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U.K.’s Labour Lurches Sharply Left on the Economy

LIVERPOOL, England — Britain’s opposition Labour Party laid out a blueprint on Monday for a sharp leftward turn in economic policy, gambling on the readiness of voters for a big expansion of the state’s role in the economy.

“The greater the mess we inherit, the more radical we have to be,” the party’s economic spokesman, John McDonnell, told Labour’s annual conference in Liverpool, England, to loud applause.

Under the plan, firms with 250 employees or more would set aside a 10th of their shares for their workers, 10.7 million in all, who would receive up to $ 650 a year in dividends. Mr. McDonnell also proposed nationalizing critical utilities, giving a third of the seats on company boards to workers and making firms prove that they paid their rightful share of tax.

Labour’s economic agenda has surprised some with its boldness and put the party on a collision course with business groups. But that is unlikely to faze a leadership that says it is rediscovering the party’s socialist roots and believes that voters will trust a left-wing agenda to redress some of the failings of a decade marked by stagnating real wages and poor productivity growth.

Mr. McDonnell even joked about his reputation as a left-wing firebrand, referring to recent comments by the Most Rev. Justin Welby, the archbishop of Canterbury, calling for a more inclusive form of capitalism.

“Just a few words of advice though, archbishop,” said Mr. McDonnell. “When they get around to calling you a Marxist, I’ll give you some tips on how to handle it.”

Under Jeremy Corbyn, Labour’s most left-wing leader for decades, the party performed better than many expected in a general election last year, depriving Prime Minister Theresa May of her parliamentary majority. In most opinion surveys, Labour is now a few percentage points behind Mrs. May’s Conservative Party, which is so divided over plans for Britain’s withdrawal from the European Union, or Brexit, that there is speculation that another election could be called soon.

Labour’s conference has been overshadowed by pressure on the leadership from members and unions to endorse a second referendum on Brexit. But Mr. McDonnell suggested that, even if there were to be a new vote, it might not give voters the choice to remain in the European Union. Later, Labour’s shadow Brexit secretary, Keir Starmer, contradicted Mr. McDonnell, saying the party was not ruling options out, including that of a second referendum with remain on the ballot.

Mr. McDonnell and Mr. Corbyn prefer to talk about an economic agenda designed to roll back the austerity politics of the last decade — policies that have helped move Labour to the left of the social democratic positions it adopted under the previous Labour leaders, Tony Blair, Gordon Brown and Ed Miliband.

“The balance of power at work has been tipped against the worker,” said Mr. McDonnell. “The result is long hours, low productivity, low pay and the insecurity of zero-hours contracts,” which let companies decide from day to day how much paid work, if any, an employee receives.

Promising to press ahead with nationalization, Mr. McDonnell identified water and sewerage companies as the first target, saying that shareholders would be compensated with bonds. While most staff would keep the same jobs those of senior executives and directors would be filled at significantly reduced salaries. Energy utilities and postal and rail services would also be nationalized.

His other big proposal would apply to companies with more than 250 workers, who would transfer 1 percent of their shares each year to “inclusive ownership funds” that would ultimately control 10 percent of the stock.

Business groups were unimpressed. “With Labour’s current proposals, the fallout for the U.K., its workers and customers would be a drop in living standards,” said Carolyn Fairbairn, director general of the Confederation of British Industry.

“At a time of great uncertainty, this is no way to build the foundations of competitiveness and productivity that will improve people’s lives,” she added.

Stephen Martin, director general of the Institute of Directors, said that the “overwhelming majority of business leaders are as frustrated as anyone about poor wage growth, sluggish productivity and corporate governance failures.”

Nevertheless, he added, “the answer will not be found in sweeping measures and angry rhetoric.”

Source: NYT > World

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