John McDonnell: Labour would 'mobilise' £500bn spending and investment through new National Investment Bank
John McDonnell today pledged to unlock £500bn of investment and lending from a new National Investment Bank if Labour win power in 2020.
The Shadow Chancellor said the new institutions would “lay the foundations for a new economy” with higher paid, more secure jobs.
Speaking in Sunderland, he said Labour would set up a network of regional banks alongside the National Investment Bank.
He pointed to the example of the KfW banks in Germany as a “compelling” example of how that model could work.
“Today I am making a firm pledge: on coming to power, Labour will set up a National Investment Bank, and a network of regional banks whose aim is to help mobilise £500bn into the economy and transform Britain,” Mr McDonnell said.
“A National Investment Bank, managed independently of government, can raise the financing needed to deliver infrastructure on this scale.
“By mitigating the risks and giving a firm, government-backed commitment to funding, it will draw in the private financing that has otherwise been wary of financing infrastructure in the UK.”
The veteran MP for Hayes and Harlington said raising extra funding would also have the benefit of stimulating job creation, particularly in regions such as the north-east where state investment has lagged behind.
He argued that Labour should aim to create another 100,000 jobs in the north-east alone through extra investment spending, with public spending encouraging private firms to invest.
“The UK’s infrastructure requirements over the next decade or more come to £500bn of additional spending,” he said.
“With £250bn of government funding, we could look to massively enhance the UK’s current public sector net investment.
“We wouldn't just reverse the planned cuts to investment.
“We would lay the foundations for a new economy. And with £100bn for new public national and regional banks, on the same conservative leverage ratio as the European Investment Bank we could look to deliver an additional £250bn of long-term, patient investment.”
The plan set out by Mr McDonnell is striking as it comes less than a week after Labour’s Owen Smith proposed a “British New Deal” with an extra £200bn of infrastructure spending.
Mr Smith and Angela Eagle are due to face off later today in a special parliamentary hustings to choose a candidate to take on Jeremy Corbyn for the party leadership.
Mr Corbyn himself has pledged that his campaign will focus on reconnecting with people in “left behind Britain”, many of whom voted to leave the EU.