Some business and City figures are pleasantly surprised when they meet John McDonnell during his “cup of tea offensive”. The shadow chancellor comes over as polite and reasonable, hardly the Marxist firebrand who admits his goal is to overthrow capitalism. He reassures his hosts he has no hidden agenda, saying that if they can come up with a better way to achieve his aims, he will adopt it.

Those business people will be feeling rather less assured now that Mr McDonnell has put more flesh on the bones of Labour’s economic policy. Business leaders are accusing Labour of pursuing an anti-business agenda, planning a tax raid on companies and putting productivity, competitiveness, investment, jobs and living standards at risk. It is a familiar charge sheet when politicians come up with radical ideas, and Mr McDonnell does certainly not lack radicalism.

John McDonnell says Labour ‘are ending the profiteering in dividends, vast executive salaries, and excessive interest payments’

Determined to switch the spotlight from divisive internal debates on Brexit, antisemitism and Labour’s rule book, he served up a rich diet for his audience at the party conference in Liverpool. Firms with more than 250 workers would have to gradually hand 10 per cent of the equity to its employees. According to Labour, almost 11 million workers could receive a total of £4bn in dividends within five years and up to £500 a year per worker after a decade. Employee shares would be managed collectively by representatives elected by workers, who would also take up a third of the seats on the boards of such companies.

Of course, some firms might try to find a way round these rules if Labour came to power, perhaps by moving their base abroad or not paying dividends. But corporate governance is long overdue for an overhaul. Theresa May talked a good game but her plans, which once included forcing companies to put workers on boards, have been diluted. While the anxiety of business, already high amid Brexit uncertainty, is understandable, it cannot be trusted to put its own house in order. Dividend payments have rocketed while wage stagnation is on course for its worst period for 200 years. Labour’s proposals have merit and deserve a fair hearing.

Mr McDonnell also outlined how Labour intends to bring the water industry back into public ownership. It would be run regionally by councils with workers, trade unions, environmental and community groups on their boards. The mutualisation model might not be replicated precisely for the rail and energy sectors and the Royal Mail, Labour’s other targets, but its direction of travel is clear. It would certainly be better than reverting to old-style, top-down state ownership.

Existing shareholders would be compensated with government bonds at a level decided by parliament, and at neutral cost to the public purse. Labour dismisses estimates that renationalising water would cost up to £90bn, saying this figure does not take account of future profits, but is coy about the higher borrowing its proposal would involve.

Its renationalisation plans are popular, according to opinion polls. While its aims may be laudable, the party must make sure its sums add up, and publish realistic costings of the impact on borrowing before a general election, rather than hide behind a cloak of commercial confidentiality.

The high-profile shadow chancellor was also evident in Labour’s intense debate on Brexit. A truce struck after five hours of heated negotiations on Sunday night over whether Labour should back a Final Say referendum proved very short-lived. On Monday morning, Mr McDonnell endorsed a referendum if Labour fails to secure a general election but interpreted the compromise motion to be put to the conference on Tuesday as meaning the party would not offer voters the option of remaining in the EU. Yet a proposal to restrict a referendum to “the terms of Brexit” was defeated in Sunday’s talks.

So Sir Keir Starmer, the shadow Brexit secretary, was right to argue that the motion does not rule out a Remain option. Given the growing body of evidence that Brexit was missold in 2016, The Independent believes EU membership should be on the ballot paper.

Labour should use Tuesday’s conference debate to clear up its confusion and accept that in any referendum, the public should get a chance to think again on Brexit, rather than be offered a false choice between a bad deal and no deal.



The Independent has launched its #FinalSay campaign to demand that voters are given a voice on the final Brexit deal.

Sign our petition here

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