Labour shadow chancellor John McDonnell has promised he has 'no tricks up my sleeve’ in a speech addressing his relationship with the City, but said he will advocate ‘radical’ interventionary policies.
Speaking to a finance sector audience at Bloomberg’s new London HQ, he said that a future Labour administration would be ‘open and transparent about [its] plans’ but that he expected both income and corporation tax to rise and market intervention, for instance via transaction taxes, to also increase.
At a fringe event at last year’s labour party conference McDonnell revealed that his office was planning for a highly negative market reaction to a future general election win, including the possibility of a sustained run on the pound and capital flight.
While he said that he would disappoint those expecting a ‘raving extremist’, he explicitly linked the post-1970s period of liberalisation to the 2008 financial crash and ensuing lost decade of stagnation.
‘We are completely open and transparent about our plans,’ said McDonnell. ‘There are some policies that you will like and some of which you will be less enthusiastic about.
'I don’t expect some people to be overjoyed at having to pay a bit more in income tax or corporation tax or at the introduction of a financial transaction tax.
‘But most people recognise with us the need for large scale investment in both our infrastructure and new technology and also in human capital with investment to raise standards in our education system, training and research and development.
‘When we go into government, we want you to come with us, alongside representatives from our manufacturers, our trade unions and wider civil society. There will be a seat at the policy making and policy delivery table for you.’
He pledged that the party would go no further than a manifesto pledge to renationalise the railways and water companies and would leave the Bank of England’s mandate unchanged.
A life-long anti-capitalist, who bought a copy of Chairman Mao’s Little Red Book to his response to the 2015 budget announcement – admittedly in a mis-firing attempt at a joke – McDonnell has been on a charm offensive in the last year, visiting the Davos World Economic Forum in January.
The speech appeared to step back from some of the commitments in the party’s 2017 manifesto, which included a rule banning banks from closing loss-making branches and creating a fiduciary duty on directors to meet social outcomes.