John McDonnell MP, Labour’s Shadow Chancellor, speech to the Co-operative Party annual conference in Cardiff:

“I want to pay tribute to the Co-operative Party which is now 99 years old and looking forward to its century next year.

“It is refreshing to be addressing the Co-operative Party who have partnered with the Labour Party through thick and thin since our electoral pact in 1927. It’s our unity as a movement that has always been our strength.

"But let’s be clear: the whole labour movement is at a turning point.

"The Leave vote was one marker for that. Simply put, it means the status quo is no longer an option.

"The despair that helped fuel the vote to Leave was driven by a deep disaffection with the political process.

"Successive governments have used an economic model that concentrated too much wealth in too few places and in too few hands.

"It was this model that spectacularly blew up in the crash of 2008, and whose consequences we are still living with.

"But the challenge for the labour movement stretches beyond criticising the failures of the old model.

"We have to recognise that if our solution to the crisis today is to pretend the clock can be turned back, we will fail.

"Since the Second World War, a political strategy has come to dominate the left that stressed the central importance of central government in transforming society.

"A successful progressive government would just have to oversee growth, and then redistribute the proceeds.

"The strategy for the left was then to win control of the state, and use the state to redistribute incomes from a growing economy.

"For seventy years, through Old Labour and New, this fundamental model of social democracy held.

"Some of Labour’s greatest successes were built on this model, whether the NHS or Sure Start centres. Tax money was taken from rising incomes and spent in a progressive manner.

"That model now seems to have come to an end.

"The economists talk about “secular stagnation”, which is the idea that the developed economies are in for a period of extended low growth. The International Monetary Fund, in its latest forecasts, has downgraded its expectations for economic growth in the developed world.

"And we know from OECD figures, analysed by the TUC, that real hourly wages have fallen 10% in this country since the crash – a worse performance than any other OECD member, except for Greece.

"We have to search for a different approach.

"The next Labour government will stand ready to invest across the whole country.

"Whilst this government still intends to cut public investment in real terms over the next few years, we know that it is investment that will deliver the economic transformation this country now urgently needs.

"That is why we have proposed a £500bn investment programme, backed up with a National Investment Bank and a network of regional development banks.

"This will deliver the funding needed to allow every part of our country and every person to reach its full potential.

"There’s a growing consensus, in these times of economic uncertainty and faltering economies, that public investment is essential to delivering prosperity.

"From the OECD to the IMF, and from the TUC to the CBI, responsible organisations concerned with the state of our economy have identified public investment as central.

"It beggars belief that Phillip Hammond has not already turned his back on former Chancellor George Osborne’s failed austerity strategy”

The co-operative economy

“The evidence that co-operative enterprises and worker-owned companies can produce far better results is compelling.

"Twice as many co-operatives survive the crucial first five years as other businesses. And worker-owned enterprises offer a clear productivity advantage.

"So that is why after this conference season is over, we will begin a major piece of work on developing the co-operative economy.

"With UK productivity now lagging further and further behind the US, Germany, and France, it’s time to turn the corner on the model of economic growth that promotes low-paid, insecure work in huge quantities.

"It’s a disgrace that zero hour contracts have risen by 20% in the last year alone.

"But by giving people a stake in the companies they work for and spreading the ownership of those companies, we can start to transform corporate Britain.

"That’s why I’ve argued for a “Right to Own” for employees. If a company is facing a change of ownership or closure, they should have first refusal on forming an alternative employee-owned business plan.

"Backed up by financing from the new regional development banks, who will be tasked to deliver low-cost financing to co-ops, this can be one way to resolve some of the issues now bearing down on our local economies.

"With two-thirds of Britain’s family businesses at risk of closure when their owners retire, employee ownership can help solve our brewing succession crisis.

"But we should be looking to the examples of Germany and the US and elsewhere, where co-operatives form a major part of how their economies operate.

"I want to see the next Labour government put in place measures that will at least double the size of our co-operative sector, giving a nearly £40bn boost to the whole economy.

"We’d look to introduce legislation to assist the formation of mutual guarantee societies, mobilising funds for small businesses by enabling them to club together to raise credit.

"Over 8% of lending to SMEs across Europe is made through mutual guarantee societies. We can end the starvation of funding for our small businesses here.

"We plan in the coming weeks to launch a guide, jointly with the Association of British Credit Unions, helping councillors and local authorities up and down the country to support the work of local credit unions.”

Ends