Labour's John McDonnell says UK economy requires 'revolution'

Labour is planning a "revolution" for the UK economy, John McDonnell has told the BBC.

The shadow chancellor was speaking to Newsnight for a series of reports to mark 40 years since the election of Margaret Thatcher.

He said he saw parallels between today and 1979 when Mrs Thatcher swept to power in a major political sea-change.

"Things aren't working for people, so they're looking for change," Mr McDonnell said.

Asked whether Labour's plans represented evolution or revolution he said: "OK it will be a revolution. Transformative - because we are going to change society and that's what's demanded of us now."

He added: "And do you know? I think most people accept that now. We'll do it by taking people with us. But it will be done on a very pragmatic basis.

"It is common sense socialism and the point about that first period of office when we go into government will be to lay the foundations for this transformation that we want.

"So we are in a hurry - because the issues are so desperate now."

Labour is advocating higher taxes on the wealthy and companies, a major expansion of public investment, the re-nationalisation of certain utilities and moves to give many more workers a direct financial ownership stake in their firms.

Critics and advocates alike say this would represent a major break from the Thatcherite legacy of lower taxes, free markets, deregulation and privatisation.

Speaking in the same Newsnight film on the future of the UK's economic settlement, the Chief Secretary to the Treasury, Liz Truss, agreed the UK was on the verge of a major change.

"I do think there is something happening, something big. Politics is now debating ideas again from first principles. We went through a few years - the Blair years, the Cameron years - where it was all about managerial politics... now we are having a more fundamental debate about our economy."

But she rejected Labour's policy agenda, particularly on tax and a bigger role for the state.

"I think higher taxes just choke economic growth," she said.

"Money that is taken in taxes is money that can't be invested in the wider economy. I look at countries like Japan and Korea which run very successful economies and the size of the state is lower.

"There's no reason we can't be more successful. Our challenge as a government is to raise economic growth. Getting growth up means more money is going into tax and public services."

Newsnight's three film series "The 40-year itch" begins on Newsnight on Monday 29 April. The first film will explore the future of work.

You can watch Newsnight on BBC Two weekdays at 22:30 or on iPlayer, subscribe to the programme on YouTube and follow it on Twitter.