancellor, responding to today’s ONS trade and manufacturing statistics and the fall in value of the pound said

Today’s trade and manufacturing figures demonstrate the immense challenges facing the UK economy after years of Tory failure. 


“Unfortunately, it comes off the back of the Conservative Party Conference were we heard nothing about the Tories' plans to boost UK exports and support the UK economy.


The widening trade deficit, sluggish growth in exports and falling manufacturing output despite the weakening pound all highlight the recklessness of a Tory Government that failed to plan for a Brexit vote and which continues to have no answers to the challenges facing the UK economy.


The country deserves better; the Government has no answers and no plan for working people and for the UK economy. Only a Labour Government will stand up for working people and build a fairer economy that works for all”

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John McDonnell MP, Labour's Shadow Chancellor, responding to the Chancellor's speech at the Conservative Party conference in Birmingham this morning

This morning Philip Hammond may have performed a u-turn on investment spending, admitting that the failed 'long-term economic plan' never really existed, he still intends to go ahead with cuts to in-work benefits, and local authority funding. 

Labour is now the only national party with a fiscal frame work that supports patient long-term investment in our economy, and it's clear that Phillip Hammond is now borrowing from Labour to invest in his own speech. As well as abandoning their own fiscal charter this was full of the same empty promises George Osborne made, only with worse gags. 

The Chancellor should apologise today for the failed Tory approach that has meant he has had to abandon the failed economic agenda of the last six years, an approach which has seen them dragging their heels on tax avoidance, an increase in child poverty, and house-building falling to its lowest peacetime rate since the 1920s. The dangerous divide in society the Chancellor mentioned has come about as a direct result of the policies he has voted for since 2010. 

There is clearly still a need for increased investment in our economy to equip our country for the future after Brexit, as well to overcome the last six years of Tory under-investment, but if they pursue a 'Hard Brexit' strategy we know that the Tories will continue to make working families pay for their failure. 

Therefore, although we welcome the Chancellor abandoning George Osborne’s fiscal approach, justifying Labour's approach in opposing it, he still needs to now actually provide the investment we really need. That is why Labour has consistently called for an investment programme in line with what many independent experts are calling for, and the timing of which will be based upon OBR forecasts and the timetable for Brexit.  

Otherwise everything he said today will be undermined by the Tories' Hard Brexit strategy that could see us facing around £40 billion risk to the public finances and put British business at a serious disadvantage.

In contrast, Labour's Fiscal Credibility Rule provides the robust framework needed to deliver financial stability and investment, so that our country can have a high-wage, high-tech economy of the future, in which no one and no community is left behind."


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John McDonnell MP, Shadow Chancellor, speaking at Labour Party Conference 2016





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Labour will set our economy on the right path—and a return to 1945 or 1997 is not the answer

At the heart of Britain’s economic issues is the failure to invest. Business investment remains lower than its pre-2008 peak, and, improbably, the government plans to cut its own investment further. The result is an economy that relies on substituting cheap labour in the place of capital. As research by John van Reenan and others has shown, this has become pronounced since 2008.

OECD figures suggest that real hourly wages are down 10 per cent since 2008. This makes the UK the worst performer in this respect in the entire developed country OECD group, bar Greece. 80 per cent of those in work have seen either flat or falling pay since the crash. We are facing a “lost decade” for living standards. But with de-industrialisation over the last forty years, the relatively stable well-paid jobs that manufacturing has supported have become thinner on the ground. The labour market has hollowed out, with a few, very well-paid jobs at the top—and ranks of lower paid, increasingly insecure jobs for the rest. Worryingly, forecasts cited by Andy Haldane at the Bank of England suggest that 15 million jobs are open to being automated out of existence over the next decade.

Factor in the concerns raised by the discussion of “secular stagnation” in the developed world, with low or zero growth persisting, and the future for our economy can look bleak. Britain has compensated for its structural weaknesses with debt, both in its domestic, private sector borrowing, and internationally, with our record current account deficit necessitating huge borrowing from and assets sales to the rest of the world.

Under these circumstances, hoping to turn the clock back to 1945 or even 1997 is simply not an option. Our economy needs restructuring if it is continue to provide rising living standards and the high-quality public services we demand. We need to think not only about how to spend money, but how to earn it.

The opportunities are there if government is prepared to take them. Manufacturing is going through a renaissance, on the back of new technology and more sophisticated processes. One in six UK manufacturers have “reshored,” bringing production back from overseas, in the last few years. The most adept governments are those able to take advantage of this shift, as in the German government’s “Industrie 4.0” programme.

Our party’s economic policy falls into three parts. First, an iron commitment to fiscal stability. Our Fiscal Credibility Rule, drawn up in consultation with world-leading economists, was originally announced in March. The basic idea is simple: we will spend only what we can afford, but ensure government has the capacity to invest in transforming the economy. And of course we will stand ready to use fiscal policy if economic stability demands it.

The second plank is our investment commitment, totalling £500bn, between a £250bn National Investment Bank and network of regional development banks, and a £250bn public investment commitment. All of this will fit inside the fiscal space currently provided by the Fiscal Credibility Rule. That £250bn figure, if invested over ten years, would represent a doubling of current public investment, bringing the UK up to OECD standards.

We would look to address the huge inequalities in investment, where planned public investment in London is over £5,300 per head, but in the north east only £413. We’ll provide for high-quality transport across the whole country, alongside a commitment to meet the best broadband internet standards in the world, matching the schemes being introduced in China and South Korea. And we’ll lift science and technology expenditure, reversing the £1bn real terms cuts George Osborne oversaw and aiming to meet the OECD 3.5 per cent of GDP target for public and private sector research spending. Britain’s science base is amongst the best in the world. We should be building on that history and success. We’ll move to rapidly decarbonise our energy system, putting Britain at the head of action on climate change—and building on our natural advantages to tap into the $630bn global renewables market forecast for 2030.

We’ll also establish a new National Education Service, ensuring that everyone, from the youngest to the oldest, has access to the best possible education and training, providing the skills our emerging high-tech economy needs.

Finally, we want to transform corporate governance, and spread company ownership far and wide. The lack of direction from government and the excessive focus on private financial returns has generated a short-termism in our big corporations. We aren’t delivering the investment needed to take best advantage of the opportunities there. Changes to corporate law, restricting some of the bad practices that characters like Philip Green have exemplified, and providing a bigger voice for the workforce are an essential part of this. The regional development banks will help promote small businesses, and co-operative and worker ownership across the economy, recognising the major productivity benefits these bring.

We’ll work with businesses, unions and customers to deliver a comprehensive industrial strategy for the UK, so that no-one and nowhere is left behind.

John McDonnell / September 20, 2016 / Prospect Magazine

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Jeremy Corbyn has been on the right side of history for 30 years. That’s real leadership

What makes a leader, and what is leadership? We are told every day that Jeremy Corbyn is not a leader, from Hilary Benn’s “He’s a good and decent man, but he’s not a leader” to the Daily Mail saying Corbyn “is the worst Labour leader in history”. But in spite of the relentless Corbyn-bashing, beyond the ability to win elections (Owen Smith: seriously?) there has been little discussion of what a leader, or leadership, means.

The adjective that sidles up most insistently to “leader” tends to be “strong”. For a strong leader is the thing to be. Margaret Thatcher was a strong leader. Tony Blair was a strong leader. David Cameron? He had pretensions in that direction. Theresa May’s performances at PMQs suggest she believes she too belongs in the strong leader club, and that condescension and archness are the way to achieve it, though her bid for membership took a turn for the worse this week when Corbyn challenged her on grammar schools.

Not all of us, however, are quite so in thrall to politicians who take voice coaching, visit bespoke tailors, employ image groomers, holiday with media moguls, or jettison past commitments (Blair’s unilateralism, for instance) when these things start to get in the way of a smooth ascent; and – to prove they are really strong, that they have the guts to take the really difficult decisions – bomb or invade some of the poorest countries on Earth.

On Wednesday a foreign affairs committee chaired by the Conservative MP Crispin Blunt delivered its excoriating verdict on David Cameron’s Libyan adventure. Few people will rush to Cameron’s defence. Yet the former prime minister might be forgiven for feeling a pang of irritation at the committee’s uncompromising verdict. In March 2011, when Cameron went to the Commons to propose bombing Libya, no fewer than 557 MPs voted with him. Just 13 voted against. 

Those 13, just in case anyone is interested? They did not include Crispin Blunt. They did not include Theresa May. They did not include Owen Smith, Corbyn’s rival for the Labour leadership or Angela Eagle, who kicked off the leadership challenge (she abstained). But they did include Jeremy Corbyn and John McDonnell. That’s what many of us call leadership.

Just last year Cameron was at it again, sombrely assuring the country that the deployment of Britain’s air power over Syria was essential for the defeat of Islamic State. It showed how little MPs had learned from the catastrophic interventions in Afghanistan, Iraq and Libya that the government was able to muster another majority. But it did. Among those who opposed, amid the familiar howls and insults and questions about their patriotism, were Jeremy Corbyn and John McDonnell.

Spooling backwards to March 2003, and the eve of the invasion of Iraq, when Blair told the house that Saddam Hussein’s weapons on mass destruction not only justified invasion but necessitated it as an urgent act of self-preservation, 412 MPs voted for the war, 149 against. Leading up to the vote, the government whips subjected Labour MPs to every kind of inducement and coercion – much of it highly unpleasant – in an effort to get them to support invasion. Those who held out were branded appeasers and cowards. Among them? No prizes for guessing: Jeremy Corbyn and John McDonnell.

When it comes to foreign military intervention, do I look to strong leaders or to someone who has, over 30 years in parliament, consistently shown that he makes the right call? Those MPs who now shake their heads in dismay at the utter calamity of Cameron’s bombing of Libya and Blair’s invasion of Iraq had the chance to make the right call.

But they didn’t. They failed. At the time when it really mattered, when the vote was before the House, when the issue was live and front and centre, they failed. Their judgment, their principles, their ability to stand their ground – they all went missing.

It is all very well to say, years after the event, that you believed the prime minister when he said that Saddam had weapons of mass destruction, or that bombing Gaddafi would bring peace and democracy to Libya. But what counts is what you do in the moment. What counts is where your vote goes. That’s when you get your chance to make the right decision.

Time after time, the Labour party’s worst leader in history has called it right. When he had a full head of hair and weighed a pound or two less, he was out on the streets marching (and being arrested) for the end of apartheid in South Africa and the release of Nelson Mandela, who was then branded a terrorist. I know because, like thousands of others, I saw him there. We didn’t see the iron lady, Margaret Thatcher. And maybe I wasn’t looking hard enough, but I didn’t see Tony Blair either.

When the scandal of systematic miscarriages of justice involving innocent Irishmen and women was at its height in the 1980s, desperate families approached senior members of the Labour opposition for help in reopening the cases. They were rebuffed. Anti-Irish sentiment was rife, and there were no votes for responsible politicians in helping Irish prisoners against the police and judiciary. Who took up their cases? Jeremy Corbyn and John McDonnell (not forgetting Chris Mullin’s powerful work on behalf of the Birmingham Six). Corbyn and McDonnell had the courage – and it took courage back then – to campaign and organise. But that’s what leaders do. 

On ID cards, on extended detentions, on equal pay and gender quality, on protection for workers and trade union rights, on anti-racism initiatives, on tax avoidance by the super rich, on the bedroom tax, on the recent welfare reform bill (Owen Smith? He abstained), on PFI – a massive, shameless scam perpetrated by financial institutions already as rich as Croesus, aided and abetted by government, that has brought the NHS to its knees – Corbyn and McDonnell called it right.

Give me this kind of leader anytime.

Ronan Bennett Guardian Opinion 15th September 2016

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John McDonnell MP, Labour's Shadow Chancellor, speaking at the Co-operative Party annual conference in Cardiff:

Co-op.jpg“I want to pay tribute to the Co-operative Party which is now 99 years old and looking forward to its century next year.

"It is refreshing to be addressing the Co-operative Party who have partnered with the Labour Party through thick and thin since our electoral pact in 1927. It’s our unity as a movement that has always been our strength.

"But let's be clear: the whole labour movement is at a turning point.

"The Leave vote was one marker for that. Simply put, it means the status quo is no longer an option.

"The despair that helped fuel the vote to Leave was driven by a deep disaffection with the political process.

"Successive governments have used an economic model that concentrated too much wealth in too few places and in too few hands.

"It was this model that spectacularly blew up in the crash of 2008, and whose consequences we are still living with.

"But the challenge for the labour movement stretches beyond criticising the failures of the old model.

"We have to recognise that if our solution to the crisis today is to pretend the clock can be turned back, we will fail.

"Since the Second World War, a political strategy has come to dominate the left that stressed the central importance of central government in transforming society.

"A successful progressive government would just have to oversee growth, and then redistribute the proceeds.

"The strategy for the left was then to win control of the state, and use the state to redistribute incomes from a growing economy.

"For seventy years, through Old Labour and New, this fundamental model of social democracy held.

"Some of Labour's greatest successes were built on this model, whether the NHS or Sure Start centres. Tax money was taken from rising incomes and spent in a progressive manner.

"That model now seems to have come to an end.

"The economists talk about “secular stagnation”, which is the idea that the developed economies are in for a period of extended low growth. The International Monetary Fund, in its latest forecasts, has downgraded its expectations for economic growth in the developed world.

"And we know from OECD figures, analysed by the TUC, that real hourly wages have fallen 10% in this country since the crash – a worse performance than any other OECD member, except for Greece.

"We have to search for a different approach.

"The next Labour government will stand ready to invest across the whole country.

"Whilst this government still intends to cut public investment in real terms over the next few years, we know that it is investment that will deliver the economic transformation this country now urgently needs.

"That is why we have proposed a £500bn investment programme, backed up with a National Investment Bank and a network of regional development banks.

"This will deliver the funding needed to allow every part of our country and every person to reach its full potential.

"There's a growing consensus, in these times of economic uncertainty and faltering economies, that public investment is essential to delivering prosperity.

"From the OECD to the IMF, and from the TUC to the CBI, responsible organisations concerned with the state of our economy have identified public investment as central.

"It beggars belief that Phillip Hammond has not already turned his back on former Chancellor George Osborne's failed austerity strategy"

The co-operative economy

"The evidence that co-operative enterprises and worker-owned companies can produce far better results is compelling.

"Twice as many co-operatives survive the crucial first five years as other businesses. And worker-owned enterprises offer a clear productivity advantage.

"So that is why after this conference season is over, we will begin a major piece of work on developing the co-operative economy.

"With UK productivity now lagging further and further behind the US, Germany, and France, it’s time to turn the corner on the model of economic growth that promotes low-paid, insecure work in huge quantities.

"It's a disgrace that zero hour contracts have risen by 20% in the last year alone.

"But by giving people a stake in the companies they work for and spreading the ownership of those companies, we can start to transform corporate Britain.

"That's why I've argued for a “Right to Own” for employees. If a company is facing a change of ownership or closure, they should have first refusal on forming an alternative employee-owned business plan.

"Backed up by financing from the new regional development banks, who will be tasked to deliver low-cost financing to co-ops, this can be one way to resolve some of the issues now bearing down on our local economies.

"With two-thirds of Britain's family businesses at risk of closure when their owners retire, employee ownership can help solve our brewing succession crisis.

"But we should be looking to the examples of Germany and the US and elsewhere, where co-operatives form a major part of how their economies operate.

"I want to see the next Labour government put in place measures that will at least double the size of our co-operative sector, giving a nearly £40bn boost to the whole economy.

"We'd look to introduce legislation to assist the formation of mutual guarantee societies, mobilising funds for small businesses by enabling them to club together to raise credit.

"Over 8% of lending to SMEs across Europe is made through mutual guarantee societies. We can end the starvation of funding for our small businesses here.

"We plan in the coming weeks to launch a guide, jointly with the Association of British Credit Unions, helping councillors and local authorities up and down the country to support the work of local credit unions."

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Labour publish the First Stage report of its HMRC Review

HMRC_Review.jpgThe Labour Party today is publishing the initial report of its review of Her Majesty’s Revenue & Customs (HMRC). This first stage of the independent review has been carried out by a team led by Professor Prem Sikka (University of Essex) with the aim of enhancing HMRC’s efficiency, effectiveness and public accountability.  

The report recommends:

  • The formation of a Supervisory Board, consisting of stakeholders, to watch over HMRC’s Board to give it direction and enhance its public accountability.  The board shall act as a bulwark against corporate capture and inertia and be accountable to parliamentary committees.
  • The Supervisory Board should support and protect tax whistleblowers.
  • Additional investment in HMRC resources and staffing.
  • That HMRC needs local knowledge and must respond to citizens’ concerns. This is best achieved through a network of local offices and staff with local knowledge.       
  • That HMRC should have a well-resourced internal investigation and prosecution unit. This would strengthen its in-house institutional knowledge base.
  • That HMRC should offer competitive financial rewards to its staff.
  • Tax returns, related computations and documents of all large companies must be made publicly available. The public availability of corporate tax information will improve the quality of information available to parliamentary committees to scrutinise the effectiveness of HMRC in meeting its objectives.
  • Parliamentary committees should be empowered to examine any tax information, no matter how sensitive. It would be up to the relevant parliamentary committee to decide whether scrutiny of any documents and practices should be conducted in private or closed meetings
  • The backlog of tax cases creates uncertainty and anxieties. This is also unfair to taxpayers. The judicial capacity to hear cases should be expanded.
  • Various reports published by HMRC should contain information that enhances transparency and accountability.
  • Public pressure is a vital ingredient in transforming HMRC. It should not be diluted by the introduction of fees to challenge tax assessments.
  • HMRC needs effective tools to combat sham. We recommend a rewrite of the General Anti Abuse Rule (GAAR). HMRC should be guided by the Department of Justice and/or a panel of retired judges, rather than by people from the corporate sector. 

John McDonnell MP, Labour’s Shadow Chancellor, said: 

“I welcome this very important contribution to the debate about tax in this country, and I would like to thank Professor Prem Sikka and his panel of experts for their enormous contribution. 

“The public want to urgently see more action on tax avoidance but the Government have made things words by cutting staff and resources at HMRC. This report lends further support to something we have been arguing for years: that HMRC needs more accountability and resources to deal with tax avoidance and evasion. 

“Labour will be looking at the report’s recommendations in great detail while we develop our policies in this area, and also discussing how to take the review forward to the next stage. 

“It’s only under a Labour Government under Jeremy Corbyn that the UK can get a serious grip on the problems of tax avoidance and evasion.” 

Professor Prem Sikka said: 

“HMRC performs a vital task in collecting taxes, enforcing lax laws and delivering services to taxpayers. Against a background of reductions in resources, it has experienced considerable difficulties in meeting the service expectation of taxpayers and challenging organised tax avoidance. We have investigated the difficulties and made recommendations to strengthen HMRC and its public accountability.”



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John McDonnell MP, Shadow Chancellor, responding to today’s reports that the UK financial sector is to raise concerns with the Prime Minister on access to the single market.

John said “Today's reports on the threat represented to Britain's financial services industry and the employment it supports shows the real dangers presented to jobs and the economy from the Tories' lack of preparation for Brexit. It is typical of the Tories to now be pulling together a backroom offer that defends financiers whilst failing to clarify how they will defend the workplace rights of working people. In July I set out five principles that must be respected during negotiations to leave the EU, which included protecting the access rights of UK financial services firms alongside freedom of trade, protecting workers’ rights, maintaining our role in the European Investment Bank and protecting the rights of EU citizens currently living and working in the UK and UK citizens in the EU.


Labour has made clear in its five red lines for Brexit negotiations that it will not support a deal that significantly harms financial services' market access to Europe, which can include passporting rights. However, the Brexit vote shows clearly that we cannot presume business as usual will continue. All sectors of the UK's financial services industry will need to continue to demonstrate that they are prepared to make a fair contribution to national prosperity and that their activities produce genuine social value, rather than socially useless activities, to retain public support in any future deals on market access.


The Government must bring forward without further delay its options for future financial services market access and make clear its preferred negotiating position before the damage caused by delay and confusion impacts on jobs and prosperity."


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John McDonnell MP, Labour’s Shadow Chancellor, commenting on NIESR’s monthly GDP estimate

"The evidence is beginning to mount about the lack of preparation for the referendum on behalf of the Tories. Not only did they fail to plan for a Leave vote, but their economic policies have left our economy weaker and more vulnerable as a result of their failure to invest for the future.

"Report after report is showing the impact the Leave vote is having.  The UK economy needs immediate investment from the Government, rather than sticking to the failed policies of George Osborne which have helped create the problem. “

“Without urgent intervention the jobs and prosperity of millions of people could be at risk. Britain is on hold waiting for Philip Hammond to tell us what approach he is planning to take, and we can’t wait until the Autumn. It’s time the Chancellor got off the sun lounger and started to show the country he has a grip."

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John McDonnell’s speech at The National Glass Centre, Sunderland

sunderland.jpgThe vote to Leave the EU presents every single one of us in politics with a challenge: to think big and adjust our policies rapidly to the new situation. 

So today I want to announce a major new commitment from Labour to the British people. A policy that will form the lynchpin of everything else we do to rescue Britain’s communities from decay; and to rebuild Britain’s industries after years of neglect. 

Britain’s relationship with Europe and the rest of the world has now been thrown open to question in a way that it hasn’t been for decades. Labour will not hesitate to defend the interests of working people in the UK, whatever the negotiations throw up. 

I have laid down clear red lines that Labour will insist future proposals on our relationship with the European Union cannot cross. These will protect jobs and existing rights for those who live and work here. 

But there are consequences for the domestic economy, too, and it is those that I want to address today. It is impossible to understand the vote to Leave without understanding how our economy is failing so many. 

One part of this is clear. George Osborne leaves behind a legacy of failure. We said austerity was a political choice. He chose it. The result was spending cuts on a scale not seen for generations. We’ve got public services cut to the bone and in some cases beyond.  

We’ve got million people using foodbanks in the sixth richest economy in the world. And investment has fallen, dragging down productivity. Our economy has become far too dependent on low-paid, insecure work as a result. 

Worse yet, spending cuts have hit the places least able to cope with them the hardest. If you live in one of the poorest boroughs – the bottom 10 per cent on the deprivation index – you’ve seen councils cut spending by £288 per person since 2010. What’s the figure for the top 10 per cent? £44. 

Disgraceful injustice. And those who suffer are: elderly people, disabled people, children at risk, council tenants – and council workers who are being asked every day to do more with less. The injustice here is painful - but it is also unnecessary. 

Labour told David Cameron that austerity is a political choice, not an economic necessity. We told him it would fail. We told them their targets would not be met. We were right. Today, in the wake of the Brexit vote, we can see that argument’s the Conservatives rejected – and Theresa May rejected - is close to becoming a consensus. The failures of austerity are all too obvious.  

However, the anger behind that vote runs far deeper than just the last six years. New analysis from the Resolution Foundation shows that it was long-standing economic injustice that helped drive the vote to Leave. Communities that had been left behind, with higher unemployment, helped determined the outcome. 

So the vote represents the wholesale rejection of an economic model that had been promoted by a few people at the centre of national political life. That economic model promoted the idea that if a lucky few at the top did well, the rest would surely also benefit. 

If you believe that, it’s logical to cut taxes on the rich, and on the big corporations. It’s logical to let tax avoidance rip on an industrial scale.

But here’s what we’re left with. The ruins of an economic model. Lives ruined by low pay, poor prospects, massive debts and a disastrous shortage of affordable homes. Some were winners, many others lost out. 

If you had the good fortune, for example, to work in financial services and own a property in London, you would have done extraordinarily well. But the better-paid, secure manufacturing jobs that were lost in the rest of the country over the last thirty years were too often replaced by poorly-paid, insecure work. 

Some of this work went to those who already live here, but some went to migrant workers from across the EU. We know why they came: to build a better life – and they had, and still have a right to. But too many employers used those new arrivals as exploited labour; kept in the dark about their rights; ripped off; forbidden to organise trade unions; sacked on the spot. 

It was to New Labour’s credit that it addressed some of the injustices of globalisation. Growth in inequality, which had risen so dramatically since 1980, was restrained during its time in office. But the inequality was not reversed. The UK has the worst regional inequalities of any current member of the European Union. 

And while we have some of the richest places in the whole continent, with central London as the single wealthiest place in the EU, more than three-quarters of the country earn less than the EU average. We can’t tolerate a situation where too many of our people live in places that are being left behind by economic growth. Under a Labour government – nobody, no town, now community, no region will get left behind. 

There is growing recognition today that we need a stimulus to mitigate a likely recession, in the wake of the vote to Leave. Andy Haldane, chief economist at the Bank of England, has argued for a big package of monetary measures to intervene against any downturn. I urge Theresea May to listen to Mr Haldane – not to any stay-behind right wing fundamentalists from the George Osborne fiasco. 

The areas most exposed to any shock and recession will not be the richest. The North-East exports more goods to the EU than any other English region, per head of population. It also receives more EU structural funding support than any other English region. The Government needs to tell us, now, what it’s going to do to stop North East’s trade relationships being damaged by Brexit. And Government must act to safeguard the £10billion of EU regional funding that is now at risk of being lost.  Either it should ensure funding remains in place, or it must guarantee the funding itself. 

Brexit is not happening in a vacuum. All over the world – as we fight to avoid the threat of stagnation identified by central banks – the old assumptions about how the world works no longer apply. The old idea that states could no longer play any role in the economy is breaking down. We’ve seen this with steel, where steel dumping by China has been met by concerted state action to protect domestic steel industries, from tariff barriers in the US to nationalisation in Italy. 

The Government’s failure to properly protect Britain’s essential steel industry suggests that it is not equipped to think through and act on these changes. There is a risk they will push the effects of any shock from the Leave vote onto the poorest and most vulnerable, and leave the whole economy adrift in an uncertain world. 

I fear, too, that the legacy of the last thirty years leaves this economy weaker than it ought to be to cope. Its low productivity, its dependence on domestic borrowing and its extraordinarily poor current account position all point to deep-rooted problems. 

We need decisive action to transform our economy. We need a break with the failures of the past. We need an economic strategy that builds on the real strengths that exist outside of the City of London. We need a government committed transforming economic outcomes for the benefit of the majority of our people, not just the rich. We need the country outside of the City and Westminster to take back control of their own economies. We need an economics that insists no one will now be left behind. 

Here’s what Labour plans to do. 

At the heart of Britain’s economic problem is poor productivity. Since 2007, productivity growth in the UK has stagnated. Every hour worked here on average produces one-third less than the average hour worked in the US, Germany, or France. Without sustained improvements in productivity, it will be harder to make real improvements in most people’s standards of living. 

The underlying problem here is the weakness of investment in the UK. Investment allows firms and workers access to new technology and ideas, and is the quickest route to drive productivity growth. Business investment in the UK was falling well before the Leave vote, and now looks set to fall further. And yet this government is currently looking to cut its own investment. 

Government investment spending is set to fall in every year from now until the end of the decade. This is uniquely damaging, since it is government investment that can provide the long-term spending on infrastructure that the private sector is unwilling to make. 

There is a near consensus today amongst economists and responsible organisations on the need for government to invest and provide the secure foundations for economic growth. From the OECD to the IMF, and the CBI to the TUC, there are demands for governments to step up. 

In the case of the UK, weak investment has meant increasingly poor infrastructure. We have been slipping down the World Economic Forum infrastructure rankings. This national weakness in infrastructure is then exaggerated by the imbalances in regional funding. 

London receives nearly half of all English infrastructure spending. Spending per head in the capital is more than £5,300. Spending per head in the North East is just £414. We know London has exceptional needs, but a gap on this scale is hard to justify. This isn’t about pulling down the successes. It’s about lifting our sights. 

Even raising public investment in the North East to the national average per capita would increase it by £7billion a year. As the OECD has argued, additional spending on infrastructure where infrastructure is already robust produces lower returns.

It is the places where that spending has been lacking that hold the greatest potential. 

We know there is huge potential here in the North East, as there is across the North of England. We can start to think about how and where future growth will come from, and plan for it now. The Northern Powerhouse Independent Economic Review identified particular strengths in advanced manufacturing, the life sciences and the digital economy. 

There are world-leading universities and research centres. The North East is an exports success story. It is the only English region to run a trade surplus with the rest of the world.  

We can see, in ten years’ time, how its economy can build on these foundations as an outward-looking, productive and fairer economy. 

But building on those strengths will need more than just the marginal tweaks of past years’ policy. We need to approach the future with confidence. Our country needs a programme of economic transformation. That must start with addressing the funding imbalance, and delivering the investment needed to kick-start high-quality growth. 

We should be aiming for nothing less than a transformation of the economies of the North. The potential here has been identified. The Northern Powerhouse Independent Economic Review suggested 850,000 high quality additional jobs can be created. But that vision won’t be achieved without a serious commitment of resources. 

At a time of grave and growing uncertainty, it is up to government to support the transformation of economies and to supply the long-term, patient investment where the private sector cannot. We can unlock the potential of the North of England with a push to deliver the sort of infrastructure and investment it has been deprived of for too long. And we should match this with a new approach to meeting the aspirations of those who live here.  Whitehall doesn’t always know best. Nor does the City of London. 

We should be handing the power to make decisions about local areas back to the people who know them best – those who live here. Devolution has to be more than a slogan. It has to mean trusting those across the rest of the country to make the decisions that are best for themselves. It means giving employees real power in their companies, with seats on boards. It means employee ownership and new co-operative enterprises to give those who work a stake in the wealth of society. Central government should be there as the backbone for this transformation. 

We should aim to match the best in the world for infrastructure and investment. South Korea, Singapore and China are moving to install ultra-fast fibre-optics, delivering speeds of one gigabit per second – or about 300 times current typical UK broadband access speeds. This will be the new frontier in connectivity. 

Why shouldn’t the North East aspire to meet that? And why shouldn’t our towns and cities provide free wifi access, just as they do now in towns and cities across the US. Our transport networks need overhauling. Rail electrification has progressed too slowly.  Bottlenecks and delays directly impact on productivity. This isn’t just about the big plans for high-speed rail. 

It means delivering the local improvements in connectivity that will make the biggest difference to those areas currently missing out on the economic and social benefits of high-quality public transport. 

There are projects held up by a lack of funding, and a lack of willingness of Government to deliver. We need to break out of the old Treasury model, which thinks that it doesn’t matter where growth occurs, as long as it occurs somewhere. 

This is quite wrong. Where growth happens and who benefits from it should be the fundamental questions of economic policy. But to break the hold of Westminster thinking, we need new institutions.  Government can commit to spending additional funds. 

