Anushka AsthanaandHeather Stewart

Friday 3 March 201719.34GMTLast modified on Friday 3 March 201722.01GMT

John McDonnellsays 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 socialistLabourleader 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’sbyelection loss in Copelandhad 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 thattriggered a backlash among Conservative MPson 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.

But he also acknowledged the difficulties for Labour, arguing that it had to urgently translate its 10-point plan, set out by Corbyn at last autumn’s party conference, into a “clearly defined message” for voters.

It had been difficult to cut through “because it’s been a 360 degree struggle to survive, as simple as that”, he said, adding: “That’s been a distraction. The various elements that have been coming at us, both in terms of the media, the briefings against us, that sort of thing.”

McDonnell cited one period when he was accused of trying to “dethrone Jeremy” one day and then of holding him hostage to prevent him from resigning the next.

“Then we had a leak of one focus group that Jon Trickett did that I never even knew existed, that was about northern voices and that sort of thing,” the shadow chancellor said. “That became: ‘Jeremy Corbyn wants to stand down and they’re testing alternative leaders’. It was fantasy. I don’t use the expression fake news, but it was fantasy. That rebuttal stuff was exhausting.”

McDonnell said he wanted to set out a Labour party policy on decarbonisation, that adopts a German model in which production is decentralised, and make commitments to tackle regional and gender imbalances, as well as pushing for a review of the Treasury and promoting plans for a national investment bank.

But he said that the media would often put an attack story under MPs’ noses instead and he suggested that Corbyn had come up against people who were protecting themselves against his anti-establishment drive.

“Jeremy Corbyn is trying to transform our society so that it is radically more equal, radically more fair, radically more democratic. The whole media establishment [is] owned by people whose power is entrenched. They are trying to destroy a socialist who is trying to transfer power from the establishment to the people. That is their job to do. The oligarchs are protecting their power base.”

He said that even papers that he believed shared Labour’s values were not giving Corbyn a fair ride.

“The Guardian became part of the New Labour establishment and, as a result of that, you feel dispossessed because your people are no longer in power,” he said.

Asked about the party’s byelection loss in Copeland, McDonnell said the leadership had taken responsibility but he had not thought for a moment that Corbyn was the wrong leader.

The shadow chancellor urged the party to unite. “People like me… we’ve looked over the cliff edge of Copeland and looked at what’s down below, and said that isn’t where we’re going to go. Let’s start talking to one another again, and let’s start uniting,” he said, adding that he wanted to talk to the centrist pressure group, Progress, which is seen as being on the opposite side of the party to him.

“Me, everybody, we’ve got to start talking to one another again, because we’ve all looked over that cliff edge. We’ve all looked over and thought that’s not where we want to go. We’ve pulled back from that now,” he said.

McDonnell claimed that Tory MPs were worried about the lack of investment by the government in public services and that his message on Wednesday would call to plough funding into social care and the NHS, to stop tax cuts for the wealthy and to do much more on tax avoidance.

Commenting on reports that Labour hadlost nearly 26,000 members in six months, McDonnell said: “These figures are mostly seasonal or the result of the lapsing of members who joined last summer and were unable to vote in the leadership election. But Labour is now the largest party in western Europe and that is because people have joined Labour in record numbers under Jeremy Corbyn’s leadership, which is something other parties can only dream of matching.”

Richard Angell, the director of the pressure group Progress, responded to McDonnell on the Guardian’s Politics Weekly podcast, saying he wanted to work with other parts of the party.

“This is a critical time for the party so of course we’re keen to talk with people,” he said. “But John McDonnell doesn’t always play nicely. This is someone who went on the telly and said Progress members are Tories and members of the ‘hard right’ which is a term we reserve for fascists.

“He’s made up this spurious nonsense about the ‘soft coup’ taking place to give the sense that they’re under siege. So that they can get back to this internal strife that they seem to enjoy in the party.”