John McDonnell on the leadership battle
(This talk was given by John McDonnell on Wednesday June 29, 2016 at a Stand Up for Labour event in the George IV pub in Chiswick, West London. The transcript has been lightly edited to account for the difference between spoken and written language but the content is unchanged. We thought that the speech deserved wide circulation.)
Let me just tell you where we’re at at the moment because it’s important that you know. I just want to go back a short while, I won’t keep you long.
When Jeremy got elected last year he got elected on 59.5% of the vote – the highest mandate that any political leader of this country has ever received from their own membership. It was overwhelming in individual members, the affiliated group and also the new supporters. In every category he won.
When we got back to Parliament he tried, in his own quiet way (I’ve known Jeremy 35/40 years and he’s one of the most caring, compassionate people I’ve met), to work with people, put them together. He created a Shadow Cabinet of left, right and centre, he tried to hold it together. And when he did that he tried to work with the Parliamentary Labour Party all the way through. But there’s been a group within the PLP who consistently refused to accept his democratic mandate and consistently undermined him in every way they possibly could. To be frank, I don’t know how he’s borne it. I’m just so proud of him, to be honest, for what he’s done.
We knew at that time, that for some time they were plotting to see if they could have a coup at some stage. We knew that. We knew all the way along. The thing about it is they’re not particularly good at it. We had people in meetings where they were discussing who would be the candidate they would run etc. And so we got intelligence on a regular basis.
False arguments about electability
And their first attempt was the Oldham by-election. What they tried to say was “It’s not political this, it’s not his policies we disagree with, it’s the fact that he can’t win elections”. So the Oldham by-election was the first test. If he had lost the Oldham by-election that might have been the opportunity for some form of coup or to start the first stages. We went to Oldham. Jim McMahon was a fantastic candidate but what we got was the best of both worlds: a good local candidate and the Corbyn supporters enthusiasm. And we has a massive victory in Oldham. So they backed off.
So the next one was going to be the local government elections. That was the excuse for the next plot. We got to the local government elections and they said again “You can’t win an election with Corbyn” etc. We won every mayoral election we contested, every one. We won the seats in terms of local government, councils we were expected to lose, we won every one.
We reached in our first six months the highest level of support that Ed Miliband got all through his term of office. Now that was not something that we thought was wonderful but it was better than anyone thought possible. And in every Parliamentary by-election that’s taken place, we’ve increased our majorities on every occasion.
When Jeremy took over as leader in September we were fourteen points behind in the opinion polls. We are now ahead of the Tories in the opinion polls this week even post-Brexit. And here’s the irony, it’s just extraordinary, on Monday the Parliamentary Labour Party meeting was one of the most disgraceful meetings I’ve ever attended. It was like a lynching without the rope. It was appalling. MP after MP got up calling on Jeremy to resign: “We can’t win elections under you”. And here’s the irony, the first item on the agenda was to welcome the new Labour MP for Tooting who had doubled Labour’s majority.
I don’t accept that this is about Jeremy not being able to win elections. I know how tough it’s going to be to defeat the Tories but also we know that we’ve been building a solid base of support. Why? Because we’ve changed the political direction of this party within nine months. When we went into the last election we were austerity-lite. We had voted for tuition fees, we had voted for wars in Iraq, and all the rest of it. We transformed ourselves. We’re now an anti-austerity party, we’re now in favour of scrapping tuition fees, we’re in favour of building council houses again, we favour trade union rights and also, in the week before Chilcott is published, under Jeremy Corbyn we are now a party that will never again go on a military adventure that cost 500,000 lives as happened in Iraq under Blair. Never again.
That’s why they’re coming for Jeremy. This isn’t about electability. This is about policy and politics. They told us that it was about the European referendum, because he hadn’t done enough.
The referendum campaign
So let me just explain what happened on that because I’m gutted that we lost it. I’m sad that we lost it. But what happened way back in September was that Jeremy and I met with Angela Eagle and Hilary Benn and they said they wanted to run the European campaign and we said “fine”. But at that point in time we said that we need to agree the politics of this. We said that we can’t just go out there as simple Europhiles because, to be frank, there was a need for reform in Europe. And at that point in time they were trying to argue that we should unanimously support Cameron’s deal in Europe. We refused.
