Tag: John McDonnell

Below is the text of the speech made by John McDonnell, the Shadow Chancellor of the Exchequer, to the Labour Party conference in Liverpool on 24 September 2018.

I want to start by thanking the Treasury Team: Peter Dowd, Shadow Chief Secretary, Jonathan Reynolds, Anneliese Dodds, Clive Lewis, Lyn Brown, Lord Dennis Tunnicliffe, Lord Bryan Davies and PPS Thelma Walker who won back Colne Valley from the Tories last year.

This month is the 10th anniversary of the financial crash. J.K.Galbraith in his book on the 1929 crash said sure you can try to create institutions to avoid crashes in the future but the best protection is memory. So it’s worth remembering. The causes of the crash were:

Yes, greed; yes, the deregulation that turned the City into a multibillion pound casino, but more importantly it was caused by the power of a small, financial elite who exercised too much power over our political system.

That power meant the bankers and speculators who caused the crisis wouldn’t be the ones who’d pay for it. It would be our families, working people, our businesses, our young people and especially the most vulnerable in our society.

It’s been 8 hard years of austerity and economic failure. In the 6th richest country in the world it cannot be right that 5000 of our fellow citizens are sleeping on our streets and that 4 million of our children are living in poverty, two thirds of them in households where someone is in work.

That tells you that wages are so low, still below 2010 levels. They are not sufficient to provide a decent life for many of our people. The Tories have created an age of insecurity where people have little if any power or control over their lives. It’s no wonder so many people voted for Brexit. They voted for any form of change. It was an anti-establishment vote.

So I believe it’s time. It’s time to shift the balance of power in our country. It’s time to give people back control over their lives.

Another Anniversary

You know, there’s another anniversary this year. One hundred years ago in 1918 the Labour Party adopted Clause Four as part of our party’s constitution. Let me remind you what it said: “to secure for the workers, by hand or by brain, the full fruits of their industry.”

I say the Clause 4 principles are as relevant today as they were back then. Fair, democratic, collective solutions to the challenges of the modern economy.

The Labour movement has always believed that democracy should not stop when we clock in at the factory gate, in the office lobby, or – like my Mum in BHS – behind the counter.

Democracy is at the heart of our socialism – and extending it should always be our goal. Our predecessors fought for democracy in Parliament, against the divine right of kings and the aristocracy. They fought for working people to get the franchise.

Our sisters fought for women’s suffrage in the teeth of ferocious opposition and our movement fought for workers to have a voice at work. The trade unions founded this party to take that democratic vision even further. So in 2018 I tell you that at the heart of our programme is the greatest extension of economic democratic rights that this country has ever seen.

It starts in the workplace.

It’s undeniable that the balance of power at work has been tipped against the worker. The result is long hours, low productivity, low pay and the insecurity of zero hour contracts.

I want to thank the IPPR for its recent report. It was a brilliant critique of the inequality embedded in today’s economy.

Archbishop Welby took some stick in the media and from some in the establishment for his support for the report. He wasn’t engaging in party politics. He was simply speaking the truth as a moral leader in our society. Just a few words of advice though Archbishop, when they get round to calling you a Marxist, I’ll give you some tips on how to handle it.

So let’s be certain. We will redress the balance of power at work. We will be proud to fulfil John Smith’s, our late leader’s promise, that workers will have trade union rights from day one whether in full time, part time or temporary work.

We’ll ban zero hours contracts. We will lift people out of poverty by setting a real living wage of £10 an hour. Wages will be determined by sectoral collective bargaining. And yes we will tackle the continuing scandal of the gender pay gap.

Corporate Governance

Real power comes from having the right to a collective say at work. Large corporations play a huge role in our lives, yet the decisions about running them are in the hands of a tiny few. Employees who create the wealth have no say in the key decisions that affect their future. After decades of talking about industrial democracy, Labour in government will legislate to implement it. As Jeremy announced yesterday, a third of the seats on company boards will be allocated to workers.

Power also comes from ownership. We believe that workers, who create the wealth of a company, should share in its ownership and, yes, in the returns that it makes.

Employee ownership increases a company’s productivity and encourages long term decision making. Let me thank the Co-op Party for its work on this and Gareth Thomas MP in particular for his ideas.

We will legislate for large companies to transfer shares into an “Inclusive Ownership Fund.” The shares will be held and managed collectively by the workers. The shareholding will give workers the same rights as other shareholders to have a say over the direction of their company. And dividend payments will be made directly to the workers from the fund. Payments could be up to £500 a year. That’s 11 million workers each with a greater say, and a greater stake, in the rewards of their labour.

Societal Dividend

But we all know it’s not just the employees of a company that create the profits it generates. It’s the collective investment in infrastructure, education and research and development that we as a society make that enables entrepreneurs to build and grow their businesses.

So we believe it’s right that society shares in the benefits that investment produces. That’s why a proportion of revenues generated by the ‘inclusive ownership funds’ will be transferred back to our public services as a social dividend. Over time, this will mobilise billions that could be spent supporting our public services and social security system.

Public Ownership

We are extending economic democracy even further by bringing water, energy, Royal Mail and rail into public ownership. Some press said the voters would be horrified. They couldn’t have been more wrong.

Public ownership has proved its popularity in opinion poll after opinion poll. It’s not surprising, look at the scandal of the privatisation of water. Water bills have risen 40% in real terms since privatisation. £18 billion has been paid out in dividends. Water companies receive more in tax credits than they pay in tax. Each day enough water to meet the needs of 20 million people is lost due to leakages. With figures like that, we can’t afford not to take them back.

But be clear, nationalisation will not be a return to the past. We don’t want to take power away from faceless directors to a Whitehall office, to swap one remote manager for another.

Today, Rebecca Long Bailey and I are launching a large scale consultation on democracy in our public services. We are also setting out our plans for a new publicly-owned water system that puts this essential service back in the hands of local councils, workers and customers.

There will be an unprecedented openness and transparency in how the industry will be managed. We are ending the profiteering in dividends, vast executive salaries and excessive interest payments.

Surpluses will be reinvested in water infrastructure and staff, or used to reduce bills. Real investment will allow the highest environmental standards.

Public and Community Ownership Unit

People have had enough of being ripped off by privatisation. That’s why we’ve said no more PFIs and we’ll bring the PFIs back in house. Through our public ownership programme we will set up a ‘Public and Community Ownership Unit’ in the Treasury. It will bring in the external expertise we will need.

