John McDonnell tells the City: "There's no tricks up my sleeves"

Catherine Neilan
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Shadow Chancellor John McDonnell Delivers His Keynote Speech To Labour Party Conference
Nothing up my sleeves, McDonnell promises (Source: Getty)

John McDonnell has insisted there will be “no tricks up my sleeves”, as he today attempted to win business leaders over to the idea of a Labour government.

Speaking to members of the London Chamber of Commerce and Industry at the luxury hotel The Goring, the longtime Marxist said financial services should be “enormously welcoming” to a Jeremy Corbyn-led government.

Harking back to his days in the early 1980s as the chair of finance for the Greater London Council, McDonnell said the “good, constructive relationship” he had with the City then could be replicated with him in charge of the Treasury.

“They knew where we were coming from: they could, with their investment, ensure a reasonable rate of return on a steady, consistent basis… there was nothing up my sleeve…. And that’s what we’re trying to say now. This is what we are about, there’s nothing up my sleeve, there will be no surprises.”

It comes just days after City A.M. reported that Labour is scenario planning for a run on the pound and capital flight should it come into power.

Today McDonnell told the delegates the party wanted to “test our ideas almost to destruction” and that it had an "open door policy" with that in mind. McDonnell revealed he has been holding roundtables with businesses from a number of sectors, including a series of meetings with asset managers.

“When we go into government, you will go into government”, he added.

“Those asset manager conversations have been really good [although] they get a bit surprised at the end when I say ‘thank you comrades’,” he added.

Separately, McDonnell told City A.M. he was asking the financial sector for “long-term stable patient investment… and the response I’m getting is ‘that is what we want, because we just want a steady return’.”

He rejected suggestions that Corbyn’s warning to banks that they should view Labour as a "threat" could undermine this future relationship.

“We are a threat to those organisations and individuals who are not performing in the way that is of benefit to the country, and our ripping us off,” he said. “Those organisations and individuals who are providing essential services to our country and our economy, I have nothing but respect.”

“But those who are ripping people off and ripping our country off can’t be tolerated... What we are saying is, people who are exploiting tax havens and avoiding paying taxes - they should be ashamed of themselves.”

McDonnell also joined calls for the FCA to publish its report into RBS-GRG immediately. “I don’t understand why it hasn’t been,” he said. Once it is published, “we can then take a decision about whether the FCA has acted appropriately,” he added.

McDonnell was speaking a day after Theresa May vowed to "win the battle of ideas and to defeat socialism today as we have defeated it before.”

Speaking at the Conservative fundraiser the Black and White Ball, the Prime Minister told party donors “Around the world, we see a rise of populism, nationalism and protectionism. We see the great positive forces of free trade, economic liberalism and the rules-based order which sustains them under threat... And we see the same underlying truth here at home, too. Jeremy Corbyn and the Labour Party are exploiting populist politics.

“And what do they offer? Massive renationalisation. Capital flight. A run on the pound. That all leads to a bankrupt Britain."

Business groups have previously slammed McDonnell's plan to nationalise PFI contracts as "the wrong plan at the wrong time".

Today, LCCI chief executive Colin Stanbridge told City A.M. the shadow chancellor was "a very persuasive speaker" but added: "The proof of the pudding is in the eating."

"When you’re in opposition it is easy - and all oppositions do this - to speak in broad terms. What business people will want to know is the details of how Labour’s policies would affect business community and the community in London.

"It's about having more details - that is what will convince business people one way or another."

Iain Anderson, executive chairman of City lobby firm Cicero, said there was "a huge appetite" by financial services firms to engage with Labour - but that both sides were at an "impasse". Concerns around initiatives like nationalising PFI contracts made investors nervous.

"Long-term investors are wondering 'how secure is that investment going to be?'," he said. "There is concern that the ground rules keep changing."

Anderson noted that Labour was missing a trick on Brexit, saying that if the party took a firmer stance in backing the Single Market and customs union as options it would find greater support from within the City. Today McDonnell said Labour favoured staying in "a" customs union, but distanced the party from the softer approach.

It's not just the renationalisation programme that could upset a burgeoning relationship between Labour and the City however. Plans for the financial transaction tax - which McDonnell himself acknowledged wasn't liked in the industry - is still an area where the two sides "don't see eye to eye", according to one industry insider.

A City of London Corporation spokesperson said: “We welcome the engagement from Labour with the City.

"This gives us the opportunity to discuss a wide range of topics and we are in full listening mode about potential policy proposals.

“However, we still have firm views on ideas like a muted financial transaction tax which would harm our competitiveness and come at the expense of jobs and growth.”

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