For a stimulus, Government can and should mobilise its own resources to deliver shovel-ready projects. But the patient, long-term investment required for future growth needs something new. 

So today I am making a firm pledge: on coming to power, Labour will set up a National Investment Bank, and a network of regional banks whose aim is to help mobilise £500bn into the economy and transform Britain. 

A National Investment Bank, managed independently of government, can raise the financing needed to deliver infrastructure on this scale. By mitigating the risks and giving a firm, government-backed commitment to funding, it will draw in the private financing that has otherwise been wary of financing infrastructure in the UK. 

There are examples across the world of similar, successful banks. The model of KfW Banks in Germany is one of the most compelling. By working with regional banks, it helps sustain economic growth across the whole the country. 

So as well as our proposal for a National Investment Bank, we would look to establish a network of regional banks, publicly accountable and locally managed, with specialist local knowledge. These would break the logjam in the British financial system. 

By being closer to a locality, and by making decisions based on local needs, they will be able to deliver the capital that our current financial system cannot. A ‘Bank of the North’ could help unlock the potential of the North of England, delivering finance for critical local infrastructure and supporting lending to high-potential local businesses. 

It would mean starting to deliver on the promise of high-quality jobs. Weak investment has damaged job creation, and particularly high quality job creation in the private sector. The argument that cutting public investment would lead to a private sector resurgence has been proved wrong. It has led to the zero hours contract economy of mass insecurity and poor pay. 

Public funding does not ‘crowd out’ private. Instead, sustained public funding can help ‘crowd in’ investment from the private sector. The North-East Independent Economic Review suggests that if the North-East had similar levels of private sector job creation to comparable regions, another 70,000 jobs could be created. With an ambitious programme of economic transformation, it will be possible to beat that. Crowding in extra private investment by providing the high-quality, public funding. Together, these will transform the economic possibilities here. 

We should be aiming to create 100,000 additional well-paid, secure jobs across the North-East.  The funding to deliver this, and to transform the rest of the economy, should be top priority of any Labour government. The UK’s infrastructure requirements over the next decade or more come to £500 billion of additional spending. 

With £250billion of government funding, we could look to massively enhance the UK’s current public sector net investment. We wouldn't just reverse the planned cuts to investment. We would lay the foundations for a new economy. 

And with £100billion for new public national and regional banks, on the same conservative leverage ratio as the European Investment Bank we could look to deliver an additional £250billion of long-term, patient investment. 

But at a time when bond yields are the lowest ever recorded, private sector growth is weak, and there are good projects and decent companies crying out for funding, this is the scale of investment we need. 

We have to reverse an historic injustice. Globalisation and government policy have done huge damage to too much of our country. So much potential has been wasted.  So many lives have been blighted by the failure of the old economic model. It is time to turn our country around. 

Labour has offered bold visions for the future before. We set up the National Health Service. We delivered a welfare state. We must now raise our sights once again. We should now work to build a transformed economy where no-one is left behind. 

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John McDonnell: voting restrictions could rig Labour leadership race.

John McDonnell has accused members of Labour’s national executive committee of attempting to rig the leadership contest by changing the rules to prevent more than 130,000 new members from voting.

The shadow chancellor, one of Jeremy Corbyn’s closest allies, said there was “widespread concern and anger” about the decision that only people who had joined the party before January this year could participate in the forthcoming leadership contest.

Speaking to the Guardian, he added: “And the decision to increase the fee to become a registered supporter from £3 last year to £25 this year – and to leave just 48 hours in which to sign up – both discriminates against the low waged, unemployed, students and the elderly and is an affront to Labour values.

“These decisions, taken by Labour’s national executive committee [NEC] this week, will be widely seen at best as turning our back on an open participatory party democracy, and at worst as an attempt to gerrymander and rig the leadership election.”

McDonnell said the huge increase in members in recent weeks, thought to be mainly from people who want to back Corbyn, ought to be a cause for celebration. To “lock those members out of the right to vote” was a step backwards for Labour and a step backwards from party democracy, he added.

Regardless of any legal action that may be taken, the national executive needs to think again and reset rules for the contest that makes this leadership election the most open and democratic the party has ever held,” McDonnell said.

He added he was deeply concerned that members had not been consulted before the NEC decided to ban all local party meetings. “This is of particular concern over the next few months and sends a negative signal to the membership.

Anushka Asthana Political editor Guardian, Friday 15 July 2016  

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John McDonnell MP, Labour’s Shadow Chancellor, responding to the reports that George Osborne intervened on behalf of HSBC over money laundering accusations, said:

"Serious questions about George Osborne's actions are raised in a congressional report on investigations into HSBC.

“The Chancellor urgently needs to clarify whether he thinks that there are circumstances in which it is acceptable for financial service companies to potentially break the law and avoid prosecution. And he should clarify if he had received representations from HSBC prior to writing to Federal Reserve chair Ben Bernanke, seeking to sway the US investigation.

"It is not acceptable for any institution to place itself above the law, however powerful or financially important. It is hard to envisage circumstances where the Chancellor of the Exchequer should be using his office to interfere in a criminal investigation."

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John McDonnell MP, Labour’s Shadow Chancellor, speaking to the Local Government Association’s annual conference in Bournemouth, said:

We are meeting at a time of enormous uncertainty, following the result of the EU referendum just two weeks ago. There is the wider political uncertainty about Britain’s role in the world. And there is the economic uncertainty introduced by the shock of the Leave vote itself. Longstanding trading and financial relationships are at risk of being torn up. Perhaps the clearest message from the vote to Leave is that business as usual is no longer an option.  

The shock of the Leave vote has been worsened by the shaky foundations of our economy. Productivity growth has stalled since 2007, an unprecedented occurrence in modern peacetime history. Partly as a result of low productivity, wage growth remains low and any inflation arising from the falling value of the pound is liable to eat into real earnings. The current account deficit remains at near-record levels, whilst borrowing by government and households is also rising. The economy is, if anything, more unbalanced than it was before the crash of 2008. 

We argued that George Osborne’s fiscal rule, introduced last autumn, had no sound basis in economics. The Chancellor has failed to hit his debt target at this year’s Budget. The shock of the Leave vote, and the absence of a plan to deal with that shock, has now forced him to abandon his fiscal surplus target. This is absolutely the right course of action, as was abandoning the threatened “Brexit Budget” of swingeing cuts and tax rises. Further austerity would be absolutely the wrong course of action to take in an economy buffeted by a shock like Brexit. 

Let me make it clear - Local Government have been bearing much of the brunt of austerity. Councils cannot and should not be the target once again .Labour will continue to press for proper funding and resources for our local authorities. But we need to also recognise that our economic policy now must be about more than just accepting the status quo. We have to do more than try and patch up the damage. The Leave vote showed just how decades of underinvestment had left too many people here feeling abandoned by what they, quite understandably, view as a distant Westminster elite. We need a break with the old way of doing things. 

I believe that it is local councils that have started to show how a new path for the economy can be created. But it has to be matched up by action from central government. The challenges are substantial. 

Regional inequality

Britain today has the worst regional inequality in Europe. The gap between our richest regions and our poorest is wider even than that between North and South Italy, or between East and West Germany. In London we see the richest places in the whole of the EU, whilst nearly 80% of UK regions earn less than the EU average. These are the places that tended towards voting Leave.  

We should not allow a situation to persist where the majority of investment, from both public and private sectors, is concentrated in a few areas, and great swathes of the country are left behind. It was important to see the government begin to lay out its vision of the British economy after the Leave vote. George Osborne’s commitment, made in the Financial Times earlier this week, that he was seeking to boost the funding made available to regions in the North of England is to be welcomed. We have asked him to set out a timetable for delivering this, and some details of the projects to be brought forward. Local Government should be vitally important partners in designing and delivering this programme.  

We’re concerned that after the Leave vote, vital EU regional funding that comes to over £10bn a year will be simply lost. This has provided a lifeline of funding for some of the poorest regions in the country and is now at risk. So we’ll be pressing the Government to address this question urgently. The Government must guarantee this funding is protected.  


The Government’s austerity policies have reinforced the UK’s regional bias. It is local authorities that have borne the brunt of the cuts.  But it is then the local authorities in some of the poorest places that have been hardest hit. Overall, local authorities have seen their spending fall by 23% since 2010, allowing for inflation. These are huge cuts for local authorities to bear.  

Action by local authorities

But across the country, councils have responded with determination to their deteriorating circumstances forced on them by austerity. Oldham council has looked to develop its own responses to the crisis, working with Oldham Credit Union to reduce the burden of problem debt locally. Its Fair Employment Charter rewards local employers and looks to use local authority procurement to improve working conditions. Enfield council in London has developed innovative contracting models with major local employers to support good jobs. And Preston, inspired by the example of Cleveland, Ohio, has developed an extensive programme of work.  

Preston was one of the councils facing the very sharpest cuts to its funding out of any in the country. But they are responding creatively. They have got major local employers and buyers – so-called anchor institutions, like the University of Central Lancashire – to drive through a local programme of economic transformation. By changing their procurement policies, these anchor institutions were able to drive up spending locally.  

They’re looking to shift a proportion of the joint council’s £5.5bn pension fund to focus on local businesses, keeping the money circulating in Preston. And the council is actively seeking opportunities to create local co-operatives as a part of local business succession, working with the local Chamber of Commerce. The aim is to sustain high quality local employment, by giving the chance for workers to keep a business in local hands.  

These are just a few of the ways in which imaginative local authorities are starting to show a new path for the economy.  We need to scale up and spread initiatives like these. And we have to make devolution a reality where it has not already been achieved. That doesn’t mean passing down responsibility for administering cuts to local and regional authorities, particularly in England. It means ending the concentration of power and wealth in just a few hands in our capital city, and giving the powers back to those local areas and places that have been excluded for too long.  

We need a government that trusts local authorities to find their own economic solutions for their own areas. Labour already has an agreement with our new Mayors to set up a Mayoral Economic Forum, helping to bring together best practices and ideas. Looking ahead, we need to bring other local authorities on board.  I think we can develop a consensus on the approach now to be taken, based on the foundation.  

Next steps

Most immediately, there is an urgent need for some clarity and certainty from government. The lack of planning for the Leave vote has already been damaging to our economy. Economic policy has been pulled together on an ad hoc basis. The centerpiece of the Government’s macroeconomic policy, the fiscal surplus target, has been ditched. And the Chancellor has now floated the prospect of exceptionally low Corporation Taxes as a solution to low and falling rates of business investment in the UK.  

This is not a view I share. Previous cuts to corporation tax have not resulted in increasing investment, as the Office for Budget Responsibility has found. And by whittling away at the tax base, cuts to corporation tax put more of the burden on households and small businesses, whilst increasing the pressure for cuts to local authority spending. So we are adamantly opposed to further cuts in the headline rate of corporation tax that threaten to turn this country into little more than a tax haven. 

We need, instead, some clear parameters for the ongoing discussions with the EU and other international partners about Britain’s future role in the world. Local Government must be represented in the negotiations and decision making as we remake our relationship with Europe. 

Another red line is preserving free trade. There is no economic case for reimposing tariff barriers with Europe and depriving British businesses of access to the world’s largest single market. And we cannot accept any restrictions on the rights of those who work here. That includes those from other EU countries who presently live and work in the UK. We will not be willing to support any EU deal that reduces the rights available to working people in this country.  

The way forward

The Brexit vote should act as a wake-up call for all of us. It will force major challenges on local and national leaders alike over the coming years. Labour wants to work in partnership with local authorities as we begin to put together a new political economy for the country. We will seek to ensure Local Government’s voice is heard and listened to in this challenging period ahead.

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Sir John Chilcot published his report of the Iraq Inquiry today Wednesday 6 July 2016.

The Iraq Inquiry has concluded that the decision to go to war was made on the basis of flawed intelligence and troops were sent in before peaceful options had been exhausted.

 This is the speech that I made in the Chamber in Iraq Debate on 18th March 2003 

John McDonnell (Hayes and Harlington): Today is the first occasion on which I have spoken in a debate about Iraq and I am grateful for the opportunity.

It is a time to draw on one's inner beliefs and vote according to principle. I want to put my views on record for my constituents and the community where I live and which I work hard to represent so that they know and understand what I do today. 

shall vote against the war and for peace. I shall walk through the Lobby with many members of the socialist Campaign group, but one will be missing. My hon. Friend the Member for Bolsover (Mr. Skinner) will not be with us tonight, and I send him our best wishes for a speedy recovery. 

Last week, in a desperate attempt to gain support for war, the Ministry of truth at No. 10 tried to portray the Campaign group's position as a challenge to the party leadership. Let us make it clear that today's vote has nothing to do with the leadership. It is a vote on principle: one is either for war or against it. 

The Prime Minister said that he wants people to vote not out of loyalty but on the basis of understanding and supporting the argument. I respect him for that. I would respect him even more if he gave us a free vote instead of a three-line Whip, and if the Whips were called off from trying to persuade people in their normal manner. 

I shall vote for peace tonight because the Bush war plan is immoral. It fails the test of the basic just war principles of not only last resort but right intention. I do not accept that Rumsfeld, Cheney, Perle and Bush have the right intention for the future of Iraq. 

I believe that war is illegal. We cannot simply erase the US ambassador's commitment to UN Security Council partners that resolution 1441 contained no hidden triggers and "no automaticity". Many will perceive war against Iraq as an act of international vigilantism by a superpower state that increasingly appears out of control. We will reap unforeseen and incalculable consequences for the world, our citizens and constituents for generations. People will suffer and die. No matter how few die, it will be too many for me.If we go to war, we must be clear that we have the support of our people.We will work through the UN. We will use weapons inspection and implement the proposal 

With great respect to the hon. Gentleman, I do not believe that the Basra road is a good example of supporting the Iraqi people. We inflicted carnage on them. Many were simply conscripts who did not wish to fight. 

If we go to war, we need the clear support of our people. In the past 12 months, we have been treated to a global propaganda exercise to persuade us of the need to attack Iraq. We have been subjected to a global stream of new-Labour-like publicity stunts, cynical in intent and increasingly ineffective. The lasting inheritance is the perpetrators' inability to tell the difference between truth and falsehood, even when lives are at stake. 

Most people have seen through the global propaganda exercise. The great persuaders have failed to persuade. People have seen through the dodgy dossiers and the forged nuclear weapons evidence. They have been offended by the use of the memories of those who died on 11 September to justify dusting off Rumsfeld's five-year-old plan to invade Iraq. They understand that the war has no link to the war against terrorism and will exacerbate the terrorist threat for years. They have grown wary of pleas for and justification of war on humanitarian grounds by those whose humanitarian credentials are compromised by their military, economic and political support for the tyrant Hussein and who, after 20 years, have suddenly discovered the plight of the Iraqi people. 

Even those who believed Bush and would have been held to the principles of the UN by the Prime Minister have been rapidly disillusioned. We now know that the Bush military regime had set a timetable for invasion of Iraq that was based not on the outcome of the UN weapons inspections but on the climatic conditions of the middle east.

A second UN resolution was not an act of faith in the UN and the rule of international law. It was simply another part of the propaganda exercise to bring states, and especially the British electorate, on side. When not enough states could be bought or bullied, the UN route was cast aside. 

We reached the height of cynicism last week when we were promised the Palestinian-Israeli road map. It comes from a President who was forced by world opinion to send Colin Powell to Israel when Sharon sent his tanks to demolish Jenin. To give Sharon the time to murder enough Palestinians, Powell took the longest route from Washington to Tel Aviv in the history of travel. Where was the road map then? Where was it this week when Israeli bulldozers drove backwards and forwards over the peace demonstrator, killing her outright?

When rational argument fails, we find a scapegoat. Who better than the traditional enemy, the French? The language that has been used in the debate against the French verges on xenophobia. Yet any criticism of the Bush regime is pounced on as anti-American.

It might be impossible to prevent the Bush regime from going to war, but we can still prevent Britain from being party to this international atrocity. Our vote tonight could withdraw any moral or political authority to take this country to war. Without the overwhelming support of the House, no Prime Minister can be confident that he has the backing of the British people for war, or the right to lead our people into this unknown risk. 

If the Prime Minister proceeds to take us to war in this coalition—not of the willing, but of the killing—I shall say clearly, "Not in my name. Not in the name of thousands of Labour party members up and down the country. Not in the name of the British people." To our communities, we say, "Continue the campaign for peace, to shorten this war and to prevent the next." To the British troops, we say, "Safe home." To the Iraqi people—the parents—we say, "Hide your children deep in the shelters, but we wish you safety. We will stand by you when the bombing stops." To the peoples of the world, we say very clearly, "We will not let this coalition destroy the United Nations as the arbiter of international order." We must form a new coalition to build institutions of global governance capable of safeguarding the world from the new superpower that is globally dictating its policy to the rest of the world.

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Novara Media Interview with John McDonnell



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John McDonnell MP, Labour’s Shadow Chancellor, responding to reports that George Osborne intends to cut corporation tax to 15 per cent, said:

"This is a futile and costly gesture from a lame-duck Chancellor who is clean out of ideas after being forced to abandon his failing flagship austerity programme. George Osborne is already set to slash corporation taxes to among the lowest rate in the G20.


"But despite falling corporate tax rates UK investment has shrunk in both of the last two quarters even with record profits and UK companies sitting on a £700bn cash pile.


"Instead of turning the whole country into a giant tax haven and playground for the ultra-rich, the Chancellor needs to get a grip on the real problems by reversing planned cuts to Government investment and bringing forward shovel-ready projects for those areas worst affected by the investment slump and the shock of Brexit."

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John McDonnell’s Speech at the Southbank Centre 1st July 2016

Brexit and what the economic implications mean for our country.

As today is the centenary of the battle of the Somme I would like to start by paying tribute to all those who lost their lives. Both my grandfathers served in the 1st World War. They as many survived but nobody ever lived through unscathed. We remember and honour the sacrifice made on all sides and are reminded of the importance of peaceful, constructive international relationships.

This has been quite a week in politics. Whatever our internal party activities, in both parties, we must recognise our responsibilities to fulfil our role to protect community interest.

Last Thursday’s vote to Leave the European Union has opened a period of intense political and economic uncertainty.

The UK’s triple-A credit rating has been lost.

Sterling markets have been in turmoil, as have stock markets here and abroad.

The FTSE100 index registered a bigger single-day fall than after the bankruptcy of Lehman Bros in 2008.

Some employers, most notably in financial services, are already looking to relocate jobs.

A quarter of those employers say they will introduce a hiring freeze.

Shares in UK banks have fallen most dramatically.

Looking ahead, most major forecasters have revised their expectations of future growth sharply downwards. A major loss of capacity, with the potential for permanent damage to the UK’s growth prospects, cannot be ruled out. The challenges ahead are immense.

I want today to look beyond the immediate economic situation, and towards a possible future for the UK and its relationship to the EU.

The people have spoken, and their decision must be respected.

We know that the population has voted to leave the European Union, we must respect that decision, but we now need to do more work to find out which elements of our European relationship our people want to preserve, and which must be changed.

This task is all the more important, given some of the frankly false information which was given out by the Leave campaigners in advance of the referendum, and the total absence of planning on their behalf for afterwards.

As I, Jeremy, and the Labour team argued during the referendum campaign, the EU has been on balance good for workers here, boosting employment and providing protections at work.

As guidelines for future negotiations or dialogue, protecting jobs and rights at work must be the starting point.

With those two aims, I believe, the following should act to outline an initial path through negotiations.

First, our aim must be to ensure freedom of trade for UK businesses in the EU, and freedom of trade for EU businesses in the UK.

Second, no EU citizen currently living or working in the UK will have their residency rights affected. No UK citizen currently living or working in the EU will have their rights affected.

Third, existing protections at work provided by the EU must be maintained.

Fourth, the UK’s role in the European Investment Bank should be maintained.

And fifth, the rights of UK financial services companies to win business across the EU must be maintained.

Any path through the negotiations that does not respect these guidelines will be liable to have severe consequences for jobs and protections at work.

Freedom of trade for UK businesses in the EU. Freedom of trade for EU businesses in the UK.

Labour does not believe that the people of Britain want to see tariffs erected around this country.

Over the years, thousands of British businesses have benefited from the freedom to do business throughout Europe, and British people have benefited from being able to buy tariff-free from European companies.

Whatever emerges from negotiations, when the final proposals for Brexit are decided, we do not want to lose the benefits that membership of the European Union has brought.

The damage that would be done to our economy by pulling out of the single market at this time could be substantial.

No EU citizen currently living or working in the UK will have their rights affected. No UK citizen currently living or working in the EU will have their rights affected.

Perhaps the most shocking and disappointing trend since last week’s vote has been the increase in racially motivated incidents.

Heartbreakingly, we have even heard reports of children asking their parents whether they will have to leave Britain because of the vote for Brexit.

Let me say to those children, and their parents, now:

Labour will always stand in solidarity with anybody who is abused because of their background.

And Labour will never vote for any kind of EU exit deal which reduces the rights to live and work of either British citizens abroad, or EU of citizens who are living here at the time of exit.

We are not that kind of people. And I don’t believe the British people, however they voted last week, are.

We have a proud history of welcoming migrants to this country.

I take heart at the number of people who have spoken out against the wave of racist attacks in the past week, and I know how many people have been shocked by them.

When the far right shouts on the streets of Britain that people who have lived, worked and raised families here for many years should be “sent back”, it is imperative that decent politicians stand with the victims and say: “we will never send you anywhere”.

It is also imperative that those politicians who knowingly helped to create the climate for such horrific incidents, in some cases seemingly to further their own careers, take responsibility for the consequences of their actions.

Guarantee of employment rights

The EU at present acts as an extra guarantee of rights for those in work.

These include maternal and paternal rights, and rights against forms of discrimination.

We will oppose any negotiations that include a reneging of those rights, and will fight any attempts to renege on existing rights in the UK.

This means that, before any withdrawal from the UK, the Government must guarantee that all the rights we have in UK thanks to our EU membership are to be preserved and not diminished on exit from the EU.

European Investment Bank

In addition to employment rights, the UK infrastructure projects often benefit from European Investment Bank funding.

The UK currently holds a 16% stake in the EIB, which last year disbursed a record £6bn in investment for the UK.

This includes £1bn for social housing.

Following the vote to Leave, there is already a threat to those projects that were seeking funding.

The EIB has a different governance structure to other EU institutions.

There is a lack of clarity about the UK’s status within it.

We should insist, given the benefits the UK enjoys and the stake we hold, that our position is maintained.

Bank passports and finance

Britain’s financial services industry employs over one million people, with another million employed in related professional services.

These aren’t just concentrated in London. Over half are outside London and the south-east.

Financial services as a whole account for nearly 10% of Britain’s GDP.

That is a similar size to our manufacturing industry.

London itself is the leading global centre for finance. It hosts the world’s largest foreign exchange market, turning over nearly $2 trillion a day. That status is directly threatened by Brexit.

There is enormous concern in the City, and amongst those major financial institutions with international interests. Those concerns centre on the potential loss of EU passporting rights.

This provides the rights for banks based in the UK to access EU financial markets. The loss of these rights, now threatened by Brexit, would be a huge blow. Financial institutions would be cut off at a stroke from those markets.

Already, there are contingency plans in place to relocate staff and, further down the line, headquarters. Research before the vote suggested that potentially 100,000 jobs in finance could be at risk. The threat is very real.

In addition, Lord Hill, the UK’s appointment as financial services Commissioner, has resigned.  Britain now no longer has any representative at the most senior level inside the EU to argue for the interests of British finance.

There is little prospect, without a clear negotiating line, of regaining that influence. Political uncertainty is feeding directly in to wider market volatility. The situation, particularly as it impacts on jobs, is untenable.

Let me be clear about this. I am a long-standing critic of the Britain’s financial institutions. From top to bottom, they have failed to live up to their obligations to society.

The focus of investment is too short-term and the rewards are, too often, excessive. As Lord Turner has said, much of the activities the City undertakes are “socially useless”.

Rewards for a very few at the top of our major financial institutions have been obscene and, quite rightly, attracted public opprobrium. Excessive rewards in financial services have contributed directly to widening inequality in this country.

The senior city figures who took part in yesterday’s Financial Times debate clearly recognised that this inequality contributed directly the vote to Leave.

Above it all, the catastrophic failure of 2008 has cast a long shadow. We are still living with its consequences now. Nonetheless, whilst the need for a fundamental reform of the City remains, we should not simply allow it to sink beneath the waves.

Our current economic model depends on financial services, including £66bn in taxes. With job losses and relocations threatened, it won’t just be a few fat cats who suffer. Over time, we know we have to change our national economic model.

The shock of the Leave vote should at least show us that we need to become a country that builds more on its strengths in science, technology, and the creative industries.

We need to show how all of our country can create and share in prosperity, rather than piling up the wealth in one corner for a few to enjoy.

We need to think how we can make finance the servant of the economy, rather than its master. But we won’t achieve this by ripping up existing, longstanding agreements in a way that threatens jobs. We’ll achieve it by working constructively with those in the financial services industry who want to reform.

The country now needs the whole system to gear itself towards delivering the long-term, patient investment this country needs. So we must ensure that any future deal with the European Union includes a banking passport and full access to European markets.

We will not be supporting any exit deal that cannot guarantee those rights.


Let me now looking ahead

To move forward, we have to be honest in our assessment of the current situation if we are to ensure the correct remedies are agreed upon for the future.

The Chancellor’s assessment of the broader economic picture.

His claim that the “roof was fixed” whilst the sun was shining belies the reality.

The Leave vote is having a greater impact because the roof has not been fixed.

We saw this in the Office for Budget Responsibility’s assessment of the UK’s fiscal position, published alongside the Budget this year. At the centre of the OBR’s pessimistic assessment was the stagnation in UK productivity. Between 2007 and 2014, on the latest available data, productivity in the UK has not grown. This is the worst erformance of any G7 economy.

It means that, today and on average, every hour worked in the UK is one-third less productive than the average hour’s work in the US, Germany, or France.

Sources of growth

Growth over the last few years has relied too much on two things.

First, the economy has produced large numbers of poorly-paid, insecure jobs.

Second, growth is becoming more and more dependent on a return to household borrowing.

We have not hit the levels of 2008 yet. However, the Office for Budget Responsibility forecasts expect an unprecedented five year period of continual household deficits.

Current account

At the same time, our deficit with the rest of the world, the current account deficit, widened in the last year to the highest level since records began in 1772.

Currently over 6% of GDP, the UK’s has the largest current account deficit of any major developed economy.

To finance this gap, borrowing from the rest of the world and sales of UK assets have reached record levels, alongside asset sales to the rest of the world.

We have been able to finance this current account deficit, despite weak productivity growth, because of what Governor Mark Carney has called the “kindness of strangers”.

Investors in the rest of the world have been willing to overlook the fundamentals of this economy in the belief that it is politically stable, has secure banks, and has a booming property market.

The Leave vote has meant that this kindness of strangers is now in short supply.

With political instability and uncertainty over the UK’s relationship with the rest of the world, the confidence of international investors in the UK’s position has been undermined.

We need an industrial strategy to develop and support key industries. The government must now bring forward a comprehensive strategy to support key industries and lay a path for future growth.


The simplest explanation for these decisive economic weaknesses is the poor state of investment in the UK. Ahead of the referendum, business investment was already in decline. It is undoubtedly now falling still further. The ongoing uncertainty alone is enough, as the press reports, to deter investment.

Investment means that businesses can have access to new machinery, technology and ideas that will help drive productivity increases. Without sufficient investment, productivity growth is difficult to achieve. But this fall in investment by businesses is being worsened by the governments’ plans to cut its own investment spending.

Government investment on current projections is set to fall by the end of the decade. Without sustained investment, we will not be able to address the economic decline that has blighted too much of our country.

Economic decline, regional inequality, and the deep-rooted alienation and despair it has produced contributed to so many voting Leave. Some are concerned that a shock to business investment spending would help push the entire economy into a recession.

Labour has called for a programme of government investment, bringing forward shovel-ready projects particularly in those areas hardest hit by long-term economic decline.


We will get through this period of uncertainty, as Britain has done many times in the past. There are real strengths in our economy, not least our talented and dedicated workforce.

Nonetheless, volatility continues and there remain grave uncertainties about the UK’s future relationship with our European partners and the wider world. The future direction of the government itself is not yet determined.

Labour is prepared, in the national interest, to work with whoever necessary to ensure that the best interests of British working people are secured.

Jeremy Corbyn has established since he became leader 9 months ago, excellent working relationships with the leaders of socialist and social democratic partners and progressive movements across Europe.

Over the coming period we will be seeking to meet them to enlist their aid in securing the best deal we can for Britain in a new relationship with Europe.

Politicians in all political parties have an immense responsibility on their shoulders. We need to concentrate fully now on the country’s and our peoples interests.

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John McDonnell MP, Labour’s Shadow Chancellor, responding to George Osborne’s statement, following the outcome of the EU referendum, said:

“The Chancellor’s statement this morning is to be welcomed in the interests of providing some certainty and stability to financial markets, and some reassurance to ordinary people in this country after days of uncertainty.

“It is reassuring to know that the Chancellor has been in urgent consultation during the weekend with those in the financial services industry, and our international partners. We also welcome the postponement of any contractionary emergency Budget until the fiscal position is made clear.

“Nonetheless, two key issues now need to be addressed by George Osborne. First, that the Treasury and financial authorities have in place interim measures needed to calm market volatility while protecting working people. We appreciate that many of these cannot be made public and so request a cross-party briefing on a Privy Council basis to secure cross-party support. Second, that he can offer interim government support, particularly to more deprived regions, in the event of a continued slide in investment, and those regions at risk of losing EU funding.

“We will get through this period of uncertainty, as Britain has done many times in the past. There are real strengths in our economy, not least our phenomenally talented and dedicated workforce. Nonetheless, volatility continues and there remain grave uncertainties about the UK’s future relationship with our European partners and the wider world. The future direction of the government itself is not yet determined. Labour is prepared, in the national interest, to work with our Parliamentary colleagues to ensure that the best interests of British working people are secured.”

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John's interview with Andrew Neil Sunday 26th June

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Now is the time for the opposition to hold together


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Labour cannot descend into infighting at this critical moment

John McDonnell Guardian Opinion 24th June 2016

The Brexit vote has delivered the most enormous shock across the political system. And as the resulting market turmoil demonstrates, it is creating an enormous economic shock too. The greatest danger we face is that this event, under this Conservative government, will be felt across the whole of society and fall most heavily on the most vulnerable.