Let me make it absolutely clear that the full weight of the Treasury will be used to take on any vested interests that try to thwart the will of the people. Some said our manifesto was a fantasy or a wish list, attractive but ultimately not deliverable. I’m telling you today that we are planned, ready and prepared.

Not just to fight another election campaign but to implement our programme when we win.

Green Book

For too long that establishment has used the Treasury as a barrier against putting power back into the hands of the people. So we will reprogram the Treasury, rewriting its rule books on how it makes decisions about what, when, and where to invest.

We will end the Treasury bias against investing the regions and nations. And we’ll make sure it assesses spending decisions against the need to tackle climate change, protect our environment, drive up productivity and meet the investment challenges of the 4th industrial revolution.

Fair Taxation

We need to exert some people power over our tax system. There are millions of businesses out there which deserve our respect and we will always support them. They are responsible, ethical entrepreneurs, who pay their taxes and support our community. They should know that we are proud of them.

But there is a minority that don’t live up to those standards. They avoid paying their taxes on an industrial scale. They are denying our hospitals, our schools and carers the resources they need.

The Tories record on tackling tax avoidance and money laundering has been a disgrace. We can’t trust the Tories on this but we shouldn’t just wait until we get into government. We should act now.

One way is to mobilise shareholder power to demand companies uphold basic tax justice standards. Numerous institutions from churches to trade unions and pension funds have large scale shareholdings in many of the companies that avoid taxes.

So today, I’m announcing my intention to bring together these organisations to launch a shareholder campaign. We’ll be demanding companies sign up to the Fair Tax Mark standards, demonstrating transparently that they pay their fair share of taxes.

So fair warning to the tax avoiders, we are coming for you.

Global Dialogue

Gordon Brown recently expressed his concern at the current weaknesses in global relationships to deal with any future economic crises. With major nations on the brink of a trade war, and with climate change accelerating, we can’t risk the kind of international breakdown that led to the Great Depression. Just as at the Bretton Woods conference in 1944, there is an urgent need to work out if the current international system can cope with these threats.

Over the past few decades that system has concentrated power in the hands of an international financial elite. Individuals, communities, and even nation states have been made increasingly powerless. It isn’t working for the Western world, where stagnant wages have helped feed the rise of the racist right. And it isn’t working for the developing world, whose wealth is plundered by multinational corporations or stashed in Western banks.

We will be convening in the spring an international social forum to bring together leading economists, politicians and civil society representatives, launching a dialogue on the common risks we face and the actions we need to take.

I am pleased to announce that Nobel Prize winning economist, Joseph Stiglitz, has agreed to lead this discussion for us.

Brexit

This leads us inevitably to the urgent question of Brexit. I don’t have to repeat the criticisms we all have of the Tories’ behaviour over this echoed in the earlier conference debate. Their failures are in plain sight.

I just say to the Tories, in the interests of our country get out of the way and let us get on with securing a way forward. A way forward that will protect our economy, our jobs and standards of living for our people. If they won’t do that then, you know my preference, let’s have a general election.

We are keeping all the options for democratic engagement on the table. But look, I feel so strongly that these Tories should face the people. Face the people for the way they have recklessly put our country’s future at risk over the last two years.

On so many fronts you know the scale of the mess we will inherit from the Tories. A society whose social fabric has been run down to the point of dereliction. A struggling, mismanaged economy vulnerable to another crisis.

Past Shadow Chancellors have come to conference with warnings about how bad the situation is to reduce people’s expectations of what can be achieved when we go into government. This Shadow Chancellor is different.

Real change

I want you to know that:

The greater the mess we inherit, the more radical we have to be; the greater the need for change, the greater the opportunity we have to create that change and we will.

The Tories’ austerity has been brutal. But what I have resented most is that they try to take away the dreams, the hope and optimism our people, especially our young people, that dream of building a better world.

But they fail to understand that we have an unwavering faith that together people can change the world. We will not settle for anything less.

Yesterday the press reported the Tories were drawing up secret plans for a quick general election. So the message from this conference is bring it on.

Whenever the general election comes, we are ready. Ready to campaign for victory, ready for Government, ready to build the future.

And you know, like Bill Shankly, we’ll be proud to call that future, socialism. Solidarity.

Below is the text of the speech made by John McDonnell, the Shadow Chancellor of the Exchequer, to the Co-operative Party Annual Conference in Cardiff on 9 September 2016.

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.

Below is the text of the speech made by John McDonnell, the Shadow Chancellor of the Exchequer, in Bournemouth on 8 July 2016.

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, 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.

Austerity

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.

Below is the text of the speech made by John McDonnell, the Shadow Chancellor, in London on 21 May 2016.

Thank you very much for coming here today…

I think this is the first event of its kind organised by a shadow chancellor.

I wanted to lay out, briefly, our strategy on the economy.

As Jeremy made clear this week, speaking at the Ralph Miliband lecture, Labour is not a party only of protest.

Protest matters, and protests make a difference.

I hope we’ve shown, over the last eight months, how an effective Opposition can make a difference.

We’ve helped win U-turns on cuts to tax credits, cuts to disability payments.

We’ve won U-turns on forced academisation.

The government has U-turned on cuts to solar panel subsidies, and on the tampon tax.

They’ve U-turned on Sunday trading, and on taking child refugees, and now even on the inclusion of the NHS in TTIP.

It’s almost dizzying, watching them from the opposite benches.

That’s what an effective Opposition can help do, alongside the protests and the movements outside of Parliament.

But it’s not enough to block and protest.

If we want to make a lasting difference to people’s lives, we have to offer an alternative.

So Labour is not only a party of protest.

It is a party of government.

The Tories may be in disarray. But even as they fight like rats in a sack over Europe, they will agree on one thing.

That is the need to tear up hard-won rights, and smash up the civilising institutions previous generations have won.

From the BBC to the NHS, from our schools to the welfare state, nothing remains safe whilst they are in power.

That means we have a responsibility to show the British people how Labour is not just an effective opposition, but a credible alternative government.

We will defend the good that has been won already.

But we can go further than this.

We should aim to show how we can improve on what we have.

Labour’s great reforming governments have always had a vision, whether in creating the NHS, or introducing the first national minimum wage.

When we return to government, we must aspire to be another great reforming administration.

I want us to surpass even the Attlee government for radical reform.

The situation demands nothing less. Simply undoing the damage inflicted by David Cameron and George Osborne will be a huge task.