So we said “get on with the campaign and call us in when you need us, we will do all that we can to support”. Jeremy toured round this country – the stamina of the man is unbelievable. Thousands of miles, meeting after meeting. Both of us spoke in virtually every major city in the country. But we campaigned on the basis of ‘remain but reform’. And that is where most of the British population are. They agree that there needs to be reform. It was no use going out there just arguing that the European Union was perfect. It was remain and reform. We also said, to be frank, as soon as you start appearing on platforms with Tories Farage and Boris Johnson ironically will call you “the establishment”. And that’s exactly what happened in Scotland and that is exactly what happened in Northern cities in particular across this country. So we believed that the tactics of the campaign were wrong. Nevertheless we worked really hard. But when the result came out they wanted a scapegoat, they wanted to blame Jeremy. They wanted to use this as the excuse for the coup.
The plot unfolds
And what happened I’ll briefly tell you. On Saturday night last Jeremy was contacted by a sympathetic journalist. He had been briefed that Hilary Benn was going round the Shadow Cabinet urging people to urge Jeremy to stand down or threaten resignation. When Jeremy contacted him and asked if it was true. Would he be happy for a statement to be put out saying it was an error or that Hilary withdraw from his actions. He refused. What else could he do but ask him to stand down? There was no other option.
What we then discovered, because they just leak like I don’t know what, was that there was a plan that what would happen is group after group of individuals, front benchers, would resign, in batches. Because it was to destabilise. It was on the basis that one group resigned, fine we could accommodate that, settle down for a few hours and then another group would resign. It went on like that.
So what Jeremy had to do was to put together another Shadow Cabinet and that’s what we’ve done. And we’ve brought in, yes, lots of the new young people into the Shadow Cabinet. I tell you, listening to some of their speeches this week has been thrilling and they are the heroes and heroines of this movement.
Finally, let me just say where we’re at now because we’re getting to the point where it becomes farcical. What they did, to try and divide me and Jeremy, they briefed the media that I was trying to challenge him. And today Tom Watson has given an interview saying its John MacDonnell who’s forcing him to stay. You can’t have it both ways.
So what I’ve said today is, straightforwardly, if Jeremy wants to remain the leader of the Labour Party I will support him wholeheartedly, I will chair his campaign committee again. It’s his decision and he’s made that decision. He’s staying.
I think this is a tragedy what’s going on now. At a time when, to be frank, our country’s facing some of the severest economic problems we’ve had in a generation as a result of the referendum, when the Tories are in disarray and this is virtually no government there whatsoever, this is the time the Labour Party should have held together and stepped up its campaigning. Parliamentary pomposity this is not. This is not just for the sake of the Party. It’s for the sake of our country and the people we represent because they’re the ones that will be hit the hardest as a result of this result from the European referendum and the economic instability.
What we’ve said is Jeremy is staying. If someone wants to challenge him fine. I spoke to Tom Watson and said if a candidate comes forward let’s have a democratic election of the leader but let’s do it as comrades, as friends, it doesn’t have to be like this. We should be able to act amicably in this party and not in the way that people have treated Jeremy in the Parliamentary Labour Party.
They’re falling out among themselves as to who should be the candidate. It looks as though Angela Eagle, we’re told by the BBC, will announce she will become a candidate tomorrow. Fine, fine. I’ve said we will convene an urgent NEC, have a short leadership campaign timetable in order to match the Tories and get our leader in place so that we can then challenge the Tories and if there is a general election then we’re ready to go with the leader.
Debate as comrades and hold together
But, above all else, now at the moment, what we need people to do, whichever position they come from, is just to hold together in the party, just basically to treat each other with some common decency.
So where we’re at at the moment is that we think there will be a candidate coming forward tomorrow, the NEC will set up the timetable for the leadership election and we’ll have what we’ve always wanted really, a democratic debate. Jeremy will stand again and tour round the country setting out his policies and we’ll hope that he gets re-elected.
We’d welcome it, if you’re not a member of the Labour Party at the moment we need you to join. If you are a member of the Labour Party let me just say this. What we’re witnessing at the moment is a very British coup. If we don’t face this down what will be the point of being a Labour Party member, voting for a leader that you want and then having the Labour Party MPs exercise a veto. That is unacceptable.
