Labour wants 'socialism with an iPad' says McDonnell (original) (raw)

Labour's vision for the country is "socialism with an iPad" where everyone can reap the benefits of technological changes, John McDonnell has said.

In a speech ahead of Wednesday's Spending Review, the shadow chancellor said automation posed a risk to manual workers and future advances must be used to "liberate, not trap" people.

He also suggested firms sitting on "vast piles" of cash may pay more tax.

This, he said, could be used to boost skills and infrastructure investment.

Chancellor George Osborne will set out his spending plans for the next four years on Wednesday.

Most departmental budgets - excluding health, education, international aid and defence - are expected to be cut by more than 25% as the government works towards its goal of eliminating the budget deficit and securing a surplus in both day-to-day and overall spending by 2020.

The government has accused Labour of fiscal irresponsibility, saying it has not come up with any ideas for savings and its plans would result in higher borrowing and taxes and put the economic recovery at risk.

Labour is calling for an alternative approach to George Osborne's cuts programme, opposing what it describes as "austerity for austerity's sake" and pledging to invest more than the government in infrastructure, skills and research and development.

Laying out his vision in a speech to the Imperial College Incubator, Mr McDonnell said the UK spent less on R&D than the United States, China, France and Germany and needed to change course if it was to create a "secure, high-wage, productive economy".

"Unless we change our political choices, the vat majority will be denied the opportunities that technological change presents," he said.

"Working with businesses, workers and civil society, governments today can and must seize the change to change how we live and work, both now and in the future."

A future Labour government's goal would be to build a new economy "where technology liberates rather than traps, where the fruits of scientific advance are shared by all", adding that this amounted to "socialism but socialism with an iPad".

Referring to Bank of England research suggesting 15 million jobs were at risk from automation, he said technological changes could exacerbate inequality.

"Those most a risk from automation are the low-paid. For those who own robots, of course, it will be a different story."

As part of a new economic settlement, he said Labour would spend 3% of national output on infrastructure by 2030 and extend the "same rights and protections" available to full-time salaried staff to all workers so they enjoyed "security of income against uncertainty".

In his Labour conference speech in September, leader Jeremy Corbyn floated the idea of extending rights to parental leave, holiday and sickness benefits to the self-employed and others on casual and flexible contracts.

Restating this, Mr McDonnell said: "Technological change. and the unfettered free market, are tearing up the old work contract. Labour, instead, will offer a new contract for a new workforce."

Labour's move to the left under Mr Corbyn has worried some businesses but Mr McDonnell insisted he wants to agree a "compact" with the City of London and with UK PLC generally to increase wealth creation and enterprise.

"Labour in government will bring together business, unions, and scientists in a new Innovation Policy strategy, with a mission-led goal to boost research and development spending, and maximise the social and economic benefits from that expenditure," he said.

But Mr McDonnell said that, despite record profits, large businesses had amassed cash reserves of £400bn and some of this needed to be used to generate investment in skills and address the "dire shortages" in some industries.

"We will also look to ways to change our corporate tax system and work constructively with companies to give them the incentives to invest wisely," he said.

"A higher tax on retained earnings should be investigated."

The shadow chancellor, one of Mr Corbyn's key allies, has been criticised by some in his party for changing his position on deficit reduction, which critics say has further undermined its credibility on the economy after its election defeat.

Having originally committed to backing the government's plan to balance the books over the next three years, Mr McDonnell did a u-turn last month, which he later admitted was "embarrassing", and said he would not set a deadline for clearing the deficit.

But he defend his approach, saying Mr Osborne's fiscal targets risk opening up a "massive deficit with the future". Labour, he insisted, would balance the books in a "sensible" way that is "consistent with sustainable economic growth whilst allowing vital investment to continue" in key areas

"George Osborne may be trying to close the fiscal deficit," he said. "But by failing to invest, he is opening up a massive deficit with the future."