Saturday 3 March 2018 / 12:15 PM Economy / John McDonnell / Local Government

John McDonnell speech to Labour’s Regional Economic Conference in Southampton


Speaking at Labour’s Regional Economic Conference in Southampton, John McDonnell MP, Shadow Chancellor, said:

I’d like to thank everyone for attending today in what promises to be a packed day of debate and discussions.

We’ve been running a series of these economic conferences up and down the country over the last two years and what’s been striking is the level of engagement from every quarter.

We’ve had venues everywhere from Liverpool to Newcastle, to Bristol and London, packed with people wanting to debate the issues and discuss policy.

It’s a tribute to our movement that we can raise the level of the economic debate like this.

Because we absolutely have to – the task ahead of us is huge, and for as long as this Tory government stays in power, it becomes more daunting.

But we have to face up to it. We in Labour have high ambitions for this country. Our discussions need to match them.

We want to build an economy and a society that is fairer and more prosperous, where everyone has a decent chance in life, and where our public services, paid for by fair taxes, are the best in the world.

But every day that passes with the Tories still in power is a day that we walk further and further away from that.

The damage being done to our public services – in fact, the damage being done to the very idea of public service – by austerity and privatisation is now immense.

Here in Southampton, the local authority has already seen more than £30m loss in its spending power and where a further £10m of central government cuts are still scheduled.

The cuts mean £227 per pupil cut from schools funding across the city.

Across the South-East, 53 libraries have been closed since 2010.

Across the country, year after year after year of austerity has stretched local authorities to what the head of the Local Government Information Unit has rightly called “breaking point”.

I want to pay tribute to those local councils who have strained every sinew to deliver our essential local services in the face of overwhelming funding cuts.

But the truth is that councils are, today, coming to the end of the line.

Three-quarters of local authorities have no faith in the sustainability of their own finances.

One in ten expect to make cuts, this year, that will affect the services they are legally obligated to provide.

Some of our most vulnerable people are the most exposed to Tory austerity. Children’s services are in an appalling crisis.

Spending on early intervention has fallen by more than 40%, even as costs and demand rise.

The All-Party Parliamentary Group inquiry into children’s care warned last year that 9 out of 10 councils were, even back then, struggling to meet their legal duties to provide care.

Across the South-East, 68 children’s centres have closed.

The President of the Association of Directors of Children’s Services said: “we cannot go on as we are”.

Yet the shortfall in their funding is set to reach £2bn by 2020.

Our social care service needs another £1bn this year, just to see it to the year’s end. More than one million vulnerable elderly people have been left without the care they need.

Austerity measures now, today, are creating an existential crisis in our most important public services. The public realm itself is under threat from the relentless, never-ending pressure of spending cuts.

And they never do end under the Tories. The deficit was supposed to be eradicated in 2015. Then 2016. Then 2017. Then 2020.

At Autumn Statement last year, Chancellor Philip Hammond suggest we might, finally, be wrapped up by 2025. But the official forecasters think it more likely we will get to 2031 before the whole deficit is cleared.

This is an appalling record, in every respect. Lives have been destroyed and millions left in despair.

There is a crisis in our local and national economies. Yet the Tories are bizarrely saying they will pass up an opportunity this month to act.

In fact, they are so desperate to play down the Spring Statement in two weeks’ time and hide from their record they refuse to publish any documents and have moved the day from the usual Wednesday after PMQs.

The Chancellor will do anything to look after himself and delay making a decision to help our struggling communities and our economy.

That is why he is continued with his failed economic policy of austerity, and letting local Councils act like human shields having to carry out his cuts.

Things have got so bad that even the Tory leader of his own local Council in Surrey has demanded help and warned that they face a “financial crisis” otherwise. If his own local Tory council leader doesn’t trust his main economic policy, why should anyone else in country?

But the challenge of creating public services and a public realm worthy of the name is just the first task we will face in government.

The pace of technological and social change is accelerating. There will be challenges for our government in making sure our tax system works fairly, and in making sure the huge potential of artificial intelligence and automation is used for the benefit of the many, not the few.

Perhaps greatest of all these challenges is climate change – which is happening, and happening as a result of human activity.

In Africa and across the world more exposed to its impacts, the results of rising average temperatures are already clear in the loss of farmland, poor harvests, and pressure on fresh water supplies.

Of the warmest years on record, three were in the last four years. Weather patterns in general are becoming more unstable.

We are not seeing the full force of these changes in the UK as yet, but the scientific evidence points towards them becoming clear over the next decade or so.

One estimate has placed the potential costs of a three-month drought at £35bn. Or the losses from environmental damage to livestock farming at £30bn.

These are cold, hard, economic risks arising from climate change and wider environmental degradation.

That’s why the next Labour government will ask the official forecasters, the Office for Budget Responsibility, to include not only the impacts of an aging population on its long-term forecasts, but also the impacts of climate change and environmental damage.

We want every part of government, from the top to the bottom, including even the Treasury, to start factoring climate change into its planning.

Because to build an economy that works for the many, not the few, we need institutions that work for the many, and not the new.

So we need a cultural change right across Whitehall and the core of the civil service.

One that thinks about more than just what the City of London or a few big employers may want today.

But instead that can think seriously about what the rest of the country might want and need not just today, but tomorrow, the day after, and well into the future.

Short-term thinking in our economic institutions has blighted this country’s prosperity.

