View all newsletters
Sign up to our newsletters

Support 110 years of independent journalism.

  1. Business
  2. Economics
19 April 2018updated 24 Jun 2021 12:23pm

John McDonnell is trying to reassure the City that Labour doesn’t have a “shadow manifesto”

The shadow chancellor says “there are no tricks up my sleeve”. But business leaders fear the party would be more radical in power than it suggests. 

By George Eaton

When John McDonnell recently greeted a business executive, he quipped: “Hello, are you looking forward to having a Marxist in No 11?” But at Labour’s “Future of Finance” conference at Bloomberg’s new European headquarters, the shadow chancellor had a more reassuring message for the City of London. “There are no tricks up my sleeve,” McDonnell declared in his speech. “What you see is what you get.”

It’s a line McDonnell has used before. “We’ve got nothing up our sleeves,” he told Financial News last month. “There is no [hidden] side to us.” What explains this reassurance mission?

The fear in the City is that Labour has a “shadow manifesto”: a programme far more radical than its 2017 version. As a backbencher, McDonnell supported policies such as the nationalisation of the banking sector, a 60 per cent top tax rate and a wealth tax on the richest 10 per cent. In 2006, he described his “most significant” intellectual influences as Marx, Lenin and Trotsky.

Allen Simpson, the chief operating officer of Labour in the City (a group for supporters in financial services) and Barclays’ director of public policy, recently told me: “There is the question of a ‘shadow manifesto’, is there an alternative manifesto sat behind? I see no evidence of that.” The City has concerns over significant elements of Labour’s programme, most notably the renationalisation of privatised services (water, energy, rail, post) and the proposed rise in taxation to a record peacetime level. But most business leaders recognise this does not amount to a plan for the overthrow of capitalism.

As I’ve written before, Labour’s 2017 manifesto owed more to social democracy than Marxism (indeed, James Meadway, McDonnell’s chief economic adviser, once compared Jeremy Corbyn’s policies to those of the SDP). In many European countries it remains the norm for public utilities to be in public hands. Unlike the socialists of the past, Labour is not proposing to nationalise the “commanding heights” of the economy or the top 200 companies, still less abolish private property.

Select and enter your email address Your weekly guide to the best writing on ideas, politics, books and culture every Saturday. The best way to sign up for The Saturday Read is via saturdayread.substack.com The New Statesman's quick and essential guide to the news and politics of the day. The best way to sign up for Morning Call is via morningcall.substack.com Our Thursday ideas newsletter, delving into philosophy, criticism, and intellectual history. The best way to sign up for The Salvo is via thesalvo.substack.com Stay up to date with NS events, subscription offers & updates. Weekly analysis of the shift to a new economy from the New Statesman's Spotlight on Policy team. The best way to sign up for The Green Transition is via spotlightonpolicy.substack.com
  • Administration / Office
  • Arts and Culture
  • Board Member
  • Business / Corporate Services
  • Client / Customer Services
  • Communications
  • Construction, Works, Engineering
  • Education, Curriculum and Teaching
  • Environment, Conservation and NRM
  • Facility / Grounds Management and Maintenance
  • Finance Management
  • Health - Medical and Nursing Management
  • HR, Training and Organisational Development
  • Information and Communications Technology
  • Information Services, Statistics, Records, Archives
  • Infrastructure Management - Transport, Utilities
  • Legal Officers and Practitioners
  • Librarians and Library Management
  • Management
  • Marketing
  • OH&S, Risk Management
  • Operations Management
  • Planning, Policy, Strategy
  • Printing, Design, Publishing, Web
  • Projects, Programs and Advisors
  • Property, Assets and Fleet Management
  • Public Relations and Media
  • Purchasing and Procurement
  • Quality Management
  • Science and Technical Research and Development
  • Security and Law Enforcement
  • Service Delivery
  • Sport and Recreation
  • Travel, Accommodation, Tourism
  • Wellbeing, Community / Social Services
Visit our privacy Policy for more information about our services, how New Statesman Media Group may use, process and share your personal data, including information on your rights in respect of your personal data and how you can unsubscribe from future marketing communications.
THANK YOU

The party has pledged to raise the top rate of income tax to 50 per cent on earnings over £123,000 (and to reduce the 45p threshold from £150,000 to £80,000 – targeting the top 5 per cent of earners). But this remains below the top rate of 60 per cent which endured for nine years of Margaret Thatcher’s reign (1979-88). Corporation tax would rise from 19 per cent to 26 per cent, a rate seen as recently as 2011, and far below France’s 33 per cent and Germany’s 30 per cent. The party has only promised to “consider” a land value tax.

What of Labour’s pledge to invest £250bn in infrastructure? The total, as few note, is spread across a decade and would be funded by borrowing at the cheap rates the UK has long failed to take full advantage of. Annual investment would rise from 2 per cent of GDP (£40bn) to 3 per cent (£65bn) – the level achieved before George Osborne’s 2010 spending cuts. Such a programme would help redress Britain’s historic underspending on infrastructure, stimulate growth, improve productivity and raise living standards. And though they are denounced by opponents as “radical” and “dangerous”, all of the above policies enjoy widespread public support.

McDonnell’s mission is to convince the City that the party will remain within the social democratic mainstream. But in doing so, he faces a tough balancing act. The shadow chancellor must also reassure left-wing allies that he would take full advantage of his office if elected. The private complaint from some Corbyn allies is not that Labour is too radical – but that it is not radical enough.

Content from our partners
Development finance reform: the key to climate action
Individually rare, collectively common – how do we transform the lives of people with rare diseases?
Future proofing the NHS

Select and enter your email address Your weekly guide to the best writing on ideas, politics, books and culture every Saturday. The best way to sign up for The Saturday Read is via saturdayread.substack.com The New Statesman's quick and essential guide to the news and politics of the day. The best way to sign up for Morning Call is via morningcall.substack.com Our Thursday ideas newsletter, delving into philosophy, criticism, and intellectual history. The best way to sign up for The Salvo is via thesalvo.substack.com Stay up to date with NS events, subscription offers & updates. Weekly analysis of the shift to a new economy from the New Statesman's Spotlight on Policy team. The best way to sign up for The Green Transition is via spotlightonpolicy.substack.com
  • Administration / Office
  • Arts and Culture
  • Board Member
  • Business / Corporate Services
  • Client / Customer Services
  • Communications
  • Construction, Works, Engineering
  • Education, Curriculum and Teaching
  • Environment, Conservation and NRM
  • Facility / Grounds Management and Maintenance
  • Finance Management
  • Health - Medical and Nursing Management
  • HR, Training and Organisational Development
  • Information and Communications Technology
  • Information Services, Statistics, Records, Archives
  • Infrastructure Management - Transport, Utilities
  • Legal Officers and Practitioners
  • Librarians and Library Management
  • Management
  • Marketing
  • OH&S, Risk Management
  • Operations Management
  • Planning, Policy, Strategy
  • Printing, Design, Publishing, Web
  • Projects, Programs and Advisors
  • Property, Assets and Fleet Management
  • Public Relations and Media
  • Purchasing and Procurement
  • Quality Management
  • Science and Technical Research and Development
  • Security and Law Enforcement
  • Service Delivery
  • Sport and Recreation
  • Travel, Accommodation, Tourism
  • Wellbeing, Community / Social Services
Visit our privacy Policy for more information about our services, how New Statesman Media Group may use, process and share your personal data, including information on your rights in respect of your personal data and how you can unsubscribe from future marketing communications.
THANK YOU