Jeremy Corbyn has launched a new onslaught on the City of London, promising a Labour government would take decisive steps to make it the “servant of industry”, not the “masters of us all”.
In a speech to the EEF manufacturers’ organisation, the Labour leader warned that Britain’s “distorted, sluggish and unequal” economy cannot be rebalanced without taking on the power of the financial sector.
He attacked a generation of politicians who believed the City could drive the whole economy and allowed it to exert a “pernicious and undemocratic” control over British politics.
After the attempted takeover of the GKN engineering group by Melrose Industries, Mr Corbyn also promised strengthened government powers to intervene in hostile takeovers.
In his address to the EEF conference in London, he called for a “fundamental rethink” on who the financial sector serves and how it is regulated.
“There can be no rebalancing of our distorted, sluggish and unequal economy without taking on the unfettered power of finance,” he said.
“For 40 years, deregulated finance has progressively become more powerful.
“Its dominance over industry, obvious and destructive; its control of politics, pernicious and undemocratic.
“The size and power of finance created a generation of politicians who thought the City of London could power the whole economy.
“Out-of-control financial wizardry and gambling were left barely regulated, while the real economies in once-strong industrial areas were put into managed decline.
“The welfare state was left to pick up the slack with sticking plaster redistribution to the people and places held back by the finance-led boom of predominantly the South East of England.
“For a generation, instead of finance serving industry, politicians have served finance.
“No more. The next Labour government will be the first in 40 years to stand up for the real economy.
“We will take decisive action to make finance the servant of industry, not the masters of us all.”
He pointed to the ongoing attempt by Melrose to gain control of GKN as a further example of “short-term performance and narrow shareholder value (being) prioritised over long-run growth and broader economic benefit”.
“We rightly praise the growth of companies like GKN and their location in the UK. And yet when we are facing the possible destruction of that company, the Government refuses to act,” he said.
“That’s why the next Labour government will broaden the scope of the ‘public interest test’ to include explicit consideration of the needs of our economy, taking advantage of new freedoms outside of the EU to allow government to intervene to protect our industrial base.”
Miles Celic, chief executive of industry body TheCityUK, said politicians like Mr Corbyn failed to understand the financial services sector was a “national asset” with major centres in cities such as Manchester, Glasgow, Cardiff, Birmingham and Bristol.
“Two-thirds of the 2.2 million jobs in the industry are outside the M25, as are over half its £95.7 billion of exports. It is also the country’s largest taxpayer, contributing over £87 billion towards funding our vital public services,” he said.
“As well as providing jobs and tax revenue, this industry helps people save for a mortgage, start a business, invest in new technologies or plan for retirement.”