Labour sets out economic plans
The FT's Jim Pickard and Sebastian Payne discuss the highlights from shadow chancellor John McDonnell's speech on the UK economy.
Produced and filmed by Petros Gioumpasis.
We'll bring existing PFI contracts back in hand.
Hello, and welcome to the labour party conference in Brighton. I'm Sebastian Payne, the FT's political leader writer, and I'm joined by Jim Pickard, our chief political correspondent, to talk about John McDonnell's big speech to the conference, which happened just behind us. Jim, tell us what John McDonnell announced. There was some new stuff and some old stuff.
So when you see John McDonnell on the broadcast media, he often comes across as kind of re-assuring, bank manager type of character, and it's easy to forget he's got a very radical past on the hard left of his party. And in the speech we saw just now, we saw him going further than the manifesto from June with some policies which were quite left-wing and involved capping the interest charges and credit cards, involved more detail on nationalising various different industries, whether water, rail industry, or energy, and also the big surprise, the rabbit out of the hat if you like, was his intention to potentially take in house all his controversial PFI schemes.
So the PFI schemes are a controversial initiative where private companies would fund public hospitals and all that sort of thing. And no one really wants to defend them-- conservatives or labour. But the announcement Mr. McDonnell made was not quite as clear as first appeared, because he said we're going to bring them back in house. That's not quite exactly what they're going to do, is it?
You're absolutely right. That PFI is not very popular these days. Even George Osborne, the former Tory chancellor, basically said we're not going to do that anymore. But there are all these schemes out there, lots of private companies involved, and they're now going to be trying to work out what on earth the shadow chancellor meant. Firstly, he said we're going to it, but then he put out a statement saying we will do it if necessary.
We'll review it.
So they're going to review it. So there's a question over whether it will happen. There's a question of whether those companies will get full compensation. And there's also a question of whether it would occur straightaway or whether maybe they would let the contracts lapse, at which point they would then take them back into state control.
This is all part of a changing sea direction towards business and the labour party, because at last year's conference, businesses really didn't think they had any chance of being in power, so they sort of really ignored what was going on here. But since June's election, it does look like Jeremy Corbyn could be prime minister and John McDonnell could be shadow chancellor. So this is why their policy is getting much more scrutiny and this kind of stuff like the PFI is getting examined properly.
A lot of people were complacent about labour's chances in the run up to June-- the mainstream media, Whitehall, who barely did any planning for labour victory, and yes, business. And there are an awful lot of people in seats coming down to Brighton amongst the kind of trendy young momentum activists, maybe visiting slightly different fringe events. And they are trying to find out what would a labour government mean for my industry, for my executives, how much tax we would have to pay, and all the rest of it.
And there is increasing concerns on issues such as what one executive said to me this morning would be a labour proposition for the highest minimum wage in Europe. They're also concerned about labour's hostility to the gig economy. And of course, the nationalisations, the high corporation tax at 26 p, and the high personal rates of income tax for the very wealthy as well.
And finally, do you think business will be at all reassured by Mr. McDonnell's speech today?
No, not at all. I think quite the opposite, because the whole PFI thing-- I mean, it's one industry. It's construction. But it's just raising the prospect of something potentially hugely radical, credit card companies on high alert as well. I think most industries are going to face some kind of intervention one way or another, whether you agree with that or not, their executives are going to be a little bit concerned right now.
Jim Pickard, thank you very much.