Jeremy Corbyn vows to strip City of London of its 'dominance over politics'

Sean Morrison
The financial sector has “pernicious and undemocratic” control over British politics, the Labour leader will say: Getty Images

Jeremy Corbyn will vow to strip the City of London of its dominance over politics in a speech later.

The Labour leader is set to say the financial sector has an “undemocratic” control over British politics.

The UK’s “distorted” economy cannot be rebalanced without swinging the power of the capital’s financial sector back towards an industry model, Mr Corbyn is due to say in his address at the EEF manufacturers organisation speech.

He will argue that the City’s growth has had a destructive impact on the “real economy” and call for a “fundamental rethink” of how the sector is regulated.

At the major speech in London, he will say: "There can be no rebalancing of our distorted, sluggish and unequal economy without taking on the power of finance."

Jeremy Corbyn: The Labour leader the City's growth has had a destructive impact on the 'real economy' (PA)

"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.”

He will say that a Labour government will take “decisive action to make finance the servant of industry, not the masters of us all”.

Canary Wharf: London's headquarters of British banks HSBC and Barclays (AFP/Getty Images)

After the attempted takeover of the GKN engineering group by Melrose Industries, Mr Corbyn will also promise strengthened government powers to intervene in hostile takeovers.

He will point 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, we are powerless to act," he will say.

"That's why the next Labour government will broaden the scope of the 'public interest test', allowing government to intervene to prevent hostile takeovers which destroy our industrial base."

But Miles Celic, chief executive of industry body TheCityUK, said Mr Corbyn failed to understand the financial services sector was a "national asset", with major centres in other 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."