It is impossible to understand this vote without recognising that huge numbers of people in our country have been let down, repeatedly, by successive Tory governments. While high finance has been allowed to run rampant, our historic industrial areas have been starved of investment. Secure, well-paid jobs have ebbed away, to be replaced by insecurity, zero-hours contracts and poverty wages. Many there feel, rightly, ignored and cast aside by the Westminster political system.

The campaign to leave made three claims to the disenfranchised. First, they claimed that pressure on public services and the lack of jobs was caused not by Tory governments imposing austerity and failing to invest, but by migration alone. We understand people’s concerns and will work to address the real insecurity that lies beneath them. But the leave camp’s second claim, that exiting the EU would be a simple solution here, was quite wrong.

And third, they were convinced by those on the leave side, including Boris Johnson, who said there would be no economic consequences from a decision to leave. Every reputable economist and economic institution warned the shock would be substantial. I don’t doubt that Boris Johnson and others knew this full well. The biggest danger here is that the shock will be felt most in those communities least able to withstand it. We should not let the leaders of leave shrug off their responsibilities here.

George Osborne has already threatened an emergency budget in the event of a vote to leave, doubling down on austerity and reversing his manifesto promises not to raise income taxes and VAT. There is no economic justification or mandate for this. Sixty-five of his own MPs have refused to support it, and Labour will oppose him every step of the way.

Labour and the whole labour movement will need to rally now in defence of working people and their families. That means immediately scrapping George Osborne’s fiscal surplus target for 2020. It has no support in the economics profession and Osborne’s desperate efforts to achieve it have resulted in the misery of spending cuts and the short-sighted slashing of vital investment. If a recession breaks, as forecasters now predict, maintaining spending will be essential to help avert an even deeper downturn than necessary. This will also mean abandoning the third pillar of the fiscal charter the government pushed through only last year: a comprehensive failure of economic policy within 12 months.

When an overwhelming consensus now exists on the necessity of public investment to support weakened economies – from the CBI to the TUC to international organisations such as the IMF and the OECD – it was clearly mistaken for the chancellor to pursue major cuts in investment, which is now scheduled to fall until the end of the decade.

Under current circumstances, with shockwaves still being felt, it is critical that the government is prepared to bring forward shovel-ready investment projects – not only to create jobs today, but to lay the secure foundations for the future economy. Investment spending should be targeted on those areas of the country that have most suffered from neglect and long-term decline under the Conservatives. We should no longer tolerate a situation in which some privileged areas of the country receive the lion’s share of public investment.

These are uncertain and dangerous times for all of us. Labour must be at the forefront of putting forward an alternative to the present economic mess, which makes unity more important now than ever. At a time of such economic uncertainty, with the Tory party split clean down the middle, Labour members and voters will not forgive us if we descend into infighting and introspection only a year after Jeremy Corbyn won his landslide victory as our leader.

The current Conservative administration has piled failure on failure. Its economic legacy will be the continuing devastation of communities across the country, the shoddy low-paid jobs it has created, and now the shock of Brexit. Together we can, and now must, do better than this.

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EU Referendum: John McDonnell MP, Labour’s Shadow Chancellor, said:

“People will be waking up this morning to turmoil in the markets and the pound crashing, and fearing the emergency budget the Chancellor threatened to hike their taxes and cut public services.

“The Government must now take steps to stabilise the economy, and to protect jobs, pensions and wages. Labour will not allow any instability to be paid for by the working people of this country”

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Labour Remain vote could secure £8bn of investment for the North of England by rejecting Tory Brexit

The Shadow Chancellor, John McDonnell MP, today called on voters in the North of England to back a Labour Remain vote and reject a Tory Brexit so that it can unlock to over £8 billion of potential further investment for the entire region through our continued membership of the European Union.


Speaking at Manchester Metropolitan University alongside former Labour Prime Minister Gordon Brown, John McDonnell MP, called on the Government to work to ensure that the UK receives its fair share of funding.

At present, Britain receives less than the per capita EU average in funding from the European Investment Bank (EIB) due to Tory cuts and changes to the regional infrastructure required to make successful funding bids in England, which have weakened its effectiveness compared to the devolved administrations.

Under the ‘Juncker Plan’, the EIB is set to increase infrastructure and investment spending across Europe by €320 billion. The UK’s current share of the EIB’s capital is 16 per cent, so if the UK was able to raise a fair share of the additional investment also to 16 per cent then this would work out to £35 billion for the UK by 2019/20.

For the North of England, the total extra funding boost would be £8.3bn. This would be enough to finance the proposed High Speed 3 and help make the Northern Powerhouse a reality.


John McDonnell MP, Labour’s Shadow Chancellor, said:


“There are opportunities for Britain inside the EU to improve the lives of working people across the North of our country.


“The Tories sell all of us short by not taking them up.


“And a Tory Brexit would close the door to the vital infrastructure investment our industrial heartlands desperately need.


“Britain has a 16 per cent share in the European Investment Bank, but receives only 11 per cent of funding.


“If we just took our fair share that would be an extra £35billion of investment.


“That’s the same as a whole year of public investment under George Osborne.


“It’s money that could transform the parts of our country hardest hit by Tory austerity.


“It could mean funding High Speed 3 and overhauling public transport here in the North.


“We could unlock that £79 billion potential of the North of England, helping create hundreds of thousands high-quality, well-paid jobs over the next decade.


“Under the Tories today, that £35 billion is extra money we’re leaving on the table.


“Under a Tory Brexit, we’d be walking away from the entire pot.


“With this additional funding, we could help deliver the investment-led recovery our country needs.


“But neither wing of the Tory Party will fight for it.


“They’re the party of corporate elite, and the CEOs who prefer to award themselves fat pay cheques instead of investing in British industry.


“By voting for a Labour Remain vote and rejecting Tory Brexit next week the North of England will be sending a clear message to the same Tory elites on both sides of the referendum campaign, who both have a track record of undermining the north.”

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Condolences to the family of Jo Cox MP for Batley and Spen

I sent my deepest sympathy and condolences to Jo Cox’s family. I am deeply saddened and shocked by Jo’s brutal murder on Thursday afternoon whilst she was in her constituency doing the job she was elected to do, serving her community. Jo was a brave compassionate MP who will be dearly missed. She was a wonderful, kind, caring person who was liked and respected in all parts of the House.

This attack was an assault on democracy itself, an attack on the right of everyone to have their say in how our country is run, and for those that the people elect to be able to listen to and represent them without fear or favour. We must not allow those who peddle hatred, terror and division to poison and degrade our national and political life.

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Philip Green should be stripped of his knighthood

John McDonnell  Guardian Opinion June 11

Last week, we saw the ugly face of British capitalism. The excellent work of the business select committee, and its Labour chair, Iain Wright, has helped throw a spotlight on some of the more disgraceful practices that are taking place here in the UK. We discovered that the management of BHS were threatening to kill one another and the head of Sports Direct spuriously claim that he doesn’t even know what his own organisation is up to.

Thanks to the work of investigative journalists, Sports Direct, a profitable company, was exposed treating its workforce with utter contempt. It had penalised low-paid employees for taking time off sick and founder, Mike Ashley, was forced to admit that his company was not even paying many of the staff the national minimum wage.

Mr Ashley is a man who has made millions while treating his workforce with disregard. He claimed he could not stop such behaviour quickly as Sports Direct was an “oil-tanker”, but it’s more like a ghost ship when it comes to accountability.

But clearly, this is what happens when trade unions are demonised by the media and suppressed by big business interests. In future, I would like to see any company that has been found to have broken the law and not paid staff the minimum wage, and is not recognising the trade union that represents their workforce, not only made to recognise that union, but made to accept, if the union wishes, worker representation on the board.

Furthermore, the chancellor, George Osborne, has to make sure there is no sweetheart deal for Sports Direct (like the one we saw for Google over unpaid taxes) if it is found in breach of national minimum wage laws.

This week, we may witness Philip Green (I refuse to use his title) justify his actions at BHS. The fact he feels he can threaten to subvert parliament is an insultto the British public. If he refuses to come before parliament, Green should be stripped of his knighthood. Parliament should have the right to strip honours from individuals, in my view. This would remove the secret committee network and help restore public faith in the honours system.

Green removed £1bn via a dividend payment from the Arcadia group in 2005. He squeezed out similar amounts from BHS while leaving the pension fund in deficit, before handing over the company to someone with very little record of business success. It was another act of vandalism that makes a mockery of those in business who are doing the right thing. And – even worse – employees of BHS will be paying for this with their pensions.

The vast majority of British firms pay their taxes and manage their staff with respect. However, there is a growing elite who think they are above the law and above British decency.

The new elite do not want to create wealth – they simply want to absorb it. The continued rise of this rent-seeking class is reminiscent of the robber barons of the 19th century. This new squalid elite assume that by their own genius they have amassed large sums of money, and that they have a right to do what they like, when they like, and that no one will stop them.

Maybe this is true under a Tory government, but under a Labour government with Jeremy Corbyn as prime minister this will no longer be the case.

It also underlines why we must remain in the European Union and reject Tory Brexit. If we don’t fight to keep and expand the working rights we have at an EU level, then a Tory Brexit government will only negotiate them away in trade deals that will resemble TTIP (the Transatlantic Trade and Investment Partnership) on steroids.

We have a chance now to build Another Europe in which we work with socialists across the EU to end austerity and take on those who attack workers’ rights and avoid taxes.

This is not anti-business. It’s anti-freeloader. If we allow these practices to continue they will undermine the foundations on which all genuine wealth creation is built. It will create an environment that benefits rent-seekers over wealth creators. It is time we brought an end to the new age of the robber barons. The health of our economy demands it.

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McDonnell joins calls to strip Sir Philip Green of knighthood if he snubs MPs

Shadow chancellor says retail billionaire should be punished if he refuses to be grilled by Commons committee next week

John McDonnell has joined calls for former BHS boss Sir Philip Green to be stripped of his knighthood if he refuses to be grilled by MPs next week.

The shadow chancellor has added his voice to the mounting antipathy in Westminster towards the retail billionaire, claiming that abolishing Green’s knighthood would be one way to “help restore public faith in the honours system”.

Green has been asked by MP Frank Field to appear before the work and pensions committee this Wednesday as part of its inquiry into the collapse of BHS, which has led to the loss of around 11,000 jobs. Rather than accept the committee’s request, Green’s response has been to demand Field resigns as chairman of the committee. He has previously stated that he was “not prepared to participate”.

McDonnell, writing in the Observer on Sunday, says that such a snub is an affront to the electorate as well as parliament and that the Arcadia chief, who has been repeatedly blamed for the collapse of the department store, should be suitably punished. “This week, we may witness Philip Green (I refuse to use his title) justify his actions at BHS,” he says. “The fact he feels he can threaten to subvert parliament is an insult to the British public. If he refuses to come before parliament, Green should be stripped of his knighthood.”

McDonnell adds: “Parliament should have the right to strip honours from individuals, in my view. This would remove the secret committee network and help restore public faith in the honours system.”

The shadow chancellor goes on to maul Green’s business decisions while at the helm of BHS over 15 years, referring to how he removed large sums from the company while leaving the pension fund in deficit before finally selling the company to Dominic Chappell, a three-time bankrupt. Last week Field’s committee heard Chappell described as a “mythomaniac” and a “Premier League liar”.

McDonnell states: “It was another act of vandalism that makes a mockery of those in business who are doing the right thing. And – even worse – employees of BHS will be paying for this with their pensions.”

However, Green appears unmoved by the fury, claiming Field is biased and orchestrated a “trial by media” designed to “destroy my reputation”.

The 64-year-old retailer has also alleged that the outcome of the inquiry was “pre-determined”. In turn, Field appears insistent on ensuring Green appears before his committee, stating: “The House of Commons decides who chairs these committees, not Sir Philip Green. It’s in his interest to turn up.”

The committee chair has considerable support from peers, with SNP MP Angus MacNeil tweeting:

Administrators announced last week that the business would be wound down and all 163 shops closed and sold off after it failed to find a buyer for the bankrupt department store. It brought to an end an 88-year trading history after intensive efforts to save the business came to nothing.

The Insolvency Service has launched an inquiry that could result in former BHS bosses facing boardroom bans.

The Pensions Regulator is also investigating the £571m pensions black hole left by BHS and will publish its findings. Field has also indicated he wants Green to put £600m into the retailer’s beleaguered pension scheme.

A group of Conservative MPs are reportedly already planning to write to the honours forfeiture committee, which must then formally evaluate the tycoon’s knighthood before advising the Queen on what action to take.

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John McDonnell MP, speaking after Treasury Questions today.

Tory Treasury Ministers refused on two separate occasions to commit Tory MEPs to support EU proposals on tax avoidance, said:


"Today the mask slipped as the Chancellor and his Ministers refused on two occasions to instruct their MEPs at the European Parliament to vote for anti-tax avoidance measures.


"The Tories need to put the record straight and say yes or no to whether they will support EU measures to clamp down on tax avoidance.


"Otherwise it clearly shows that the Tories say one thing when they think people are watching on tax avoidance but do another thing when they think no one's looking.


"And it further shows that a Tory Brexit would only mean that the Tories would openly work against the EU in clamping down on tax avoidance."

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John McDonnell: it’s time for the left to save the Europe debate from the Tories

Shadow chancellor John McDonnell puts forward the left wing case for voting to stay in Europe and transform it, speaking to the Another Europe is Possible conference. Thanks to Ed Dingwall for transcription.

mcdonnell-aeip.jpgNothing could be starker than the contrast between the debate on the referendum with regards to the progressives on the left and the debate on the right. I think the debate on the right is disfiguring political discourse, in this country. To be frank, it's turning people off.

The Tories seem to be transposing the gang warfare of the Eton playground and the battles over the Tory leadership succession on to our national political scene. It's rancorous, personal and bitter and has degenerated into name-calling and the hyperbole of Project Fear, with ludicrously exaggerated claims and counter-claims from both sides of the Conservative Party. Johnson's comparison of the EU with the Third Reich, and Cameron's claims of impending World War Three – they just beggar belief. The economic argument has degenerated into, on one hand, a description of economic paradise post-Brexit and outside the single market; and, on the other hand, a near Pompeii-like condition of the City of London and the economy if we leave the EU.

We just cannot go on like this. We cannot let the Conservatives and the rest of the right drag this debate into the intellectual gutter. Our country and our people deserve better than this. We must not allow the decision over the future role of Britain in Europe to become embroiled any further in the in-fighting over who is to be the next leader of the Tory Party; or the exploitation of people's insecurities by the far right.

Time to step in

So it's time now for those on the left and on the progressive spectrum to step in, and it's our job to retrieve this debate and save it from the right. The nature of the debate on the left should be in dramatic contrast to that on the right, and I think it already is. It has to be collegiate and, in Labour Party terms, comradely – a discussion among friends and allies who seek the same goal but offer a different route and a mechanism to achieve that goal. So let's appreciate that there are those on the left who have a principled, rational and coherent argument why we should vote to leave. But we just believe they're wrong.

Let's look at where we agree. First, on the left and on the progressive spectrum we all accept that many of the immensely critical issues we face are transnational and they require transnational political solutions. Second, our consciences don't end at the Channel, or at the North Sea.

I want to look at some of the examples of some of the transnational challenges we face. On energy, and creating the energy to light and warm our homes and power our industries: to be frank, I don't want to poison the air breathed by families in Paris, Madrid or Athens; or put their very existence, or their descendants’ existence, at risk of cataclysmic consequences of climate change. We know the EU is, and could be, an even more critical part of that much needed transnational architecture to respond to climate change. That's one of the reasons why we want to remain in.

On resources, to rise to the challenge of poverty and inequality both in Britain and across Europe, we need to harvest the resources of this rich continent effectively and fairly and wisely. How, in all conscience, can we turn a blind eye any more to the City of London effectively operating like a funnel to offshore tax havens for the taxes of transnational corporations and the super-rich. The taxes that should be paid to fund healthcare for the sick, the care for the elderly, the education of our young and tackling poverty – public funding that's desperately needed, not just in this country but right the way across Europe. We know that if we clamp down here, the tax evaders and avoiders will move elsewhere. That's why European agreements are necessary, and which form the basis of global agreements to track down and confront tax evasion and avoidance. That's why we need to stay in.

Humanitarian challenges

We shouldn't be able to sleep at night when we see refugee children's bodies washed upon the beaches of the Mediterranean. Memories are often sadly short. Europe learned the harsh truth, after the second world war, of the consequences of the barbarity of war and conflict. It faced then a refugee crisis on a scale never witnessed before. But by coordinated transnational cooperation across Europe, refugees in their millions were supported and resettled. It took time and concerted action across the whole of Europe. Vital lessons were learned about how to prevent, resolve and respond to conflicts. Setting up the Europe-wide institutions to bring people together was one of those lessons. If the European Union was eventually established for anything, to be frank, it was to ensure that we could come together effectively to rise to those humanitarian challenges on our shores. We should do nothing that puts at risk the institutions that enable us to take this coordinated response, to be organised to tackle the refugee crisis. That's another reason for staying in.

And it's important that on the left we don't avoid the issue of free movement and immigration, which is inevitably coming to the fore in this debate. None of us underestimate people's anxieties and emotions on this issue. We know that if we ignore it, we do so at our peril. So it has to be confronted head on.

The British have been and, almost certainly, will continue to be one of the greatest beneficiaries of the free movement of people across Europe. Whether it's the Brits retiring to the warmth of the sun, or the quiet countryside of rural France, or the beaches of Greece, or our young people increasingly opting to study and work across Europe, or British workers taking work elsewhere when our own economy is slowed, it's the British who are reaping the rewards of travel and settlement that free movement brings us. Inward migration often keeps our own economy afloat, filling the skills gaps and supporting an ageing population to pay its way. I speak as the grandson of an Irish immigrant and, I have to tell you, it's been the case for almost a century and a half that migrants have supported this economy and kept it afloat. I'm proud that it was often Irish men who built most of the infrastructure on which you travelled to get here today, many of the buildings we work in and hold these meetings in; and it was Irish women nurses who populated the NHS, cared for the elderly, taught in our schools, and worked in the factories that rebuilt the economy after the second world war and beyond. I'm proud of being the grandson of a migrant worker.

But we have to be straight with people as well. Of course migration, on any scale, presents its problems of integration and pressure on public services. But all of these problems can be readily overcome. The vast bulk of the evidence demonstrates that migrants pay more into the economy than they take out. And, despite general concerns about migration, all the evidence shows that on a one-to-one basis and within communities, the nature of British people is to be extremely welcoming to incomers. People generally just want to get on with each other and live in peace and harmony.

Austerity is to blame

We mustn't let the Tories use immigration as a smokescreen for the cuts in public expenditure that they've introduced as austerity. Our public services – the NHS in particular – and our housebuilding and infrastructure programmes would be in real difficulties but for the staff coming from across Europe. Where there are pressures in a particular area, the simple and obvious solution is specific programmes of government support to deal with them. It's not rocket science.

We have a duty also to address the issue of migration in a way that's positive in its view that a community can respond to receive the benefits of migration at the same time as overcoming some of the short-term issues.

The question for the left then, is whether we can transform the operation of the European Union. It's the same question asked by the left about any state institutions – whether it's the local council, the national government, or any transnational institutions. The strategy we pursued on the left, in the past and now, has been described traditionally as 'in and against the state'.

The state isn't just a set of institutions, it's a relationship. Usually one of dominance of the institution over the individual. Socialists and progressives have gone within these institutions to try to transform that relationship. That is, to transform it into a democratic relationship, where it is the democratic people's wishes that dominate, not the bureaucracy or the powerful economic interests that the bureaucracy often represents.

So, finally, that's the challenging question posed to the modern left. Can we, and how can we, democratically transform our European institutions? The optimism is based upon this: for the first time in over a generation there are movements and political forces mobilised and mobilising across Europe to respond to that challenge, but responding to it increasingly together. We have the opportunity now, from today, to re-route the referendum debate away from Tory Brexit; and into a debate about the democratic future of Europe, about 'another Europe': a Europe that is not just possible, but urgently and vitally needed.

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Labour meet with Tata to discuss way forward for UK steel industry

Labour today met with senior representatives of Tata Steel to discuss the future of the UK steel industry.


Shadow Chancellor John McDonnell MP and Shadow Secretary of State for Business, Innovation and Skills Angela Eagle MP met with Koushik Chatterjee, Group Executive Director of Tata Steel and Bimlendra Jha, Chief Executive Officer of Tata Steel UK in Westminster this morning, along with representatives of the steel unions Community, GMB and Unite.


Tata Steel announced their plans to sell their entire UK business in March. Since then Labour has been working to secure the future of UK steel making.


The constructive discussions focused on the sale process and the future of the industry. John McDonnell and Angela Eagle stressed the importance of ensuring sufficient time for a suitable buyer to be found. They also discussed the changes needed to ensure the sustainable future of the UK steel industry, including action on energy, business rates, and the British Steel Pension Scheme.


All parties agreed the need to find a resolution to the pension issue which both protected workers and pensioners, and supported the sale process and the future sustainability of the business.


Steel is a foundation industry. It is vital for UK manufacturing and it supports 40,000 jobs across the country. Labour will continue to push the Government to do what is necessary to save our steel industry. 


John McDonnell MP, Shadow Chancellor said:


"We had a positive meeting today with the management of TATA Steel and we are both agreed on working together to protect the jobs and pensions of UK steelworkers. 

"The steel sector is a vital part of the UK economy and Labour will keep the pressure on this Tory Government while providing them with a legitimate alternative like Labour's Four Point Plan to Save Our Steel Industry."

Angela Eagle MP, Shadow First Secretary of State and Shadow Secretary of State for Business, Innovation and Skills said:


“We are determined to work in partnership with Tata Steel and the steel unions to secure the future of this vital foundation industry. We also welcome Tata Steel’s commitments to being a responsible seller.


“Steel can have a bright future if we take the right decisions now. We’ll keep the pressure up on the Tory Government to do what is necessary to save our steel.”

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John McDonnell’s response to the Queen’s Speech 2016

I wish to move the amendment in the name of the leader of the opposition and several colleagues.

Mr Speaker last week was the first time I have visited the Other Place to listen to Her Majesty read to us the Queen’s Speech.Usually I avoid the crush and stay here to have a chat with the Honourable Member for Bolsover.I have to say that Her Majesty has to be admired for the way in which she delivered this fictional drivel of a Queen’s Speech whilst keeping a straight face.The Queen’s speech before us demonstrates conclusively the massive distance between the Chancellor and the real world.

The Queen’s Speech opened with an extraordinary piece of doublespeak.The government apparently thinks we live in a “strengthening economy”.They seemingly are not paying attention to their own statistics, and their own forecasts.After precipitating the slowest recovery in modern British history, the Chancellor is now presiding over a recovery built on sand.

Business investment has slumped again – by 0.5% in the first quarter, according to this morning’s figures.And the OBR’s most recent forecasts saw downward revisions across the life of this Parliament.Consumer debt is rising at record rates, and is forecast to remain at unprecedented levels.The current account deficit has reached record highs.We are borrowing more than ever before from the rest of the world as a result. We are not, as the Queen’s Speech claimed “living within our means”.

And productivity has slumped under this government. The gap between what the average hour worked in Britain produces, and what the average hour worked in the US, France or Germany produces, is bigger than it has been for a generation. Every hour worked in Germany produces one third more, on average, than it does here. Low productivity is the sign of a weakened, damaged economy. It means lower wages and more insecurity.

The slump in productivity, which has been far worse here under this Chancellor than in any comparable G7 economy, is what caused the Office for Budget Responsibility to revise its future forecasts downwards.

Growth has been revised downwards for every year for the rest of this decade. And when the OBR revised its forecasts downwards, the Chancellor’s entire Budget plan was shot to pieces. He’s been left with a £4.8bn black hole of committed spending with no committed funding.

It is nonsensical to claim, as the Government’s Queen’s Speech did, that the public finances are being placed on a “secure footing” when there are gaping holes in the Budget and the Institute of Fiscal Studies thinks there is only a 50:50 chance of meeting the government’s own fiscal surplus target. This is betting the nation’s finances on the equivalent of tossing a coin. There is nothing responsible. There is nothing “secure” in setting unrealistic and politically-motivated targets for public spending cuts.

And it is useless to preach about the need for a “stronger economy” when, by his actions in office for six years, the Chancellor has methodically undermined the economy.  This was his choice. Austerity was a political choice, not an economic necessity. We all now live, and are still living with its consequences. Because it was the wrong choice to make, the Chancellor has failed, and it is the British people who are bearing the cost.

He has piled failure upon failure, but at the centre of it all is the failure to sustain productivity. Productivity is the key to growth in any modern economy. And the surest way to achieve increased productivity is through increased investment. Increased investment means installing new equipment and replacing old infrastructure. Yet business investment remains weak. When business investment is weak, government should step in to make sure vital, world-class infrastructure is there, from high-speed rail to high-speed broadband.

A consensus from the IMF to the OECD, from the CBI to the TUC, is now urging governments across the world to invest in the future. But this government, clinging to its fiscal surplus target, is set to actually cut real-terms government investment over the course of this Parliament. You couldn’t imagine a more perverse and inadequate economic policy.

And behind the failure to invest lies the failure of our economic institutions. Too many of them have been captured by special interests, or place short-term gain ahead of long-term growth. We have major corporations sitting on a cash pile of up to £700bn, paying out salaries to senior executives whilst failing to invest. It’s no wonder that we have seen a series of shareholders revolts at the remuneration packages of some of chief executives.

We have a Department for Business that doesn’t believe in supporting business. And have a department for tax collection that doesn’t believe in collecting taxes – not, at least, from major multinationals. And who can blame them? When they strike a deal with Google which reflects an effective tax rate in the single digits the Chancellor calls it a “major success.” that is why I have written to the Chancellor to make sure that he urgently contacts the French authorities so that they share any information they find from their investigation into Google’s Paris headquarters with us so that we can get a better understanding of Google’s operations in the UK.

After six years, the Chancellor has no-one to blame for his failures but himself.

The Queen’s Speech furnished us with plenty more unreal promises.

The government says it will “support aspiration and promote homeownership”. Tell that to the hundreds of thousands of our young people who now have no serious chance of ever owning a home of their own. Homeownership has fallen to its lowest level in decades under this Chancellor’s watch. Rough sleeping has risen in London by 30% in the last year. The biggest rise since the current reporting were introduced. Nearly 70,000 families were living in temporary accommodation, including Bed and Breakfasts, last year. 9 in 10 under 35’s on modest incomes could be frozen out of home ownership by 2025 according to independent analysis.

Acording to the Queens Speech the government will “spread economic prosperity”. Tell that to the steelworkers, their families and communities, threatened with the destruction of their industry. Especially tell that to the steel workers I visited in Redcar where the government failed even to mothball the plant to save their local futures. Tell that to the BHS workers facing redundancy as their boss, Sir Philip Green, an advisor to government, stripped their business clean.

The government will “continue to support the Northern Powerhouse”. That’s why they’re  closing its Sheffield office, and threatening another six offices across the North with closure. That’s why of the top 15 infrastructure projects with most public funding only 1 is in the north.

The government intends to not to tackle “poverty and deprivation” but to redefine it. The chancellor’s shameful response to the one million people using our food banks every year is to introduce “new indicators for measuring life chances”. The Chancellor’s failed austerity programme has a human cost: 500,000 more children have been forced into poverty, Nearly 13 million people are now living in poverty, And over half of those living in poverty are in work. This Queens Speech offers no solutions to those who have barely enough to feed their families or who can’t pay to heat their houses. Instead this government will make sure they are counting their misery properly.

The reality is that after six years of desperate efforts to impose cuts on this economy, against the best available advice from the economics profession itself, the Chancellor is staring an entirely predictable failure in the face. He started out with such high flown promises.

There was going to be a “march of the makers”. Yet today manufacturing is still smaller than it was in 2008. There was going to be a “rebalancing” of the economy. Yet today we see that for every three jobs created in London, just one is created in the North. There was going to be a modernised tax service. But as the National Audit Office found in a damning report earlier this week, the quality of service at HMRC has “collapsed” in the last year as a result of staffing cuts.

The Chancellor has promised increased investment, but cut government investment spending – and now plans to cut it into the future. He forecast, in 2010, the fastest recovery in living memory. He has delivered the slowest recovery in modern British history.

He and his government have, perhaps understandably, clung to the job creation figures. Every month they are greeted with rare enthusiasm by this government’s ministers. The reality is that over half of those in poverty, nearly 7m people, are also in families where someone works. We have seen jobs created since 2010, but too many have been poorly-paid and insecure. 800,000 people now on zero hours contracts. Insecurity at work made worse by the undermining of employment rights by this government. There was no need for this.

It is the direct result of a failure to invest. Too many businesses have substituted cheap labour for expensive investment. They can’t be blamed: the government has set the lead, cutting its own investment spending. But low investment and weak productivity have real world consequences. It means wasted talents and opportunities lost. On one side, some are stretched to breaking point to make ends meet.  Others are left to languish, desperately searching for extra hours.

On wages that even the government’s own forecasters don’t expect to recover before 2020. Millions of people now self-employed, but their average earnings have fallen by 22% since the Rt Hon Member for Tatton became Chancellor.

The Queen’s Speech tells us that the government plans to create an economy “where work is rewarded”. Nothing could be further from the truth. Those who work hardest are punished with cuts to tax credits. But tax-dodgers and the super-rich are rewarded with tax cuts.

This government has failed and will continue to fail on every measure it set itself. It has failed in its target to reduce the debt. It has failed in its welfare cap target. It is failing to achieve its target on closing the deficit.

This is a government that has lost its way. Gone is the pretence of being the new “workers party”, trumpeted so loudly last summer. That disappeared when they started cutting in work benefits. The government wanders around, from crisis to crisis, looking for another U-turn to make. The cuts to Personal Independence Payments were scrapped. Forced academisation is being scrapped. The tampon tax and cuts to renewables subsidies both abandoned.

There is only one policy directive that seems to hold this sorry excuse for a government administration together. This is the policy, in defiance of all sound economic advice, to impose spending cuts of a viciousness not seen in this country for generations.

There is a consensus across this House that a strong economy is the foundation on which all else can be built. This government has not created a strong economy. Strong on rhetoric, perhaps. Strong on creative accounting, as the last Budget revealed. But the Chancellor’s economy is a jerry-built structure, resting on a recovery built on sand. The Rt Hon Member for Tatton has had plenty of opportunities to, as he so memorably put it in happier times, “fix the roof when the sun was shining”. But he has simply failed.