It means that instead of investing, too often our companies have looked to pay dividends to shareholders, before putting their money into the skills and new technologies that will secure future prosperity.

So that last year, dividends paid out by UK companies reached a record £94 billion – but investment in manufacturing is still lower today than in 2008.

This has real consequences. Whilst the rest of the world moves into the fourth industrial revolution of AI, automation, and robotics, Britain has the lowest usage of robots in manufacturing of any major developed economy.

Some of the worst examples of short-termism have been in our outsourced and privatised public services.

So Carilion paid out higher and higher dividends every year for the last sixteen years – but its pensions deficit is now nearly £1 billion.

It’s a glaring example of how short-term thinking poisons the real economy, and its why the next Labour government will bring those PFI contracts back in-house, and end the privatisation racket.

Our election Manifesto committed us to bringing water, electricity, gas, the Royal Mail and trains back into public ownership.

The Tories and their press supporters have screamed blue murder about this.

But the policies are popular – 70 or 80% support for bringing essential public services like the utilities into public hands and public control.

People recognise the failings of the 30-year privatisation experiment.

But we’re not going to turn the clock back. We want new, more democratic forms of public ownership that place essential services in the hands of those who work on them, and those who use them.

Who, after all, knows best how to run a service, than the people who are actually running that service?

So as we develop our programme, through events like the Alternative Models of Ownership conference, we’ll bring forward ideas to make new, publicly-owned institutions that are more transparent and more democratic.

But we have to go much further than this.

The ideas we’re discussing today aren’t only about correcting the mistakes of the past – although we have a job to do here.

They’re about looking to the future.

There’s sessions on building a new, sustainable economy, and on the fourth industrial revolution.

There’s a session on making the tax system fair, and bringing public assets back into public ownership.

And unlike the Tories, who cannot seriously discuss Brexit for fear of upsetting one faction or another, we have a session on the future of the economy right here in the South-East after Brexit.

Let’s be clear about this: unlike the Tories, where Brexit policy is ultimately determined by whichever backbencher with a grudge can shout the loudest, Labour’s principles have always been clear.

We respect the result of the referendum because we are democrats and because, unlike some commentators, we think that people took their vote seriously, and deserve to have their vote taken seriously.

But it is now up to us, as politicians and as a Party, to offer a clear vision of what the country could be like after Brexit.

The most the Tories can promise us is that they don’t think it will be a “Mad Max-style dystopia”.

We need to raise people’s sights, and we need to bring the country together again.

We can only do that by showing in clear, specific, real terms what a new relationship with our European partners might mean.

The programme Labour has begun to lay out, and that Jeremy helped clarify earlier this week, begins to do just that.

First, our priority in negotiations is to protect our economy. Unlike the yahoos on the Tory Right, we are not about to drive the economy over a cliff, keeping our fingers crossed that somehow this will turn it into the low tax, low regulation nirvana that Jacob Rees Mogg and others dream about.

We’ll fight to protect jobs, services, and standards.

So as part of that Labour will push for the UK to remain in a customs union with the EU, helping our businesses to trade and keeping our economy open.

We want to have a close, co-operative relationship after Brexit with our closest trading partners and longstanding allies.

We’re doing this because we’re internationalists. We don’t believe in pulling up the drawbridge at Dover and peering out at the rest of the world.

But real internationalism, for me, doesn’t putting a big tick next to everything the EU does. We can’t, for example, support the austerity measures forced by the EU institutions across the continent in the euro crisis, and now written into EU law.

As internationalists we warned that austerity was a gross mistake, at best, that would sow the seeds of resentment and bitterness that are now growing into a far-right movement rising across the continent.

We can’t support those EU rules that would block a future government, here in Britain or anywhere else, acting in the interests of its people to rebuild industry, protect jobs, or bring public services back into public ownership.

And we won’t sign up to free trade agreements that give away the NHS or force through yet more privatisation.

Labour campaigned for remain and reform in the referendum, and – as the vote to Leave demonstrated – the case for the reform of the EU is compelling.

As Jeremy said on Monday, the EU is neither the source of all our problems – nor the light of the world.

Real internationalism means standing alongside others across the world, and building the alliances and partnerships that we need to tackle the global issues, from climate change to tax avoidance.

And it means building an economy that is always open to new ideas and talent, wherever they come from.

Our prosperity, today, in Britain is built on two foundations: the skills, talents, and efforts of the people who work here, the real wealth creators; and those institutions that we have created, from the NHS to our universities, that help sustain and spread our shared wealth.

The Tories threaten all of this. But if we have an alternative vision of what a post-Brexit economy might look like, it should be one in which government supports, rather than hinders the creation of real wealth.

Instead of supporting the rent-seekers and the financiers at the top, it means a government able to implement an industrial strategy that creates real, secure jobs.

Instead of cuts to public services, it means a government able to deliver the funding needed to sustain 21st century public services.

Instead of removing subsidies to renewable energy, and cutting research funding, it means a government that will deliver the investment new ideas and new technologies need so they can deliver for society.

And instead of undermining our institutions, even our democracy, we’ll build new, more democratic economic institutions that give real control back to working people.

It means a government that is committed alongside the whole labour movement to building a society that is radically fairer, radically more democratic, and more prosperous, in which that prosperity is sustainable and shared by all.

That society has a historic name. It’s called socialism.