But we should aim higher than this.

Not just cleaning up the mess and addressing the challenges, whether that is inequality or climate change.

But making the most of the opportunities that could be opened up.

New technology and new ways of working could help create a better, more prosperous society.

Our whole society could do so much better than we are.

What we’ve attempted, over the last eight months, is to lay out the framework by which Labour can win the next election and then set about the fundamental business of transforming capitalism.

We should aim at nothing less than that.

It’s important that we state our objective clearly.

Our aim is that is that in the life of one Parliament we lay the foundations of a new society that is radically fairer, more equal and more democratic, based upon a prosperous economy which is economically and environmentally sustainable and where that prosperity is shared by all.

And we aim to introduce a new era of transformative economics to achieve that goal.

That means we have to be ambitious. We have to “rewrite the rules” of the economy, in the words of Economic Advisory Council member Joseph Stiglitz.

The old rules have failed too many.

They have meant rising inequality, and wasted talent.

Prosperity has become too concentrated in the hands of too few, and the best opportunities in life restricted to a gilded set at the top of society.

We have trampled all over the natural world, and squandered its resources.

This is a bigger project than offering just a few appealing policy tweaks here and there.

It means striving for a transformation in how capitalism in Britain operates.

That means a fundamental shift in how future governments relate to the economy.

We are a long way from the election. But in outline this rewriting of the rules has three parts.

First, we need to make an absolute commitment to responsible financing by a future Labour government.

Let me spell out what that means.

The old rules meant the last Labour government relied too heavily on tax revenues from financial services, and too heavily on off-balance sheet spending through the Private Finance Initiative.

It didn’t do enough to clamp down on tax evasion and avoidance.

It helped create an unfair tax system.

In Opposition today we are doing all we can, here and at an EU level, to hold this government of tax dodgers to account.

This country will no longer act like a tax haven for the super-rich under Labour. And nor will those other places it exercises jurisdiction over.

And on the other side, it means every penny of government spending will be accounted for.

Unlike the current government, we won’t gamble with the nation’s finances, setting unachievable targets and leaving black holes in their accounts.

If we don’t show that we are responsible custodians of the people’s money, they will not give us the right to govern.

We can reject the dreadful choice of austerity and maintain solid government finances.

We’ve enshrined these commitments in our Fiscal Credibility Rule, drawn up with help from the world-leading economists on our Economic Advisory Council.

This Rule says we will close the deficit on day-to-day spending over a five year period, but we’ll make sure government has the capacity to invest in the future.

If there was a single biggest failure for George Osborne, it has been his failure to invest.

But he is the worst of a long tradition of weak investment by British governments. We want to break with that.

Investment is the key to shared prosperity now, and in the future.

We’re not just a Party that thinks how to spend money.

We need to be a Party that thinks 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 self-employed – the party of workers and small businesses.

Second, we need to reshape how government and the economy relate to each other.

Another Economic Advisory Council member, Marianna Mazzucato has written about how what she calls the “entrepreneurial state” can help support new industries and technologies.

This breaking with the failures of the hands-off approach.

We’ve seen, just in the last few months, what happens when a government thinks a vital industry like steel can be left to the mercies of the market.

It means plant closures and job losses, devastating communities.

It means a key industry for the future left on the brink of disappearance.

We responded rapidly to the steel crisis, arguing that government had to step in.

To nationalise to stabilize the industry.

Use government spending to buy steel from British plants, protecting jobs here.

And work with, not against, our European partners to stop the dumping of cheap steel.

I’m pleased to see our do-nothing Business Secretary has been forced to respond to pressure to act.

But we need to think beyond crisis management.

If, for instance, we’re serious about seeing a shift towards a low-carbon economy, we’ll need to transform how we produce and use electricity.

More public transport and more renewables have to be a part of the mix.

And that has to mean supporting a steel industry here.

So we’re not just seeing industrial policy as a response to crisis.

Too many governments in the past, and not just this one, thought government should only intervene when something goes wrong.

We think government intervention should be there to make sure things go right.

The swift actions taken by the previous Labour government, for instance, to support the car industry in the aftermath of the 2008 crash mean that, today, Britain exports more cars than ever before.

So we know intervention can work. We have to apply it properly.

Jeremy has argued before for a National Investment Bank.

This could supply the investment needed for the big infrastructure projects, like high speed rail, that form the backbone of a modern economy and in which Britain is sorely deficient.

It can help local and regional institutions provide the financing for our small businesses, still starved of funding by our existing banks.

And we’ll look for ways to ensure new technologies get the funding they need not just for research but for dissemination and adoption.

Renewables in particular need attention.

As we develop our policies, we’ll be drawing on the best research and expertise to show how this new institution could work

We must overcome the arrogance and isolation of government.

Civil servants do not always know best. Nor do politicians.

Too many governments in the past have believed that they do.

But it should be fundamental to a genuinely democratic approach to economic policy that governments are there to bring people together, to facilitate discussion and to listen.

Not to impose, but to seek consensus.

When we return to government, I’ll be looking to set up an Economic and Innovation Forum which will provide a space where representatives of businesses, unions, and wider civil society can come together with government at a national level.

We’ll create a real partnership in policymaking.

We will restore that line of communication right from the shop floor, the office, the studio and the R and D department to the heart of government.decision making.

We think we are far more effective when we work together, when we co-operate.

But intervention can take place not only at the national level.

Pioneering councils, under the cosh of Tory austerity, are having to think creatively about how to deliver local services and secure the local economy.

Transformative councils like Preston in Lancashire are developing a “local entrepreneurial state”. The council there is working with major local institutions, like the university, to help support the local economy.

Procurement spending is being rerouted back into local businesses. They’ve provided a multi-million pound boost to the economy in Preston and beyond.

Alongside that, they’re helping workers set up co-operatives to sustain local employment.

We think this bottom-up approach can be applied more widely.

Take the scandal of the housing crisis.

At the national level, Jeremy has made the shadow housing minister a fully-fledged shadow cabinet post for the first time in years.

This reflects the high priority we are giving to housing and solving the serious housing crisis.

Sadiq Khan has rightly highlighted the issue of housings costs in London.

The cost of housing in London is arguably the biggest single blight on this city.

Many, particularly young people, who are unable to get onto the housing ladder are then at the mercy of an unforgiving, unrestrained housing market.

Other urban areas are suffering from skyrocketing rents.

We’ll look to give local authorities the powers to impose rent regulation to secure fair rents where these are needed as Labour committed itself to at the last election.