It would have meant taking quite a different approach. We all hope that once the referendum is out of the way, the economy will pick up. But without change the trajectory is clear. We are trapped in a low-wage, low-skill, low-investment, low-productivity economy.

We need a government that adopts a sensible and credible fiscal rule enabling long term patient investment in our economy. We need a government that uses record low interest rates to invest in the future. At a minimum, the government should now invest in the infrastructure, skills and technology that can help transform how this economy operates.

We need a government that actually clamps down on tax avoidance. It could go further, and overhaul a tax system that is manifestly failing to levy fair rates on those who can pay the most.

We need a government with an industrial policy. A government that backs the steel industry, works with our European partners to clamp down on the flooding of markets with cheap subsidised Chinese steel.

And it could seek to transform the institutions that govern our economy, from the Treasury to the great corporations, unlocking the potential that is otherwise wasted when vested interests dominate decision-making.

The Queen’s Speech was an opportunity for the Government to accept austerity has failed and to change course. It was not taken.  If this government cannot write a speech for Her Majesty that can undo the damage it has inflicted, and set out a confident course for this country’s economy, it is clearly time for Labour to lead the way.

Labour rejects the failed and cruel austerity programme adopted by this government. Instead, working in partnership with businesses, entrepreneurs and workers Labour would create an entrepreneurial state to support innovation, create wealth and drive growth. And we would share the proceeds of that growth fairly.

By investing in our economy Labour would lay the foundations of a new society that is radically fairer, more equal, and more democratic. An alternative based upon a prosperous economy which is economically sound, environmentally sustainable and where that prosperity is shared by all.

I beg to move

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State of the Economy Conference at the Imperial College London

economy_conf.jpgI made the opening speech to the 800 delegates at our first Economic Conference setting out our radical reforms to surpass even the Atlee government. The party will revive plans for rent controls and urge councils to follow the lead of areas like Manchester to offer cheap, local authority-backed mortgages, Labour would make it a mission to ensure families and young people on ordinary incomes aren't locked out of home-ownership as they are under the Tories. I also announced plans for a mayors' economic forum to allow the elected local leaders to share ideas along with a new economic and innovation forum to bring together businesses, unions and government.


workshop.jpgThis was followed by a keynote speech from Ha-Joon Chang talking about a balanced and sustainable economy. There were 5 workshops in the morning – What would a fair tax system look like, Europe, Britain and the economic challenges ahead, Economics within a carbon budget, Alternative models of ownership and a finance sector fit for purpose. The afternoon session’s workshops included Rewriting the rules to tackle inequality, Fiscal and monetary policy: can the UK do better?, How much debt is too much?, Gendering economic policymaking, and Technology and the future world of work.  A fantastic question and answer session took place in each workshop following exceptional presentations from all speakers. I was fortunate enough to be able to spend some time in each of the workshops and I was astounded by the level of enthusiasm and participation from all delegates. The workshops were followed by a plenary panel consisting of Sue Himmelweit, Linda Yeuh, Paul Mason, Adam Marshall and Len McCluskey with closing remarks by Jeremy Corbyn.

Ieconomy_lunch.jpgt was a day of serious economic debate featuring world famous experts, NGOs, trade unions and people impacted by policy We have the opportunity to build a fairer, equal, prosperous economy. We must be bold and ambitious.

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John McDonnell MP, Labour’s Shadow Chancellor responding to the Treasury analysis out today on the risks of Brexit, said:

"The report out today from the Treasury further underlies the weakness of the UK's economy thanks to six years of George Osborne's failed policies leaving us with a recovery built on sand, as well as the fragile state of the global economy and the serious risks a Tory Brexit poses. 

"This is yet more evidence that a Tory Brexit would only make matters worse for working people already struggling under a Tory Government.

"I welcome the admission by David Cameron and George Osborne that the last recession was not caused by the then Labour Government and that a recession post Brexit would be a Tory recession.

"However, the Treasury report worryingly suggests that the Chancellor would respond to a possible recession as a result of Tory Brexit by doing nothing. Something UK households simply cannot afford.

"Our economy needs a government committed to delivering investment to build the secure foundations of the high-tech, high-wage economy of the future. Labour wants to remain and reform the EU so we can work in unison with our neighbours to grow our economy and create jobs. "

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The Shadow Chancellor, John McDonnell MP, is hosting a ‘State of the Economy’ conference at Imperial College in London on Saturday.

The one day conference will hear from a number of world-leading experts to discuss the current state of the UK economy including: Ha-Joon Chang, Paul Mason, Linda Yueh, Jonathan Portes, Adam Marshall (Acting Director General of the British Chambers of Commerce), Len McCluskey (Unite General Secretary) and Helen Walbey from the Federation of Small Businesses.

Labour Leader Jeremy Corbyn will address the conference in the afternoon and there will be a keynote speech by John McDonnell in the morning.

Angela Eagle MP, Shadow Business Secretary, and Labour’s entire Shadow Treasury team will be attending and chairing sessions throughout the day and the ideas that are discussed will help to inform Labour’s economic policy making.


Filming opportunities: Speech by John McDonnell 11.00 – 11.20, Speech by Jeremy Corbyn 16.10 – 16.30

When: 1030 for a 1100 start for John McDonnell’s speech. 1545 for a 1610 start for Jeremy Corbyn’s speech. Saturday 21 May 2016.

Where: Great Hall, Sherfield Building, Imperial College, London, SW7 2AZ


You must accredit by 1700 Hrs, Friday 20 May 2016 to attend this event.


To accredit please email with your name, role, organisation, mobile number and email address.


John McDonnell MP, Labour’s Shadow Chancellor, said:

“I am bringing together a range of economic experts at this one day conference to help stimulate the debate about how we can create a future economy where prosperity is shared by all.”

“The conference will analyse the current state of the UK economy and we will also be hosting workshop sessions chaired by Labour’s Shadow Treasury team to ensure the conference is truly participatory as we want to hear everyone’s ideas.”

Jeremy Corbyn MP, Labour Party Leader, said:


“By broadening and opening up the debate about the future of our economy we can lay the ground for Labour to return to power in 2020 and make the changes we need.”


“The New Economics events John McDonnell has been hosting all round the country have been fantastic and I’m very pleased to be speaking at Labour’s state of the economy conference.”

Dr Ha-Joon Chang, said:

"I'm looking forward to speaking at Labour’s economic conference as I think it's great that in the spirit of Labour’s new politics the Shadow Chancellor is opening up the debate on the future of the economy to people from all round the country.


“Perhaps if the Conservatives listened to a broader range of viewpoints the economy wouldn't be in such a mess.”


“No sensible economist agrees with the way the Conservatives are handling the economy at the moment, so I hope this conference will play a major part in developing Labour's alternative plans for a more dynamic, fairer, and more sustainable economy".

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Labour can rescue EU debate from Tory negativity, says John McDonnell

John McDonnell, the shadow chancellor, will say that Labour can “rescue” the European Union referendum debate from Conservative infighting by making a positive case for Britain to remain in the EU.

Speaking a day after his predecessor Ed Balls appeared alongside George Osborne in a hangar at Stansted airport to promote the message that Britain is stronger in Europe, McDonnell will say Labour has its own, distinctive argument about “hope and solidarity” to bring to the debate.

“I want to rescue the debate from the negativity and ‘Project Fear’ coming from all sides of the Tory party,” he will tell an audience at the TUC in London.

“The referendum resulted from the splits in the Conservative party and their fear of Ukip, and as a result the debate has degenerated and brought out the worst in Westminster politics.”

Senior Conservatives have repeatedly clashed over the referendum in recent days, with Boris Johnson accusing the prime minister of “totally demented” scare-mongering, and the Treasury of talking down the British economy, while the chancellor accused the leave camp of stoking conspiracy theories about an establishment stitch-up.

Speculation is rife that the David Cameron could face a leadership challenge once the referendum is out of the way, even if the public vote to remain in the EU. Eurosceptic backbenchers have become increasingly irritated at the tightly controlled campaign to convince voters of the risks of leaving, which many see as a cynical “Project Fear” approach.

McDonnell, like his leader and close ally Jeremy Corbyn, has previously been lukewarm about the EU, but he is now promising to throw himself into campaigning to stay in.

“It’s time to turn this debate around, drive out the politics of despair and offer a vision for Britain and Europe, one where we protect workers’ rights, tackle tax avoidance, get to grips with climate change and protect our industries like steel. This is a vision of Europe based on hope and solidarity,” he will say.

Corbyn has made a conscious decision not to share a platform with Cameron in the run-up to the referendum, eschewing the cross-party approach of the Better Together campaign against Scottish independence which saw Labour set aside party differences with the Conservatives to help win the campaign, only to be severely punished at the polls.

Aides to McDonnell said Balls – an unpopular figure among Corbyn’s team for what they deride as the “austerity-lite” policies of Labour’s general election manifesto last year – had asked the shadow chancellor’s permission before agreeing to Osborne’s invitation to join him on Monday.

Labour has its own referendum bus touring the country, with Alan Johnson, the leader of the Labour In campaign, appearing at scores of events to try to persuade Labour voters to go to the polling stations on 23 June.

With many Conservative voters passionately opposed to EU membership, and the polls looking close, the leaders of the Stronger In campaign are very keen to encourage Labour supporters to come out and vote.

Tim Farron, the Lib Dem leader, will deliver a tough message to older voters today, urging them to think of their children and grandchildren when casting their vote in June. “Have you the right to limit, bind and impoverish their futures? To narrow their horizons, curtail their freedoms, hamper their ambitions and isolate the country that they will inherit?” he will say at a Liberal Youth Europe rally.

“Today we sit around the table with people that 70 years ago we were at war with. We sit around the table with people that, 25 years ago, had nuclear weapons on their soil pointed at us. Europe is the world’s most successful peace process.”

Guradian, 17th May 2016, Heather Stewart

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John McDonnell: these elections are a first step to winning in 2020

inews.jpgThese elections have confounded the doomsayers. The Tories and their friends in the media arrogantly thought they had destroyed the Labour Party last May. However, we have proved them wrong.

As against many predictions to the contrary, we have held councils in key election battlegrounds like Southampton, Norwich, Harlow, Derby, West Lancashire, Nuneaton and Cannock Chase. And we have gained seats from the Tories in places like Birmingham and Daventry, and from others in Sunderland, Cambridge, and Newcastle.

We have also won both by-elections with large majorities and increased our shares of the vote. In Sheffield Brightside, Gill Furniss won with a majority of almost 10,000 with a 5.8 per cent increase in the share of the vote. In Ogmore, Chris Elmore won a majority of 8,575.

In addition, we have retained power in Wales and seen off the Tories in all their targets seats, plus a win in Llanelli is another excellent result as it was Plaid Cymru’s top target seat.

Of course things didn’t go the way we wanted everywhere. In Scotland we’re obviously disappointed with the result, although just a year after Labour lost all but one of our MPs, no-one thought that this was an election where the test for Labour was whether we increased our number of MSPs.

Yet there was still some good news to build on as we won seats in East Lothian, Edinburgh Southern and Dunbarton.

But we must not forget that the Tories said we should judge Jeremy Corbyn in these elections on how well we do in London. And by that measure we have done incredibly well.

The Tories mistakenly believed that Jeremy would hurt Sadiq’s chances so they put them both together on all their leaflets, which backfired tremendously as it helped promote two of our strongest assets in London.

They also completely underestimated the success of Jeremy’s campaign last summer that has helped us to mobilise our activist base in London, helping us as a party to get out our vote on polling day.

On top of all this the Tories further got their tactics terribly wrong in London with a racist and divisive style of campaigning that we should never see repeated again by a major political party.

Nevertheless, now for only the second time ever we have a Labour London Mayor of London.

But we are not getting too carried away as we accept that the path back to power for Labour will be a long one. And we must all come together as a party and a movement to unite with those who equally want to evict the Tories from Downing Street.

That is why these elections are just the start of us laying down the foundations to win the elections that really matter in 2020. Friday May 6th 2016

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John's response to Anti-Semitism Row-Sky News







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Punjabi 'A' level Retained

a_level_panjabi.png                      A Level Action Group ( ALAG )

354 Chester Road North Sutton Coldfield B73 6RP  {West Midlands}






Rt John McDonnell MP

House of Commons




Date : 22.04.2016

REF: Confirmation of Plans for A Level Panjabi under Government reform: Dated 22.04.2016


Dear Mr McDonnell

I would like to thank you for your exceptional support with your petition and in general you have provided us which has brought a very positive result of AQA making an announcement about the retention of  Panjabi A level qualification in the future. This news was welcomed by A Level Action Group with great enthusiasm and  with a sigh of relief.

We the Panjabi speaking community, specially the Sikhs community would like to express our heartiest thanks to you for your support since April 2015.

We at A Level Action Group are committed to work with AQA to whatever support is needed in the future to maintain Panjabi A Level qualification to the standards as required by DfE and Ofqual.

Hoping to hearing from you soon.


Yours sincerely


G Singh

( On behalf of A Level Action Group )


Gurjit Gill, Dr J S Nagra, Ranjit S Dhanda, Harmeet S Bhakna, Nirmal Singh Kandhalvi, Niranjan S Dhillon,                                                                     

t: 07940 974011  e:       f : Save Panjabi A Level 2015

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John McDonnell Addresses Anti Austerity March



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State of the Economy Conference – Saturday 21st May




As Labour’s Shadow Chancellor, on Saturday 21st May I am pleased to announce that I am convening a ‘State of the Economy’ conference at Imperial College in London and you are invited to join us.  


Following on from my ‘New Economics Lecture Series’, currently touring the country to open up the debate about the future of our economy to people outside of Westminster, this one day conference will hear from experts about the current state of the UK economy but will also be an opportunity for everyone to pitch in their own ideas.  


I am delighted we have a range of excellent speakers confirmed already including Ha-Joon Chang, Richard Murphy, Anastasia Nesvetailova, Jonathan Portes, Adrienne Roberts, Anneliese Dodds MEP and many more. 


In the morning and afternoon workshop sessions we have planned I am very much looking forward to hearing the ideas that you have to bring to the conference where we will be discussing a range of different topics ranging from tax, sustainable economics, debt, technology and alternative models of ownership to name just a few. Groups confirmed already to take part in the workshop sessions include the Women’s Budget Group and the Jubilee Debt Campaign. 


Labour’s entire Shadow Treasury team will be attending and chairing sessions throughout the day and the ideas that are discussed will help to inform our ongoing policy making process.  


Tickets are £10 to cover the cost of the venue and refreshments on the day. Please register to come here: 


I really hope you are able to join us for what should be a fascinating and exciting day of debate, contributions and ideas.  





John McDonnell MP


Shadow Chancellor of the Exchequer

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Economics for the Common Good?

This is a speech I delivered to Christians on the left as part of The Tawney Dialogue in Westminster Central Hall.

Thank you very much for the opportunity to say a few words this evening.

I wanted to pick up on the question posed by the title.  There’s a tendency to think that economics has little or nothing to do with the morality. If you’re on the left it is an argument that sometimes gets used against us.

Of course, our opponents will argue, it would be very nice to live in a fairer or more equal society. It would be nice, they might say, to ensure everyone has a decent home to live in, or access to education. But something that gets labelled “economics” is against all that.

“Economics” is apparently against the wealthy paying fair taxes. Or it’s opposed to funding public services properly. Some people argue this more in sorrow than enthusiasm, of course. Others enthusiastically embrace the idea of unfettered free markets.

The underlying belief is that whilst we might not enjoy it, the best way to run an economy is through free markets and low taxes. So although the left may mean well, it is argued that we simply don’t understand how to run the economy. This is unfair on the left. But it also misses an important point

Questions of morality have always informed economic thinking. It was Adam Smith, arguably the first modern economist, who described economics as a "moral science". I think that description is a good one. It is a science because considering economic problems requires serious analytical thought. And it is moral because ultimately it deals with questions of justice and fairness - of who gets and owns what.

We have to consider the two sides together. It is in this light that Labour is still developing its thinking. There are two major challenges ahead of us. The first is in winning the argument that an economic policy of the left can work. There is a desperate need for change.

The figures on homelessness or child poverty are national disgrace. Here in London, immense wealth nestles side-by-side with some of the worst poverty in the country. But we can see it also in the explosion of zero hour contracts.

There is an entire generation of young people growing up now with zero expectations about the future. They are trapped in low-wage, insecure work and inadequate housing. Owning a home of their own is an increasingly distant dream.

The moral case for a change in direction is clear. But the left has comparably little trouble winning that argument. Where we have trouble is not in convincing people of the moral case for change. Our difficulty, and it is the biggest single difficulty the Labour Party faces, is in convincing people that we can deliver this change.

I’ve called the fight for economic credibility by the Labour Party the biggest it has faced for a generation. We might not think this fight is fair. The financial crisis was global. It did not happen because of Labour overspending. But it happened on Labour’s watch and the last Labour government was too lax in its approach to finance.

Nonetheless, to give George Osborne and David Cameron their credit, once the financial crisis truly erupted in late 2008, they moved very fast. They flipped their support for Labour’s spending plans completely on its head. They have argued insistently for nearly eight years that the crisis was due to Labour spending too much.

Now this is nonsense. You don’t get a banking crisis because you employ too many nurses or teachers. You get a banking crisis because, to be blunt, you employ too many bankers.

But aided and abetted by a media campaign, the Tory leadership have drummed home the message that Labour caused the global financial crisis. I believe that message is now losing its appeal as the consequences of austerity become apparent. George Osborne is backing away from it, seeking to blame current economic difficulty

We will not be able to help create a fairer, more equal society if we are not trusted on the basics of handling the economy. Since Jeremy was elected, back in September, we’ve put in place the structures needed to start to win back credibility.

But that leads us to the second, deeper challenge.

Some might think there is a quick and easy solution to the problem of Labour’s economic credibility. One that means we concede the argument to the Conservatives and sign up to their own economic policy. I don't believe this would be the right course for us not only because I don't believe the austerity policies pursued by this government are fair.

They are clearly not.

Had we signed up to the Conseravtive's' spending plans, we would not have been able to move so quickly in opposing the disgraceful cuts to the Personal Independence Payment announced in March's Budget. Winning a reversal of that cut was a major success for us. But the Conservatives' economic policy is not just unfair. It is a failure on its own terms.

Just this week, the International Monetary Fund has revised its estimates for the UK's growth downwards. This follows a major revision downwards by the official forecasters, the Office for Budget Responsibility, back in March. Looking in to the details, the Office for Budget Responsibility cite a slump in productivity since 2007 as the main reason for the UK economy's weakness.

Since the crash, and with George Osborne as Chancellor, we have seen economic growth based on the creation of a large number of poorly paid, insecure and low productivity jobs. At the same time, consumer spending is increasingly sustained by rising levels of debt.

The OBR is forecasting unprecedented borrowing by households over the next few years, just to keep the economy moving. This should sound familiar. It was household debt that kept the economy moving before the crash, too. All of this points towards not just a failing with Osborne's economic policy. There are deep, structural problems that a government committed to real reform would address.

The challenge for those on the left will be in winning the case for those reforms. I think we can do it. The consensus amongst economists is today unusually large. Austerity measures are opposed across the board.

And the IMF, the OECD, the CBI and the TUC are all now arguing for a major programme of investment by government to help national economies weather the storm. Labour's Fiscal Credibility Rule will allow a future government the flexibility to invest in vital infrastructure like new rail, and renewable energy.

The current government, instead, is cutting government investment - flying in the face of the consensus. It's wedded to a particular vision of the economy in which the state's role is reduced to a minimum, and financial interests take precedence.

This isn't just a moral question. It means leaving the whole economy more exposed to risks. We've had two terrible examples of this in the last fortnight or so. The threatened closure of the Port Talbot steelworks places 40,000 people at risk of losing their jobs.

The case for government action is clear.

Labour has argued for its four-point plan to stabilise this vital industry and place it on a secure footing for the future. Yet extraordinarily when the market for steel globally has been trashed by the "dumping" of cheap steel by China, this government has not just refused to intervene. It has actively blocked attempts to prevent dumping by the EU.

One EU official went so far as to claim that this is "payment" by the government to China for handing over the contract to build Hinkley Point C nuclear power plant. Whatever the case, it is quite extraordinary to find a British government actively arguing against Britain's clear economic interests.

Or take the Panama Papers leak. This is about far more than just a few individuals seeking to minimise their taxes, as some Conservative MPs have claimed. What the Panama Papers show is that tax avoidance is entirely systematic. The total amount of wealth held in tax havens has been estimated at $21 trillion. It is a direct result of the massive increase in inequality we have seen over the last thirty years or more.

Extremely wealthy individuals and very large corporations, aided and abetted by shady operators like Mossack Fonesca, have been able to construct an entire offshore world. They can reduce their taxes to a bare minimum, unlike the rest of us who make a fair contribution.

And at the centre of this offshore world is the City of London. Respectable London banks and accountancy firms are at the centre of the tax avoidance system, setting up thousands of offshore shell companies. This has direct economic consequences.

Every pound squirrelled away like this is a pound not invested here. Every offshore trust investing in London property is not investing in the productive economy. The super rich and big businesses are hoarding their wealth and failing to invest for the future. One estimate puts the corporate wealth hoard at £700bn for the UK alone.

This money should be put to work. It should be invested into helping create the high tech, high wage economy of the future.

So opposing tax avoidance isn't just the right thing to do because it means fighting for fairness. It is the right thing to do because it means helping create a better economy for all of us.

We have to make a break with the failures of the past. What the crash of 2008 should have taught us above all else is that we cannot allow financial interests to sit in the driving seat of our economy again. We run the risk of being driven into a wall, again. The IMF today also warned of the increased risk of a future financial crisis.

I'm concerned about what happens in the future. I don't think we have an economy that is well prepared for an increasingly uncertain world.

As Labour develops its economic thinking, we want to win the argument not just that what we are doing is morally right. We need to win the argument that we have the best solutions to the series of problems that now threaten our economy.

Economics and economic policy is always informed by morality.

I believe that if we get this balance right, we can win a majority with the idea that not only should the economy be more just. It should also be more efficient. The two are inseparable.

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John McDonnell’s Opposition Day Speech on the Panama Papers

Mr Speaker, I wish to move the motion that stands in my name and that of my Hon Friends.

On tax avoidance and evasion we need to move the debate on to the issue of the fairness and effectiveness of our tax system.

I say to the House we need to do so as constructively as we can.

The leak of documents from Panama lawyers Mossack Fonseca has provoked an extraordinary public discussion.

An entire hidden world has been brought into the light.

What it reveals is profoundly unsettling.

We now know that Mossack Fonseca sat at the centre of a vast web of tax evasion and tax avoidance.

The world’s super-rich commissioned its services to hide their income and wealth from the public gaze.

Some of them had plainly criminal intentions.

Money from the Brinks Mat robbery was allegedly laundered through a shell company set up by Mossack Fonseca.

Mexican drug baron Rafael Caro Quintero held his property through a shell company established by Mossack Fonseca.

But even if they were not criminals, many of Mossack Fonseca’s clients, if not all, had the strong intention of evading or avoiding the taxes that would otherwise be due from them.

Mossack Fonseca exploited the presence of loopholes and entire jurisdictions that favour secrecy and minimal taxation.

We can expect further news over the next few weeks and months, as the investigative work continues.

Yesterday the Panama headquarters of Mossack Fonseca was raided but ten days since the initial leak, I believe their UK offices in Hitchin have not been.

This is despite concerns being raised by the firm’s founder over the lack of due diligence the UK office performed over a company in their charge and a clear legal precedent for UK authorities to intervene.

There may well be more revelations, set to tarnish individual reputations.

The Prime Minister has done himself no favours over the last week.

A lesson for the future is that when asked a straight question, to answer straightforwardly, straightaway.

The Prime Minister could and should have come clean about his relationship to Blairmore Holdings far earlier.

Even today, we have not seen his full tax return, or that of the Chancellor.

What we are confronted with today, however, is far bigger than any individual.

At the centre of the allegations is a single issue.

The fundamental problem is not tax avoidance by this individual or that company.

These are symptoms of the disease.

The fundamental issue is the corruption of democracy itself.

At the centre of our Parliamentary system is the idea that those who levy taxes on the people are accountable to the people.

If those making decisions on our taxation system are believed to be avoiding paying their own taxes it undermines the credibility of the system.

The common understanding is also that those who live here and benefit from public services will make a proportionate contribution towards them.

The level of taxation may vary. Sometimes it is higher and sometimes it is lower.

But because we have a shared sense of fairness, we expect those with the broadest shoulders to carry the greatest burden in taxes.

But what we have seen over the last thirty years is the growth of wealth inequality on such a scale that it has undermined that basic principle of our democracy.

Figures from Oxfam suggest that the richest 1% own more than the rest of the world combined.

Great hoards of assets, in property and in financial wealth, have been built up.

On the best available measures we have - the levels of income inequality in Britain today are climbing as high as they were at the time of the First World War.[1]

The share of income going to the super-rich has risen almost inexorably for three decades.

We are returning to the levels of inequality we had before universal suffrage.

Before women had the vote.

Before the development of universal free education and healthcare.

A world before the gains of democracy brought obscene levels of wealth inequality under control and created a more humane society for the majority.

The world of the Rockefellers and the robber barons is the one we are returning to.

Immense, almost unimaginable wealth for a gilded elite but insecurity for growing numbers.

Much of that wealth is now held off-shore in secretive, unaccountable tax havens.

Twenty-one trillion dollars, equivalent to one-third of global GDP, is estimated to be hidden from taxation systems in global tax havens.

If taxed fairly, that wealth might easily raise $188 billion a year in extra taxes.

This isn’t about a few families looking to “minimise their tax bill”, as the Member for Gainsborough claimed.[2]

It is systematic.

It is an offshore world operating parallel with the world the rest of us live in.

This is not an accident.

The offshore world is being constructed, piece by piece, by multinational corporations and the super-rich.

They are aided by shady offshore operations like Mossack Fonseca.

We have to be honest about this- supposedly reputable accountancy firms here in London play their part.

PWC have, according the Public Accounts Committee, aided tax avoidance “on an industrial scale”.[3]

Deloitte have advised big businesses on avoiding tax in African countries.[4]

Ernst and Young act as tax advisors to Facebook, Apple, and Google.[5]

And just last month KPMG has had one of its tax avoidance schemes declared illegal by the High Court.[6]

All together, the Big Four accountancy firms earn at least £2bn annually from their tax operations.

Banks headquartered and operating in London have been particularly proficient in directing their funds through Mossack Fonseca shell companies.

HSBC and its affiliates created more offshore companies through Mossack Fonesca than any other bank. Over 2,300 were created in total.

Coutts, a subsidiary of RBS, created over 500 offshore companies through its subsidiary in Jersey.

Supposedly reputable companies are aiding and abetting the systematic abuse of our tax system.

We should be clear about this.

The City of London is viewed by many as a tax haven, in the middle of a dense network of havens created for the super-rich to avoid the taxes the rest of us must pay.

This is the world that the super-rich inhabit.

They live by different rules.

It is an alien world for the majority of us.

It is a world of off-shore trusts and legal trickery that would put Byzantium to shame.

A world in which it is perfectly normal to buy property in London through a company registered in the British Virgin Islands, managed by lawyers in Panama with offices in Bermuda.

A world in which citizenship and attachment to a country is something to pick and to choose depending on price.

The scandal of the “non-doms” continues, in which a few super-rich can pay a notional fee instead of the taxes that would otherwise be due from them as residents.

Tucked away in this year’s Budget was an extraordinary clause that wrote off selected non-doms entire capital gains tax bill on any gains made before April 2017.

This is not the world that most of us live in.

Most of us pay our taxes.

Contrary to the opinion of the Member for Rutland and Melton, this is not because we live in a country “low achievers”.[7]

We do so because we understand that a decent society depends on the contribution all of us make.

Without the payment of taxes, we cannot run the public services that are essential to a decent society.

We don’t have access to the kind of specialist services Mossack Fonseca and other companies provide.

We can’t negotiate with HMRC about when and how much to pay.

But for the global elite, tax avoidance is as much part of their world as the yachts or the country mansions.

This world is a corrosive influence on our democracy.

The more the super-rich can escape the burden of taxation, the more it falls on the rest of us who cannot.

It is morally wrong that a billionaire oligarch should be paying proportionately less in taxes than the migrant cleaner of his mansion.

It is a disgrace that an immense global corporation like Google should pay no corporation tax for nearly a decade, whilst small businesses are chased for tiny amounts.

And it is an affront to the basic principles of our democracy that large corporations should be able to negotiate sweetheart deals with the HMRC.

It is also a corrosion of democracy when a revolving door apparently exists between HMRC, charged with collecting taxes, and major accountancy firms whose business depends on minimising taxes.

HMRC’s last director went to work for Deloitte.

And now we find that the executive director appointed by HMRC to oversee its inquiry into the Panama leaks is a former advisor to tax havens who believes that tax is a form of “legalised extortion”.

The structures of government itself are being bent out of shape by tax avoidance.

Decisions are warped around the need to protect the interests and wealth of the super-rich and the giant corporations.

Democracy becomes corroded.

The party opposite receives more than half of its election campaign funding from hedge funds.

In public view, here in London, its leadership have made loud and repeated noises about tax avoidance.

Yet its MEPs in Brussels have voted six times, on instructions from the Treasury, to block EU-wide measures against tax avoidance.

The Prime Minister lobbied the EU Commission in 2013 to remove offshore trusts from new, tighter EU regulations on avoidance.

The Conservatives’ own record reveals they are not trusted on this issue.

Not only have they impeded efforts to clamp down on tax avoidance, these schemes directly implicate senior figures in the Conservative Party.

Several Conservative Party donors, three former Conservative MPs and six members of the House of Lords are among those with connections to companies on the books of the offshore law firm Mossack Fonseca.

As the super-rich flee their obligations to society, the burden of taxation is pushed elsewhere.

Independent assessments of tax and benefit changes introduced since May 2015 show that the poorest 10% are forecast to see their incomes fall by more than 20% by 2020.

Women will be hit hardest of all, having already borne nearly 80% of cuts introduced since 2010.

It is the poorest and those least able to carry the burden who will suffer the most under this government.

An economic system that allows tax avoidance on this scale is one in which the inventor or the entrepreneur is second to the owner of wealth.

The worker comes second to the plutocrat.

The tax-payer comes second to the tax-dodger.

It is a system where inherited wealth and privilege, not talent or effort, is rewarded.

The last Labour government took measures against avoidance.

