Tuesday 28 February 2017 / 12:28 PM 2017 Press Archive / The Latest from Labour

John McDonnell speech to the British Chamber of Commerce

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Thank
you very much for the invite to speak here today.

We’re
meeting at a time of upheaval not only for British businesses, but for our
whole society.

The
vote to Leave the EU has created fundamental and unexpected challenges for us
all.

It
is forcing all of us to think more deeply than in the past about what kind of
society and country we want to be.

Businesses
are a critical part of that national conversation.

Particularly
as the Brexit negotiations get underway, it is essential their voice is heard
loud and clear – and listened to by government.

Action
is needed now on business rates, and I’ll come on to Labour’s own plans and
demands shortly.

But
more fundamentally, there needs to be a change of direction on the economy.

Too
often, governments have focused on the short-term gains, when they should have
been thinking about the future.

This
has meant cuts in government investment over the last six years, when the
economy has been crying out for essential investment spending.

It
meant that research spending by government fell by £1bn in real terms, at a
time when the gains from the application of science are so obvious.

Decisions
like these do not happen in isolation.

They
are the product of a Westminster political system with a short-term culture and
an excessive focus on what just a few economic hotspots can deliver.

And
the belief that government can do nothing for businesses and the economy has
damaged businesses and the economy.

Fundamental
mistakes in policy have helped lead us to a situation in which the productivity
of our economy now lags far behind similar countries.

It
now takes a typical British worker five days to produce what a typical German
or French worker produces in four.

Without
productivity growth, consistent improvements in most people’s standard of
living will be difficult to achieve.

That
failure on productivity means that we have lived through what Mark Carney has
called a “lost decade” for earnings as wage growth stagnates.

And
the forecasts currently indicate another lost decade ahead.

If
we are to turn this situation round, it will require government to take a lead.

But
too often on Brexit, Ministers have given the impression of placing their
narrow political positioning above the good of the whole country.

The
vote was to Leave and Labour respects that decision.

But
that vote to Leave is not the same as an excuse to damage the whole economy.

It
is simply not true that no deal with the EU is preferable to a bad deal.

No
deal is a bad deal – it’s the worst possible deal, with all the dangers
of WTO-only trading rules.

Labour
has always called for full, tariff-free access to the Single Market.

Nor
do we think that the Government should be using EU migrants as a bargaining
chip.

EU
migrants have made and will continue to make a huge contribution to this
country, whether in our businesses or in keeping our public services running.

But
those 3m migrants have been subject to a terrible uncertainty as this
government has failed to guarantee their rights.

It
is simply not acceptable to place people under that sort of pressure.

It’s
not even a convincing bargaining position to take, since there are 1.5m UK
citizens resident in other EU countries whose rights can also be placed on
hold.

Our
European partners know this, and won’t be swayed by attempts at tough talk from
London.

The
sooner the situation is resolved with a clear and unambiguous statement that EU
migrants currently resident here will have their rights protected, the sooner
the negotiation process can move on.

That’s
not only the principled position to take. It’s also popular.

And
it’s economically the most sensible, since it guarantees those currently in
work can remain in work, and plan for the future.

This
years’ Budget could be an opportunity for government to address the fundamental
issues of low investment and a lack of industrial strategy.

Unfortunately,
the signs are that this opportunity will be missed.

A
small amount of additional funding was pledged for public investment by the
Chancellor at the Autumn Statement.

With
interest rates for government at close to all-time lows, the economic case for
a major programme of government investment in infrastructure and research is
overwhelming.

A
consensus amongst business organisations, economists, and trade unions now
exists on this point.

However,
the increase in capital spend currently offered by this government does not
properly address the pressing need to overhaul our infrastructure across the
whole country, including new investments in road and rail.

Our
broadband provision, meanwhile, remains inadequate for a modern, developed
economy.

Labour
has committed to the delivery of a fully-fibre optic broadband connectivity,
across the whole country.

As
part of our commitment to invest, we will in government deliver the funding
needed to accelerate fibre to the premises, prioritising areas of clear
business need.

Labour
welcomed the publication of this government’s industrial strategy green paper.

It’s
a first move towards correcting previous mistakes.

Labour
want to see an industrial strategy with broad, cross-party support because this
would ensure the long-term stability such a strategy needs.

The
most successful economies now have governments that are prepared to act to
support them and their businesses.

That
doesn’t just mean protecting essential industries, like steel or chemicals.

It
also means moving to support new sectors and smaller businesses.

And
it means moving beyond some of the mistakes of the past and putting place and
regional development at the centre of our approach.

The
Government has to address, first and foremost, the regional disparities in
investment, and support for smaller businesses.

