John McDonnell has announced a radical Labour plan to commit £400 billion (€460 billion) of investment to what he called the twin crises of the climate emergency and social deprivation, saying that if rapid action was not taken, "future generations would never forgive us".
Using a speech in Liverpool to outline the economic priorities of Labour's election campaign, the shadow chancellor said a Jeremy Corbyn government would change fiscal rules so borrowing for investment would be excluded from borrowing targets.
Mr McDonnell, who described his programme as "in the best tradition of British socialism" and following in the footsteps of Hugh Dalton and Gordon Brown, also vowed to move significant political decision-making power away from London and to the north.
Saying much of the planning for investment would be devolved, Mr McDonnell promised that part of the treasury would be moved to the north of England, and that his ministerial meetings would be held in other places as well as London.
“What does this mean?” he said. “It means that the centre of political gravity is shifting away from London. It’s coming back home to the north.”
Speaking soon after the chancellor, Sajid Javid, used a speech to say that the Conservatives would revise their own fiscal rules to be able to spend an extra £20 billion per year on infrastructure, Mr McDonnell said far greater ambition was needed.
As well as £250 billion in investment over 10 years for a green transformation fund to invest in areas such as clean energy and home insulation, Labour is also pledging £150 billion over five years for what is billed as a new social transformation fund.
Infrastructure
This would be spent on infrastructure-based projects such as schools, hospitals and a focus on social housing to “begin the urgent task of repairing our social fabric that has been torn apart by the Tories”, Mr McDonnell said.
Mr McDonnell urged voters to ignore Conservative pledges of more spending: “They treat us all with contempt. They think people are stupid. That with Brexit on the agenda, they think we’ll all forget about the past 10 years and the prospect of the next five years if they get back.”
The election, McDonnell said, was “a once-in-a-generation chance to get back on track”, with the focus on the climate emergency and crumbling social infrastructure.
Asked after the speech whether the amount pledged could spook money markets and help increase interest rates, McDonnell said: “Our scale of investment matches the scale of those emergencies that we now face, on climate change and socially. I’ll tell you, if we didn’t set off on that march, future generations would never forgive us.”
On whether the spending plans would be revised if a Labour Brexit deal were approved in a second referendum and the UK left the EU, Mr McDonnell did not directly respond, saying only that Brexit would be the choice of the people.
Saying fully-costed spending and investment plans would be spelled out in Labour’s manifesto, Mr McDonnell said cheap and plentiful government borrowing made the programme realistic: “There’s no shortage at the moment of demand for government bonds across the world.”
Laying out the party’s vision in the speech he said: “Our aim as a Labour government is to achieve what past Labour governments have aspired to – an irreversible shift in the balance of power and wealth in favour of working people.
“That means change, real change. It means investment on a scale never seen before in this country and certainly never seen before in the north and outside of London and the south-east.
“To achieve that objective also requires therefore an irreversible shift in the centre of gravity in political decision-making, as well as investment in this country, from its location solely in London to be relocated to the north and regions and nations of our country.”
Spending would be guided by a national investment bank, with a series of regional arms, Mr McDonnell said, with “decision-making devolved down to local communities”. – Guardian