Its measures on corporation tax avoidance are forecast by the Financial Times to raise ten times as much revenue as the present Chancellor’s schemes.

But the Panama leak must act as a spur to decisive action.

In response to the Panama leaks, the Government has stepped up the rhetoric on tax evasion but much of what has been announced falls short of what is needed or repeats existing announcements.

I remind the Ministers opposite that page 223 of the OBR report that accompanied this year’s budget included a disclosure scheme for companies operating in Jersey, Guernsey and the Isle of Man. Due to its consistent underfunding HMRC simply did not have the resources to follow up on the links of the scheme.

The Government’s proposed taskforce will report to members of the Government from a party funded by donors featured in the Panama papers. To have any credibility any inquiry must be fully independent.

A gentle word of advice to the Prime Minister. Less press releases and more action.

It is time to move on closing the tax havens, cleaning out the muck of avoidance. Step by Step.

We need an immediate, full, public inquiry into the Panama papers leaks.

We must shine a light on and start to prise apart the corrupt networks that operate through tax havens.

Part of that means creating a proper register of MPs interests. Members of this House should not be able to hide behind spurious claims of privacy.

We want HMRC properly resourced to chase down tax avoiders, with a new specialist unit dedicated to the task.

Foreign firms bidding for government contracts here should be required to name their owners.

Full, public, country-by-country reporting of earnings and ownership by companies is a necessity if fair amounts of taxation are to be charged.

The measures announced by the EU this week do not go nearly far enough, requiring only partial reporting by companies.

The turnover threshold is far too high and Labour MEP’s in Europe will be pushing to get this figure reduced to a much lower level so that many large corporations find it far more difficult to dodge paying their fair share of tax.

Banks need to reveal the beneficial ownership of companies and trusts they work with.

This means creating a public register of ownership of companies and trusts, not only companies as the government is currently enforcing.

Labour will work alongside leading tax experts to lead a review into publishing a public register of the trusts too often used to avoid paying tax and reduce transparency in our tax system.

And we must ensure that Crown Dependencies and Overseas Territories enforce far stricter minimum standards of transparency for company and trust ownership.

The government’s current programme for reform is being laughed at by the tax havens.

Only this week, after signing a new deal on beneficial ownership the Cayman Islands Premier Alden McLaughlin was celebrating a victory over the UK saying:

"This is what we wanted, this is what we have been pushing for three years for.”[8]

The truth is the government is playing into the hands of those who want to abuse the tax system.

We need serious action on enforcement.

We need, as Christian Aid and others are calling for, not central registers but full public registers accessible to all including journalists and other businesses if we are going curb the sort of activities exposed in the Panama Papers.

This package of measures is Labour’s Tax Transparency and Enforcement Programme.

We believe it offers a sound basis to take the first, necessary steps against avoidance and towards openness and transparency.

We are presenting them today as we want to see immediate effective action.

This is a test of leadership.

The leadership of the Party opposite could take this opportunity to correct the series of errors it has made.

It can join us in taking effective steps towards dealing seriously with avoidance.

People want to see the Party opposite take these steps.

Otherwise they will rightfully stand accused of siding with the wrong people.

They will rightfully stand accused of being party of the tax avoiders.

Incidentally it’s not that long ago the Chancellor of the Exchequer appeared on television to give advice on the “pretty clever financial products”, as he described them, that would allow the wealthy to dodge inheritance tax.

Some of the Conservative Party’s backbench MPs believe tax avoidance is a sign of success.

Its donors are named in the Panama Papers.

And the Prime Minister himself is a direct beneficiary of a scheme set up in an offshore tax haven through his prior ownership of Blairmore Holdings shares.

So the Panama leaks have presented a stark political choice.

Do we continue to support, as the Party opposite will continue to support, a system of corruption and avoidance?

Or do we now take the action necessary to restore fairness to our tax system, and correct the abuse of democracy?

That is the challenge, and the choice, ahead of us.

I urge the Government and all members of this House to join us in a serious programme of work to tackle the abuse of our tax system.

The Government can make a start by supporting our motion today and adopting Labour’s Tax Transparency Enforcement Programme.

I commend this motion to the House.

[1] Piketty figures for the top 5%.

[2] Edward Leigh, Hansard, 11 April 2016





[7] Alan Duncan, Hansard, 11 April 2016


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Labour’s Tax Transparency Enforcement Programme

Labour’s Tax Transparency Enforcement Programme

Tax havens play no positive role. It should be a matter of shame to the British Government that, despite all their rhetoric, more than half the companies recently named in the Panama Papers were registered in UK governed tax havens. The involvement of senior figures in foreign governments has given the impression of a nexus of influence and opacity involving major political and corporate players avoiding taxes in countries across the globe. High net worth individuals are not the only users of tax havens. Earlier this year it emerged that profitable large technology companies have paid a tiny fraction of their turnover in corporation tax, moving a large proportion of their global profits into UK overseas territories. While closer to home, a recent period of disclosure for tax repatriation from Crown dependencies brought significantly less than promised, with HMRC blaming their staff’s inability to process on top of existing workloads. Recent revelations in the ‘Panama Papers’ have shown that the Government’s approach to closing tax havens in British overseas territories and crown dependencies has not delivered the returns the Government promised. We need a new and more effective approach

Labour is proposing:

1. An immediate public Inquiry

The Labour Party wants to see an immediate public enquiry launched into the revelations in the Panama Papers, to establish the harm done to the UK’s tax revenue and consider detailed proposals for reform including, if necessary, greater amendments to UK company and/or trust law to increase transparency.

2. Greater Parliamentary Scrutiny

Change the register of members’ interests to include mandatory publication of all offshore holdings.

3. Specialised Tax Enforcement unit

Labour wants HMRC to be properly resourced to investigate any potential illegality whether in relation to tax law or conflicts of interest for legislators. We would double the number of staff scrutinising the tax affairs of High Net Worth individuals and companies.

4. Public Sector Transparency

Foreign companies wanting to tender for public sector contracts must have their beneficial owners listed publicly. Examine proposals for companies bidding for public sector contracts and procurement to register for tax purposes in the UK, including full disclosure of beneficial ownership listed publicly and accounts filed with Companies House.

5. Cooperation with European partners: Country by Country Reporting & protection for whistleblowers

Full public publication of country-by-country reporting for multinationals negotiated at EU level with agreed fairer thresholds for reporting for companies and obligations to report publicly about activities in every country in which they operate, be it inside or outside the EU.

Support proposals for genuine and robust protection and safeguards for whistleblowers in this area at a European level. 

6. Firm Anti-Avoidance Rule

Introduction of a General Anti-Avoidance Principle, strengthening and extending the General Anti-Avoidance Rule to cover offshore abuses.

7. Crack down on accounting tricks

Look into the development of the ‘Ramsay principle’ by courts. Courts should ignore “artificial steps” inserted in transactions to try and reduce the tax on the transaction.

8. Enforce our programme working with the banking sector

Work with banks to provide further information over beneficial ownership for all companies and trusts that they work for.

9. Strict minimum standards for crown dependencies and overseas territories: All territories which enjoy the protection of the UK for their financial stability, foreign policy and/or security policy must adhere to a minimum standard of transparency in relation to company and trust ownership.

This minimum standard will include a public register of owners, directors, major shareholders and beneficial owners for all companies and trusts.

10. A Labour led review into the registry of Trusts

Labour will launch a review to produce detailed proposals for a registry of (a) trusts which transfer the residence of their trustees offshore and (b) tax avoidance schemes involving trusts which are disclosed to the HMRC under the current law.  In the case of trusts with no beneficial owner listed, the settlor would be deemed the beneficial owner.

The legal precedents for enforcing major legislative standards on overseas territories are many: in recent years the UK government has intervened in the Caribbean overseas territories over corruption, the death penalty and legalising homosexuality. Eric Pickles said in October 2015 that the Government could legislate to force UK-governed tax havens to reveal true owners of companies.

Labour believes that a precedent has been set. There are minimum ethical standards which territories must adhere to if they wish to enjoy the status and protections associated with British overseas territory status. In return for improving transparency, under Labour the UK would give overseas territories financial support to aid the transition to build economies which are not reliant on offshore financial services. Labour will seek to add any countries which are acting as tax havens to the OECD blacklist. In the case of the Crown dependencies, under Labour the UK will no longer support their existing EU concessions (eg. no trade barriers) if minimum standards are not met.

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McDonnell lays out five-point plan to shine a light on tax avoidance

Labour List 11th April 2016

Labour has sought to capitalise on the Tories’ catastrophic handling of the Panama Papers scandal by demanding a public inquiry as it published a five-point plan to increase tax transparency.

John McDonnell, the shadow Chancellor, said the row over tax avoidance came down to an “issue of basic morality and national security”.

Now the party has published a series of demands designed to deal with “the impression of a nexus of influence and opacity” involving senior politicians and business people around the world.

Its proposals are designed to increase scrutiny on David Cameron, who will be forced to defend himself again today, when he makes a statement on the Panama Papers to MPs.

Labour is proposing:

  • ·         An immediate public inquiry into the revelations contained in the Panama Papers.
  • ·         To force MPs and peers to publish details of any offshore investments they hold.
  • ·         Increased resources for HMRC to investigate potential breaches of the law, politicians facing conflicts of interest, and the tax arrangements of businesses and wealthy individuals.
  • ·         A “beneficial ownership” register revealing the ultimate owners of foreign companies when they bid for contracts in the British public sector.
  • ·         Country-by-country reporting for multinational firms to be negotiated at EU level.

McDonnell said it should be a “matter of shame” to the Government that more than half the companies named in the Panama Papers were registered in UK-governed tax havens.

“Not only has this Government impeded international efforts to crack down on tax avoidance and to tackle tax havens but senior figures are personally implicated in these immoral schemes.

“Labour’s Tax Transparency Enforcement Programme will stop the super rich hiding their wealth from legitimate taxes whilst the rest of us our told there is not enough money to pay for the public services we all rely on. No longer will the richest wilfully avoid paying their fair share while disabled people have their support to live independently brutally cut.

“Under this Government there has been one rule for the rich and another for the rest of us. Tax haven corruption is not just a tax issue – it drives at the very heart of our democracy and its credibility. We risk eroding public trust in our democracy if we do not tackle the issue head on.”

McDonnell also sought to link tax avoidance to the funding of other crimes, including violence.

“These sorts of schemes fund terrorism and launder criminals’ money. It’s not just about tax avoidance. It’s an issue of basic morality and national security to take on this sort of behaviour.

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This is a crisis rooted deep in Tory attitudes

The guardian comment is free 5th April 2015 John McDonnell

The Panama Papers highlight the growing concern that there is one rule for the very rich and another for everyone else. For when individuals and companies manipulate the tax rules to reduce their tax bill, this understandably outrages those ordinary people paying the price of deficit reduction, and businesses who play by the rules. They, reasonably, expect a level playing field. The Panama Papers have destroyed any illusion of fairness in our tax system.

However, it goes even deeper than that. For the papers expose the Tories from top to bottom as a party that is not only failing to tackle tax avoidance, but deep down doesn’t really want to either. David Cameron, for example, says he has “some savings” from which he “derives some interest”, but does this mean any of his “savings” come or have come from Blairmore or any offshore tax arrangements at any time? He should just put the record straight rather than try to wriggle around, fooling no one.

The revelations also bring into question the government’s record in tackling tax avoidance and tax havens in particular. The UK has a huge responsibility to deal with this. Many of the tax havens fuelling the problem are British overseas territories or crown dependencies, relying on British financial, foreign policy and security support. Three years ago Cameron promised to get the UK’s own houses in order, but he has failed.

Virtually no progress has been made in ensuring the UK’s overseas territories and crown dependencies meet the UK government’s demands. But then, there is no evidence that the Tories were committed to this in the first place. Since the general election, they have dropped their commitment to public registers of beneficial ownership, despite Cameron claiming two years ago that “making company beneficial ownership information open to the public is by far the best approach”.

So we shouldn’t be surprised that a year ago Tory peer Lord Blencathra described Cameron’s crackdown on tax havens as a “purely political gesture”, or that former Tory foreign office minister Grant Shapps appeared to row back on the Tories’ demands, in a visit to the Cayman Islands last year.

The Treasury minister David Gauke let the cat out of the bag in parliament last month when he admitted that the UK’s overseas territories “are not committed” to a public register of beneficial ownership. Despite this continuing failure, the Tories continue to make the absurd claim that they are leading the way on the issue.

But then, this is the pattern we have come to expect from Cameron and George Osborne – big announcements and lots of rhetoric, with broken promises to follow. Take, for example, the UK-Swiss tax agreement, announced to great fanfare in 2011. It has raised a fraction of the £5bn promised.

And it came as no surprise when in the budget last month the Office for Budget Responsibility revealed that a key anti-avoidance measure announced in 2013 – a disclosure facility with the crown dependencies – is set to raise just a quarter of what Osborne initially promised.

Tories should not be judged on what they say but what they actually do. On six occasions last year, Osborne instructed his MEPs to vote down proposals to clamp down on multinationals engaged in tax avoidance. Meanwhile, in January it was revealed that the government had been lobbying the EU to remove Bermuda from an official blacklist of tax havens.

As more and more revelations emerge, it is increasingly clear that this is a Tory crisis, firmly rooted in their beliefs and attitudes. While the PM and chancellor mutter platitudes in public, their inaction in tackling these problems exposes those true beliefs. The Tories should come clean and set out their position: is the prime minister happy to receive money from big donors accused of tax avoidance?

The government needs, as Jeremy Corbyn has said, to stop dithering. There should be an immediate, independent investigation into the tax affairs of all British people linked to the Panama Papers. And, given the important role the UK plays in our crown dependencies and overseas territories, the government must now set out what further action it is prepared to take to achieve greater transparency.

There is no reason why the UK cannot use its relationship with these tax havens to force them to stop dragging their feet. At the very least, there should be strictly enforced minimum standards of transparency, including the publication of public records of companies’ accounts, directors, major shareholders and all beneficial ownership of trusts. Without these things, how can we possibly have faith that wealthy people and corporations are not receiving preferential treatment compared with those of us who fill in tax returns or have it deducted automatically?

Labour has already called for tax havens to be blacklisted unless they produce a public register of company owners and sanctioned if they fall foul. And it is surely time that the chancellor listened to our calls to end the unjustifiable cuts to staffing numbers at HM Revenue and Customs, as they cannot be put in a position where their hands are being tied.

The super-rich elite cannot be allowed to dodge their taxes and flout the rules. This unfairness and abuse must stop, and stop now.

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John McDonnell says "doing nothing is not an answer" as he unveils his four point action plan to rescue the British steel industry

The steel crisis exposes the Tories as out of touch and incompetent.

Forty thousand workers and their families face the loss of their livelihoods.

As we saw under the Tories in the 1980s, closures like this can tear apart entire communities.

Even some Tory MPs share Labour’s call for emergency measures like nationalisation not to be ruled out.

Yet David Cameron refuses to recall Parliament for an emergency debate.

Some have tried to claim measures to combat climate change are to blame.

However less than two per cent of steel production costs are due to climate measures.

In reality, British steel is in crisis because of the dumping of cheap steel by China and because we have a government that will not take the action necessary.

Other EU countries like Germany and Italy have acted to protect their steel industries.

The barrier to action isn’t in Brussels. It’s in West-minster, where the Government has spent three years blocking EU action.

One EU official even claimed the Tories were blocking action on dumping as a “thank you” to China.

This has done us no good. China has slapped a 46 per cent tariff on British steel.

Labour has different priorities. This is our four-point Action Plan to save British steel:

  • Stabilise the industry and protect steelworkers by allowing time for a buyer to be found but being prepared to nationalise plants threatened with closure.
  • Fast-track key investment projects like high-speed rail in the North, and build them with British steel.
  • Create a level playing field. The Tories must stop blocking EU initiatives to protect steel but also look at business rates and energy prices.
  • Restructure the industry so it has a future, in partnership with workers, management and major customers working alongside government.

This isn’t just about the jobs and communities now being threatened.

It’s about how we start to make an economy that works for the good of all.

Doing nothing is not an answer.

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ITV Interview with Shadow Chancellor: the government must act swiftly on Tata

Shadow Chancellor John McDonnell says the government needs to act immediately to take a public stake in the steel sector in the wake of Tata's decision to sell off its UK businesses.

He says we need to work with our European partners to protect against the dumping of Chinese steel on the international market as part of a long term strategy to make the UK market viable.

Watch his full interview:




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John McDonnell calls for U-turn, saying cut would give 200,000 wealthy people as much as government planned to take from disabled. Guardian 25th March 2016

George Osborne’s budget is handing a tax cut averaging £3,000 to some of the wealthiest people in the country who make up just 0.3% of the population, the shadow chancellor, John McDonnell, has said.

Labour is calling for the cut in capital gains tax (CGT) to be scrapped, saying it would give investors already making money about the same, on average, as the government had planned to take from disabled people under changes to benefits.

The party is planning to campaign against the CGT cuts in the coming weeks to apply more pressure on the chancellor following Iain Duncan Smith’s shock resignation as work and pensions secretary, when he branded Osborne’s budget “deeply unfair”, triggering the scrapping of the disability benefit cuts.

McDonnell said Osborne was the “bankers’ chancellor” and had been shown again to be “looking after a wealthy minority”.

A spokesman for Osborne hit back that Labour was “shameless and hypocritical”, given that CGT for the highest earners would still be two percentage points higher than it was at the end of Gordon Brown’s government.

Osborne made the surprise announcement of a cut in capital gains tax (CGT) – from 28% to 20% for higher rate taxpayers and 18% to 10% for those on the basic rate – in the budget as a way to encourage people to invest in shares. The tax is applied on profits on the sale of assets that exceed £11,100 and is paid by a very small minority of people.

There is no official impact assessment showing how many people will benefit, but government sources indicated they thought about 130,000 people would gain from the tax cut, of whom about 50,000 are basic rate taxpayers and 80,000 higher rate taxpayers. The source suggested the median benefit for higher rate taxpayers would be £2,000 on a one-off basis.

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John McDonnell says George Osborne is playing with our economy in a vain attempt to gain a pointless political victory

Last week George Osborne presented a Budget that was barely worth the paper it was printed on. We discovered that not only has he massaged the figures, including shuffling around billions in corporation tax receipts, but that he has also squeezed in a flotilla of unspecified cuts. The Chancellor is doing this not because he needs to balance the books, but because he wants to hit an arbitrary target for the government surplus in 2019-20.

This is an entirely political choice, not one made through economic necessity. Proof is provided by Osborne himself, as he now claims he can “absorb” £4.4 billion in disability cuts he has reversed, despite previously having claimed they were necessary.

He is still going ahead with tax breaks that will go overwhelmingly to the wealthiest 5 per cent, by cutting capital gains tax. And for big corporations he is continuing to slash corporation tax worth billions more in revenue. Obviously if he can’t collect Google’s taxes then he thinks he might as well cut them. Meanwhile he plans to cut real-terms funding for schools by 8 per cent.

In worsening economic circumstances, due (as the Office for Budget Responsibility have explained) to a weakening domestic economy, the Chancellor should have taken remedial action. Labour’s calls for a major boost to government investment have been joined by a growing coalition that now includes international expert bodies like the IMF and the OECD, alongside the TUC and CBI at home. Astonishingly, however, the Chancellor has planned for government investment to fall over the lifetime of this Parliament.

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George Osborne is unfit to hold office

John McDonnell Guardian Comment 23rd March

It’s said that a week is a long time in politics – but under this chancellor a weekend is the length of a “long-term economic plan”. That’s exactly how long George Osborne was able to stand up his own budget before it collapsed.

It’s unprecedented in modern history for a budget, the centrepiece of a government’s economic policymaking, to disintegrate so rapidly. Yet Osborne has achieved it.

Under intense political pressure, he has reversed his cuts to disability benefit. Within four days of presenting his budget to parliament, it no longer adds up,. And remarkably he has been forced into accepting two opposition amendments, on tampon tax and solar subsidies.

The attempted defence in parliament revealed two central facts. First, that he will not apologise to those many thousands of people with disabilities who have spent more than a week worrying about the loss of their essential payments. Yet he was able to say he was “sorry” that his fellow Tory Iain Duncan Smith resigned.

The personal independence payment (PIP) is paid out to allow those who have disabilities to live with some autonomy, often in order to enable people to get to work. This is state support for things such as preparing or eating food, washing and bathing, reading and communicating.

To propose taking up to £150 a week away from disabled people that helps them to live independently and with dignity is a chilling example of the lengths Osborne is willing to go to in putting his own political career ahead of the long-term good of our nation. The cuts to PIP are morally indefensible, and reveal a chancellor that has chosen austerity over basic humanity.

Second, it is clear from his speech that the chancellor has no idea how he is going to fill the £4.4bn black hole left in his budget. Osborne confidently believes that by autumn the losses would be “absorbed”. But you can’t “absorb” £4.4bn. In reality, paying for this means cuts elsewhere, or stealth taxes – something the chancellor has become rather adept at.

He is, in other words, banking on a more favourable outlook for the economy by the time we get to the autumn statement. This is the equivalent of hoping to find money down the back of the sofa. As Robert Chote, director of the Office for Budget Responsibility (OBR), put it when announcing pessimistic new forecasts: “What the sofa gives, the sofa can also take away. ”This is why I said he was more a chancer than a chancellor.

George Osborne could, very easily, pay for PIP by reversing his cuts to capital gains tax, which benefit the richest 5%, and the projected cuts to corporation tax. But he will not do this because at the centre of his budget was a cold political decision. The chancellor wants to achieve a surplus on government spending by 2019-20, by spending £10bn less than it receives in taxes.

He claimed he would eliminate the deficit by last year; it is still over £70bn. He claimed he would be bringing down the government’s debt burden, relative to GDP; it is rising and set to rise further.

The OBR has revised growth forecasts down. They have revised wage growth down. They have revised business investment down. They have revised productivity down. 

The productivity slump is the most fundamental problem. It is the weakness of productivity that undermined wider growth. This is a domestic issue for which Osborne must take responsibility. He has presided over a low-wage, low-productivity, low-investment recovery that is built on sand.

Instead of cutting government investment, still scheduled to fall over the lifetime of this parliament, he should be following the advice of the IMF, the OECD, the CBI, the TUC and international experts in driving investment up.

Labour’s fiscal credibility rule, developed in consultation with, and supported by, world-leading economists, offers a framework through which we can eliminate the deficit fairly. We can avoid the counterproductive and cruel cuts we have seen under this government while allowing government the capacity to invest in the future.

But the chancellor clings to his surplus target because his political credibility would disappear entirely if he lost this last remaining fiscal rule. Not a single respectable economist can be found in defence of the surplus rule. But Osborne does not care how much pain it inflicts on the most vulnerable and he does not care how much damage it does to the economy. He cares very deeply, however, about his political career.

Not only have the chancellor’s plans been revealed to have no basis in economics but they are devoid of basic morality. He is not fit to hold the office.

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McDonnell calls for 'urgent rethinking of Osborne's failing economic policy'

John McDonnell, the shadow chancellor, has put out a statement calling for a rethink of George Osborne’s entire economic strategy. He said: 

Iain Duncan Smith’s resignation must now provoke an urgent rethinking of George Osborne’s failing economic policy.

The cuts that George Osborne is inflicting on some of the most vulnerable in our society are not only cruel but unnecessary. As the former secretary of state alluded to in his resignation letter, these cuts are a needless attempt by this chancellor to meet his own nonsensical fiscal rules. 

To take up to £150 a week from disabled people is a chilling example of the lengths George Osborne is willing to go to in placing his own political career and fiscal rules ahead of the long term good of our nation. 

Labour have offered to work with the government to revise their failed approach and instead ensure we have a fiscal policy that is fair, sustainable and shares the wealth more equally within our society. 

Labour’s fiscal credibility rule, developed in consultation with world leading economists offers a framework through which we can eliminate the deficit fairly, avoiding the counter-productive, needless and cruel cuts we have seen under this government.

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John McDonnell’s Response to the Budget

Budget Resolutions and Economic Situation; House of Commons Budget Debates, 17 Mar 2016

It has now been the best part of 24 hours since the Chancellor delivered his Budget. There are some things in it that I would like to welcome. On the sugar tax, we look forward to seeing more detail about how it will be put into practice. I agree with my right hon. Friend the Member for Islington North (Jeremy Corbyn) who said yesterday that we needed a comprehensive strategy to tackle the growing problem of obesity. I regret, therefore, that £200 million has been cut from public health budgets this year—those are the budgets that were to be used to develop that strategy.

We are also pleased that the Chancellor is looking at addressing savings overall, though we wonder whether the new lifetime individual savings accounts will do much to address the scandal of low retirement savings for the less well-off. On the rise in tax thresholds, we welcome anything that puts more money in the pockets of middle and low earners, but we wonder how that aim can sit alongside the Conservatives’ plans to cut universal credit. 

It is about time that we had some straight talking about what this Budget means. It is an admission of abject failure by the Chancellor. For the record, in the six years that he has been in charge of the nation’s finances, he has missed every major target he has set himself. He said that he would balance the books by 2015, but the deficit this year is set to be more than £72 billion. He said that Britain would pay its way in the world, but he has overseen the biggest current account deficit since modern records began. 

The Chancellor promised us a “march of the makers”, but manufacturing still lags behind its 2008 levels. He said he would build his way out of our housing crisis, but we have seen new house building fall to its lowest level since the 1920s. He said that he had moved the economy away from reliance on household debt, but, yesterday, the Office for Budget Responsibility said that his entire plan relied on household debt rising “to unprecedented levels.” He said that he would aim for £1 trillion of exports by 2020. Yesterday’s figures suggest that he will miss that target by the small matter of £357 billion. 

When it comes to the Chancellor’s failures, he is barely off the starting blocks. The fiscal rule he brought before Parliament last year had three tests. We already knew that he was likely to fail one of them, with the welfare cap forecast to be breached. Yesterday, it emerged that he will fail the second of his tests. Having already raised the debt burden to 83.3% of GDP, it is set to rise now to 83.7% this year. Therefore, since the new fiscal rule was introduced, it is nought out of two for the Chancellor’s targets. 

Yesterday, the OBR revised down its forecast for growth for this year, and for every year in this Parliament—in some cases by significant margins. That is reflected in lower forecasts for earnings growth. The Resolution Foundation says that typical wages will not recover to their pre-crash levels before the end of this decade. It is not just forecasts for economic growth and wages that are down. Those are driven by productivity, which has also been revised down for every year of this Parliament. Any productivity improvements last year have disappeared. As the OBR said, it was, “Another false dawn”. Perhaps that is not surprising. After all, productivity is linked to business investment, which should be driving the recovery, but which plunged sharply last quarter. 

As I have said, perhaps the fall in productivity is unsurprising, because productivity is linked to business investment, which should be driving the recovery, but which plunged in the last quarter. 

I can tell the House what happened to business investment forecasts—they were revised down again in this Parliament. None of this should be a surprise for the Chancellor, but it seems that it is. At the autumn statement, he said that he wanted a plan “that actually produces better results than were forecast.” ”.—[Official Report, 25 November 2015; Vol. 602, c. 1385.]

The Secretary of State for Work and Pensions said this last week about the autumn statement:

“If you can’t forecast more than two months, how in heaven’s name can you forecast the next four or five years.”

That is what we all want to know. 

Yesterday the Chancellor pointed repeatedly to global economic headwinds as an explanation for his failure. His problem is that we have known about them for a while. Many of us were warning him last summer about the challenges facing the global economy. I spoke about them in this place, as did others on the Labour Benches, but rather than adapting his proposals to deal with the global reality, the Chancellor has charged headlong into another failure of his own making. He has failed to heed our warnings and the warnings of others, he has failed to invest in the key infrastructure that our economy needs, and as a result he has failed to boost Britain’s productivity figures. 

On productivity, it is the Chancellor’s failure to boost Britain’s productivity that is at issue. The Office for Budget Responsibility is very clear on this point. British productivity, not global factors, is the reason the Chancellor is in trouble. Robert Chote, the head of the OBR, confirmed in an interview last night that “most of the downward growth revisions were not driven by global uncertainty, but by weaker than thought domestic productivity.” As a result of that, we now see drastically reduced economic forecasts and disappointing tax revenues. 

The Chancellor has been in the job six years now. It is about time he took some responsibility for what has happened on his watch. It is not just on basic economic competence that the Chancellor has let this country down. Unfairness is at the very core of this Budget and of his whole approach. 

The Chancellor said in 2010 that this country would not make the mistakes of the past in making the poor carry the burden of fiscal consolidation. The facts prove that that is just not accurate. According to the Institute for Fiscal Studies, the long-run effect of all tax and benefit changes in last year’s autumn statement would mean percentage losses around 25 times larger for those in the bottom decile than for those in the top decile. 

Let me repeat what the IFS said so that everyone is clear: the percentage losses were about 25 times larger for those at the bottom than for those at the top. So much for the Government’s statement about the broadest shoulders taking the strain. Furthermore, time and again, it is women who have borne the brunt of the Chancellor’s cuts. Recent analysis by the Women’s Budget Group showed that 81% of tax and welfare changes since 2010 have fallen on women. 

The distributional analysis by the Women’s Budget Group shows that by 2020 female lone parents and single female pensioners will experience the greatest drop in living standards—by 20% on average. In the case of older ladies, the single female pensioners, the cuts in care are falling upon their shoulders. I find that scandalous in this society. 

It is disappointing, too, that the Budget offered no progress on scrapping the tampon tax. The Chancellor is hoping for a deal from the EU on the tax. If there is no deal, we will continue to fight for it to be scrapped. 

Young people have also paid a heavy price during the Chancellor’s tenure. It is not just the education maintenance cuts in the last Parliament, or the enormous hikes in tuition fees; it is the dream of home ownership receding into the distance for young people on average incomes.  

The new Lifetime ISA will not resolve that. With pay falling so sharply for the young, there can be very few who can afford to save £4,000 a year.

We know that so far on the Chancellor’s watch, people with severe disabilities have been hit 19 times harder than those without disabilities. If that were not enough, the Government are now taking over £100 a week out of the pockets of disabled people. Even for a Chancellor who has repeatedly cut public spending on the backs of those least likely or least able to fight back, this represents a new low. I believe it is morally reprehensible. 

On disability, I am appealing to the Chancellor to think again. We will support him in reversing the cuts in personal independence payments for disabled people. If he can fund capital gains tax giveaways for the richest 5%, he can find the money to reverse this cruel and unnecessary cut. 