We know the supply of housing is simply not sufficient to meet demand.

My colleague the shadow housing minister John Healey has set out his plans to build 100,000 new council houses a year, funded from savings in the Housing Benefit bill.

With fewer new social rented homes built last year than at any time in over two decades, it will be a top priority for a Labour government to reverse the short-term and counter-productive cuts in housing investment made by George Osborne.

But we have to also meet the aspirations of people to own their own home.

We are also looking at how we can reverse the freefall decline in home-ownership amongst young people.

There are now a third of a million fewer home-owners under 35 than when David Cameron became PM, and the biggest drop is among working class young people.

We know that part of the reason why the Tories are failing on home-ownership is that their support is not targeted at those who need help the most.

Thousands of households earning over £100,000 a year have benefited from the government’s ‘help to buy’ scheme, while their so-called ‘starter homes’ will cost up to £450,000 each.

So 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.

It is Labour councils providing innovative solutions to the housing crisis.

Councils in Manchester, Warrington and Sandwell, offering cheap, local authority-backed mortgages to first-time buyers in particular.

With too many first-time buyers excluded from the housing market by high-street banks, we’ll be looking at ways to securely expand local authority mortgage lending.

We need action now to solve the housing crisis.

With Mayors elected across major cities in this country, and more Mayoral elections to follow, there is a new enthusiasm and capacity to take the initiative locally.

Bristol’s new Mayor, Marvin Rees, and his administration have announced plans to build 2,000 new homes every year.

They’ve immediately released land the size of 80 football pitches for new building.

Along with Jon Trickett, our Shadow Secretary of State for Communities and Local Government, I will be convening a Mayors’ Economic Forum to bring together local leaderships to participate in the development of economic policy making.

For the first time, national economic policy making will be influenced directly by local decision makers representing their metropolises and local communities.

Clearly one of our first agenda items will be solving the housing crisis.

We can all learn from each other in this, but we need mechanisms to make it happen.

This leads to the third policy area.

We need to unlock the potential of the whole economy, and society.

The economic institutions that we have were developed in an earlier age.

Too many of them are not fit for purpose in the 21st century.

Our banking system failed in 2008 and still fails too many small businesses today.

As Lord Turner has detailed, it pumps lending into the property market, but fails to invest in the productive economy.

No other major developed economy has a banking system so dominated by a few corporations.

We need to end that domination, developing a range of new institutions including the National Investment Bank.

We need to make sure every part of our economy has access to the financing it needs, not concentrate it in one sector and in one place.

Similarly, the fixation on shareholder value and short-term results means that our giant corporations are sitting on giant cash piles – perhaps up to £700bn.

Instead of investing money productively, creating new jobs and opportunities, our corporations are hoarding cash.

And those responsible for running them are paying themselves obscene amounts of cash.

Shareholders have risen in revolt against excessive executive pay.

I think we need to open up the whole question of how our major corporations are structured.

Put an end to the short-termism. End the fixation with shareholder value. Start to think how employees and customers can be brought into the decision-making process.

These aren’t just good in themselves. There is a hard-nosed economic case for addressing these questions.

We know that there is a clear boost to the economy from worker ownership and management.

One recent academic literature thinks worker-managed companies enjoy a productivity bonus of 6-14%.

I’ve said I want to at least double the size of the co-operative sector in Britain.

Similar economies like the US and Germany make far more use of co-operatives than here.

There is a long labour movement tradition in Britain of support for grassroots ownership and decentralized economies, from the Rochdale Pioneers onwards.

That tradition has been buried for too long. After the Second World War, Labour adopted a model of centralized ownership and control for the economy.

This model worked well enough, for a time. But it always had problems.

Today, the proliferation of small-scale and digital technology can grant a new lease of life to the tradition.

From community-owned renewable generation to open source software, collective and shared forms of ownership can provide fairer and more efficient ways of working than the older business models.

So the future has an ancient heart.

I’ve said before that democracy and decentralization must be the centerpiece of our economic policy.

From the ground up, we can start to transform how capitalism in Britain works.

Previous Labour governments were content to only think about how to redistribute income.

Today, technological change means we have to think more closely about ownership.

I’ve spoken before of moving beyond the Tory Right to Buy and creating a Labour Right to Own.

This can be at the centre of our offer to Britain.

A radical decentralization of economic power and authority back to working people and local communities.

If we are to make all this work, we have to go beyond simply thinking we can pull the levers of government, and expect to deliver results.

The machinery of government that we have for overseeing the economy is looking increasingly rusty.

Those levers cannot be relied on.

We have an HMRC that, time and again, lets major corporations off the hook when it comes to their taxes – whilst hounding hard-pressed small businesses.

I want to pay tribute to the staff of Revenue and Customs, who have been cut and cut again by Osborne.

Staff at HMRC generate revenues. Cutting their numbers is self-defeating.

But serious questions have to be raised about its management.

Economists from across the political spectrum are questioning whether, after 2008, we need a new way of making monetary policy.

Andy Haldane, chief economist at the Bank of England, has raised interesting future possibilities for monetary policy, including more quantitative easing and even negative interest rates.

The current architecture was established in 1997. We can raise a legitimate question as to whether the Monetary Policy Committee’s remit still fits changed circumstances.

And then at the heart of economic policymaking in Britain sits the Treasury.

Its powers, already expansive under Gordon Brown, have grown hugely under Osborne.

It dominates not just economic policy, but the whole of domestic policymaking in Whitehall.

Its staff are talented and dedicated. But, time and again, it has faced serious questions about its own role.

Is it too short-term in its outlook? Too focused on London? Too unimaginative in its approach?

Iain Duncan Smith has even gone so far as to call it “the worst thing in Britain”.

I’ve commissioned a series of reviews, led by experts, to report on the functioning of these three critical institutions.

Lord Kerslake, former head of the civil service, is reviewing the Treasury.

Professor Prem Sikka is reviewing HMRC.

And Professor Danny Blanchflower is conducting a review of the Monetary Policy Committee.

All three will report back over the next period, and make recommendations that will feed into our own policymaking.

We are creating our own architecture for sound economic policy making and implementation.

Even in outline, this is a bold programme.

But economics isn’t a spectator sport.

I’m heartened to see so many here today, just as hundreds upon hundreds have turned out across the country for the lecture series.

Everyone here has a critical role to play.

Fundamentally, we have to reshape the narrative on the economy.

