The shadow chancellor is set to pledge “new economics” in his first big speech to Labour’s party conference, aiming to convince voters his outlook for the UK economy is a viable one.
John McDonnell will propose a review of the major economic institutions, a bigger economics role for the business department and a new remit for the Bank of England.
During his conference speech in Brighton, McDonnell will emphasise the need to bring the current account deficit under control and will vote for the new charter of budget responsibility set out by George Osborne – due to be endorsed by parliament.
A group of ten trade union leaders stressed McDonnell should not tone down Corbyn’s promises made during his leadership campaign, saying he must “stand up to any attempts to undermine his democratic right to lead the Labour party and the programme he has supported”.
The shadow chancellor will say a future Labour government will live within its means, invest to grow the economy and share proceeds more equally. McDonnell also told the BBC some may be disappointed with his speech as it wouldn’t contain “all the exciting things” written about by the media.
The Hayes and Harlington MP said reports he was planning significant tax increases were wrong. He is set to outline the strengths of a “Robin Hood tax” on stock market trading, to help stem the City’s excesses, while helping to provide improvements to public services.
McDonnell recently told a fringe meeting that he had reached an agreement with shadow business secretary Angela Eagle over the controversial Financial Transaction Tax, and intends to launch an “open” debate within the party, hoping to turn it into party policy.
“We are going to launch a review of our taxation system, we are going to bring the greatest economic minds in the world to bear on that issue, we are going to consult with the British people and then we will arrive at a decision on the way forward,” he said.
The shadow chancellor has appointed a range of eminent economics advisers to help build macro-economic policy at meetings once every quarter. Thomas Piketty and Nobel prize-winning economist Joseph Stiglitz are among those involved.
McDonnell has said he will review the role of the Treasury to focus on fiscal policy and revenue collection, along with a commitment to ending corporate tax evasion. McDonnell said income tax “isn’t the big issue for me”, with cracking down on tax evasion a priority.
He is also likely to call for the Bank of England mandate to be widened, so that it has a brief looking towards how to achieve economic growth – rather than just keeping inflation under two per cent a year.
McDonnell wants access to the Office for Budget Responsibility and the Treasury model, as well as to the Bank of England models in order to test out his policies. “Everything we put forward as a policy we are going to test and test again rigorously,” he said.
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