LONDON (Reuters) - Britain’s shadow chancellor John McDonnell offered London’s mighty financial services industry a new pact on Thursday: higher taxes in return for a seat at the policymaking table if Labour wins the next election.
McDonnell, a veteran socialist who has won over many voters with his promises to re-nationalise services and increase public spending, said he wanted a “new start” in relations with London’s lucrative financial sector.
“There are some policies that you will like and some which you will be less enthusiastic about,” McDonnell, 66, told a conference on the future of finance in London, the only financial capital to rival New York.
“I don’t expect some people to be overjoyed at having to pay a bit more in income tax or corporation tax or at the introduction of a Financial Transaction Tax.”
With opinion polls showing Labour level with Prime Minister Theresa May’s Conservatives, finance executives are increasingly focused on what a government under left-wing leader Jeremy Corbyn and McDonnell could mean for the City if the next scheduled election in 2022 went their way.
Despite his previous antipathy towards bankers, McDonnell is trying to win the support of financial leaders just as former Labour leader Tony Blair helped prepare his party for power with what was dubbed the “prawn cocktail offensive” in the 1990s.
However, McDonnell was clear that the party will seek to extract more revenue from the City of London, including proposals to expand an existing tax on shares to trading on other assets such as bonds and derivatives.
In return, McDonnell said a Labour government would offer the finance sector a chance to influence policies and promised to be honest about his plans.
“There are no tricks up my sleeve,” he said. “What you see is what you get.”
Joking that finance executives might expect to meet “a raving extremist who is about to nationalise their company and send them on a re-education course,” McDonnell said that instead he wanted them to work with them.
“I make no apology for believing in the need for finance to serve the wider economy rather than becoming the over-powerful master of everything else,” he said.
“There have always been many people in the finance sector who understand and share that belief.”
A senior finance executive in the audience said he was reassured by the speech and added that Labour Party officials are trying to find common ground with business.
The executive, who spoke on condition of anonymity, said higher taxes were already factored in under a Labour government.
“There is at least now a recognition that we have a legitimate voice,” the executive said. “We have come a long way since they really hated us.”
In the past, McDonnell has said he wants to overthrow capitalism and praised Karl Marx and Friedrich Engels’s “Communist Manifesto”.
McDonnell has already met executives from Standard Chartered, Barclays and the London Stock Exchange, in what has been dubbed a “cup of tea offensive” to court the support of financial leaders.
Under Corbyn and McDonnell, Labour has shifted from the centrist pro-business platform of former prime minister Blair to being more left-wing since they took hold of the party leadership almost three years ago.
In a separate speech on Thursday, Corbyn promised to build a million “genuinely affordable” homes over a decade.
Labour said that its proposals were aimed at making affordable housing available to people on ordinary incomes.
“When housing has become a site of speculation for a wealthy few, leaving the many unable to access a decent, secure home, something has gone seriously wrong,” he said.
“We need to restore the principle that a decent home is a right owed to all, not a privilege for the few.”
Reporting by Andrew MacAskill; Editing by William James/Guy Faulconbridge/Andrew Heavens