It’s been dominated for too long not only by the ludicrous claims of the austerity-mongers.

Going back further, it’s been the dominated by a particular belief that free markets are fundamentally always right, and that free market outcomes are always the best.

We have to break with that.

But that means winning the argument.

It means all of us being prepared to take on and challenge the arguments when they arise.

It means we’re all ready to make the case for a different way of doing economics, based on the best possible expert advice and with a clear vision for the future.

So the debates and discussion we hear today aren’t supposed to stay on this campus.

They need to be taken to every town and village in the country.

If we want to realise the kind of programme I’ve laid out, we need to be prepared to take that message to every corner of the country.

I’m convinced there’s a real thirst out there to see something new.

You don’t need to spend too long convincing most people that things aren’t working as they should.

But unless we have a credible alternative, and the people prepared to make the case for it, we won’t be able to change how things work.

It doesn’t mean shouting and berating those who disagree with us, but patiently explaining how we can do things better.

So I think this conference should be the first of many.

Slowly but surely, we need to reshape the discussion.

Each one of us has an important role to play in this.

We need you all to help raise the quality of economic discourse in this country.

We need you all to be the advocates of the transformative economics we are developing to achieve that fairer, more equal, more democratic, sustainable prosperous society we aspire to.

And as we approach the election, we will work together to sharpen and develop our ideas collectively.

If the Tories are the party of a failing past and present, Labour must be the party of the future.

If the Tories are the party of fear, Labour must be the party of hope.

That’s what this conference today is all about.

Let’s go to it.

Below is the text of the speech made by John McDonnell, the Shadow Chancellor of the Exchequer, at Imperial College on 20 November 2015.

I’m grateful to you here at Imperial College for having me here to speak today. And what an inspiring place it is to speak about the future of the economy and the world of work, at the College’s new Incubator where start-ups and entrepreneurs can work alongside some of the leading minds in science.

My own experiences of work began with the technological revolution of the time.

Looking back at it now, I think about the possibilities open to us then. There were skilled jobs available for the millions who, like me, didn’t go straight from university. There was generous access to courses at local FE colleges. There was free education for those who did go to university.

On modest means, a young person could buy a house. After all the advances we have made, why is it that so many things we took for granted back then are no longer available to our children’s generation? Wages for the under 30s have been decimated since the financial crisis, and are still 10% below their 2010 level.

Home ownership in many parts of the country is out of the reach of the millions whose parents are unable to help with a deposit. Social housing is almost a distant memory, and the insecurity of private renting means upheaval and uncertainty for a majority.

How did this come about?

How can it be, with all the productive and creative advances of the last few decades that in some of the most important aspects of life, my grandchildren have a less secure life to look forward to than mine?

John Maynard Keynes famously predicted in the 1930s that these expanding capacities would lead to a fifteen hour working week, the rest of the time filled with leisure activities rather than worrying about how to find more money.

For today’s young people, more than any other generation since, his dream could not seem further from coming true.

This is the backdrop to Jeremy Corbyn’s election. Jeremy was elected leader of the Labour Party by an overwhelming majority of members and supporters on the basis of a programme that rested on three pillars.

First, a New Politics, the creation of a more democratic, engaging and kinder politics in both the Labour party and society.

Second, a New Economics, laying the economic foundations of a prosperous, fairer and sustainable society.

Third, a New Relationship with the World, based upon a foreign policy promoting mutual co-operation, conflict prevention and resolution rather than military aggression.

The good society that I think most of us envisage is one that is free, democratic, prosperous, environmentally sustainable, safe and secure, based upon the values of fairness, equality and social justice, where everybody has the ability to develop their talents and enjoyment of life to the full.

Austerity provides none of this. Worse, it moves us further and further away from that vision. The impact is felt by the poorest and most vulnerable. Just one example, amongst many. The number of those sleeping rough has risen by a shocking 55 percent since 2010.

In the sixth-richest country in the world, that anybody should be without a roof over their head is a disgrace. And there is worse to come. Unless reversed by the Chancellor, under public pressure, tax credit cuts threaten over  three million households with losing £1,300 a year. These raw figures hide the real stories – of huge suffering and personal tragedies now being borne across the country.

Yet none of this suffering is necessary. Austerity, as I argued in September and have continued to argue, is a straight political choice. There is no economic necessity behind it. There is a broad consensus, from the International Monetary Fund and across the economics profession, against it. Austerity is a political choice. It threatens our future economic security. It is, however, for George Osborne and the Conservatives, the easy option.

Since the late 1970s, governments across the World have promoted gains for the few in the belief that the many would, eventually, share. Capital markets were liberalised and taxes cut. But under successive governments, inequality rose. Not trickle-down, but trickle-up. It is time to change the rules of the game.

Neoliberalism – the current rulebook – has outlived its time. The old rules are failing the majority. And they will not cope with the changes that are ahead of us. My real concern is for the long term well-being of our economy.

If we are to thrive as an economy we have to base our future on the rapidly developing new technologies. It’s what many are calling the new machine age. Miss this boat and we will struggle to keep up in a competitive global market place. We will have a country divided geographically between the finance sector of the City of London – surrounded by a sea of low-paid, service sector jobs – and the rest of the country.

In many areas, the pace of industrial decline will continue to destroy lives and devastate communities. If this sounds dystopian, take a trip to Teeside and see what the loss of steel, of Potash mining and the loss of 300 HMRC jobs can do to threaten the life of a community.

Technological advance is forcing the pace of change. Bank of England research suggests that 15 million jobs could be at risk of automation over the next decade or so. And those most at risk from automation are the lowest-paid.

For those who own the robots, of course, it will be a different story. Wealth will flow faster into fewer hands. A minority will continue to profit immensely. But there is a different way. First we need government to understand and accept the strategic role it has to play in our new economy.

The current government is blocking the path to our future. They are willfully blind to the changes taking place. They privilege vested interests and the old ways of working. Our giant corporations are enjoying a boom time, taking their biggest ever slice of our national income as profits.

Some of the most powerful institutions in the land appear to act almost unhindered. Think about how little has been done to get even our publicly owned banks to clean up their act since the crash. So many of our underlying problems can be traced back to the domination of a few powerful institutions that have failed, over many years, to act in the public interest. And yet we have a government all but captured by vested interests.

Corporation tax, already the lowest in the G7, has been cut again and cut, heading towards just 18%. Featherbedding, through a wildly complex system of tax reliefs that now comes to £110bn a year.

