John McDonnell's policy about-turns spook UK industry and investors

In April Britain's shadow chancellor, John McDonnell, sought to reassure the head of the country’s biggest telecoms group BT that it would not feature in his sweeping nationalisation plans, should the Labour Party be elected to power on December 12th.

On the sidelines of a conference in London amid rumours about Labour’s ambitions, John McDonnell told Chief Executive Philip Jansen: “BT is not part of our plans,” according to a person briefed on the talks.    

However McDonnell last month stunned the company and the business community by pledging to take over its broadband network and provide free internet for all. He has reportedly not met with BT since. 

The move confirmed the fears of many executives that McDonnell’s promise of the most radical socialist government in British history will end the pro-business climate that has endured since the days of Margaret Thatcher. 

Labour policies include plans to nationalise rail, mail, utility and water companies, give 10% of big companies’ shares to staff, bring in a four-day working week, hike taxes on the wealthy, and ramp up borrowing and spending. 

The party says social discontent behind Britain’s shock 2016 vote to leave the European Union still runs deep, and voters who feel left behind by decades of unchecked capitalism and years of spending cuts will put Labour in power. 

Polls also show more than half of the public support nationalisation of rail and water companies, higher taxes on the rich and putting workers on boards. But the agenda has put Labour on a collision course with business. 

McDonnell, 68, has spent the last three years meeting executives from companies such as Goldman Sachs and Vodafone to explain his vision, drinking only tea to protect his abstemious reputation. 

Executives are impressed by his eagerness to meet them, describing him as hard-working and open to ideas, but they worry about what they say is his habit of producing policy changes out of the blue, despite assurances that he has “nothing up my sleeve” and “what you see is what you get”

In November, McDonnell was asked whether he would impose a windfall tax on oil and gas companies and if so, how it would work. “No and no,” he replied. Days later the policy was included in the party’s plans for a greener economy. 

Labour also announced last year that it would force all large companies to hand over a tenth of their equity to the workforce. The British Chambers of Commerce said this was a “massive new source of uncertainty” that could hit investment. 

John Caudwell, the billionaire founder of retailer Phones4u, told McDonnell in a radio programme on Monday that while he welcomed efforts to narrow the gap between rich and poor he feared Labour would harden its policies once in government. 

“I am not interested in manifestoes, because you will change your mind when you get in power,” he said. 

Once fired for being too radical from the hotbed of 1980s left-wing politics, the Greater London Council, McDonnell was installed as Labour’s finance spokesman in 2015 when his friend and fellow Marxist Jeremy Corbyn became leader. 

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