John McDonnell was one of the few Labour MPs who never doubted that the party would exceed expectations at the general election. As he delivered his third conference speech as shadow chancellor, McDonnell basked in this success (with Jeremy Corbyn still photographing him like a proud father). “I said then in interview after interview that the polls would narrow and we should shock them all,” he recalled. “Not many believed me.”
But alive to the charge that Labour has become a mere protest movement, McDonnell set his sights higher: “We have proved that we are an effective campaigning party. We now have to prove that we will be an effective governing party.”
The shadow chancellor sought to situate Corbynism within the Labour tradition, hailing the Attlee and Wilson governments but also “the Blair-Brown government that recognised and delivered the scale of public investment that a 21st century society needed.” At the dawn of “the fourth industrial revolution,” he declared, “it is a Corbyn Labour government that will rescue our country from the long years of austerity.”
Though he offered an olive branch to New Labour, McDonnell’s policy platform represents a rupture. His new policy announcement was a commitment to end the Private Finance Initiative (PFI), the programme under which infrastructure programmes are funded by private, rather than public capital (ultimately at exorbitant cost to the state). Labour, McDonnell vowed, would not only sign no new PFI deals but would “bring existing PFI contracts back in-house”. The upfront cost to the government would be significant but Labour’s fiscal rules, unlike the Conservatives’, wisely distinguish between current and capital spending.
There was another standing ovation as McDonnell also pledged: “Rail, water, energy, Royal Mail- we’re taking them back.” But the shadow chancellor sought to erase the impression that Labour are merely big, rather than wise, spenders. “The Tories have borrowed more than any Labour government ever,” he accurately noted, promising to “eliminate the deficit and reduce debt” in office.
But looming over McDonnell’s speech was the spectre of Brexit. The UK’s exit from the single market and the customs union could deal an economic blow that renders Labour’s plans undeliverable. On Brexit, McDonnell, a lifelong eurosceptic, said little. He warned the Conservatives not to downgrade workers’ rights or environmental protections but made no mention of the single market (long regarded by the Labour left as an obstacle to socialism).
At this year’s conference, Labour’s Brexit compromise has endured. But as McDonnell knows, by next year, the stakes will be higher. “As we go into government, you know we will have to clear up the mess the Tories will have left us,” he told his audience. How great that mess is hinges on Brexit.