- Reuters / Darren Staples
- The Labour party has detailed proposals to move parts of the Bank of England to Birmingham and lend £250 billion to British firms through a publicly-owned RBS, should the party be elected to government.
- Shadow chancellor John McDonnell said investment should “tackle our productivity problems,” and do so on “a basis of regional fairness.”
LONDON – The Labour party has detailed proposals for a radical shake-up of the government’s financial strategy which would see it move parts of the Bank of England to Birmingham and lend £250 billion to British firms over a decade through a publicly-owned RBS should it be elected.
Speaking on Monday morning at the launch of a report commissioned by the party, shadow chancellor John McDonnell said the UK economy required “long-term, stable, patient investment” into sectors such as manufacturing and technology which would boost the UK’s chronically low productivity levels.
The report, prepared by GFC Economics, outlined proposals for a “Strategic Investment Board” which would answer to the Treasury. Under the radical plans, the Royal Bank of Scotland – currently part-owned by the taxpayer – would be taken into full public ownership distribute loans to British start-ups and other businesses.
McDonnell said the Strategic Investment Board would oversee the distribution of £250 billion over a decade.
The Conservative party, meanwhile, plans to sell £3 billion tranches of its RBS shares every year until it is privately-owned.
The report said other countries such as the US and Japan are racing ahead in areas such as the use of industrial robots – which are widely acknowledged to boost overall productivity – because they receive considerably higher levels of investment.
McDonnell also called for the Bank of England to relocate major parts of its operations to Birmingham, and said the new Strategic Investment Board would also be relocated in the Midlands city in a bid to “rebalance” the UK economy on “a basis of regional fairness.”
The Bank of England has been independent from poilitical control since 1997 and McDonnell insisted would remain so, despite having a role in “implementing strategic direction” and “regulatory oversight” for the RBS loans under the new plans.
“The structures outlined in this report will operate effectively and the government’s job is to set the overall framework from which those structures will be able to achieve their objective,” he said.
McDonnell said the plans demonstrate “how we could harness [other financial institutions] to do two things: provide investment and provide it in a way that tackles our productivity problems, and does so on a basis of regional fairness.”
He also suggested Labour would hold sessions of parliament outside London if it was elected. “I think there’s an argument for ensuring that Cabinet and maybe sessions of parliament could be held elsewhere. Jeremy has been talking about holding shadow cabinet meetings around the country on a regular basis, and I think you’ll see that evolve into other forms of direct devolution.”