There has been a recent modern invention by the Greeks. It’s called democracy. What we’re standing for in this period now is democracy in the Party – the ability of rank and file members of the Labour Party to choose the leader that they want and the policies that they want. And if we lost that, if we allow this coup to destroy Jeremy Corbyn, they destroy our Party. I am not going to allow that to happen and I hope that you don’t. So I’m urging you, pleading with you now, as we go through this period, let’s be comradely to whoever comes forward in the other campaign and let’s stand firm in the interests of democracy. And I appeal to you to support the person who actually did get democratically elected nine months ago, who transformed our policies into becoming a socialist party once again, and right the way round the country gave people hope of a new form of politics, caring and compassionate but socialist above all else.
So I say to you if this election comes stand with me and support Jeremy Corbyn. Solidarity.
Thanks to Jackie Walker for sharing
July 2015 http://www.independent.co.uk/news/uk/jeremy-corbyn-labour-mps-are-plotting-a-coup-against-the-potential-leader-if-he-is-elected-10399272.html
Frederick James: Dear friends and comrades today in Parliament John McDonnell [Labour shadow chancellor] on an opposition day debate on Tax Avoidance and Evasion. It was thoughtful, considerate and masterly and showed why we badly need John McDonnell as our Chancellor of the Exchequer and why we need a Corbyn led Labour Government.
Here is a transcript of his speech sorry for the lateness as he kept getting interupted by Tories. I have summised it as best I can,
I beg to move
That this House notes with concern the revelations contained within the Panama Papers and recognises the widespread public view that individuals and companies should pay their fair share of tax; and calls upon the Government to implement Labour’s Tax Transparency Enforcement Programme which includes: an immediate public inquiry into the revelations in the Panama Papers, HMRC being properly resourced to investigate tax avoidance and evasion, greater public sector transparency to ensure foreign companies wanting to tender for public sector contracts publicly list their beneficial owners, consultation on proposals for foreign companies wanting to own UK property to have their beneficial owners listed publicly, working with banks to provide further information over beneficial ownership for all companies and whom they work for, the swift implementation of full public country-by-country reporting with a fair turnover threshold as well as ensuring robust protection for whistle blowers in this area, ensuring stricter minimum standards of transparency of company and trust ownership for Crown Dependencies and Overseas Territories, consideration of the development of the Ramsey Principle by courts, implementation of an immediate review into the registry of trusts, and the strengthening and extension of the General Anti-Avoidance Rule to cover offshore abuses.
I see that the Chancellor [George Osborne] is absent again today. Much as I look forward to seeing the various members of his Treasury team, is there a specific reason why he is not here for this important debate?
I am happy to give way. [Interruption.] Is it critical? In respect of his attendance at the International Monetary Fund, he might look at yesterday’s IMF report that downgraded the growth expectations for our economy and think again about the policies he is pursuing, which fail to invest in the infrastructure, skills and new technology that our economy needs to compete in the world market. Perhaps we will send him a letter and he can say hello to the Chamber some time when he happens to be passing through.
We need to move the debate about tax avoidance and evasion on to the issue of the fairness and effectiveness of our tax system, and we need to do so as constructively as we can. The leak of documents from Panama lawyers Mossack Fonseca has provoked an extraordinary public discussion, and an entire hidden world has been brought into the light. What it reveals is profoundly unsettling.
We now know that Mossack Fonseca sat at the centre of a vast web of tax evasion and tax avoidance. The world’s super-rich commissioned its services to hide their income and wealth from the public gaze. Some of them had plainly criminal intentions. Money from the Brink’s-Mat robbery was allegedly laundered through a shell company set up by Mossack Fonseca, while the Mexican drug baron Rafael Caro Quintero held his property through a shell company established by Mossack Fomseca.
Mossack Fonseca exploited the presence of loopholes and entire jurisdictions that favour secrecy and minimal taxation. We can expect further news over the next few weeks and months, as the investigative work continues. Yesterday the Panama headquarters of Mossack Fonseca was raided, but 10 days on since the initial leak, I believe that its UK offices in Hitchin—not far away—have not been, despite the raising of concerns by the firm’s founder about the lack of due diligence performed by the UK office in relation to a company in its charge, and a clear legal precedent for the UK authorities to intervene.