Cutting HMRC, while turning a blind eye to rampant tax avoidance and evasion, running into billions. And whilst large corporations are treated with kid gloves, those who work are shown the iron fist. We already have the most repressive union laws in Western Europe.

The Trade Union Bill will tighten the screw still further. Labour will oppose the Trade Union Bill at every step of the way and, should it become law, repeal it in government. Unlike France or Germany, in the UK rights of workers to speak up in their own companies are limited in the extreme.

No formal provision exists for workers to have a say in decisions that affect not only their own lives but potentially those of their customers. We are throwing away the chance for those who work to bring their skills, talent, and in-depth knowledge into how our corporations make decisions.

Democracy isn’t just a political question. It is a bread-and-butter issue. A new contract for the workplace means securing a better balance between those who work, and those who employ. We will open a review on workplace representation, drawing on the best practice from around the world to unlock democracy in our workplaces and release its creative potential.

We will seek to break open the monopolies and oligopolies that dominate our essential industries, offering extended support to those seeking to set up cooperative and community ownership of their companies and assets. Meeting the challenges of the future requires a state that can think and act strategically. A new economics can start to provide an alternative.

We need to think about how government can operate on the basis not only of providing necessary public services, but also to meet challenges in the future. That is why we have launched reviews of the mandate of the Bank of England, and the Treasury’s function, to report on how they can operate in the best interests of society.

That is just the first step in a process that will see us work with businesses, entrepreneurs, scientists, trade unions and wider civil society to shape the economy of the future.

We know this can be done. Finland met its disastrous recession in the 1990s by transforming its economy from an exporter of lumber, to an exporter of technology. At the centre of its transition it established the Science and Technology Policy Council, chaired by the Prime Minister, drawing on expertise from across business, science, and civil society.

Labour in government will bring together business, unions, and scientists in a new Innovation Policy strategy, with a mission-led goal to boost research and development spending, and maximise the social and economic benefits from that expenditure.

We already have brilliant entrepreneurs like Dale Vince, who started the world’s first green energy company, Ecotricity, from a caravan in Gloucestershire. Ecotricity now supplies 75,300 homes with renewable energy and in 2014 had turnover of £66 million.

We need more creativity like this.

Thousands of new businesses are being created. We want government to work with, not against, those entrepreneurs helping create wealth in society. But rather than investing for the future, Osborne has overseen a slump in government funding for vital infrastructure.

As a share of GDP, public infrastructure spending has fallen from 3.3% in the final year of the last Labour government to 1.6% today. It is scheduled to fall still further, to 1.4%. Meanwhile, our major corporations, despite record profits, are sitting on vast cash piles. At least £400bn is held in corporate bank accounts – money that should be invested.

This is part of a pattern, identified by Martin Wolf, of slumping investment, relative to cash flow, across major economies. That slide has been amongst the worst in the UK, stretching back beyond the crash to the early 2000s.

Meanwhile, dividend payments are at an all-time high. So we have a government that won’t invest and corporations that won’t invest, a damaging cycle setting up the generations ahead for failure.

The consequences of this failure are all too apparent. Underpaid and overworked staff. Insecurity. Businesses unable to compete. Basic utilities under threat. The National Grid has warned of electricity shortages.

This in Britain, in 2015 – the sixth richest economy on the planet. Clearly, some of this has got back to Osborne. In a state of panic, he has been running around China trying to drum up funding. Osborne opposes nationalisation – except when it’s the Chinese or the French state doing it. Short-termism and antipathy to the state dominates every decision.

The OECD thinks that, as a minimum, a developed country like Britain should be spending 3.5% of GDP on infrastructure. Labour in power will meet and exceed that commitment, reversing decades of underspend. This could include renewable energy, energy efficiency, major public transport improvements and ultra-highspeed broadband.

Labour understands that government’s role is to provide the opportunity for massive advances in technology, skills and organisational change. A Labour Government would prioritise provision of patient long term finance for investment in research to support the technology that will drive future innovation in our economy. And we would look to change our corporate tax system to give companies incentives to invest wisely. A higher tax on retained earnings should be investigated, alongside improved deductibility for long-term investment.

The City of London and our financial institutions can also play their part. Labour will seek a new compact with financial services, looking for guarantees on stable, long-term domestic investment, mobilising their skills and resources for the wider public benefit.

I am hoping to meet with Mark Boleat of the Corporation of London later this month to discuss ways in which the City and finance can play their part in a new contract for Britain. We will retain, of course, the right to legislate if needed. It is science, technology and innovation that are shaping our new world. Britain has an extraordinary and proud legacy of scientific research, of which this institution is a part. It is still a world-leader today in the quality of its research.

But rather than build on that heritage, we are strip-mining it. Despite promising to protect research funding this has neglected it. Current expenditure on research and development has fallen by £1bn in real terms since 2010. This is having results. For example, the UK’s cutting-edge neutron source at Harwell is only running 120 days a year due to funding shortages, and leading scientists say we are facing irreversible declines in “particle physics, astrophysics, and nuclear physics.”

Britain spends less on research as a share of GDP than France, Germany, the US and China, all of whom are increasing their commitment to science and technology. We spend less than 0.5% of GDP on science and that is set to reduce still further. The UK has no long-term plan to increase R&D spending. Modern breakthroughs in research are the result of past investment by government, built on the foundations of an immense scientific and technical heritage.

However, in science, technology, and innovation, we are beginning to live off past glories. We can, and should, do better. The Royal Society recommends a target of meeting at least the OECD average spend on research and development by 2020. A Labour Government will aim to exceed this, with total spending – from both public and private sources – of at least 3% of GDP by 2030.

We will extend Labour’s Ten-Year Framework to cover the next decade and increase innovation support, ring-fencing this spending. Osborne may be trying to close the fiscal deficit. But by failing to invest, he is opening up a massive deficit with the future.

We believe that any fiscal rule should ensure government’s current spending is brought into sensible balance, consistent with sustainable economic growth, whilst allowing vital investment to continue. Another priority will be to ensure that our provision of skills is adequate to the needs of the new economy we wish to create.

At present, employer after employer reports dire shortages. Further Education colleges, a vital lynch-pin of the education system, are threatened with swingeing cuts. If every person is to have the opportunity to share in the prosperity that the new economy can offer, every person must have the opportunity to learn, develop and fulfil their potential.