I just say this across the House: this is a very important issue—we will not make party politics of this. As someone who has campaigned on disability issues in the House for 18 years, I sincerely urge all Members to press the Chancellor to think again. This cut is cruel, and it is, unfortunately, dangerous for the wellbeing of disabled people. 

If corporation tax—already the lowest in the G7—can be reduced yet further, money can be found so the Government can think again about making yet more cuts to people with disabilities. 

Finally, I want to talk about the future. Yesterday’s Budget does not meet the needs and aspirations of our society. It fails to equip us for the challenges ahead. It fails to lay the foundations for a stronger economy that could deliver prosperity shared by all. 

The Chancellor has repeatedly told us we are the builders, and yesterday we heard more of it. On infrastructure, we are back to press-release politics: projects announced with no certainty of funding to complete them—projects that should have started six years ago. It is always tarmac tomorrow. If stories about garden suburbs sound familiar, it might be because we have heard them before. Announcements about garden suburbs have become a hardy perennial of the Chancellor’s announcements. 

However, despite all the rhetoric, all the re-announcements and all the photo opportunities in high-vis jackets, one statistic is in black and white in the OBR’s documents: public sector investment as a share of GDP is scheduled to fall from 1.9% last year to 1.5% by the end of this Parliament—a lack of investment in our infrastructure that will hold back the growth of our economy. 

On education, it seems that we are back to the politics of spin and stunts. Forcing schools to become academies will do nothing to address the shortage of teachers, the shortage of school places and increasing class sizes. Forcing schools to compete for the extra-hour funding places more bureaucratic burdens on headteachers, with only a one-in-four chance of gaining that additional funding. 

We have learned this morning that there is a half-a-billion-pound black hole in the funding needed for the Chancellor’s plans for schools. I would welcome the Secretary of State for Education confirming whether she will find the money to ensure that, if academisation is funded, schools are fully funded for that process. 

As for long-term financial planning, it is increasingly clear that the Chancellor is determined to flog off anything that is not nailed down, in a desperate attempt to meet his self-imposed targets. 

Last year, we noted that the Chancellor could meet the conditions of his fiscal rule only by selling off profitable state assets, even at a loss to the taxpayer. Official figures yesterday suggested that taxpayers will face a loss of more than £20 billion pounds as a result of the Chancellor’s decisions on RBS share sales. 

Yesterday, again, we learned that the Government are considering the privatisation of the Land Registry. That is despite their deciding against it as recently as 2014. That is despite the Land Registry returning millions of pounds in profits to taxpayers. That is despite a 98% customer satisfaction rate. It makes no difference to this Chancellor: everything must go, everything is up for sale. When will he learn that you cannot keep paying the rent by selling the furniture?

 The Chancellor has consistently put his political career ahead of the interests of this country. Yesterday he tried to do the same, and he failed. His disastrous economic failures are the result of putting personal ambition ahead of sound economics.

The Chancellor is clinging to the tattered remains of his fiscal charter, using it to justify brutal cuts to vulnerable people. In contrast to his rule—widely savaged by economists, and now on the point of being torn up by Government statisticians—Labour has a real alternative. Labour will build a society based on a fair tax system, where the wealthy and powerful pay their fair share. In line with recommendations from the OECD, the IMF, the G20, the CBI and the TUC, Labour will invest to grow opportunity and output. Labour will eliminate the deficit by growing our economy. Labour will invest in skills for a high-wage, high-tech economy. 

In contrast to the Chancellor’s broken promises, we will balance Government spending, using a fiscal credibility rule developed, and recommended to us, by the world’s leading economists—our economic advisory council. We will balance Government spending, but not, like the Chancellor, by bullying those who will not fight back. We will invest to deliver shared prosperity, with people able to fulfil their potential, and a country meeting its potential. 

Let me make this clear: Labour does not want to see the Chancellor drive the economy over a cliff, blinded by his adherence to a fiscal rule that everyone now knows cannot work. In the interests of this country, we are making him an offer: let us work together to design a fiscal framework that balances the books without destroying the economy. However, let me also make this clear: if he refuses our offer of co-operation, Labour will fight every inch of the way against the counter- productive, vindictive and needless measures the Chancellor has set out in this Budget. Britain deserves better than this. 

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John McDonnell MP, Labour’s Shadow Chancellor, speech at the RSA on Labour’s approach to the economy

Rewriting The Rules

Thank you very much for the opportunity to speak here at the RSA on Labour’s approach to the economy.

George Osborne will be presenting his Budget to Parliament next week. As is usual, much of its content has been trailed in the press.

Or, rather, much of what will not be in it has been trailed.

Osborne is not, we are told, now considering changes to pensions tax relief.

Osborne would like to, but will not, be cutting the top rate of income tax, we are told.

He is too scared about his future career prospects to risk it.

And then, in news he snuck out late on a Friday evening, Osborne announces that the “economy is smaller than we thought” and that as a result further spending cuts or tax rises may be needed to hit his own target for a surplus.

What an astonishing about-turn from a chancellor who had, just a few months before, declared that we had arrived at the sunlit uplands.

Osborne claimed at the time of the Autumn Statement his economic plan was producing “better results than expected”.

Now he has to admit, shamefaced, that the results are worse than he expected.

When George Osborne said the sun was shining, what did he do?

He cut flood defences.

He cut policing.

He decimated local authority spending.

Women in Britain are now facing, according to the Fawcett Society, the greatest threat to their financial security and livelihoods for a generation.

The truth is that George Osborne’s recovery is built on sand.

Business investment is falling.

Exports are falling.

The productivity gap between Britain and the rest of the G7 is the widest it has been for a generation.

Without productivity growth, we cannot hope, over the long term, to improve living standards for most people.

The truth is that we are failing to meet our potential. Failing to reach our potential means failing to meet the aspirations of our people.

It means a gender pay gap that is still wedged at 19 percent.

It means seeing a 22 percent fall in earnings for the self-employed in just a few years.

It means those wanting to grow their small businesses deprived of the loans they need by a failing banking system.

It means another 100,000 people pushed into the insecurity of zero-hours contracts.

It means a whole generation of our young people for whom the security of home ownership is rapidly becoming an impossible dream.

George Osborne will be presenting his Budget next week.

It could be an opportunity to begin to turn things round.

Instead, we can expect more of the same from this Chancellor.

More wheezes. More short-term political fixes.

And in defiance of the growing consensus in the economics profession he will continue to pursue spending cuts.

At a time when the IMF and the OECD are insisting on the need for increased government investment, George Osborne is planning for government investment spending to fall as a share of GDP.

He claims that a “cocktail of threats” elsewhere in the world means that now is the time to hunker down.

He couldn’t be more wrong. Now is the time to break with the failed approach he has taken that has left this economy more exposed to shocks elsewhere in the world.

George Osborne’s Budget should be about safeguarding the economy, and equipping it for the future.

Osborne’s policies do neither.


Austerity is a political choice

Austerity makes little sense in economics terms.

But it is a politically easy choice for the UK, since it works to the benefit of powerful vested interests.

Maurice Obstfeld, currently chief economist at the International Monetary Fund, wrote a fascinating paper on this back in 2013.

In it, he describes perfectly the logic driving Osborne’s cuts agenda.

When countries have very large financial systems, Obstfeld argues, they must have small governments.

This is because large financial systems are prone to spectacular collapse, as we saw in 2008.

When that happens, governments are expected to step in, arranging bailouts and propping up the economy.

So government must be small today in case of a major financial crisis tomorrow.

This is exactly what Osborne has aimed at since 2008. Cutting the state down to size, in case of a further financial risks.

Behind this is a limited, cramped vision of what this country could achieve. Instead of arguing for a financial sector that serves society, Osborne is arguing for a society that serves the financial sector.

That is his political choice.

His choice, and the choice of too many past governments, imposes a real cost.

The Bank of International Settlements have argued that these financial expansions have resulted in a serious misallocation of investment.

When capital is misallocated, it means that whilst giant chain stores can always grow, the small, family-owned business looking to expand can’t get the finance its needs.

Capital is flowing the wrong way.

We can see this today, after the crash.

Society’s resources have been diverted away from productive use, and into low-productivity investments.

The underlying economy was weakened by excessive financial expansion, even if, during the boom years, this was disguised by comparatively rapid economic growth.

We chased the illusory gains of financial expansion, and neglected real wealth creation.

Our boom was bigger, but our bust was all the greater.


Labour’s alternative in outline

Labour’s alternative has to be nothing less than a radical break with the past.

There can be no turning the clock back, whether to 1997 or 1945.

In the words of our Economic Advisory Council member Joseph Stiglitz, we must now “rewrite the rules” of how our economy operates.

The old rules have failed too many. They have meant extraordinary rises in inequality, and falling social mobility.

They have meant low investment, low productivity, and low pay, even as a lucky few have done extremely well.

Rewriting the rules today means three things.

First, an absolute commitment to responsible financing by a future Labour government.

The old rules meant relying too much on tax revenues from financial services, and too much on expensive funding schemes like PFI.

We didn’t do enough to clamp down on tax avoiders.

We should show how we can account for every penny in tax revenue raised, and every penny spent.

There is nothing left-wing about ever-increasing government debts, or borrowing to cover day-to-day expenses.

Borrowing today is money to be repaid tomorrow.

With a greater and greater portion of our government debt now held by those in the rest of the world, government borrowing increasingly represents a net loss for those of us living here.

The public, rightly, want a government that is responsible with its finances. We in the Labour Party have to show them how we will act as a responsible custodian.

We shouldn’t be the Party that only thinks how to spend money.

We are the Party that thinks about how to earn money.

The clue is in our name. We are the party of labour – the party of the wealth creators, of technicians, designers, machinists, entrepreneurs – the party of workers and small businesses.

We need to get back to the best of our own tradition.


Entrepreneurial state and the reviews

Second, we need to use government’s capacities wisely.

Another Economic Advisory Council member, Marianna Mazzucato, has written brilliantly about the role an “entrepreneurial state” can play in establishing new industries and driving innovation.

I can give you an example. Just last week it was announced that the United States’ Advanced Research Projects Agency-Energy, ARPA-E had made a major breakthrough in battery technology that could hugely accelerate the spread of renewable energy.

ARPA-E was established by Barack Obama as recently as 2009 to promote blue-sky research in new energy technologies. It is kind of innovative approach we could be drawing on here.

Britain has an extraordinary heritage of scientific research. We can and should be doing more to draw on this, and to improve the application of this research.

Instead, real spending on research and development has fallen by £1bn under George Osborne’s watch.

If we want to create the economy of the future, we cannot have a government that stands idly by.

The state should be making the long-term, patient investments that are the foundations of long-term prosperity.

That should be prosperity shared across the whole country. And it should be aligned to a functioning, twenty-first century industrial policy.

There’s a glimmer of what this might look like already, in the extraordinary turnaround of UK motor manufacturing.

Prompt action by Government and the Secretary of State for Business in the aftermath of the crash stabilised the industry and laid the foundations for its recovery.

Today, Britain’s car industry exports more than ever before. It is the most productive in Europe.

There are still problems here, of course. There is not a single domestically-owned motor manufacturer. Its supply lines, like those across much of manufacturing, are hugely internationalised.

But it is crucial example that effective government intervention, carefully applied, can produce results.

This is about more than a few policy changes. We need to take a close look at how the institutions charged with overseeing the economy function.

So we’ve launched reviews, led by experts, of the major institutions of economic governance.

Lord Kerslake, former head of the civil service, is reviewing the Treasury.

Accountancy expert Professor Prem Sikka is reviewing the role of HMRC.

Danny Blanchflower, former Monetary Policy Committee member, is reviewing the MPC itself.

In each case, we want to take a forensic approach to understanding how these core institutions can best deliver the prosperous, fair economy of the future.

This isn’t about making the state bigger or smaller. It’s about making it smarter.


Socialism from below

Third, we need to unlock the potential of the wider economy.

The figures are clear. The potential of this economy is being held back by the weakness of the supply-side.

George Osborne’s policies have held back demand. But it is on the supply-side that, it is now clear, we need the biggest shake-up. This is what the slump in productivity indicates.

There is a growing coalition of economists, unions, and businesses who will support government investment in infrastructure.

That is one part of the solution.

Another is in the provision of skills. Latest figures suggest that 22 percent of all jobs vacancies are going unfilled as a result of a lack of candidates with the right skills or experience.

Here, too, government can intervene directly. But it must do so effectively. The present Chancellor’s solutions are inadequate. Ofsted was damning in its report on the many new apprenticeships being offered. The surge in numbers had led to a slump in quality.

We’re not just failing our young people if we fail to provide them with the skills they need. The entire economy suffers as a result.

But government action alone is not enough.

I’ve said before that our watchwords on the economy will be democracy and decentralisation.

We need a far more sophisticated argument about ownership that does not just fall into the caricature of either pure privatisation, or monolithic state control.

Decentralised ownership of electricity production, as we see in Germany or Denmark, must play an important part in the shift to low-carbon production.

But we can go further than this. Government can clear the barriers that hold back entrepreneurship and innovation.

This doesn’t just mean blind deregulation. It means taking on the vested interests that hold back aspiration.

The potential is there. If we mobilise the potential of our small businesses, giving them the opportunity to match the productivity growth of small businesses across Europe, we can boost GDP by £140bn.

We need to clear barriers to their financing, and think creatively about how to fund their expansion.

For instance, Britain has an extraordinarily concentrated banking sector that is not serving customers properly, particularly small businesses.

We need a network of regional and local banks, in tune to the needs of their local businesses and communities.

A Labour government should not be afraid of taking on the big monopolies where they are failing the rest of us.

We are moving into a world in which more and more people are starting businesses, or becoming self-employed.

We must welcome genuine entrepreneurship, and extend employment protection to the self-employed.

And we should be unafraid to support new models of business ownership and management, like worker-owned enterprises and co-operatives.

Worker-owned and managed enterprises are typically more productive and are less likely to fail in a downturn than those in more conventional ownership.

I’ve spoken before about creating a Right to Own for employees, giving them first refusal on taking over a company when it changes hands.

Over the next few years, many small business owners will be looking to retire. Yet two-thirds of family businesses face being sold off for the lack of anyone to take over.

Employee ownership, supported by government where needed, can be an important part in safeguarding their future.


Fiscal Credibility Rule

I want now to return to my first point on sound finances. Sound finances are the foundations on which everything else is possible.

We know a rule for spending is needed. It should make clear the framework in which a future Labour government will make its spending decisions so that the public can trust those spending decisions.

We also know investment is needed.

Others in my party are in agreement with me on the case for investment and jobs, but the public need more than platitudes from our party.

At a time when major international organisations and central banks are calling for a rethink in how economic policy operates, we need clarity and a vision.

Following discussions with our Economic Advisory Council and expert advisors we have decided to recommend a Fiscal Credibility Rule which will underpin Labour’s fiscal position.

We believe that governments should not need to borrow to fund their day-to-day spending.

And that is why we would commit to always eliminating the deficit on current spending in five years, as part of a strategy to target balance on current spending over a target five-year period.

While there are exceptional times when shocks from the private sector mean that government has to step in to help, everybody knows that if you’re putting the rent on the credit card month after month, things needs to change.

Alongside this, we recognise the need for investment which raises the growth rate of our economy by increasing productivity as well as stimulating demand in the short term.

That is why our target for eliminating the deficit excludes investment.

And because we want to ensure that the Government’s debt is set on a sustainable path, we will commit to ensuring that, at the end of every Parliament, Government debt as a proportion of trend GDP is lower than it was at the start.

It is essential for our future prosperity that we retain the ability to borrow for investing in capital projects which over time will pay for themselves.

We owe that, at least, to those whose homes are endangered by flooding, many of whom suffered so much this winter.

But we also know that we are entering a period of great uncertainty for the world economy, which may put many existing economic structures under pressure.

Economists are debating secular stagnation, savings gluts, demographic transition and many other explanations.

Meanwhile inside central banks across the world policymakers are grappling with the concepts of negative interest rates, extended QE purchases, raising inflation targets, and even so-called helicopter money.

Only yesterday we saw the European Central Bank entering new territory with a new and broader programme of quantitative easing.

One thing is clear: we are in unprecedented times.

So it is right that, if conventional monetary again becomes constrained by hitting a lower bound as it did after the global financial crisis, we understand when fiscal policy has to take some responsibility.

And that is why we will reserve the right, for as long as monetary policy is unable to undertake its usual role due to the lower bound, to suspend our targets so that monetary and fiscal policy can work together.

Rather than an arbitrary cut off for GDP forecasts, we will suspend our rule in the circumstances when it is clear that fiscal policy needs to work together with monetary policy to get the economy moving again.

Taken together, these principles will underlie everything we say about fiscal policy.

We, as Party, as interested in how Government earns money as much as how it spends money.

I am making no announcements today about our spending commitments.

We will be discussing policies democratically across the Labour Party for the next few years, as we have pledged throughout and since Jeremy’s election campaign.

But I promise that, from now on, any potential commitments we do make will be judged on how they fit into our Fiscal Credibility Rule.

And to oversee all this we will make sure that the Office for Budget Responsibility is properly resourced and genuinely independent, reporting to Parliament.


Most important fight for a generation

Why have we been having this conversation now?

In my recent speech at the London School of Economics I said that Labour faces its most important fight in a generation.

It is clear that regaining the public’s trust with the public finances must happen before the electorate will consider trusting Labour with the keys to Government again.

There is no short cut to regaining fiscal credibility with the electorate.

We have a long way to go before we can regain the trust that was lost after the global financial crisis of 2008, which happened on Labour’s watch. There is no silver bullet.

But the first stage of that is to lay out our framework for overall fiscal policy. To show that we can be trusted, that we take seriously our responsibility as stewards of the nation’s finances.

In coming to this position we have consulted with some of the most eminent economists in the world.

This is in stark contrast to George Osborne’s own fiscal rules.

Since adopting an even stricter target than the one he repeatedly missed during the last Parliament, his approach has been savaged by economists on all sides.

The Financial Times and the Economist, every single economist who appeared in front of the Treasury Select Committee criticised Osborne’s new rule. Literally every single one, including those on the political right.

There is absolutely no economic case for Osborne’s fiscal rule. It is designed solely with the Tory leadership contest in mind.

It is time for him to put the national interest above his own political ambitions, and adopt a fiscal rule that can sustain shared prosperity.

We will take this rule through our party policy processes and on to Labour Party conference, where our overall economic strategy will be determined.


Fairness and the future

We have a huge potential in this country. But we have a Chancellor that is failing us.

He is sacrificing the bold, necessary action we need for the sake of his political career.

At a time when we should be looking forward, and setting down the solid foundations for secure future prosperity, we have a Chancellor who is too busy looking back.

Jeremy was elected on a promise of “straight talking, honest politics”. We need a bit of straight talking, honest economics if we want to realise our potential.

This means an end to the bluff and bluster.

We need a Budget that is about fairness, and about the future.

With that in mind, let me ask four things from the Chancellor for his Budget next week.

First, as Jeremy Corbyn called for last week, to jump start investment across the country we need a National Investment Bank, with the capacity to deliver investment funding where it is urgently needed.

Second, new infrastructure is welcome. But needs to be backed by real government commitment.

Our Fiscal Credibility Rule means that we can end the nonsensical situation in which George Osborne can make endless announcements on infrastructure projects, but then fail to find the means to finance them.

This is simply not serious when the UK is falling down the OECD’s infrastructure rankings.

His efforts at persuading the private sector to step in have flopped. His Pensions Infrastructure Platform to persuade pension providers to invest was expected to raise £20 billion. In fact it has raised just £1 billion.

Just 9 percent of the projects in his Infrastructure Pipeline are currently being built.

If the funding isn’t available, it means vital new projects like Swansea’s Tidal Lagoon are delayed, and delayed again.

Our Fiscal Credibility Rule will provide us with the means to finance vital infrastructure, whether it is high-speed broadband or new rail connections in the North.

Third, our housing crisis is a national disgrace.

We need bold action to address it. Housebuilding has slumped to the lowest level since the 1920s with George Osborne as Chancellor.

We are building around half the number of homes we need.

Wheezes and quick-fixes from the Chancellor won’t address this.

We know new homes alone won’t solve the problem. But we have to do better than this.

We are failing the aspiration of our young people to own their own homes.

We are failing too many to provide the most basic minimum a decent society demands.

Our Fiscal Credibility Rule can provide us with the secure, credible foundations to unlock the financing necessary to deliver the new homes we so urgently need.

We think a programme to build 100,000 new homes a year could begin to address the crisis. My colleague John Healey has offered furthers proposals here.

And finally on fairness, we will insist on wanting to see a Budget from George Osborne in which, unlike its predecessors, it is not the poorest who suffer the most.

Year in, year out, Osborne’s Budgets have leaned too hard on those least able to bear the burden.

We want to see a government and a Chancellor who does not just make noises about fairness, but who delivers. We will be looking closely at independent distributional analyses of his impact, to see that the poorest in society do not continue to bear the brunt.

In particular we will be monitoring the expected effect of his decisions on women, who have borne the brunt of 81 percent of his cuts.

George Osborne had the opportunity to deal with this. He still has, next week. But it will less thinking about his political career, and more thought about the future of this country. It will require boldness, and challenging some of the vested interests in his own party.

Labour will rewrite the rules to build a fairer, more prosperous economy.

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INTERVIEW: John McDonnell on the Gender Pay Gap - By Libby Mayfield 8th March 2016

In 1970 the Equal Pay Act came into force, but even now we still see women on average earning 80p to a man’s £1. Research by the UN suggests that it may up 70 years before the gender pay gap closes, and there are more than enough startling figures about how few women are in senior management positions, even in the UK.

Several day ago I met with John McDonnell, Shadow Chancellor of the Exchequer, at the first East Midland’s Momentum Conference to discuss Labour’s view on the gender pay gap.

McDonnell ‘s disgust at the gap is almost tangible, describing it as “appalling”, adding: “I just find it staggering – we’re talking 40 years on and we still have this situation.”

Today marks Labour’s Shadow Cabinet meeting in Barking and Dagenham where the first equalities legislation was produced after the Ford sewing machinists strike of 1968. McDonnell said: “This is not just symbolic. We want to use that Shadow Cabinet to discuss in detail some of the policies that we’re advocating.

“First of all we want to tighten up the legislation that tackles discrimination in that way.

“The second is to make sure that we improve the trade union rights in this country so that women can be fairly represented, and the government is trying to undermine trade unions’ rights as a result of the trade union bill.

“Then it’s looking at investment, in particular skills training. Investment in bringing women forward through education opportunities as well, so that’s also about tackling the issue of tuition fees which I think still act as a deterrent for many working class women to stay on into higher education and go to university.

“It’s also looking at how girls and young women are treated in the whole educational system.”

As well as these steps, which all seem perfect on paper, he mentioned a more pragmatic way to measure the party’s policy success: “We’re launching a women’s commission as well, so we bring women in from all walks of life to advise us on the development of those policies and their implementation.”

He finished by adding: “It isn’t just income; if you look at the number of chief executives of major companies that are women, there are very few women on boards, or women in senior management positions.

“There’s been a recent assessment about austerity and where the cuts fall, and 81% of the cuts fall on women – again it demonstrates the nature of our society in terms of inequality, but also demonstrates the inequality of policy making as well.”

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John McDonnell says Powerday application will cause 'chaos' on high street

The Hayes and Harlington MP has penned a letter to the council, urging them to reject a waste recycling plant in West Drayton

John McDonnell has pledged his support to residents in fighting against a waste recycling plant planning application in West Drayton .

The Hayes and Harlington MP and Shadow Chancellor has written to Hillingdon Council 'strongly urging' them to reject Powerday's application to transform the old coal depot site on Tavistock Road.  


Powerday Plc submitted a planning application to demolish the existing Old Coal Depot buildings and construct a 'Materials Recovery Facility' (MRF), despite a promise in early 2015 not to develop the site and after a five year battle with residents.

The site, which will incorporate a recovery and recycling building, storage bays and associated car parking, landscaping, fencing and infrastructure, will recover recyclable materials such as plastics, glass and cardboard from businesses and households.

But the site was previously rejected by Hillingdon Council after a 4,000-strong petition, and active residents are gearing up to campaign again.

John McDonnell wrote to the Council to object to the first application and back put his backing of campaign against the site into writing again.

He believes the town centre is not equipped to deal with large volumes of HGVs, is concerned for increased traffic and worries for residents being exposed to fumes.

He wrote: “I share residents’ concerns that the access point will be opposite West Drayton bus and train station.

“Not only will this cause chaos on the High Street and surrounding roads but buses and passengers alike will have to negotiate with huge lorries that will be trying to access the plant.

“This proposed development is in the heart of a densely populated area. I believe that such a development will have a detrimental impact for those working and living in the vicinity and beyond.

“This proposed development does not provide any benefits for the local community and will undoubtedly affect the residents’ quality of life as they will be exposed to noise, light and air pollution as well as an increase in traffic 24 hours a day, 7 days a week.”

John McDonnell joins residents opposed to the building of a large recycling facility

Mr McDonnell also asks that the council consults as widely as possible on the application as it will have an impact on the wider area.

The Hayes and Harlington MP told getwestlondon : “After an overwhelmingly negative response to the first planning application by Powerday which included a petition signed by over 3000 people it’s frustrating that we’re now having to reject a second bid.

“I share the concern of local residents who say that our local area is already heavily congested and that this development would worsen the traffic problems and result in more air pollution and noise.

“I believe that such a development will have a detrimental impact for those working and living in our area and that Powerday need to accept the wishes of our local community”.

Residents were previously lobbying MPs to put their support in to writing, after support from Councillors and the local Assembly Member .

Boris Johnson , MP for Uxbridge and South Ruislip , was contacted but has not commented on the application.

Cllr Jan Sweeting, councillor for West Drayton is hoping for more information from Powerday in the coming weeks.

She said: “The GLA are currently asking for more information.

“Once we have a date for the committee meeting we'd like as many people from Yiewsley and West Drayton to attend and have an opportunity to be there when the council makes the decision.”

Katherine Clementine, Get West London, 29th February 2016

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John McDonnell MP, Labour’s Shadow Chancellor, speaking after Treasury Questions today, said:

"The Chancellor had no answers today as his economic plans were brought into question. Instead he left it to his deputy, the Chief Secretary, who had no meaningful defence of this government’s record.

"We all remember the Chancellor’s boasts at the end of last year but he was quiet today when asked why he now thinks the economy is smaller than he used to claim.

"George Osborne is keen to find fault with everyone but himself. However, since the Autumn Statement, we’ve seen business investment fall, his exports target secretly abandoned, the trade deficit widening, manufacturing entering recession, construction entering recession, the productivity gap widen to the biggest it has been for a generation, and unsecured household debt rising at record rates. 

"In the week that a former Bank of England governor says the banks have failed to learn their lesson, it's clear we have a bankers’ Chancellor who has failed to learn his lessons too."

In response to the claims by George Osborne that the 45p rate has raised £8 billion more in taxes than the 50p rate, John McDonnell MP said:

"No one seriously believes these fantasy figures from George Osborne. And it will come as no surprise that yet again this bankers' Chancellor is playing fast and loose with figures to justify his tax giveaways to a wealthy few, while making the rest of us worse off.

"The truth is that the delay in implementing the 45p rate probably allowed significant time for many wealthy people to structure their tax arrangements so that they could simply pay it at the Chancellor's new lower rate. Now George Osborne is trying to hide the fact that this was really a giveaway to people at the top while everyone else pays more'."

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OECD – This is a highly important intervention.

John McDonnell MP, Labour’s Shadow Chancellorresponding to the OECD’s Interim Economic Outlook, which calls on countries like the UK to reduce their austerity measures and increase investment spending, said:

“This is a highly important intervention by the OECD, who in the past have been relatively supportive of the government’s economic policy, but George Osborne is starting to look increasingly isolated, as now the latest report from the OECD confirms what Labour have been saying that the Chancellor should change direction.

“The OECD are correct to advise, what Labour has been arguing for months, that we need to increase investment, as the time is right to invest now in our future in much needed infrastructure, so that we avoid paying more at a later date for missing this opportunity.

“But the truth is that since entering Number 11, George Osborne doesn’t put his money where his mouth is on infrastructure spending. He cut the level of investment in the UK with investment in infrastructure set to fall as a share of GDP, and he has allowed the Infrastructure Pipeline to become blocked with only 9 per cent of projects listed as started.

“Today’s statement from the OECD will come as yet another hammer blow to this downgraded Chancellor’s already fading economic credibility. But George Osborne has to start to listen and cannot just stand in the way for what is best for the UK economy out of fear for his Tory leadership bid.”

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Full house at LSE for John McDonnell's talk on Labour's economic policy

LSE.jpg‘Labour is interested in how we earn money not just how to spend it’  

It is now five months since Jeremy Corbyn turned the British political world upside down and became leader of the Labour Party.

His campaign spoke of the need for a ‘New Politics’ and touched a nerve with thousands of people up and down this country who instinctively understand the need for radical change.

Our job is now to deliver that change, and I believe we have made real progress in doing so.

A few weeks after Jeremy asked me to take the job as Shadow Chancellor, George Osborne brought his so-called Charter for Budget Responsibility to Parliament.

Now these have become something of a farce in recent years. Each time, the Chancellor solemnly informs us this is how he will address the finances of the Government.

And each year he misses the targets he set himself, and tries again.

When we spoke to our colleagues it became clear that the mood which carried Jeremy to the Labour leadership was beginning to shift opinion throughout the Labour Party, and there was a real appetite for opposing Osborne’s plans.

We voted against them and drew a clear unequivocal line in the sand.

From now on, the Labour Party is an anti-austerity party, which rejects the failed approach to macroeconomics that has done so much damage to this country and across Europe.

I am immensely proud of that, and I believe all of us in the Labour Party should be.

But this is just the very beginning. It is not just bad macroeconomic policy which holds back the potential of the UK.

We want to look root and branch at every aspect of the British economy and especially how it interacts with the process of government.One of the first things we did was to commission a series of reviews by respected figures in their fields into the key institutions of economic decision making.

Lord Kerslake, the former Head of the Civil Service, is conducting a review into the workings of the Treasury. He has brought together an impressive team of experienced figures from the public and private sector to look at whether its current role and mandate are appropriate.

In particular, I have asked him to look separately at the roles of the Treasury as an “economics ministry” and as a “finance ministry”.

Alongside that, Danny Blanchflower, formerly of the Bank of England’s Monetary Policy Committee, is looking into the make-up and mandate of the committee.

