Labour's McDonnell To Promise 'New Economics'

The Labour Party will consider radical changes to the Bank of England as it plans to "tackle the deficit without austerity".

Shadow chancellor John McDonnell will promise a "new economics" at his keynote conference address in Brighton to underpin what Labour calls the "new politics" of Jeremy Corbyn.

He will argue that Labour can tackle the deficit, build a stable economy and help entrepreneurs while "offering the electorate a real economic alternative".

In an exclusive interview with Sky News ahead of his speech, the shadow chancellor denied that adopting George Osborne's fiscal charter, aiming for a surplus in this Parliament, had undermined his radical credentials.

"What we are trying to do is completely change the narrative to close down the issue about deficit denial and then move on to a much wider open debate in our society, so you’ll see that in the speech," he said.

"It's exactly what we said [in the leadership campaign]. What we’re going to do is make sure we can manage our economy, tackle the deficit without austerity. That's what we are saying. That’s the dividing line between us and the Tories."

:: Watch shadow chancellor John McDonnell's speech live on Sky News at 12.15pm

Independence of the Bank of England has been part of the political consensus in the UK for nearly two decades.

Mr McDonnell's plans for a review of the central bank fall short of that, but may see a change in its mandate.

He will also call for openness at the Office for Budget Responsibility and an effectiveness review at the HMRC, responsible for tax collection.

Mr McDonnell attended a fringe meeting for advocates of a Financial Transaction Tax last night and admitted "contretemps" with his predecessor Ed Balls over the issue in the past.

He indicated Labour could be open to a unilateral FTT, rather than its current position of adopting it only alongside other major economies.

Economist Richard Murphy, an early inspiration for so-called Corbynomics and "People's Quantitative Easing", told Sky News that much of the economic strategy of the new Labour leadership was dependent on there being another economic crisis.

"Peoples QE was a plan for economic downturn. I believe - and I think John believes - we are going to have one...

"John is saying we should put in place the plans that real opposition has to put in place - the plans that will revive the economy," Mr Murphy told Sky News.

The previous shadow chancellor, Chris Leslie, called on Sunday for more "clarity" on Mr McDonnell's fiscal plans.

Mr Leslie said Labour would be "laughed out of the court" if it tries to balance the books without spending cuts or tax rises.

Mr McDonnell will also confirm a new economic advisory panel - that includes Nobel laureate Joseph Stiglitz and best-selling economist Thomas Piketty - will meet every quarter to develop Labour economic policy.