There may be more revelations to come, set to tarnish individual reputations. I put this mildly: the Prime Minister has done himself no favours over the last 10 days. A lesson for the future is that, when asked a straight question, one should answer straightforwardly and straight away. The Prime Minister could and should have come clean about his relationship with Blairmore Holdings far earlier.
Even today, we have not seen the Prime Minister’s full tax return or that of the Chancellor, and it is important that that should happen. The Prime Minister established the principle, which I advocated three months ago, that the Prime Minister, the Chancellor, the Leader of the Opposition and the shadow Chancellor should publish their tax returns—not summaries; their full tax returns—but that has not happened.
However, what confronts us today is an issue far bigger than any individual. At the centre of the allegations is a single issue. The fundamental problem is not tax avoidance by this individual or that company; those are symptoms of the disease. The fundamental issue is the corruption of democracy itself. At the core of our parliamentary system is the idea that those who levy taxes on the people are accountable to the people. If those who make decisions about our taxation system are believed to be avoiding paying their own taxes, that undermines the whole credibility of our system.
The common understanding is also that those who live here and benefit from public services will make a proportionate contribution towards them. The level of taxation may vary—sometimes it is higher, sometimes lower—but because we have a shared sense of fairness, we expect those with the broadest shoulders to carry the greatest burden in taxes. Over the last 30 years, however, we have witnessed the growth of wealth inequality on such a scale that it has undermined that basic principle of democracy.
Great hoards of assets, in property and in financial wealth, have been built up. According to the best available measures, the levels of income inequality in Britain today are climbing as high as they were at the time of the first world war. The share of income going to the super-rich has risen almost inexorably for three decades. We are returning to the levels of inequality that were experienced before universal suffrage—before women had the vote, and before the development of universal free education and healthcare—in a world that existed before the gains of democracy brought obscene levels of wealth inequality under control, and created a more humane society for the majority.
The world of the Rockefellers and the robber barons is the one to which we are returning: a world in which there is immense, almost unimaginable wealth for a gilded elite, but insecurity for growing numbers. Much of that wealth is now held offshore in secretive, unaccountable tax havens. According to the most recent estimate, $21 trillion dollars, equivalent to a third of global GDP, is hidden from taxation systems in global tax havens. It is estimated that, if taxed fairly, that wealth would raise $188 billion a year in extra taxation.
This is not about a few families seeking to “minimise their tax bill”, as was claimed by the hon. Member for Gainsborough (Sir Edward Leigh). It is systematic. An offshore world is operating parallel with the world in which the rest of us live. This is not an accident. The offshore world is being constructed, piece by piece, by multinational corporations and the super-rich, aided by shady offshore operations such as Mossack Fonseca, and—we must be honest about this—supposedly reputable accountancy firms here in London are also playing their part.
According to the Public Accounts Committee, PwC has aided tax avoidance “on an industrial scale”. Deloitte has advised big businesses on avoiding tax in African countries. Ernst and Young act as tax advisers to Facebook, Apple and Google and just last month KPMG had one of its tax-avoidance schemes declared illegal by the High Court. Together, the big four accountancy firms in this country earn at least £2 billion annually from their tax operations.
But it is not just them. Banks headquartered and operating in London have been particularly proficient in directing their funds through Mossack Fonseca shell companies. HSBC and its affiliates created more offshore companies through Mossack Fonseca—over 2,300 in total—than any other bank. Coutts, a subsidiary of RBS, created over 500 offshore companies through its subsidiary in Jersey. Supposedly reputable companies are aiding and abetting the systematic abuse of our tax system.
We should be clear: the City of London is being viewed by many as a tax haven in the middle of a dense network of havens created for the super-rich to avoid the taxes the rest of us must pay.
We have to find a better way in our taxation system to benefit those at the lower end of the scale. At the moment, although we are happy with the rise in tax thresholds, there needs to be a way to compensate for that more equitably. Again, it is not us saying this; it is the IFS and many other independent assessors. They are saying that this is not the most effective way of redistributing wealth in this country.