Secure foundations for the new economy mean prosperity across the whole country. The widening gap between our richest places and the rest is clearly excessive. Average weekly pay in North-East Derbyshire is £389 a week while in the City of London it’s £921. Government’s response to this regional disparity has been persistently inadequate. Planned infrastructure spending per person in the North of England is one-fifth of its level in London.

We won’t get a “Northern Powerhouse” unless government is prepared to pay for it. Improved transport, greater autonomy in taxation and spending decisions, and powers to borrow will enable our regions to meet their huge potential. And of course we cannot allow government to strip local councils to the bone. Labour will continue to oppose the devastating cuts being made to local authority funding. Local authorities can, and should, be local engines of sustainable, long-term prosperity. How we work is changing.

Shifts in technology are opening up new possibilities. The spread of information technology, in particular, with the long-term decline in the cost of computing power has created opportunities that simply did not exist before.

Airbnb, for example, simply could not have existed before the internet. It does not own or rent rooms itself. It provides a space through which others can do so. Sometimes this has been labelled the “gig economy”. Its enthusiasts talk up its possibilities for more exciting, more varied consumption, making better use of the assets we own.

But a nice phrase can hide a grim reality for those who depend on the new world of work for their livelihood. The insecurity of self-employment. The uncertainty of not knowing where, or when, the next pay-cheque will be coming from. And the pressure this places on those in more typical employment, whether it is London taxi drivers threatened by Uber or call-centre workers placed on zero-hour contracts.

Millions of workers excluded from the hard-won protections of formal employment contracts. And relentless pressure placed on those, the majority, still protected. It was the labour movement that won shorter working days. Health and safety at work. Rights in the workplace. But technological change, and the unfettered free market, are tearing up the old work contract. Labour, instead, will offer a new contract for a new workforce. Security of income against uncertainty. The same rights and protections extended to all those at work.

This is why the fight over tax credits matters so much. The tax credit system is well-adapted to new forms of employment. Small businesses, providing a useful service to the community, rely on the tax credits system to get them on their feet and smooth out their earnings. So we will defend and, where we can, improve the tax credits system. Self-employment offers few protections. So we will look to extend maternity and paternity rights to all self-employed workers.

White van man – and woman – deserve just as much protection and recognition as white-collar workers. Austerity is a political choice, not an economic necessity. Unless we change our political choices, the vast majority will be denied the opportunities that technological change presents. We can’t afford to run a deficit with the future.

Working with businesses, workers, and civil society, governments today can and must seize the chance to change how we live and work, both now and in the future. We can break the stalemate and change course. A new economy, where technology liberates rather than traps. Where the fruits of scientific advance are shared by all. And where every one of us has the opportunity to develop our talents. A prosperous society built on sustainable growth, and predicated on the values of fairness, equality and social justice. It’s socialism, but socialism with an iPad.

Below is the text of the speech made by John McDonnell, the Shadow Chancellor of the Exchequer, at the London Chambers of Commerce on 2 December 2015.

I’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 business.

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.

Below is the text of the speech made by John McDonnell to the Public and Commercial Services Union in 2009.

Look, thanks, look I’ve got to be brief today, sorry about this, I can’t hang about, I’ve got to get back home, there’s a bloke coming round to do the moat, put up the pergola and tarmac the tennis courts.

I couldn’t get here the other day for Mark’s rally because I was dealing with the bill on prostitution in parliament, and I’ve learnt a lot, so when I heard that someone had claimed for floating their duck, I thought it was rhyming slang for some bizarre sexual practice.

You just can’t make this up can you? I was here two-years ago, can you remember? It was the day that I hadn’t got nominated to stand as leader of the Labour party.

I couldn’t get the nominations, one of the MPs told me that ‘I’d seen your manifesto and I’ve seen your proposal for public expenditure and I can’t nominate you, ‘cos we can’t trust you with the public finances’. You can’t trust this lot with the bloody tea money, let alone the public finances. Unbelievable isn’t it.

There is a deep sense of irony that when all this scandal on the expenses was beginning to break, parliament, MPs were voting through the welfare reform bill.

A welfare reform bill where people lose benefits, not for fiddling their benefits, not for fiddling at all but just because they simply don’t turn up for an interview.

A welfare reform bill, where we are forcing the long term unemployed to work, under workfair proposals where they will work for one pound seventy three an hour, contrast that with the £400 a month that some of the MPs have been spending, two-thousand pounds on plasma television screens, tens of thousands of pounds on mortgages which didn’t even exist.

Obscene? Of course it is. And no wonder people are pissed off quite honestly, no wonder. I’m angry as well ‘cos they bring us all down, they bring us all down.

You know the solution isn’t just about sacking the speaker, or a few corrupt, bent politicians, it’s just as the solution to the economic crisis isn’t just about getting rid of a few bankers.

The solution for this political crisis isn’t just about getting rid of a few MP’s, this is a systemic crisis, it’s a systemic failure.

And the political and economic crisis are not isolated, they’re two sides of the same corrupt, incompetent, unfair, and un-democratic system in which we live. An economic system which has created grotesque inequalities of wealth.

A society where 3 million children still live in poverty, whilst the rich pay less in proportion of their taxes than their own cleaners.

But also it’s a political system which has created vast inequalities of power, why, and we know, we see it everyday, a government permeated by big business.

Number 10 populated by advisors who have come from big business, lucrative jobs, or are going to lucrative jobs in big business.

Where we witness the farce of welfare reform, designed for this government by a venture capitalist, someone clearly expert in poverty and it’s experience.

Where former ministers who have awarded contracts to companies within months of standing down as ministers are employed as consultants by those companies and raking in anything in some instances from 50 and in some instances a 100 thousand pound a year.

And to be frank with you, where MPs will vote for what ever is put in front of them. What for? Just to be offered the chance of being a bag carrier to a bag carrier.

And this week, the reason I was in parliament yesterday is a classic example, we had before us a change in the standing orders of parliament, not as enlightening as the last debate I have to say, it was bringing forward a change in standing orders which would allow parliament to debate the new planning policies that the government is bringing forward on, nuclear power, on expansion of airports, on the major infrastructure projects that will design the future of our environment for generations.

And the government gave us the opportunity to allow us to debate those proposals. So I moved a simple amendment, that when we’ve debated them, can we have a vote. Labour MPs voted against even having a vote. We are voting ourselves virtually into irrelevancy, out of existence.

And yes, there are issues of morality, but I don’t think we should loose sight of the real morality that’s at stake in government and politics today.

