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Labour would give workforce 'new contract' says McDonnell Labour wants 'socialism with an iPad' says McDonnell
(about 3 hours later)
Labour would extend existing employment rights to the self-employed and those working flexibly, shadow chancellor John McDonnell will say later. Labour's vision for the country is "socialism with an iPad" where everyone can reap the benefits of technological changes, John McDonnell has said.
A "new contract for a new workforce" is needed to reflect a "unfettered" labour market and technological changes. 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.
Ahead of next week's Spending Review, Mr McDonnell will say a "new economics" is needed to create a "secure, high-wage, productive economy". He also suggested firms sitting on "vast piles" of cash may pay more tax.
He will urge changes to corporate tax to ensure firms "invest more wisely". 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.Chancellor George Osborne will set out his spending plans for the next four years on Wednesday.
'Sustainable growth'
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.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. 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.
Scientific advances
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.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.
Mr McDonnell will say Mr Osborne's fiscal targets risk opening up a "massive deficit with the future". Labour, he will insist, would balance the books in a "sensible" way that is "consistent with sustainable economic growth whilst allowing vital investment to continue" in key areas. 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.
'Unfettered market'
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.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.
'Failing to invest'
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.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, in a speech at the Imperial College Incubator, he will defend his approach. 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 will say. "But by failing to invest, he is opening up a massive deficit with the future." "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."
Labour's move to the left under Jeremy Corbyn has worried some businesses but Mr McDonnell will insist he wants to work constructively with firms to increase wealth creation and enterprise while "safeguarding" the world of work.
Mr McDonnell has questioned the government's plans to further cut corporation tax to 19% and the shadow chancellor will say that a shake-up of the corporate tax system is needed to promote investment in skills and address the "dire shortages" in some industries.
"Our large companies are sitting on billions in cash, he will say.
"So 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."
In government, he will say Labour would 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 conference speech in September, Mr 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.
Mr McDonnell will say: "Technological change. and the unfettered free market, are tearing up the old work contract," he will say. "Labour, instead, will offer a new contract for a new workforce."