It is an alien world for the majority of us. It is a world of offshore trusts and legal trickery that would put Byzantium to shame; a world in which it is perfectly normal to buy property in London through a company registered in the British Virgin Islands, managed by lawyers in Panama with offices in Bermuda; a world in which citizenship and attachment to a country are something to pick and to choose depending on price. The scandal of the “non-doms” continues, in which a few super-rich can pay a notional fee instead of the taxes that would otherwise be due from them as residents.
Tucked away in this year’s Budget was an extraordinary clause that wrote off selected non-doms’ entire capital gains tax bill on any gains made before April 2017—a giveaway to the wealthy. This is not the world that most of us live in. Most of us pay our taxes. Contrary to the shocking opinion of the right hon. Member for Rutland and Melton (Sir Alan Duncan), that is not because we live in a country of “low achievers”, as he described them. We do so because we understand that a decent society depends on the contributions all of us make. Without the payment of taxes, we cannot run the public services that are essential to a decent society.
We do not have access to the specialist services that Mossack Fonseca and other companies provide. We cannot negotiate with HMRC about when and how much to pay in tax. However, for the global elite, tax avoidance is as much a part of their world as the yachts and the mansions. This world is a corrosive influence on our democracy. The more the super-rich can escape the burden of taxation, the more it falls on the rest of us in society.
It is morally wrong that a billionaire oligarch should be paying proportionately less in taxes than the migrant cleaner of his mansion. It is a disgrace that an immense global corporation such as Google should pay no corporation tax for nearly a decade, while small businesses are chased for tiny amounts. It is an affront to the basic principles of our democracy that large corporations should be able to negotiate sweetheart deals with HMRC.
It is a disgrace that an immense global corporation such as Google should pay no corporation tax for a decade, while small businesses are chased for tiny amounts. It is an affront to the basic principles of our democracy that large corporations should be able to negotiate sweetheart deals with HMRC. It is also a corrosion of democracy when a revolving door apparently exists between HMRC, which is charged with collecting taxes, and major accountancy firms whose business depends on minimising taxes. HMRC’s last director went to work for Deloitte, and now we find that the executive director appointed by HMRC to oversee its inquiry into the Panama leaks is a former adviser to tax havens who believes that tax is a form of “legalised extortion”. The structures of Government are being bent out of shape by tax avoidance. Decisions are warped around the need to protect the interests and wealth of the super-rich and of giant corporations. Democracy becomes corroded.
On party donations, the Conservatives receive more than half their election campaign funding from hedge funds. In public view, here in London, its party leadership has made loud and repeated noises about tax avoidance, yet its MEPs in Brussels have voted six times, on instructions from the Treasury, to block the EU-wide measures against tax avoidance. As we have heard in evidence this week, the Prime Minister lobbied the EU Commission in 2013 to remove offshore trusts from new tighter EU regulations on avoidance. The Conservatives’ own record reveals that people no longer trust them on this issue. Not only have they impeded efforts to clamp down on tax avoidance, but these schemes directly implicate senior figures in the Conservative party. Several Conservative party donors, three former Conservative MPs and six Members of the House of Lords are among those with connections to companies on the books of the offshore law firm Mossack Fonseca.
As the super-rich flee their obligations to society, the burden of taxation is pushed elsewhere. As I have said, independent assessments of the tax and benefit changes introduced since May 2015 show that the poorest 10% are forecast to see their incomes fall by more than 20% by 2020, with 80% of the burden falling on women. It is the poorest and those least able to carry the burden who will suffer the most under this Government. An economic system that allows tax avoidance on this scale is one in which the inventor and the entrepreneur come second to the owner of wealth, the worker comes second to the plutocrat and the taxpayer come second to the tax dodger. It is a system in which inherited wealth and privilege, rather than talent and effort, are rewarded.
There has been criticism of the last Labour Government, and I was not enamoured of all their economic policies, but they did take measures against avoidance. Their measures on corporation tax avoidance are forecast—not by me, but by the Financial Times—to raise 10 times as much revenue as the present Chancellor’s schemes.
