September 14, 2015 / 12:50 PM / 3 years ago

Factbox - Public banks and pay caps: the thoughts of Labour's new economy chief

(Reuters) - John McDonnell, the man who could be Britain’s next finance minister if the opposition Labour Party wins power, is a critic of the capitalist system which he has said he wants to overhaul by nationalising banks and capping executives’ pay.

McDonnell was named as Labour’s top spokesman on economic policy by newly-elected party leader Jeremy Corbyn, adding to Labour’s sharp shift leftwards since its heavy defeat in May’s parliamentary election.

Below is a summary of economic proposals and ideas put forward by McDonnell, a former trade union official and a member of parliament since 1997:

BANKS - McDonnell wants public ownership of the banking system to take control of “our casino economy”. This would include full separation of retail and investment banking and the introduction of a financial transaction tax. He has also proposed capital controls on banks if they oppose the tax.

BANK OF ENGLAND - A Labour government should reclaim the power to set interest rates from the Bank of England, reversing a reform made by former prime minister Tony Blair in 1997 that helped to persuade investors the economy was safe under Labour.

PUBLIC FINANCES - McDonnell said in August that a Labour government led by Corbyn would be committed to eliminating the budget deficit but not at the expense of cuts to tax credits for lower earners and to public services, or a public pay freeze.

HIGHER TAXES - Instead, the money to balance Britain’s books would come from higher taxes on the rich and corporations as well as from tougher enforcement of tax payment. This would also help to pay for investment in housing and infrastructure.

In an article written in 2012, McDonnell said the income tax rate should be raised to 60 percent for people earning more than 100,000 pounds ($155,000) and 70 percent for those earning more than 1 million pounds a year.

INEQUALITY - In the same article, McDonnell called for a cap on wages of no more than 20 times the lowest paid in any company. He also wants legislation to tackle the gap between pay for men and women, and to restore trade union rights. He opposes welfare spending cuts.

RAILWAYS, UTILITIES - McDonnell says the rail industry should be renationalised, with workers and passengers given a role in its management. The energy sector would be “socialised from below” through a huge expansion of renewable energy production and supply, following Germany’s model. McDonnell is opposed to nuclear power which Britain plans to expand.

MEDIA - Laws on the media would be reformed to prevent “the monopoly ownership and control of our media by rich individuals and corporations,” McDonnell says on his website, an apparent reference to the British media interests of Rupert Murdoch.

Compiled by William Schomberg; editing by David Stamp

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