I’ve asked him to report back on whether the MPC has the mandate it needs to meet the challenges and uncertainties of the future, or whether changes need to be made.

Professor Prem Sikka of Essex University is conducting a review for us into the operation of HMRC and whether it is fit for purpose.

This topic now seems even more important following the recent revelations about Google’s tax bill.

And finally, alongside these external reviews, my colleague Seema Malhotra is looking at the system of tax reliefs which has developed over the years.

We want to understand whether they work as intended in incentivising business investment.

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Labour claims missed opportunity

George Osborne has been accused of missing a golden opportunity to crack down on tax avoidance by multinational companies by making it part of the Government's EU reform agenda.


In a Commons debate, Labour argued that David Cameron's EU proposals should have included measures such as country-by-country reporting, which would force firms to disclose the sales, profits and taxes paid in each nation where they operate.


John McDonnell, the shadow Chancellor, claimed Google's £130m "sweetheart" deal with HM Revenue and Customs had "driven a coach and horses" through international efforts to ensure that multinationals pay more tax. "The UK is now becoming depicted across Europe as a tax haven," he warned. "It risks establishing a race to the bottom in which every country outbids each other to offer the lowest possible taxation."


But a Labour motion calling for full details of the Google agreement to be published and the swift introduction of country-by-country reporting was defeated by 299 votes to 271, a government majority of 28.


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Google tax deal under fire as it emerges figure included share options scheme

Phillip Inman Economics correspondent, the Guardian 4 February 2016

George Osborne’s claim that the government secured a major corporation tax deal with Google appear to be unravelling after it emerged that a quarter of the £130m recovered by HM Revenue & Customs related to the US company’s share options scheme.

Filings by Google’s UK subsidiary show that £33m of the funds paid to the Treasury followed a wrangle over share options handed to staff, which the US business had argued were exempt from UK tax.

The company’s accounts show that the government was only able to claw back less than £100m in corporation tax from Google for the 2005-2014 period, and not the £130m the chancellor claimed. MPs and foreign governments have criticised the deal for allowing Google to generate billions of pounds in profits from its UK business and pay little corporation tax.

The Treasury select committee said last week that it would examine the deal, while several ministers have conceded that the outcome of the tax dispute was disappointing. John McDonnell, the shadow chancellor, said there was an important distinction between a settlement for unpaid corporation tax based on Google’s profits and the need to pay tax on share options for staff.

He said the low rate of corporation tax paid by Google, which was already “totally unacceptable”, needed to be independently examined. “If true, this is truly shameful behaviour by the chancellor. He dressed this deal up as a ‘major victory’, when in reality it was a defeat,” McDonnell said.

“It adds weight to my calls for why we desperately need the government to publish the detail of their deal with Google. Because having greater transparency of this Tory deal is the only way we can get to the bottom of whether or not taxpayers are getting value for money.

“Sadly, George Osborne refuses to do this and is now hiding himself as well as the true details of this deal from public scrutiny so as to avoid any awkward questions.”

Google settled a long-running tax dispute with HMRC last month following a six-year audit of the company’s UK business. It uses a complex web of subsidiaries that allows the US parent operation to divert profits from Google’s non-US businesses to the low-tax territory of Bermuda.

Critics of the tax settlement have calculated that Google generated sales of £24bn in the UK between 2005 and 2014. It has reported profit margins of between 25% and 30%, giving an estimated profit of about £7.2bn.

As it already agreed to pay about £70m in addition to the £130m settlement, Google’s effective tax rate is between 2% and 3%, compared to the 20% headline rate of corporation tax.

Richard Murphy, a tax expert who advises the Labour leader, Jeremy Corbyn, on economic policy, said most major US corporations had attempted to depress their tax bills by charging subsidiaries the cost of share options to staff, and that all had been ruled out by HMRC.

He said it was unclear why HMRC had failed until now to force Google to comply. “What was already a poor deal for the government is now looking even worse,” Murphy said. “And it looks like HMRC’s mess-up. I would say it clearly shows that HMRC is under-resourced and is struggling to cope in negotiations with major corporations.”

A Google spokesperson said: “After a six-year audit by the tax authority, we are paying the amount of tax that HMRC agrees we should pay. Governments make tax law, the tax authorities enforce the law and Google complies with the law.”

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Labour to force Commons vote on tax avoidance

John McDonnell challenged the Conservatives to take a more open and transparent approach to dealing with the crisis over tax avoidance by large multinationals. in the Chamber on Wednesday.

Following the missed opportunity to use the EU negotiations as a way to get a deal on tax avoidance across Europe, John McDonnell MP, Labour’s Shadow Chancellor, wants the government to release the full details of their deal with Google, and to fully back making publicly available country-by-country-reporting (CBCR).

In an Opposition Day debate in the House of Commons on Wednesday he called on the Chancellor George Osborne to back Labour’s plan and force a vote in Parliament.

Labour’s Shadow Chancellor, John McDonnell MP, said:

“The past fortnight has shown that the Chancellor has missed an opportunity to not only restore public faith in our tax system, but he has also missed a major opportunity to strike a deal across the Europe on tax avoidance.

“The Chancellor could have used these negotiations to get EU wide agreement on making publicly available country-by-country-reporting by big multinationals, so that we get proper transparency of these tax deals.

“The truth is that you cannot trust the Tories when it comes to tax avoidance, because they say one thing in public and another in private. Only at the weekend we found that they were secretly telling their MEPs to oppose tax avoidance measures in Brussels while in Westminster pretending to care.

“Today’s debate offers George Osborne a real chance to stop blocking important reforms so that we can now start to begin to deal with the crisis of tax avoidance and achieve a fairer outcome for taxpayers.”

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How John McDonnell proved his critics wrong - and put Labour back on track

The controversial appointment is paying dividends for Jeremy Corbyn, asserts Liam Young.

From the moment Jeremy Corbyn selected John McDonnell to be his shadow chancellor there have been many rumblings both inside and out of the Parliamentary Labour Party. The press lambasted him as even more left wing than the leader himself. Vocal members of the PLP had called on Jeremy to appoint Angela Eagle to the role so as to balance the shadow cabinet both politically and by gender. However the last week has vindicated Jeremy’s decision. McDonnell has not just outperformed expectations held over him by the naysayers, but he has also begun to establish a vision for a new British economy.

This run of form began on 18 January with the announcement of ‘the new economics tour’. The first talk took place last week alongside Mariana Mazzucato who is a member of McDonnell’s economic advisory board, also made up of heavyweight economists Thomas Piketty and Joseph Stiglitz. Not only did the announcement ensure some good news for Labour’s economic credibility by showing the party backed by respected economists, but it also showed some real direction. McDonnell’s speech at the Co-Operative conference confirmed this sense of direction. In proposing a ‘right to own’ the Shadow Chancellor, all too aware of Labour’s previous failure to form a coherent economic vision, began to stress core components of his new economic approach.

However it is McDonnell’s handling of the on-going Google tax fiasco that has proven his competence for the position not just of shadow Chancellor, but Chancellor of the Exchequer. A the weekend McDonnell published his tax return as he had promised and asked Osborne to do the same. I think it is rather unlikely that the millionaire Tory chancellor will agree to the request, but this only helps strengthen McDonnell’s point that the Tories are detached from the economic reality that the average taxpayer is faced with. Something that also supported this was the widely shared clip of George Osborne giving advice on how to avoid Taxes live on the Daily Politics on 15 May 2003. Dubbing him the ‘Banker’s Chancellor’ McDonnell has capitalised on the Chancellor’s disappearance in recent days. 

On the same day that the Tory bedroom tax was deemed illegal by court judges, the Tories were forced to defend their links with the Google deal. It was later revealed that ministers had been briefing European MEPs to vote so as to protect Google’s tax status in Bermuda. McDonnell put it best when he argued that the Tory mask ‘has finally slipped’. On one hand the Prime Minister was telling the British people that he wished to clamp down on tax avoidance, but on the other he was asking his MEPs to oppose plans that would have seen that happen.

The polls seem to show the British public backing the shadow chancellor on his stance. If Labour is ever to regain trust on the economy then this is exactly what it must do; align itself with public concern about tax evasion and avoidance. McDonnell was right to relate this to the personal. As many people rushed to have their tax returns completed, Google was resting assured of a greatly reduced rate and a government that was going to do nothing about it. McDonnell stated that George Osborne had spent the last week in hiding. The shadow chancellor has been doing the opposite. He has been out in the open, making the argument for a new economy that works in the interest of all. As Osborne hides, his image as the banker’s chancellor is only further entrenched. In his absence, John McDonnell is primed to emerge as the people’s chancellor, on the side of all hard-working individuals fighting for a level playing field on tax.

Liam Young, New Statesman 2nd February 2016

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John McDonnell now making his mark

THE first shadow chancellor of his kind has lately been arguably one of the best performers in UK politics.

Jeremy Corbyn’s detractors both within and outside the Labour Party sought to focus much of their fire on shadow chancellor John McDonnell from the moment the leader appointed McDonnell to the role that is in reality the second most powerful one in ­opposition.

The position of shadow chancellor is also an awkward post to define, partly because there is no constitutional status attached to the role in the way there is for leader of the opposition.

It’s an appointment now made solely at the discretion of the party leader and Corbyn’s choice of McDonnell, seen as one of the most left-wing MPs, rather then going for a more centrist figure like Hilary Benn or even a New Labour-leaning MP such as Rachel Reeves or Chuka Umunna, predictably sparked hostility from much of the Parliamentary Labour Party.

In any meaningful sense the shadow chancellor is next in line to be party leader, holding much more sway than the deputy party leader largely due to the post being so encompassing over economic and spending policy.

John Smith and Gordon Brown for example would both go on to lead Labour after holding the Treasury brief.

Shadow chancellors often try to distance themselves from leaders’ decisions that could be detrimental to their own political ambitions.

Brown comes to mind as a classic study here, particularly after his epic fall-out with Tony Blair over who should stand for party leader following Smith’s death in May 1994.

Such tensions were evocatively portrayed in the acclaimed 1990s play The Absence of War by the left-leaning playwright Sir David Hare, which was to enjoy a long run on stage as well as being scripted for TV.

The original production tells the story of a struggling Labour leader, memorably played by the late John Thaw, fighting a doomed election campaign in the early 1990s – with echoes of Neil Kinnock’s defeat in 1992, while simultaneously facing plotting from a disloyal but intellectually more adroit shadow chancellor.

But McDonnell is the first shadow chancellor of his kind in the way that Corbyn is the first Labour leader of his kind, not just with the avowedly socialist policy platform, but also because he is not driven by career or personal ambition after nearly two decades on the backbenches.

Like Corbyn, McDonnell will know the Labour left now has what may be a one-off chance at disproving the supposed conventional wisdom that the party cannot win from the left.

So to take the title of Hare’s play, there is perhaps rarely in Labour’s history “the absence of war” between the office of the leader of the opposition and that of the shadow chancellor, if not among the party’s MPs. Perhaps this accounts partly for why McDonnell is the “boo boy” of the anti-Corbyn brigade in sections of the media and among those in Labour’s ranks keen to see the leader and his shadow chancellor ousted as soon as possible.

There have been some “own goals” from McDonnell, such as when responding to George Osborne’s autumn statement the shadow chancellor waved a copy in the Commons of the Little Red Book written by the Chinese dictator Mao Tse-tung.

What should have been a story about a Labour triumph after an effective campaign from the party leadership to force Osborne to dump controversial cuts to tax credits instead became one about how a left-wing Labour politician had quoted the writings of a “Stalinist despot”.

As powerful as the shadow chancellor is in the party of opposition, one of McDonnell’s political staffers should have snatched the book when learning of the intended stunt.

But after what was not a fatal mistake, McDonnell has since been arguably one of the best performers in UK politics, taking the fight to the Tories following Osborne’s controversial claim that the UK’s tax deal with Google was a “major success” despite a public backlash against the £130 million agreement for being too lenient.

Such an approach from Labour not only had resonance with most voters, but also allowed McDonnell to portray Osborne as an out-of-touch over-privileged Tory, as the shadow chancellor published his own income tax return online and challenged his opposite number to do likewise.

A bonus from all this was that the issue achieved some long overdue party unity.

True Labour schisms over Trident will not go away, but last week one of those implacably opposed to Corbyn and McDonnell, the Blairite-orientated former cabinet minister Caroline Flint, made an effective intervention in the Commons, taking the same line as the leadership.

It may well be that the likes of Flint will continue to refuse to serve on Corbyn’s front bench, but perhaps the Google example shows how the prospects of using the talents of such figures in Labour’s national campaigns up to and including the next general election is a real one.

Of course in the next few months and years, McDonnell will continue to be characterised by opponents in loaded terms as a “hard left” ideologue, with a poor grasp of the Treasury brief and someone well out of his depth.

But Labour’s leadership and McDonell’s office would do well to be ready to battle hard to prevent the shadow chancellor being saddled with such a perception in the minds of the public – something the Tories and sections of the media will surely attempt.

Pointing out that McDonnell served as Ken Livingstone’s chair of finance on the now defunct Greater London Council in the 1980s and was effectively the chancellor of the UK capital would be a good start. But it’s taking on big corporations over the issue of unpaid tax at a time when the living standards of those on modest incomes are being hit by heavy austerity that may prove a decisive hit with the electorate and could yet see McDonnell become the UK’s chancellor.

Andrew Whitaker, The Scotsman, 2nd February 2016

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The future is here − Labour is inventing the economics of tomorrow

Embracing automation, shortening the working week, collaborating with the private sector and reducing inequality are just some of the ideas being discussed by Shadow Chancellor of the Exchequer John McDonnell.


Beckett’s post-election autopsy pinned defeat, among other reasons, on Miliband’s failure to challenge the myth that Labour caused the 2008 financial crash. Cameron has solidified the narrative in the public’s mind with his repeated attacks on Labour’s financial credibility.  However, by giving left-leaning intellectuals a platform in his series of public talks, John McDonnell is opening up a completely new discourse around economics and it is time to get excited.


Although bound by their anti-austerity and pro-market beliefs, each economist is bringing their own unique specialism to the table.


Mariana Mazzucato began the series last week, arguing for state investment in innovation that made her book, The Entrepreneurial State, such a compelling read. Seeing the state as an impediment to innovation is, in her view, pure ideology, especially when tech giants like Apple relied so heavily on state money to get off the ground. This isn’t an attack on the private sector; Mazzucato believes it should work in harmony with the state. Where risks are high - for example, when investing in climate solutions - state funding must fill in the gaps that the typically cautious private sector leaves behind. Otherwise we’ll never achieve our most pressing collective goals.


In tomorrow’s talk, “Technology and the Future World of Work”, Bria, Srnicek and Susskind will imagine the radical potential of technology, liberating us from what David Graeber calls “bullshit jobs”. Embracing automation and the internet of things (the interconnectivity between the physical and virtual realms) as progress towards a more efficient society will free us from long hours of unrewarding labour.


In March the debate turns to the pressing economics of inequality. Joseph Stiglitz is an unsurprising participant, ever since the crash he’s been one of neoliberalism’s most outspoken critics, and yet this still represents a major coup for McDonnell. No one else in the lecture series, or in Labour’s Economic Advisory Committee for that matter, boasts a CV that includes Nobel Laureate and former chief economist for the World Bank. Where Thomas Piketty, author of Capital, and fellow member of the advisory committee, sees inequality as inherent to capitalism, Stiglitz believes it’s reversible through reform. To him, inequality isn’t just a moral blotch on our culture, it’s also bad news for our collective growth. If Labour used his clout to infuse that idea with some much-needed respectability, voting selfishly could cease to make sense. 


Of all the lectures, the last, “Framing the Economic Narrative”, contains the lesson Labour needs to pay close attention to. Simon Wren-Lewis keenly observes the way economics and politics intersect. He views austerity as a trap for the left “as long as they refuse to challenge it”. The thinking goes: if you accept that cuts should happen, it’s a position of weakness to then argue over who's targeted. Joining him is economic policy advisor, Ann Pettifor, who understands better than most that progressive economic ideas mean nothing without the credible politicians to enforce them.


If Labour is to gain a firm grip on the economy again, this series is a great start.


Callum Towler, The Independent, 2nd February 2016

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John McDonnell MP Tax Return 2015

This is a link to my full tax return, as provided to the Sunday Mirror, with P60 included for additional information.

 Tax return:



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John McDonnell helps launch Newham anti-austerity campaign

The shadow chancellor warned “people are suffering” at the anti-austerity campaign’s inaugural meeting today.

newham.jpgAll have publicly backed Newham United Against Austerity. a co-ordinated challenge opposing austerity measures and further public spending cuts by the Conservative government.

Mr McDonnell said: “Austerity is not an economic necessity, it’s a political choice.

“We can afford these services. We are still the sixth richest country in the world.”

The Labour MP called for the “mobilisation of our communities” to come together in fighting austerity and went on to criticise the current government for bailing out the banks as well as privatising prisons and the education system.

He spoke to an audience of just under 100 people at the Stratford campus of University of East London this afternoon.

Kevin Courtney, deputy general secretary of the national union of teachers, said Newham schools were facing budget cuts of 17 per cent over the next five years and said “we can’t let it happen”.

He said: “We are all in it together and if we are not in it together then we have no chance,” telling audience members that the NUT did not usually work with other organisations but they had been left with no other choice.

Other speakers included Rokhasana Fiaz, Newham councillor for Custom House, who spoke out against the growth of inequality and child poverty, and Yvone Green, Unison’s greater London region officer.

Attendees – including teachers, Labour members, disability and housing campaigners and Newham councillors, were urged to forget their differences and unite together against the cuts.

The meeting was chaired by MP Lyn Brown and launched with the support of Newham Council and Newham Joint Trade Union Committee.

A second campaign meeting has been planned for March 5.

Newham Recorder 30th January 2016

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Walthamstow CLP fundraiser

walthamstow.jpgI received a very warm welcome at Walthamstow CLP’s fundraising curry at Zaiqa Buffet Restaurant last night. I spoke alongside Matt Wrack and Arica Nadeem. Meeting and talking to members gave me a great sense of hope for the work we have to do over the next few years to bring about a Labour government. It was great to see some of my old friends again each of them committed to an anti-austerity movement as the way forward. But what really impressed me was the number of young people who came along and it is their enthusiasm and energy that will take Labour to victory.

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Writing to Margrethe Vestager, the Competition Commissioner for the European Commission today, John McDonnell MP, Labour’s Shadow Chancellor said:


Margarethe Vestager

The Competition Commissioner for the European Commission European Commission

Rue de la Loi / Wetstraat 200

1049 1049 Brussels



27th January 2016


 Dear Ms Vestager,

I am writing to request an investigation by the Commission of the deal reached between HM Revenue and Customs and Google, as confirmed by HM Government last week.

Public concern is focused on the low sum offered by Google in lieu of taxes dating back over a decade, on the potential future damage to UK tax revenues, and on the revenues of our EU partners.

Despite requests, HM Government is refusing to publish details of the deal beyond the headline figure. We believe £130m to be significantly lower than a fair or reasonable assessment of Google’s UK turnover and profits would suggest, with experts suggesting that Google has been levied an effective tax rate of around 3%.

I am therefore requesting an investigation under EU competition law, since we are concerned that, first, the deal is arguably not compliant with State Aid rules, creating a favourable treatment for a particular company; second, that if the deal is generalised, it could constitute a serious potential threat to the ability of other EU members to levy taxes in their jurisdiction.

There is a strong public interest case in establishing the facts of the deal. I look forward to your response.



Yours sincerely



John McDonnell

Shadow Chancellor of the Exchequer

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“The New Economics Series” was launched with a lecture from Mariana Mazzucato


The Shadow Chancellor, John McDonnell introduced a lecture delivered by Mariana Mazzucato, RM Phillips Professor in the Economics of Innovation, on “Economic Policy: from market fixing to market creating and shaping” to a packed audience at The Royal Institution last night. Mariana followed her lecture with an extensive question and answer session.

This lecture was part of a series of public events to broaden the debate around economics in Britain. John said “I am delighted to have some of the brightest minds in economics sharing their thoughts about how we can build an economy fit for the future.”

“On the most pressing issues of the day – for example, how to tackle inequality, the role of innovation and the future of the workplace – Labour will be listening to what is being said while we put together our own proposals.

“These meetings are an important first step on the path to reshaping the economic debate in the country, and getting away from it being a Westminster dominated view of economics.”

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Google's 'effective tax rate is now around three per cent despite estimated revenues of £1billion in 2014 alone'.

Below is a copy of the letter I have written to George Osborne asking if he will now directly address some of the outstanding questions. 

Dear George, 

Since news of the tax deal between HM Revenue and Customs and Google broke on 22 January there has been much comment and discussion about the rights and wrongs of this case specifically, as well as the general principle of large companies being able to negotiate settlements such as this with the UK’s tax authorities. 

It is notable that while you have hailed the deal as “a major success”, Downing Street has instead chosen to describe it as “a step forward” with “more to do”. When there appears to be disagreement about the significance of the deal at the highest levels of government it is only right that the public is given greater clarity on the specifics of the settlement reached. 

This deal with Google raises a number of important issues about the tax treatment of large companies in the UK. For that reason I welcomed the opportunity the House of Commons was yesterday given to discuss the details of this case. However, it was disappointing that you were not present to address this issue in person. 

Yesterday’s statement in the House by the Financial Secretary to the Treasury, Mr David Gauke, left many questions unanswered. For that reason I am writing to ask if you will now directly address some of the outstanding questions: 

  • Firstly, please can you clarify exactly when you were first made aware of the details of the deal with Google? Did you (or any other Treasury Minister) personally sign it off, and were other Ministers involved in the settlement?

  • What discussions, if any, did you or members of your private office have with HMRC and with Google representatives about the deal?

  • Did HM Treasury and HMRC discuss details of the deal with Number 10 before the announcement was made?

  • What is HMRC’s understanding of the effective tax rate faced by Google over the past 10 years as a result of this settlement?

  • Are you confident that this deal will not undermine international co-operation on tax avoidance, such as the OECD base erosion and profit shifting scheme?

  • Can you clarify whether Google is changing the company structures that enabled this avoidance to take place over the past decade?

  • What concerns, if any, do you have that this agreement creates a precedent for future deals with other large technology corporations?

  • To help ensure HMRC is best placed to address complex issues like this will you now halt the programme of HMRC staffing cuts? 

I was also concerned to read in The Times this morning the revelation that HMRC officials have “never challenged” Google’s claim that it has “no permanent establishment” in the UK. Such a claim is obviously critical to the entire tax issue. Can you clarify whether the accusation in today’s Times is accurate? In addition, have you, or your office, ever raised with Google directly its claim that it does not have a permanent establishment in the UK? Furthermore, have you, or your office, ever discussed with HMRC, Google’s claim not to have a permanent establishment in the UK? 

When times are tough it is more important than ever that everyone pays – and is seen to pay – their fair share. I know that many are concerned about the tax treatment of large companies and it is important for public trust that HMRC is fair and transparent in its dealings with such companies. That is why, in the interests of openness and transparency, it is essential you provide full and frank answers to the above questions as well as commit to publishing details of the deal and how it was reached. 

Given the significant public interest in this matter, I am making this letter public. 

Yours sincerely


John McDonnell MP

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Labour's McDonnell considers giving workers right to buy firms

Labour government could give employees the right to take over their companies if they are sold, dissolved or floated on the stock market.

Shadow Chancellor John McDonnell says the party does not want to return to an era of widespread state ownership.

Instead, Labour would look to expand co-operatives and explore giving workers the "right to own".

David Cameron has accused Labour of wanting to turn back the clock to the days of state ownership and strikes.

But Mr McDonnell tackled this claim head-on in a speech in Manchester, saying Labour had to move on from its traditional belief that state ownership was always the answer.

"Whatever the achievements of the past, we cannot simply turn the clock back - whether to 1997, 1964, or 1945," he said.

At the last election, "the Tories talked relentlessly, overwhelmingly about the future. Labour, strikingly, did not".

"We cannot allow that to happen again. We cannot be small 'c' conservatives."

He added: "A future Labour government will end the current programme of spending cuts. We will protect what has already been won.

"But we must look beyond this point. We should be seizing the opportunity to create a fairer, more democratic society."

Labour has already announced its intention to return the railways to public ownership.

But when it comes to the wider economy, Mr McDonnell said Labour should "look elsewhere" for solutions, and draw on its tradition of supporting workers' co-operatives.

He signalled support for giving employees in companies which are about to be sold off - or floated on the stock exchange - the first option to purchase the company.

'Positive alternative'

"The Tories have offered a Right to Buy, Labour would seek to better this. We'd be creating a new Right to Own," he said in a speech in Manchester.

He said the "biggest hurdle" facing co-ops and other small businesses was getting initial funding from high street banks.

"No other major developed economy has just five banks providing 80% of loans. We'd look to break up these monopolies, introducing real competition and choice.

"Regional and local banks, prudently run and with a public service mandate, have to be part of the solution here."

Mr McDonnell is also considering adopting the Italian government's policy of offering funding to help employee-owned enterprises to get off the ground.

"With consortium co-operatives providing an effective means for new businesses to share and reduce costs, we'd look to support these at a local level, working with local authorities, businesses and trade unions," he said.

'Terrible downsides'

He said the policy would be developed "over the next few years", adding: "In an uncertain world where a laissez faire market approach continues to fail, co-operation is an idea whose time has come again.

"This is the start of developing a new, positive economic alternative for Labour."

He also urged Labour to embrace opportunities offered by the internet and new technology.

"Technology is proving disruptive. It can have terrible downsides - de-skilling and an accelerated concentration of wealth.

"But it also opens up new possibilities - the explosion of sharing that the Internet can provide.

"There is an entrepreneurial spirit at work here: not the theatrical meanness and one-upmanship of Gordon Gekko, but a desire to create something better for us all."

Chief Secretary to the Treasury Greg Hands said Labour represented "a threat to our economic security".

He added: "Now we know the truth: Labour is planning another debt-fuelled spending spree and a huge tax bombshell on the businesses that have helped to drive Britain's recovery from the economic mess they left behind."

BBC News 21 January 2016

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George Osborne has proved today what we all suspected, that he’s really just the Bankers’ Chancellor - John McDonnell

John McDonnell MP, Labour’s Shadow Chancellor, speaking after Treasury Questions, said:

“Only eight weeks ago the George Osborne promised an “economic recovery for all, felt in all parts of our nation”, but on the day that the IMF has echoed Labour’s warnings about the global economy and called for the government to increase investment spending, the Chancellor decides to demean his office with school boy jokes about mental health.

“If the Chancellor could at least appreciate how angry families of steelworkers in south Wales are, knowing that when bankers’ bonuses were threatened, he immediately shot across to Brussels with an army of lawyers to defend them, and he’ll jump into a helicopter for a Tory fundraiser, but it’s taken him four months to lift a finger for steelworkers’ jobs.

"The truth is that we have a Chancellor who has woken up late to the crisis in the steel industry, tax credit cuts, police cuts, and the problems in the global economy. But when it came to the banks he was wide awake to all their concerns.

“George Osborne has proved today at Treasury Questions, what we all suspected, that he’s really just the Bankers’ Chancellor.

19th January 2016 labour press team

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Labour to hold free seminars on public finances to end Westminster orthodoxy

The Shadow Chancellor, John McDonnell MP, has announced this morning he is convening a series of public events to broaden the debate around economics in Britain.

A range of experts will present their views at a number of events across the country, with questions from members of the public.

The aim of these meetings will be to shape the debate around the economy of the future

‘The New Economics’ events will be open to the public and will feature members of Labour’s Economic Advisory Council, including Nobel Prize winner Joseph Stiglitz and Mariana Mazzucato; and other leading economists such as Ha-Joon Chang.

Other events will include public seminars, bringing together experts to discuss the most important topics in economics, ahead of a national conference in May. Topics will include “Innovation and the Strategic State”, “Inequality” and “Technology and the future world of work”.

Events will take place in London and across the country and will be open to the public to attend for free by booking through the website.

The first event is to take place on Tuesday 26th January from 18.30-20.30 at the Royal Institute.


Article in Today’s Guardian:

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George Osborne’s ‘cocktail of threats’ will leave us with a hangover

The chancellor promised 2015 would be the year government borrowing would hit zero, but we’re facing a noxious economic brew of his own making

George Osborne yesterday warned us about a “cocktail of threats” brewing in the world economy. All the ingredients are there for a noxious brew. The emerging markets debt bubble. The ongoing stock market turmoil in China. Recession in Brazil and Russia, and the slowdown in India. The collapse in global commodity prices.

I’ve warned about the danger signs elsewhere before. But curiously, Osborne didn’t talk up these “threats” in last year’s autumn statement. He didn’t raise them at the summer budget. They were hardly a centrepiece of his election campaign.

Quite the opposite. He’s spent a fair few years now talking up how clever he has been, and how good everything is going to be. This was a result of his “long-term economic plan”. But there’s never been a “long-term economic plan”. Just the short-term politics of austerity. The result is Osborne serving up a rather unpleasant domestic cocktail of his own making.

The chancellor claims Britain is “living within its means”, but our borrowing from the rest of the world rose to record levels. We have to borrow because we buy far more from the rest of the world than the rest of the world buys from us. And because we’ve borrowed so much money, and sold off so many assets, the payments due to the rest of the world are astronomical. We are borrowing more from abroad than any other developed economy.

If Osborne’s “march of the makers” had ever got out of the parade ground, this deficit with the rest of the world – our “current account” deficit – might have been shrunk. Instead, manufacturing exports have slumped and manufacturing output is decreasing, with manufacturing output still below its level of seven years ago, before the crash.

Far from “rebalancing” the economy, Britain has become more dependent on services, and we’ve shrunk manufacturing, which is the bedrock of any modern economy. And while employment in London is up nearly 12% since 2010, it’s up just 0.3% across the rest of the country. Even then, far too many new jobs are poorly paid and insecure, with pay still down on 2008.

I doubt even Osborne believes his own stories any more. That’s why he’s getting his excuses in first

The increase in poorly paid, insecure jobs means British households can’t “live within their means” either. After years of paying back their debts, households are being forced to borrow once more. Unsecured borrowing, covering credit cards, store cards and (alarmingly) payday lending is now rising at the fastest rate since before the crash.

The centrepiece of Osborne’s much-hyped “plan” is his effort to bring down the government’s own borrowing, while hoping he can increase household debts. And with tremors in China, it’s Britain that, thanks to its overstretched banks, has the largest single exposure to Chinese debt of any major western economy.