It
can’t be right that more than half the UK’s transport investment is made in
London.

Labour
will put in place a legal mechanism for public investment that will allow
Parliamentary oversight on regional capital spending per head.

We
want to see not only London, but the whole country, raise their game and the
huge disparities closed.

So
Labour will commit the £10bn investment needed to build a “Crossrail for the
North”, linking up the great northern from Liverpool right through to Newcastle
and Hull.

We
need also to unblock our financial system and put in place the mechanisms
needed to deliver loan capital to our businesses.

The
next Labour government is committed to establishing a National Investment Bank,
backed up by a network of regional development banks.

This
will be charged with delivering long-term capital to smaller and medium-sized
businesses in particular.

The
inability of smaller firms to access the finance they need for growth has held
back their potential.

And
the concentration of lending by our existing financial system in London has
meant the rest of the country has lagged behind.

Labour
will correct this bias.

We
want to see smaller firms succeed across the whole of the country.

But
there is essential action for businesses that can be taken right now, on
business rate revaluation.

The
growth of online retail is of course welcome for consumers who have benefitted
from price competition. However, we cannot let our high streets become a
wasteland of boarded up shop windows.

The
government risk letting our high street shops wither on the vine, and just so
they can play politics with their business rates.

The
revaluation of business rates due on 1 April has quite rightly caused uproar.

Whilst
few would disagree that a revaluation is long overdue, it has been handled
atrociously.

It
was delayed not for the best economic reasons, but for the best interests of
the Tories ahead of a General Election. It cannot be allowed to continue this
way.

And
it also cannot be right that whilst the average small shop will be hit by an
extra £3,663 in their business rates over the next five years, some large
retailers and online retailers will see a substantial fall.

The
revaluation doesn’t reflect how our economy has changed since the last one.

And
nor does it take account of the particular cost pressures smaller businesses
are now under.

Labour
have responded to fears about the impact of looming business rate hikes for
some businesses by calling on the Government to set up an emergency
transitional relief fund and take a series of measures to ease the business
rate burden for business.

Yesterday,
we hosted an urgent meeting with leading business organisations, including
representatives from the Chamber of Commerce, to discuss a radical shakeup of
business rates in the longer term.

We
believe that government action now is vital to reduce the impact on smaller
businesses, and move towards making the local business taxation system fairer
and closer to the real economy.

We’ve
called for a £150m a year for three years transitional relief fund to be
established, available to local authorities to distribute to businesses facing
a “cliff edge” in their rates bills.

We
want the shift from RPI to CPI uprating in rates to be brought forward three
years.

We
think, like yourselves, that this would soften the immediate blow to
businesses.

But
looking ahead, we think it is essential that plant and machinery are removed
from the business rates system.

It
cannot be right that companies seeking to do the right thing, and investing for
the future, are then penalised for doing so.

This
is the exact opposite of how the tax system is supposed to function, and
clearly out of line with best practice elsewhere.

For
a country facing the productivity slump that Britain is now experiencing,
additional taxation on investment like this cannot be justified.

Alongside
more regular revaluations, removing periodic and unmanageable hikes, Labour is
calling for a fundamental overhaul of the business rates system.

I
am calling on the Chancellor today to provide real and genuine support for
those business struggling next week.

We
cannot go ahead in the way we are if it could mean many businesses go to the
wall, and the jobs destroyed.

Businesses
in London have been particularly hard hit.

London’s
property values have been racing ahead of the rest of the country for years.

That
means small businesses in London are being hit with particularly heavy rates
hikes, and some no longer qualify for transitional relief.

Labour’s
emergency relief fund offers a lifeline to those businesses.

Labour
wants to support these businesses that are a cornerstone of our economy.

And
it’s becoming clear day after day, that Labour is the only party that is truly
on the side of small and medium sized business.

The
years ahead could be challenging for this country, and for its businesses.

I
believe that what the Chambers of Commerce represent is an essential voice for
businesses across the whole country.

By
taking on and representing the views of businesses in every community, you can
make a decisive contribution to how we address the challenges ahead.

That’s
not just about what’s good for the economy.

It’s
about being genuinely civic businesses – able to act locally to support their
communities.

But
that can only happen when there is also a genuinely supportive government.

Action
is needed immediately on business rates, ahead of the revaluation coming in to
force.

The
Chancellor must take the opportunity of bringing forward a programme, backed up
with money, that will address the immediate problems caused by revaluation.

But
over the longer term it means coming forward with a clear plan of action for
our economy.

One
that recognises the support businesses need and the essential role they play –
and that will break with the mistakes of the past.