Yes, be angry at the thousands of pounds that are spent on moats and mortgages and expensive meals. But I tell you, be angrier at the expenditure on immoral wars, Iraq and Afghanistan, and elsewhere, where thousands have died.

And yes, be angry at the expenditure of tax payers money on their extravagant lifestyles, but be even angrier at the extravagance of spending seventy-three billion pounds on trident when there are 3 million children, and 2 million pensioners still living in poverty.

And yes, be shocked at how much they consume, the food, the allowances, the TV’s and all the rest, but be more shocked that despite all we know now about climate change, despite all that we know, they are still promoting policies like airport expansion that will consume our planet.

And yes, be angry, at what they are spending on their second homes, but I tell you, be bloody angrier that after twelve years of a Labour government that hasn’t spent the money to house the 80,000 homeless families that we have in our country.

Be angry at that. And you know, when they wanted to keep their allowances private, I was angry at the privatisation of the jobs that we’ve seen over the last twelve years. The cuts in a 100,000 workers of this union.

But I say to you now, let’s not waste that anger, lets not waste it. Don’t waste that demand to change, otherwise this anger would be futile.

And if it’s diverted solely into stringing up a few MPs, enjoyable as that may be, if it is just diverted into that and the Tories are allowed to use it opportunistically to get them into power, or worse still if the revulsion of political practices of Labour and other MPs delivers people into the hands of the BNP, or even UKIP, that anger and that revulsion will be wasted.

I think our task, and the task of this union now is to link up with all those others who are angry as well.

Link up with all those others who want change, to channel the anger that people feel, to channel this exasperation into a demand for change, but real change this time.

We don’t want just a new parliament. That’s not what we are about. We want a new society. A society that’s based on rights. The rights at work, the right to a decent wage, the right to decent working conditions. The right to be safe at work, and yes to have a say and to be represented and yes, in many instances, to have that say through public and common ownership of our services.

A society that’s based upon rights at home. A right to a decent home. A right to a decent and clean environment, treatment when our children or members of our family are sick. Free education at all levels. A right to be free from poverty and a society which is fifth richest country in the world.

And yes, rights in our communities. Community institutions which have the power and resources at local level to tackle the problems that we experience. The need for homes, the need for safe areas, the need for a clean and green environment.

And yes, a local democracy that isn’t just about marking a ballot paper once every four years, but where we can all have a say and continual basis to change our society.

But it is also about the rights to control the destiny of our country. To own and democratically control our financial institutions so we can plan the future of our economy so that we no longer suffer the risk, the scourge of approaching 3 million unemployed.

To own and control our public services which are the foundations of any civilised society.

Ending the rip-offs and the privatisations. And yes, the right to a parliament elected that is truly representative of our country of all classes.

A government not appointed by patronage through the prime minister but elected by MPs and ministers elected directly by MPs.

And I say yes, as a Labour party member, a party which is not a degenerate bureaucracy, but a party where members take back the power to select their candidates to determine their policies and their programs and elect the party’s officers. And yes maybe just occasionally to elect the leader of the party in a democratic ballot.

This is just the start of this debate. The crisis can be exploited and will be exploited by the Tories and the fascists or we can harness the powerful surge of anger and revulsion amongst the people to determine that new society that we want. How do we go forward?

Well there’s various discussions and proposals. Some like Compass and the Guardian and others are calling for an immediate debate.

But that debate they want to contain within the political elite.

The political class, the very people who have corrupted our system so far. They are looking for some form of self-interested rotation within that elite. That sort of discussion, I think, is absolutely meaningless and ineffectual.

These are the very people who gave us Blair, supported Brown and now deifying Alan Johnson. All of them voted for the same wars, the same privatisations, the same attacks on our civil liberties and yes are now voting for policies that will cut our jobs, our services and yes even attack the poor on benefits.

And its interesting isn’t it. That there’s a consensus almost across all of them, all the political parties now. It’s a consensus that the economic crisis will be paid for by us, not them. Paid for by cuts in services, cuts in jobs, more unemployment, cuts in wages, and yes, and then they come for your pension.

We need now new voices. We need new political formations which reflect the breadth of the challenge to the status quo and to these vested interests. The government is talked about, and the prime minister is talked about convening conventions about parliamentary reform.

My view is that this change will only come about, not through parliament, not through MP’s, not through prime ministers but through us, through the people themselves, and I think PCS has a fundamental role working with others. We set up the trade union co-ordinating group to work with other unions.

Why don’t we invite other unions with us, to convene our own conventions? Invite other trade unionists from all unions, but also organisations that are campaigning in every policy field for the same changes we demand.

Why don’t we link up with all those others who are demanding fundamental change, the campaigners on climate change, the groups demanding decent incomes, decent pensions, the families who have got no homes, the asylum seekers, the most oppressed within our society, the cleaners on poverty wages that we mentioned earlier today in the debate.

The teachers, the public sector workers, the ones who are facing the cuts in privatisation, the people at the sharp end. They are the ones who should determine the new society that we want to create.

And it will mean new structures, new alliances, new formations, new methods for mobilising the demand for change. That’s what we need.

And you know it isn’t just about electoral politics. I tell you wherever necessary, wherever it is needed, it may mean direct action if parliament fails to give us a choice we have to relocate democracy from parliament onto the picket line and onto the streets.

If it comes to it, we have to seize the power again that the MPs themselves have so distorted. We can’t be spectators as party leaders and media commentators try to prop up this system which is so degenerate.

It’s time for us to seize the moment. Its time for us to seize the moment for change, and it takes courage, it takes courage to stand against the stream.

But if we don’t unite, if we don’t call upon others, if we don’t unite with all of those who are angry like us, all those who are coming under attack, all those who are entering into struggle already, if we don’t do that, they’ll simply reform the system, tidy up the expenses, give themselves all a wage rise, stuff their pockets yet again and carry on as before.

That’s not acceptable to our members, it shouldn’t be acceptable to us, so the demand we want now is change led by the people.

It’s about restoring democracy to the people themselves, it’s about getting rid of this degenerate bureaucratic system that we have, and restoring the rights that people demand.

Real rights to a decent home, a decent environment, a decent job, a decent education, a decent health service and security in the long term.

We as a union have always demonstrated that we are capable of leading that demand for change. From this conference, let’s put out that call to all those other unions and all those other organisations that want change like us to unite with us for this creation, not of a new parliament, but of new politics and a new society. That’s the challenge, let’s seize it. Solidarity.