McDonnell’s announcement signals major shift in UK’s political centre of gravity under a Labour government – and a direct promise to northern towns that they will no longer be ignored
Shadow Chancellor John McDonnell will use his first major speech of the general election campaign to promise an “irreversible shift in the centre of gravity in political decision making and investment” from London to the North.
McDonnell will pledge an additional £150 billion in a new Social Transformation Fund, to be spent over the first five years of a Labour government.
In a speech in his home city of Liverpool, McDonnell will say that the fund will be used to “upgrade and expand our schools, hospitals, care homes and council houses”. He will also promise that a “powerful section of the Treasury” will be based in the north of England.
McDonnell will say that a National Transformation Fund unit of the Treasury will be launched to deliver the plan, ensuring that key decisions about investment in the north are made in the north:
Our aim as a Labour government is to achieve what past Labour governments have aspired to. An irreversible shift in the balance of power and wealth in favour of working people. That means change means investment on a scale never seen before in this country and certainly never seen before in the North and outside of London and the South East.
To achieve that objective also requires therefore an irreversible shift in the centre of gravity in political decision making and investment in this country from its location solely in London into the North and regions and nations of our country.
McDonnell will make clear that a National Transformation Unit of the North will ensure the regions gets their fair share of investment:
On the scale of change investment needed I can tell you today that Labour’s National Transformation Fund will be bigger than we promised at the 2017 election. For areas that haven’t had their fair share for years, we’ll deliver £250 billion of investment here and around the country over the next ten years through our Green Transformation Fund.
Upgrading our energy, transport and other networks. To meet our targets and decarbonise as thoroughly and fast as our commitment to a just transition will allow. But it’s not just the natural world that’s been neglected. So we’ll also commit to an additional £100 billion in a new Social Transformation Fund.
Spent over the first five years of our Labour government, the Social Transformation Fund will begin the urgent task of repairing our social fabric that the Tories have torn apart. A hundred billion pounds to replace, upgrade and expand our schools, hospitals, care homes and council houses. To deal with the human emergency which the Tories have created, alongside the climate emergency.”
McDonnell will also set out how Labour plans to break up the Treasury and devolve some of its powers from London to the north:
But it’s not just about spending more. It’s about how it’s spent. With decision-making devolved down to local communities.
So we’ll carve out part of our National Transformation Fund for a Local Transformation Fund in each of England’s regions. With money for the devolved governments as well of course. And that money will be ring-fenced for infrastructure projects decided and developed at a local level. With decisions made transparently and democratically in each region about how their fund is allocated. And regional offices of government departments overseen by a board of local county and city council leaders with that board publicly accountable to open meetings of local councillors, trade unions and business representatives. They will be supported by a National Transformation Fund unit of the Treasury.
I can confirm that this powerful section of the Treasury Unit will be based here in the North. At the same time my Treasury ministerial meetings will no longer be solely in London.
Labour’s Treasury ministers will meet outside of London and will have a ministerial office in the North. The centre of gravity of political gravity is shifting away from London:
This is where the investment is needed and this is where those decisions on investment need to be made on the ground. Power is coming home. Back to the people. We can only deliver the real change we need by putting power into the hands of communities Of the people who know their local area best, like those who came up with the tidal barrage idea for the Mersey, which we’ll build.
It won’t just be public investment, of course. We can’t do it if the private finance sector isn’t pulling its weight too. So the days of the City dictating terms to the rest of the country are over.
The finance sector will be brought in line with the rest of us in addressing the emergency, with an end to short-termist thinking – the thinking that only prices in risks associated with an investment here and now, rather than the potential for a dramatic change in the price of carbon investments leading to significant stranded assets.”
How it will be funded and organised
- Labour’s National Transformation Fund will be funded by issuing government long-dated bonds and spent on capital investment that raises the productive capacity of the UK economy. It will include a Green Transformation Fund and a Social Transformation Fund.
- the NTF will be overseen by a unit of HM Treasury based in the north of England.
- a Green Transformation Fund of £250bn over ten years to invest in the areas we need to transition to a sustainable economy, energy and transport in particular.
- some specific projects will be announced between now and the General Election but those already announced include retrofitting homes, offshore wind and Crossrail for the North
- a proportion will be earmarked for Local Transformation Funds to be spent under the auspices of regional boards (see below)
- a Social Transformation Fund of £150bn over five years to repair the damage done to the infrastructure of the country by years of austerity and neglect. This would include capital investment for schools, hospitals, etc and again elements will be announced before the election.
- Labour will establish regional offices of Government in each of the nine regions of England. The Offices will be staffed by civil servants from relevant departments, including Treasury, BEIS, MHCLG, Transport, and Education.
- their responsibilities will include setting priorities for regional development banks, feeding into the Sustainable Investment Board, regional spatial planning and industrial strategies, and identifying and delivering projects to be funded from the Local Transformation Funds.
- strategic governance of the Offices will be the responsibility of an Executive Board made up of county and city leaders in the area. Twice a year the Board will be held accountable by a General Assembly open to local councillors, LEPs/businesses and unions in the region.
- the overall figures will include Barnett consequentials for devolved governments.
Labour in government will not only promise that communities outside London will not be forgotten as they were for years under right-wing governments – it will reorganise key political and financial functions to guarantee it.
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