Shadow chancellor John McDonnell warns City: ‘People want change… get used to it’
It’s fair to say that John McDonnell does not see the world in quite the same light as most City workers.
During the first Budget after he became shadow chancellor, McDonnell quoted from Chairman Mao’s Little Red Book, before flinging it at his then-counterpart George Osborne.
Years earlier, he was caught on camera saying he had been “waiting for [the 2008 financial crash] for a generation”.
More recently he’s argued that Venezuela’s troubles are because the country isn’t socialist enough.
But his press man says it’s time to take McDonnell seriously as a chancellor-in-waiting. So when we meet the first question has to be: Do you still want to overthrow capitalism?
“I want to transform capitalism,” he replies without pausing.
“So do most other people I know, including those who work in the City… There is something wrong with the system itself which needs transformation. We are sixth or fifth biggest economy in the world and yet at the same time we can’t house our own people, a million foodbank parcels handed out last year – that is a system that’s not working.”
McDonnell argues that, instead of the wealth “going into the City, which is then going into property speculation” it should be “properly invested, so we have an economy that is economically and environmentally sustainable, that when we create prosperity it is shared by everyone”.
Read more: John McDonnell launches anti-austerity tour of ‘neglected’ UK communities
He shrugs off the suggestion that the City might be nervous about his support for radically higher levels of redistribution, or that his aims could be achieved without a wholesale change of the model.
“Nobody in the City wants to step over a homeless person sleeping,” he says. “I think people underestimate the altruism that there is in the City, about wanting themselves to transform society.”
And if they don’t like what he’s selling? McDonnell is unflinching on that point too. “People do want change, and these [policy] areas will happen, so get used to it,” he says.
On Labour’s financial transaction tax, for example: “You won’t like that, fair enough” – but it will be used to pay for education and skills “that you will benefit from”.
He has been busy meeting Morgan Stanley, Santander, Royal Bank of Scotland and many other financial companies, so that they know what a Labour government would bring with it – urging them to “move along from their expectations of him as a card-carrying Marxist “who’s going to nationalise you all and send you on a re-education camp”.
At the same time, McDonnell freely admits that he has built his own reputation – he has even been known to end City meetings by thanking the “comrades” – and acknowledges the reaction from the financial sector tends to be “yeah, we are wary of you”.
McDonnell believes the best way for him to counter the City’s scepticism of him is by being straight – he’s promised in speeches to the City that there are no tricks up his sleeve.
Read more: John McDonnell wants the Bank of England to target productivity growth
But while his meetings are aiding Labour’s engagement with the Square Mile, they do not appear to be winning him widespread support.
Sources tell Morning Wirethey still fear the opposition can’t be trusted.
After last week’s broadside against financial services from leader Jeremy
Corbyn, one source said: “They’re speaking with forked tongues. We just don’t know how things would pan out under them. The City is incredibly nervous [about a Corbyn
Government].”
McDonnell stands by Corbyn’s speech, in which the party leader said that the London financial sector’s success was “linked to the demise of industry” in other parts of the UK.
Making several swipes at the City, Corbyn said that an “unregulated bankers’ rip off… has dehumanised our values and our economy”.
Commenting on the speech, McDonnell said it’s right that the government invests in manufacturing and attempts to rebalance the economy, both sectorally and regionally.
“We are sucking the talent out of those northern areas,” he says.
“All they want is the infrastructure in place to develop those ideas… The concentration [in London] means in the longer term we will fall flat on our face… The state can be the entre-
preneurial state that helps with the development of initial product – you’ve got to be an interventionist state at that level.”
Read more: McDonnell admits Labour is ‘walking a tightrope’ on Brexit
More generally McDonnell stands by Corbyn’s sometimes antagonistic stance towards the City – last year the Labour leader said Morgan Stanley should view him as “a threat” – and says the role of chancellor should be “an honest colleague” of the sector.
Indeed, it’s clear the wariness is not all in one direction. McDonnell believes the City still has “real issues” culturally that must be tackled.
“It is greed,” he sighs. “We seem to have in-built into our system a fast-buck psychology in some areas of the City.”
In the autumn Labour will bring forward proposals around “harnessing” the City for longer-term benefit but McDonnell says there are signs of change already.
“There’s a level of debate now that wasn’t possible a few years ago,” he
says. “Maybe because people are having to come to terms with us as a possible government.”
But that still seems far off. Last week’s YouGov poll showed voting intentions were a dead heat between Labour and Conservative, while both Corbyn and Theresa May lost out to
“Don’t Know” as the country’s choice of Prime Minister.
But McDonnell rubbishes suggestions the opposition should be performing better in the face of a shambolic May government, arguing that Brexit – which he acknowledges Labour is “walking a tightrope on” – is overshadowing everything.
“We need another five or six per cent, so when we go to the next General Election campaign that is what our objective will be and that is what we will get and we will go into govern-
ment,” he says, confidently. And that could be sooner than you think.
“If the government hasn’t secured a deal by this autumn… we should force them to stand to one side,” says McDonnell. “If they’re not willing to, let’s just call a General Election.”
While it remains unclear how Labour would force an election, the City can no longer dismiss the prospect of Corbyn and McDonnell gaining the keys to Downing Street at some point in the coming years.