Sajid Javid: Tories will increase borrowing to invest in infrastructure

John McDonnell

Syed Kamall, Academic and Research Director at the Institute of Economic Affairs, said: "Today's election speeches show both parties have abandoned fiscal restraint in favour of increases in public spending to be paid for through extra borrowing".

Speaking in Liverpool, the shadow chancellor said that an incoming Labour government must address the "urgent task of rebuilding our social fabric that has been torn apart by the Tories".

He promised "real change" by investing money in the North and regions outside of London and the South East. It requires an irreversible shift in the centre of gravity in political decision-making, as well as investment, from its location exclusively in London to the North and regions and nations of our country'.

Mr McDonnell added: 'It will mandate us to deliver an improvement in the overall balance sheet by the end of the Parliament.

McDonnell said his party would exclude investment in infrastructure from its borrowing targets if it won the election, adding to government debt "but also adding to the government's assets".

'With the rents on our new council properties and the electricity produced by our public sector energy companies put aside against the price of servicing the debt issued to attract them.

He vowed that the party would not let borrowing costs soar, promising a cap "in normal times" on debt servicing costs of 10% of Britain's tax take.

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He announced that a social transformation fund with immediate funding of £150 billion would be established by the next Labour government to "upgrade and extend" the education and care system, as well as engage in building a wave of new council houses.

And he said Labour's Treasury will meet outside of London and hold ministerial office in the north of England, saying: "The centre of political gravity is shifting away from London".

Mr McDonnell added: 'On the same time my Treasury ministerial meetings will no longer be exclusively in London. The centre of gravity, of political gravity, is intelligent some distance off from London. It's coming back home to the North'.

Javid, who said it was a responsible time to invest in the country, said he would keep a balanced current budget for day-to-day spending, but would borrow more to invest.

The IFS said Labour plans to spend an extra £55 billion per year on investment over the next five years, would more than double public investment spending - taking United Kingdom government investment spending from around the bottom of the global league table to around the top.

Under a third rule the framework would be reassessed if future borrowing costs rise significantly to above average.

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