When Osborne first arrived in office, he promised us that 2015 was the year that government borrowing would hit zero. The figures, out just before Christmas, speak for themselves. Not only is government borrowing running at £67bn for the financial year to date, borrowing in November alone was the largest since 2013. Osborne has spectacularly failed to meet his own targets.

In addition, he’s letting the financiers off the hook with a return to a soft-touch approach to bank regulations. Last summer, he kicked out the head of the watchdog he set up, the Financial Conduct Authority, which is charged with keeping bankers in line, for being a little too good at his job; meanwhile he stayed silent as the FCA watered down its vital inquiry into banking culture. And on top of all this he’s also slashed taxes for mega-banks, despite recent revelations showing some banks are not paying any tax.

As a result, it’ll hardly be surprising if the bankers are getting back to their old tricks.

I doubt even Osborne believes his own stories any more. That’s why he’s getting his excuses in first. His austerity programme is leaving our economy more unbalanced, with rising debts, and overexposed to risks elsewhere in the world. But, incredibly, he wants more of the same failure – more austerity. Instead, we need real investment in science, skills, and infrastructure, made for the long term across the whole country, not excuses and spin. Without this, George Osborne offers warnings but no solutions to a domestic cocktail that he made that will leave the rest of us with the hangover.

The Guardian Comment is Free Friday 8th January.

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John McDonnell MP shows support for housing and homelessness advice in Hayes and Harlington

John McDonnell MP showed his support for people fighting bad housing and homelessness in Hayes & Harlington recently, when he attended the launch of Shelter’s new campaign to raise awareness of its vital advice and support services. 

John attended the event on Tuesday 5th January where he met with Shelter’s Director of Services Alison Mohammed to discuss the frontline services Shelter delivers in Hayes & Harlington, and across the UK. These include the 531 cases that Shelter dealt with in the Hillingdon area last year alone. 

Prompted by a new Shelter and YouGov survey, the event highlighted the strain families face in London in January, with 1 in 10 rent or mortgage payers fearing they will be unable to meet their housing costs this month.  

At the same time 21% of people in London are cutting back on winter fuel and clothing to meet their housing payments – the equivalent of 1.4 million people. 

John and Shelter are urging anyone who is struggling with their housing costs to seek advice, before problems spiral out of control. Shelter, the leading housing and homelessness charity, helps over 4 million people a year with free, practical housing advice, through its online support, face to face and national helpline services. 

Shelter’s Director of Services Alison Mohammed said: “Every day at Shelter we hear from families who face the bleak choice between missing their rent or cutting back on heating. Or from parents whose children have stopped asking for treats because they know they’re struggling just to keep a roof over their heads. 

“No-one should have to face these problems alone, which is why Shelter is here 365 days a year. Getting advice early can make all the difference, and we’re only ever a click or a call away at or on 0808 800 4444.”

John McDonnell MP said: “Shelter’s frontline services provide invaluable assistance to many of Hayes & Harlington residents, particularly at what can be an extremely tough time of year. They can often be the difference between a family staying in their home or becoming homeless.  

“I know from my regular surgeries that it is absolutely critical people who are struggling to stay in their homes seek help at the earliest opportunity. I would urge anyone who is having difficulty making their rent or mortgage payments to contact Shelter, or myself, as soon as they can.  

“With so many parents in the U.K cutting back on winter essentials to pay their rent or mortgage, it is important that people in Hayes & Harlington are aware of the support that is available to them.”

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Shadow chancellor criticises George Osborne's relationship with top bankers

Labour’s John McDonnell said the chancellor is offering the financial industry an ‘ever more soft touch’ through various regulatory concessions

Shadow chancellor John McDonnell has accused George Osborne of being too close to Britain’s top bankers, offering the industry “an ever more soft touch” through a series of regulatory concessions that have emerged in recent weeks.

Over the weekend it was reported by Reuters that two more investment banks with major operations in the City – Citigroup and Credit Suisse – had paid no tax for 2014 in the UK.

It follows Reuters analysis last month that showed a further seven banks had paid a combined £21m in UK corporation tax in 2014 despite generating UK profits of £3.6bn.

“These are damning findings that make a real mockery of the government’s approach to taxation of the financial sector,” said McDonnell. “This news will also be completely disheartening to the millions of us UK taxpayers who bailed out the banks and continue to pay the price for their past actions and excesses.”

Last week, McDonnell had again attacked Osborne after City regulator the Financial Conduct Authority (FCA) dropped a long-awaited review of banking culture which had been promised in the wake of multiple scandals. The decision to abandon the review followed the resignation of the FCA chief executive, Martin Wheatley, after the chancellor had forced him out in July.

The Treasury has insisted it had no hand in the regulator’s decision, but McDonnell renewed his criticism.

“The chancellor has been moving towards an ever more soft touch approach by reducing the bank levy and cutting corporation tax, selling publicly owned banks off at a loss, and only last week he sat by while the watchdog he set up watered down its review into the sector, only six months after he replaced the head of the FCA for issuing large fines to banks.”

The Guardian Sunday 3 January 2016

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Shadow chancellor calls on George Osborne to tell financial watchdog to restart review or risk sending wrong message at wrong time

FCA.jpg.pngJohn McDonnell, the shadow chancellor, has urged George Osborne to relaunch a review into banking culture after the City regulator ditched it.

McDonnell called on the chancellor to exert his influence to restart the study, which the Financial Conduct Authority dropped just months after launching it.

This will be a huge blow to customers and taxpayers who are all still paying the price for the failed culture in the banking sector that’s been widely attributed to be among the main causes of the crash and the scandals over Libor and price-fixing,” McDonnell said, adding that the FCA was making a “dangerous and costly mistake”.

“The chancellor therefore cannot stay silent on this issue. It’s time he used his influence to keep this review going. Otherwise he’s letting down the rest of us who bailed the banks out and also allowing a signal to be sent to carry on regardless. Given the scale and severity of the failings in the financial sector and the criminal behaviour shown by some banks, the scrapping of the FCA’s review into banking culture sends the wrong message at the wrong time,” he said.

The review was included in the FCA’s business plan for 2015, but was dropped after an initial assessment found it difficult to compare different cultures inside banks. The decision to abandon the review follows the resignation of the FCA chief executive, Martin Wheatley, after the chancellor forced him out in July. A permanent replacement has not been named to take over from Wheatley, who had flagged his tough stance towards the industry by warning he would shoot first and ask questions later.

The Labour MP John Mann, who sits on the Treasury select committee, tweeted “Osborne has used void from no ceo in post after he sacked Wheatley to dismember critical FCA enquiry into bank culture” He added: “FCA surrender to big banks today is entirely from pressure from Treasury and Osborne.”

Mark Garnier, a Conservative MP on the committee, told BBC Radio 4’s Today programme: “There has always been this great argument that perhaps the Treasury is having more influence over the regulator than perhaps it ought to and certainly, if I was looking for a Machiavellian plot behind what’s happened here and the tone of the regulator, then I suppose I would start looking at the Treasury.”

The Guardian 31 December 2015 Jill Treanor

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John McDonnell calls for cross party agreement on flood defence funding

John McDonnell MP, Labour’s Shadow Chancellor, responding to the flooding across many parts of the country is calling for cross party agreement on flood defence funding.

John McDonnell MP, Labour’s Shadow Chancellor, said:

“It is truly terrible what many are suffering at this time of year, despite the excellent work of the emergency services. It is in this light that as politicians we must not just sit idly by watching these awful scenes on TV, but come together to act.

"While we must take the measures needed to reduce the threat of climate change, we also need a cross party approach to securing a long term stable plan for investment in a programme that enables us to adapt to climate change.

"We have to recognise the potential scale of expenditure and stability of investment planning that is required. Our country cannot afford for the government to not invest when the sun is shining; which is what we have seen with the current stop start approach to investment in this field in recent years.

"I am willing to sit down with the Chancellor to seek a cross party consensus on identifying the resources we need for this programme so that any investment programme remains secure beyond the life of one Parliament.

"We also need to look again at the contribution the insurance sector could make to this investment programme.”

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Labour's New Economics Means a Strategic Approach for the Renewables Industry

solar_panells.jpgThe decision by this Government to cut subsidies for Britain's flourishing renewables industry was one of its stranger decisions. So much for George Osborne's "long-term economic plan". A promising new industry has been torn apart, with 5,000 job losses already, five firms closed down - and 27,000 jobs threatened.

Environmentalists and business groups are on the same side in condemning the move. New, young industries need help to establish themselves and stand on their own two feet. Instead, this government has kicked away the support - and made tackling climate change all the harder.

The sheer short-sightedness of the subsidy cut was made clear today when I visited Banister House with Lisa Nandy, our shadow secretary of state for energy and climate change. It's the first community-owned rooftop solar energy project in Hackney, and the largest in London.

With the help of Repowering London, they have installed over 400 solar panels on the roof of 14 housing blocks on the estate, after raising £150,000 via a community share offer. The impressive solar array is expected to save approximately 679 tonnes of carbon dioxide over the next twenty years by replacing electricity that would otherwise be generated by coal and gas power stations.

The project has provided skilled jobs to those who installed the solar panels, and they continue to take on young apprentices.

However, because of the government's cuts to "feed-in-tariff" (FIT) subsidies, energy projects like Banister House are under threat. The swingeing 87% cut to funding the FIT scheme is decimating our rooftop solar industry. The government's own estimates suggest that future installations will fall by over 90%. That's one million fewer solar schemes being installed by 2020.

Slashing the FIT scheme now means it will well over a decade for most household solar panels to pay for themselves. In practice, that means most families, schools, council tenants and community groups will be forced out of the solar revolution. We'll be trailing behind the rest of the world, and needlessly threatening jobs that will be vital in the low-carbon economy of the future.

It's hard to fathom the logic here. David Cameron had some fine words in Paris about tackling climate change. George Osborne has pledged support for new industries. It's a false economy to make cuts now that will cost us so dearly in the future.

Businesses in their infancy and operating in high-potential areas should be the priority. If we don't support them we'll be losing out on what Barclays has called a $30trillion global investment blitz from fast-growing green industries. We should be shaping the economy of the future - thinking about where the opportunities are, and taking on the challenge of climate change.

Successful economies today have governments prepared to take a strategic approach to how development takes place. The old idea that simply exposing new industries to the full blast of competition will promote their development is increasingly discredited. Economists from Dani Rodrik to Ha Joon Chang to Marianna Mazzucato have shown how intelligent support by Government can nurture new technologies and create the space in which new industries can flourish.

But the Tories are stuck in the past, and ducking the challenge. In November, the UK became the only G7 country to increase fossil fuel subsidies. We are paying out £6billion a year, almost twice the financial support we provide renewable energy providers - which we are now continuing to cut.

After the deal struck in Paris over the weekend, the shift to a low-carbon economy is inevitable. The government should be supporting this transition, not hampering it.

Huffington Post 16th December 2015

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John McDonnell Interview for Holyrood Magazine 14th December 2015

john_green_chair.jpgHe laughs heartily when I tell him I was shocked by these latest revelations. After all, this comes on top of the same newspaper headlining one article on the Monday after Jeremy Corbyn appointed McDonnell to his shadow cabinet with ‘Corbyn has just appointed a nutjob as shadow chancellor’, albeit the paper did later apologise and changed the header online to ‘man from cloud cuckoo land’. 

The media in general has taken agin McDonnell. It has described him variously as one of the ‘loony left’ and as ‘the most controversial figure in the Labour Party’ after claims emerged suggesting that he had been an IRA sympathiser and had threatened to kill Margaret Thatcher.

He was already being painted as one of the most divisive characters in Corbyn’s shadow cabinet – there were predictions of all-out civil war over his appointment – and this even before he said he would “swim through vomit” to vote against the Conservative’s Welfare Bill and had thrown a copy of Mao Tse-tung’s ‘Little Red Book’ across the Commons in his idiosyncratic reply to George Osborne’s Autumn Statement.

When I interviewed McDonnell nine years ago, during his abortive attempt to push Brown into a leadership contest and out from a simple coronation to be the next leader of the Labour Party, he had struck me then as a man of great integrity. Yes, he was opposed to New Labour spin and remained steadfastly true to his socialist beliefs. But he seemed far removed from the left-wing firebrand that the red-tops tried to portray.

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royal_mail.jpgJohn McDonnell MP has visited Royal Mail’s Hayes Delivery Office to pass on Christmas wishes and encouragement to postmen and women at their busiest time of year.

Mr McDonnell was shown around the office by Delivery Office Manager, Alison Ray, and was introduced to the postmen and women who are working hard sorting and delivering mail in the Hayes area during the Festive season.

Mr McDonnell, said: “There is a huge amount of effort and dedication that goes into delivering a first class Christmas at Royal Mail’s busiest time of year. It was great to meet the team here at Hayes.

“Our postal workers do such an important job at this time of year and I would like to thank them for their efforts and wish them all the best over the busy festive period.”

Alison Ray, Royal Mail Delivery Office Manager at Hayes, commented: “Our postmen and women are working extremely hard to deliver Christmas cards, letters and parcels to people across Hayes. We are grateful that Johnvisited the office to see our operation and to support the team.

We’d like to remind our customers to post early so that friends and family have longer to enjoy their Christmas greetings. We would also like to ask everyone to please always use the postcode as this helps us greatly in the job that we do at this busy time.”

The last recommend posting dates for Christmas are:

Second Class – Saturday 19 December 2015

First Class – Monday 21 December 2015

Special Delivery – Wednesday 23 December 2015 

Customers can also help Royal Mail ensure that all their letters, cards and parcels are delivered as quickly and efficiently as possible by taking a few easy steps:

  • Post early – Avoid disappointment by posting your cards and parcels early. 
  • Use a postcode – A clearly addressed card or parcel, with a postcode, and return address on the back of the envelope, will ensure quick and efficient delivery.
  • Use Special Delivery – For valuable and important packages and parcels guarantee delivery with Royal Mail’s Special Delivery, which means your gift is tracked, traced and insured against loss.
  • Wrap parcels well and always give a return address
  • For more information about Royal Mail’s last recommended posting dates, please visit: or call 03457 740 740.
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John McDonnell says Labour can be the most powerful force for progressive change in generations

john_and_jeremy.jpgIt was inevitable and understandable that the election of Jeremy Corbyn would be a massive culture shock for some sections of the party, especially some members of the parliamentary Labour party.

For the first time a leader had been elected directly, by party members and supporters, who was not part of a small circle of Labour’s frontbench.

The new leader was also elected with an overwhelming mandate on a political programme that seeks to take the party in a direction that reflects the current views of party members. This platform explicitly seeks to transform the party from the traditional centralised party into something more akin to a mass social movement, responding to the rising demand for greater activist engagement.

People who were comfortable with the old ways of working in the party saw everything they thought permanent suddenly at risk of change, not sure what was to replace the old methods. A venture and career path they had given their lives over to they saw being placed in jeopardy.

Of course, people get anxious in these situations and can feel threatened. Who wouldn’t? Nevertheless the majorities in every section of the party, including the parliamentary party, are embracing this new energetic movement to update our party for the new century.

People realise that if Labour is to fulfil its founding goal of transforming our economic and political system into a more equal, free and truly democratic society, which provides security and life-changing opportunities to the British people, then there is no going back.

Interestingly, more often than not it is Labour MPs who are emphasising that our members don’t want simply to be cogs in an electoral machine, delivering the leaflets and knocking on the doors, yet without being the effective determiners of the direction of the party.

The challenge we all face in the party is how we move from the politics and organisational form of the old party ways to the new politics and keep everyone together. Of course, it’s tough. Some are worried about a degeneration into the old-style politics where disagreement is not tolerated, and the old-style, heavy-handed discipline, with threats of expulsion or deselection, being reeled out.

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New Statesman article 4th December 2015

John McDonnell on Labour’s new politics: “It’s a story we can all be part of”

This is going to be one of the most significant periods for politics this country has seen for a century, writes the shadow chancellor.

Just five months ago, Jeremy Corbyn, Michael Meacher and a couple of other “left” MPs were sitting in a room discussing the pressure we were under to put up a candidate for the Labour Party leadership election. After much debate, all eyes turned to Jeremy and we said to him, “It’s your turn.”

To begin with, he didn’t want to do it. He wasn’t keen, but he eventually agreed. “All right, if you believe I can do it,” he said.

That’s the sort of leader I want – someone with a sense of duty to the people they serve and who will do what needs to be done for the greater good of all.

What the establishment don’t understand is that we have a different concept of leadership from anything seen before. We come together as a collective, as a community, as a class, and that’s the way we make decisions. True leaders don’t make decisions in isolation; they follow and listen to the collective call and the community.

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John McDonnell’s Speech to the London Chamber of Commerce 2nd December 2015

lcc.jpgI’d like to start by thanking the London Chambers of Commerce for giving me this opportunity to lay out what Labour’s new approach means for business. Jeremy was elected, back in the summer, he promised a new politics. I’ve spoken in the past few weeks about how this relates to a new economics. 

Today, I want to begin to lay out what the new economics means for businesses, and how Labour’s approach will be a break with the kind of mistakes made in the past. That means a new relationship between business and government. Not one of antagonism. But recognising how together we can generate and share prosperity, with proper support where it is needed. It means identifying the challenges and opportunities the rapid technological change presents us with. It means recognising real wealth creation, and developing long-term investment for the future.And for London, it means building on an extraordinary economic record, but recognising the many problems the capital faces. 

The backdrop to my speech here today is an economy that is finally growing again after the slowest recovery on record, but where the headline figures hid deep underlying problems. The productivity gap between us and the G7 is at its largest since 1991, and last week’s Office for Budget Responsibility report downgraded their forecasts for productivity growth for the rest of the Parliament. Our current account deficit has reached record highs. We’re not properly paying our way, becoming far too dependent on short-term borrowing from the rest of the world.  And with interest rates glued to the floor, the pace of household borrowing is picking up rapidly. So rapidly that the Financial Policy Committee is considering activating the countercyclical buffer, and warning about future shocks. 

London is an exceptional, world-class city. It’s an extraordinary centre for creativity and entrepreneurship. A new business in London is created every 6 minutes.But keeping London, and London’s businesses at the cutting-edge means recognising where we’re not doing enough. And that means changing what government is doing. 

Short-term vs. long-term 

It’s not good enough that 36% of London’s businesses report being affected by slow internet speeds in the last year. London ranks 26th out of the 33 European capitals for broadband speed. Average connection speeds in Bucharest are nearly four times faster than here. 

Meanwhile, as so-called “superfast” broadband trickles out, countries like South Korea are investing in ultra-fast broadband, with connections of 1,000 megabits per second compared to the 25 megabits speed typical today. It’s no good patting ourselves on the back about London’s great historic legacies, and its status as a cosmopolitan world city, whilst failing to build on either. And it’s no good the government talking up improvements in connectivity when too many businesses face a reality of delays, difficulties, and poor service.

More needs to be done to support the digital economy. We would support the London Chamber of Commerce’s calls for the creation of a London business panel focused on raising awareness of the benefits of online trading to sole traders and small businesses. 

Building on London’s success means ensuring the whole country shares in the prosperity. The better our regions and nations outside the capital do, the better we all do. We want London businesses to also share in the potential of the rest of the country. That means delivering investment here and across the UK. We want to keep this city and country at the cutting edge, helping build the high tech, high wage economy of the future.

That also means solving London’s housing crisis. London rental prices are the highest in Europe. The biggest single constrain on London businesses right now is that the people they want to employ can’t afford to live here. That’s bad for them, bad for business, bad for all of us. 

Labour is committed in government to providing at least 200,000 new homes a year, and would allow local councils additional powers to tax empty properties, bringing them properly into use. My colleague Sadiq Khan, if elected Mayor, would like to see public land held by bodies like Transport for London used for more housing. 

The Spending Review

All of this together is why Labour has decisively rejected the Chancellor’s austerity policies. Not a single credible economist can be found to support his fiscal surplus rule. By restricting day-to-day and capital spending, it places a straitjacket on vital government investment. There is no credible economic case of austerity and there never has been. We think the tide is turning on this question as the real impacts of extraordinary spending cuts become clear. 

George Osborne was pushed into a u-turn on the tax credit reductions that would have seen 3m families lose £1,300 a year. It was under pressure from Labour and others that he reversed. However, the pain has been delayed, rather than postponed. As the Institute of Fiscal Studies analysis shows, Cuts to Universal Credits will see a similar number of families lose a similar amount, but pushed somewhat into the future. Labour will continue to campaign for a fair deal here.  

The reality of his delayed cuts to tax credits is that 2.6 million working families will be £1,600 worse off, as the independent IFS has set out. This is taking £4.1bn of spending power out of the economy. Labour has offered George Osborne a way for him to reverse his own cuts - by targeting a lower surplus and reversing his giveaways to the wealthy, but we’ve yet to receive an answer.

Other cuts will continue, even if at a reduced pace. Local authorities face an extraordinary 79% decline in their budget, should Osborne carry out his plan.And Osborne is continuing the extraordinary pace of asset sales, with air traffic control, the Land Registry and the Ordnance Survey all scheduled to be sold. But Osborne has to complete the sales to meet, as the Office for Budget Responsibility say, his own debt reduction target. Without the asset sales, he misses his own, economically worthless, target. This isn’t a long-term economic plan. It’s a series of short-term political manoeuvres.  

In place of austerity, Labour will seek to balance spending on the government’s day-to-day at a pace compatible with fair and sustainable growth, whilst making sure government can still use its full powers to invest in vital infrastructure, science, and skills. We are committed to raising the level of infrastructure spending to at least the minimum the OECD thinks applies in a developed economy, of 3.5% of GDP.  

At present, despite many fine words in the Autumn Statement, government infrastructure spending is scheduled to fall to well below half that figure over the next few years. It’s no use increasing capital spending in the Department for Transport, whilst cutting day-to-day spending a colossal 37%. We’ll be building new roads – but how will pay to repair them?  

This isn’t good enough. And whilst we welcome the government’s commitment to protect day-to-day science spending in real terms, we should, like the US, China, Germany and France, be looking to increase what we spend on research and development.  That’s how we can start to make the most of the opportunities that technological change is bringing.

The government spends less than 0.5% of GDP on research and development. We will look to lift that level, aiming to deliver research and development spending, from all sources, of 3% of GDP over the course of the next two Parliaments.  

And subsidies for solar energy have been slashed, tearing apart what was a British business success story. Businesses in their infancy and operating in high-potential areas need support. We’ll be losing out on what Barclays has called a $30trillion global investment blitz from fast-growing green industries. 

It’s the short-term thinking that leads to the closure of the successful Business Growth Service – not announced in the Spending Review itself, but only made public nearly a week later. The Business Growth Service had helped over 18,000 businesses meet their potential, raising £100m in funding for small businesses. It’s been sacrificed on the altar of austerity. 

Short-term vs long-term 

There’s a deeper failing here. We’ve had decades now where successive governments have focused on the short-term. It’s why we don’t invest properly in infrastructure. It’s why skills budgets are cut and the training we provide not adequate. 

Independent polling shows that among the main barriers to London’s global competitiveness is its lack of affordable housing and its lack of skilled workers. The future prosperity of our nation’s economy is dependent on strategic investment today.  A future which is being gambled by this Government. We know that is our access to EU labour markets, our digital connectivity and our infrastructure which are the most important factors in attracting businesses ventures to London yet too often we are failing to incentivise that investment.    

We have major institutions, like the Treasury, that seem far too concerned about short-term penny-pinching at the expense of long-term investment. I’m pleased that Lord Kerslake is now leading a review of the Treasury, launched yesterday, and looking to see how it can function in the best interests of the whole economy.But we need a break with the past if we’re to meet the challenges of the future. This short-term way of thinking, sometimes called neoliberalism, has had its day. 

Short-termism means all of us lose out. It means skills shortages. It means poor infrastructure. It means failing to invest in science and technology.It means a seriously unbalanced economy, both domestically and in our relations with the rest of the world. Our current account deficit, and the dependency it creates on short-term financing with all the risks this entails, should be treated as a particularly concern. Above all, it means failing to reach this country’s potential. 

We need institutions and a government that stand on the side of our real wealth creators. The business that create decent jobs, that pay their taxes, and that bring a social value to their communities. The innovators and entrepreneurs who create new wealth. And those who work, whether for themselves or as employees, providing the goods and services. 

Fair financing 

But we are all being poorly served by the institutions we have. Our current financial system is plainly not fit for this purpose. 2008 should have been a wake-up call. Instead, we’ve allowed it to settle back into a rut. Reforms have not gone far enough.

This means businesses lose out. Less than half of small traders were approved for bank credit over this financial year. Lending to small businesses has fallen and fallen again, year after year. Even with a recent improvement, lending is down £49bn on 2008 levels.  

It’s no good expecting our high-street banks to provide. Despite recovery in some parts of the economy, the Funding for Lending scheme is having to be extended in an effort to get our banks to try and lend to small businesses. For small businesses, “too big to fail” shouldn’t also mean “too big to lend”. Nothing substantive has changed. The same failed institutions we had before the crash are all set to fail again. 

Labour will take a different approach. No other major developed economy has just five high street banks providing over 80% of all loans. A more diverse market for finance will be a more resilient financial market. We think that regional and local banks, properly managed with a public service mandate, are part of the answer for small businesses. 

We want banks that know their customers and understand the needs of their local businesses. Germany’s network of highly successful “Sparkassen”, publicly-owned local banks in tune with their communities, provide one model.   

The individual branches support each other to provide security, with a combined balance sheet of over 1trillion euros. But the banking licence for each branch means it has to lend only to local and regional businesses. 

The US’ Community Reinvestment Act has helped promote transparency amongst banks and lending to small businesses. We’ll look to introduce a similar Act of Parliament here. And we’ll look for ways for government to support innovative new forms of financing in peer-to-peer lending. Placing this emerging sector on a properly regulated basis can help it grow. 

I’ve been meeting with Mark Boleat of the Corporation of London to discuss how the City of London can use its resources and its talents to help deliver the patient, long-term financing businesses in the UK need. We want a new compact with the City, spelling out its obligations. And we’ll retain the right to legislate if needed. 

Fair contributions, fair taxes 

But it’s not just financing. Our tax system needs to be focused on the future.Tax reliefs have grown into an unmanageable thicket of different schemes and wheezes. This tangle is estimated to cost the taxpayer at least £110bn a year. Labour think it’s time for a pruning. 

We want to encourage healthy growth, keeping the reliefs that promote good investment, jobs and entrepreneurship. But we’ll cut away at the wasteful and the unnecessary.We’ll launch a proper review of the system, lead by my colleague Seema Malhotra, looking to cut away where we can but keeping the parts that help support decent businesses. 

We want to do what we can to unlock the potential of our businesses, including releasing the huge cash hoards they have built up over the last decade. We think money should be invested for the long-term. 

The system of reliefs needs a root-and-branch reform so we can get the best possible deal for taxpayers, businesses, and society at large. But we have to be clear. There needs to be a different approach to business taxation all round.

This Chancellor has cut and cut again the rate of Corporation Tax. That’s cost the taxpayer £7bn over the last Parliament. Yet business rates have risen by a total of £3bn over the last Parliament. That’s a huge increase, particularly for small businesses. We think the tax burden should fall heaviest on the broadest shoulders. And we want to see our small businesses also able to grow and flourish. So Labour will cut the headline business rate in their first Budget, and freeze it thereafter.  

We’ve made a firm defence of tax credits, and we welcome George Osborne’s decision to reverse the cuts to tax credits. Of course, we know there’s a job still to be done here with the cuts to earnings still coming through the Universal Credit system. But we recognise the value of tax credits in helping provide a solid financial footing for the self-employed and those just starting their businesses.  

Labour has always been the workers’ party. The clue is in the name. But we need to recognise how, and where, people work has changed. Self-employment reached a record high last year. New technology is enabling new ways of working. Some of this is providing opportunities for entrepreneurship and expanding the range of goods and services we have access to. But it can also mean the exploitation and uncertainty of zero-hours contracts, or the intolerable pressures placed on those in existing forms of employment.  

We have many institutions that are simply not adapted to the new world of work. Labour is proposing a new contract for a new workforce, and for new businesses. We need to think of ways that we can offer the same protections to those in self-employment as those in more traditional employment contracts. We can start by making sure maternity and paternity pay is properly provided for those who are self-employed. Labour will insist on giving everyone a fair deal. 

Recognising decent businesses 

That fair deal applies across society. Businesses create a huge value. And that’s not just the revenue they earn. It’s the vital social value of small traders, of independent shops, of start-ups. It’s the taxes paid, and the good jobs supported. It’s being a part of a community. It’s providing a service, big or small. We think it’s dog eat dog. But real wealth creation isn’t about some desperate war of all against all. 

Now I’m a socialist. But my socialism has always meant all of us pulling together. What we achieve by working together is always going to be more than what we achieve separately. Working together means recognising contributions when they are made. It means recognising the hard work and effort our decent businesses make. When people are paid fairly, and taxes paid properly. 

We know a small number fail the rest of us. The tax dodgers, wriggling out of making the fair contribution the rest of us make. The under-payers, ducking their responsibilities to their own employees and failing to pay a wage anyone can live on. It’s an attitude that’s fine for some. But the decent businesses who make the effort lose out. We’ve allowed a small minority to duck their responsibilities to society, undercutting wages and undermining the public purse. The rest of us lose out from the actions of a few.  

We think decent businesses should be recognised. So Labour would introduce a “Good Business” kitemark scheme. Those businesses who pay their taxes transparently and properly, and who pay their employees at least the living wage, deserve proper, public recognition. It’ll be open to any business that wants to apply. We’ll make sure that the strivers are properly and publicly recognised. We’re for decent businesses. We’re on the side of the real wealth creators, across the country and right here in London.

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John McDonnell Helps Dog Trust Raise Awareness of Puppy Smuggling Plight

Dogs Trust, the UK’s largest dog welfare charity highlighted the UK’s growing puppy smuggling problem to MPs at its annual House of Commons reception on 1st December, which was hosted by Sir Roger Gale MP and supported by the players of People’s Postcode Lottery


dog_pic.jpgJohn said “I am pleased to support Dogs Trust in raising awareness of the issue of illegal puppy smuggling - something which affects many people in my constituency each year. Not only is this issue affecting unwitting members of the public who are buying puppies without knowing where in the world they have come from, but it also brings with it a risk of disease to humans and dogs, which is simply unacceptable. There are also the huge welfare concerns for the puppies being transported such long distances at such a young age. It’s evident that greater measures need to be put in place to deter people from smuggling puppies into this country illegally.”