John McDonnell has said he will begin the process of moving some key Treasury functions out of London before Christmas if Labour wins Thursday’s general election.
Setting out the party’s action plan for a Labour government's first 100 days in power, the shadow chancellor also said the party's first priority would be to hold a budget “to end austerity in social security and public services”.
This would be held on 5 February, McDonnell said, and would confirm an increase in the minimum wage – from £8.21 an hour for over-25s to £10 – as well as additional money “to fix the worst aspects of Universal Credit, while we design its replacement” and a 5% pay rise for public-sector workers.
Before that, the party would establish a National Transformation Unit in the Treasury. McDonnell has pledged that this part of the Treasury, which would oversee a £400bn national investment fund, would be based in the north of England as part of an “irreversible shift in the centre of gravity in political decision making and investment”.
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Today he said the unit would be formed before Christmas “so it can start work in the Treasury, before being moved out to its new office in the north of England early next year”. This will be made up of a Green Transformation Fund of £250bn over ten years, and Social Transformation Fund of £150bn over five years to improve public infrastructure.
He added: “It will provide the initial finance for our new National Investment Bank, regional development banks and Post Bank, using the power of the Treasury to get affordable finance onto every high street in Britain.”
In a speech today, McDonnell said he had used the pre-election contact had with officials in the finance ministry to lay out the plans.
"We’ve already started our meetings with the Treasury, they are working up plans and getting ready to implement all this. So don’t be fooled by the doubters who say our plans are unachievable,” he said.
“A decade of austerity, and 40 years of believing the market knows best, have dulled people’s sense of what’s possible, just as they were intended to do. That’s why – if we are to help make hope real again – we need to remake government, and what people expect from it.”
McDonnell said people’s potential has been wasted in too many parts of the country.
“That’s down to successive governments sitting back and leaving the fate of whole communities at the mercy of market forces. Good jobs and whole industries that were once the pride of our country have been lost and replaced with dreary, exploitative, insecure and low paid jobs. Or in some cases no jobs at all.
“No wonder people feel disillusioned in politicians. As our manifesto makes clear, turning these two things around will be our number one priority in government.”
This would include taking steps to bring water, electricity, rail and broadband into public ownership within 100 days of Labour coming to power. McDonnell set out plans for boards to run these services made up customer, worker and local authority representatives. The party would also create people’s assemblies “to hold these boards to account and give everyone the option of participating in how their utilities are run”, he said.
These would be “institutions that will become a normal part of people’s lives, like the NHS”, and would “put real power in your hands every day”, he said.
“Together we will improve services and bring down fares and bills because we believe in democracy and we believe in you. In our first hundred days we will start the process of bringing water and energy into public ownership.
“We’ll make sure decisions are taken locally by those who understand the services – those who use them and deliver them. Meetings will be public and streamed online with new transparency regulations set higher than ever before.”