The City should not underestimate John McDonnell anymore

OK, mea culpa: like most of the City, I didn’t spend too much time poring over the Labour manifesto before 8 June.

I assumed Corbyn-led Labour would not win – and that was right – but rarely have the losers emerged from an election proclaiming victory quite so assertively.

There is no denying that Corbyn ran “Theresa May’s Team” far closer than could have been predicted just a few short weeks before the election. We suddenly need to pay serious attention to Labour again – and, in particular, the Shadow Chancellor John McDonnell.

McDonnell is a man of real ambition. He twice attempted (unsuccessfully) to secure the nominations required to run for leader of the Labour Party. Make no mistake, he is someone who has set his sights firmly on the top.

However, his failure to secure these nominations is also revealing: for his first 18 years in Parliament, McDonnell was a complete outsider within the Parliamentary Labour Party (PLP). Whereas a sufficient number of colleagues were willing to ‘lend’ Corbyn their nomination in 2015, McDonnell enjoyed no such luck in his aborted leadership bids of 2007 and 2010.

McDonnell is a pragmatist, prepared to disown some of his utterances of the past if it helps him to earn a hearing in the present

A former Labour minister and fellow member of Labour’s 1997 intake of MPs told me that McDonnell was “rarely around” and was “much more interested in the extra-parliamentary circuit – party rallies, protest groups, fringe groups.” It is quite a feat to have gone from being such a peripheral figure within the PLP to being the most influential ally of the party leader.

Yet McDonnell is undoubtedly adept at speaking the language of a leading politician. In his appearances on Andrew Marr or the Today programme, he exudes an air of reason and common sense which belies the decades spent in ardent support of hard left causes and movements.

With his past comments in support of various extremists, McDonnell arguably carries even more baggage than his boss. Among the most notorious are his calls to honour the “bombs and bullets and sacrifice” of the IRA, and his “joke” that he would assassinate Margaret Thatcher if he could go back in time.

But he has also been much more unreserved in apologising for such comments than Corbyn. In 2015, he apologised “from the bottom of [his] heart” for offense caused by his IRA remarks. This illustrates another notable feature of the John McDonnell of 2017: he is a pragmatist, prepared to disown some of his utterances of the past if it helps him to earn a hearing in the present. Would he be willing or able to be similarly pragmatic in policy terms if he ever secured the keys to No 11?

Be in no doubt, John McDonnell wants to be Chancellor, and his ambitions may not end there

The Labour manifesto of 2017 undoubtedly had McDonnell’s fingerprints all over it. From commitments to raise taxes on the wealthiest and corporations, to plans for a major programme of renationalisation of utilities, it was a programme for government which resonated strongly with McDonnell’s long-held leftist beliefs.

But there were also signs of comprise. The manifesto committed the party to the renewal of Trident; extolled the virtues of the single market; and set a target of eliminating the government’s deficit on day-to-day spending within five years in a bid to demonstrate fiscal restraint.

Some of these positions reflect the democratic structures of the Labour party in respect of policy development. Corbyn and McDonnell cannot simply dictate policy, with bodies such as the National Executive Committee and National Policy Forum having a key role to play.

Unless they can succeed in tipping the balance of these bodies in their own favour, the Labour party itself is likely to reign in the most radical policy instincts of the would-be PM and Chancellor.

But be in no doubt, John McDonnell wants to be Chancellor, and his ambitions may not end there. If ever he succeeds in making it to Downing Street, he will vigorously pursue a radical left-wing agenda for corporate Britain. But in doing so, don’t be surprised to see him making compromises along the way, and portraying it all as simple common sense.

The City should not underestimate or ignore John McDonnell anymore.

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