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A Jeremy Corbyn government will put Britain in an economic 'deep freeze', business chiefs warn
Business leaders have warned that a Jeremy Corbyn government would put the economy in the “deep freeze” and “crack the foundations” of prosperity, as Labour unveiled plans to seize control of swathes of industry.
John McDonnell, the shadow chancellor, was accused of treating business as “the enemy” as he pledged to end “vast executive salaries”, sack bosses of renationalised companies and snatch away profits from successful firms.
He also hinted that Labour could re-endorse Clause IV, the socialist mission statement adopted in 1918, arguing that its “principles are as relevant today” as they were 100 years ago.
The original version, which committed Labour to nationalisation of industry and utilities, was dropped by Tony Blair in 1995 after he said it made the party unelectable.
The heads of some of the country’s biggest trade bodies said that Labour’s “blind ideology” would drive businesses abroad, hit pensions and drag down living standards.
Carolyn Fairbairn, director general of the Confederation of British Industry, said the policies would “hobble” the UK’s competitiveness on a global stage and be a “double whammy” on people’s pensions and savings.
She said: “Labour must meet business halfway or they will crack the foundations of this country’s prosperity. From renationalisation to dilution of shares, Labour seems determined to impose rules that display a wilful misunderstanding of business.
“The fallout for the UK, its workers and customers would be a drop in living standards. Firms urge Labour to open their eyes and work with them to move forward, rather than blocking progress through blind ideology.”
Her comments were echoed by Stephen Martin, director general of the Institute of Directors, who urged Mr McDonnell to stop “clobbering employers” and treating business like the “enemy”. He said: “Renationalisation across the board would lead to lots of sound and fury, solving nothing.
“Recreating public monopolies funded by the taxpayer is not the answer to private monopolies. Competition and better regulation is.”
Dr Adam Marshall, director general of the British Chambers of Commerce, dismissed Mr McDonnell’s plans as a “tax grab” and an “unprecedented overreach” into the free market.
“The call for wholesale nationalisation could put investment in a deep freeze at precisely the time we want to be encouraging investment in the economy,” he said. “Why would investors in the UK and in boardrooms across the world, choose to put a penny into Britain in the knowledge their shareholdings will be diluted and their boards subject to significant government interference?”
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In his speech to the Labour party conference in Liverpool, Mr McDonnell set out plans to renationalise water companies and sack their executives before advertising their jobs with “dramatically reduced” salaries.
Labour sources confirmed the plan would apply across all sectors taken back into public ownership.
Mr McDonnell said he would empower workers and bring to heel the “faceless directors” of industries who had presided over “profiteering” and hefty dividends.
Asked whether a Labour government would legislate to renationalise water companies without compensation for investors, aides of Mr McDonnell said only that they were “not expecting” that scenario to arise but refused to say how much, if anything, they would be entitled to.
It came less than 24 hours after Labour also confirmed it would force businesses with more than 250 employees to give 10 per cent of their shares to workers, in a move that could see FTSE firms de-list or face handing over billions of pounds in equity.
McDonnell speech: Telegraph analysis
Mr McDonnell went on: “Let me make it absolutely clear that the full weight of the Treasury will be used to take on any vested interests that try to thwart the will of the people.
“Some said our manifesto was a fantasy or a wish list, attractive but ultimately not deliverable. I’m telling you today that we are planned, ready and prepared – not just to fight another election campaign but to implement our programme when we win.
“So let’s be certain. We will redress the balance of power at work… employees who create the wealth have no say in the key decisions that affect their future. After decades of talking about industrial democracy, Labour in government will legislate to implement it.”
He added that “at the heart of our programme is the greatest extension of economic democratic rights that this country has ever seen”.
Philip Hammond, the Chancellor of the Exchequer, said: “John McDonnell showed yet again that Labour don’t know how to handle the economy and have no idea what their plans would cost.
“Labour’s plan to put politicians in charge of crucial industries means there would be nowhere to turn when things go wrong. They aren’t fit to govern and, just like last time, it’s working people who would pay the price."