The Panama leaks must act as a spur to decisive action. In response to the leaks, the Government have stepped up their rhetoric on tax evasion but much of what has been announced falls short of what is needed or repeats existing announcements. I remind Ministers that page 223 of the Office for Budget Responsibility report that accompanied this year’s Budget outlined a disclosure scheme for companies operating in Jersey, Guernsey and the Isle of Man. The report said that owing to HMRC’s consistent underfunding, it did not have the resources to follow up on the links of the scheme. I again offer some words of advice to those on the Government Front Bench: fewer press releases and more action. It is time to move on and to close down tax havens and clean up this muck of avoidance.
Let us take this step by step. We need an immediate and full public inquiry into the Panama leaks. The Government’s proposed taskforce will report to members of the Government, the Chancellor and the Home Secretary, who are members of a party funded by donors featured in the Panama papers. To have any credibility, the inquiry must be fully independent. We must shine a light on, and start to prise apart, the corrupt networks that operate through tax havens. Part of that will involve creating a proper register of MPs’ interests. Members of this House should not be able to hide behind spurious claims of privacy. We want HMRC to be properly resourced to chase down the tax avoiders, with a new specialist unit dedicated to the task. Foreign firms bidding for Government contracts here should be required to name their owners. Full, public, country-by-country reporting of earnings and ownership by companies and trusts is a necessity if fair amounts of taxation are to be charged.The measures announced by the EU this week do not go nearly far enough, requiring only partial reporting by companies. The turnover threshold is far too high, and Labour MEPs in Europe will be pushing to get that figure reduced much lower to make it more difficult for large corporations to dodge paying their fair share of tax. Banks need to reveal the beneficial ownership of companies and trusts they work with. That means creating a public register of ownership of companies and trusts, and not only of companies, as the Government are currently enforcing. The Prime Minister has a role to play in this, as it was he who lobbied for the exclusion of trusts from the proposed EU measures. Labour will work alongside leading tax experts to lead a review into publishing a public register of the trusts too often used to avoid paying tax and reduce transparency in our tax system.
We must ensure that Crown dependencies and overseas territories enforce far stricter minimum standards of transparency for company and trust ownership. The Government’s current programme for reform is being laughed at by the tax havens. As my right hon. Friend the Leader of the Opposition said today, it was only this week, after signing a new deal on beneficial ownership, that the Cayman Islands Premier Alden McLaughlin celebrated a victory over the UK, saying:
“This is what we wanted, this is what we have been pushing for three years”.
The truth is that the Government are playing into the hands of those who want to abuse the tax system.
We need serious action on enforcement. We need not central registers but, as Christian Aid and others are calling for, full public registers accessible to all, including journalists and other businesses, if we are going to curb the activities exposed in the Panama papers. This package of measures is Labour’s tax transparency and enforcement programme. We believe that it offers a sound basis to take the first necessary steps against avoidance and towards openness and transparency. We are presenting it today as we want to see immediate effective action.
This is a test of leadership. The leadership of the Conservative party could take this opportunity to correct the series of errors that it has made. It could join us today in taking effective steps towards dealing seriously with avoidance. People want to see the Conservatives take these steps. Otherwise, they will rightly stand accused of siding with the wrong people and of being the party of the tax avoiders. Incidentally, it was not long ago that the Chancellor of the Exchequer appeared on television to give advice on the “pretty clever financial products”, as he described them, that would allow the wealthy to dodge inheritance tax.
Some of the Conservative party’s Back Benchers believe that tax avoidance is a sign of success. The party’s donors are named in the Panama papers, and the Prime Minister himself is a direct beneficiary of a scheme set up in an offshore tax haven through his prior ownership of Blairmore Holdings shares.
The Panama leaks have presented a stark political choice. Do we continue to allow a system of corruption and avoidance, or do we now take the action necessary to restore fairness to our taxation system and to correct the abuse of democracy? That is the challenge, and the choice, ahead of us. I urge the Government and all Members of this House to join us in a serious programme of work to tackle the abuse of our tax system. The Government can make a start by supporting our motion today and adopting Labour’s tax transparency enforcement programme. I commend this motion to the House.
[House of Commons debate Wednesday April 13, 2016]
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