'Power is coming home' pledge as Labour says it will set up Government offices in the North

Speaking in his home city of Liverpool today (Thursday) Mr McDonnell will set out a National Transformation Fund worth £400bn - first mooted in an interview with the Manchester Evening News in July.

But since then the fund has been split into two to include a new £150bn Social Transformation Fund over five years, to be spent over the first five years of a Labour government, which he will say will go to schools, hospitals, care homes and council houses “to deal with the human emergency which the Tories have created”.

Both this fund, and an accompanying Green Transformation Fund worth £250bn over 10 years would be controlled by a unit of the Treasury set up in the North.

And Labour has pledged to set up regional Government offices with civil servants from not only the Treasury but also the Department for Business, Energy and Industrial Strategy, Ministry of Housing, Communities and Local Government, the Department for Transport, and the Department for Education.

The units would set priorities for regional development banks, regional planning and industrial strategies, and identifying and delivering projects from the funds, and they would be accountable to local leaders.

Mr McDonnell is expected to say: “Our aim as a Labour government is to achieve what past Labour governments have aspired to. An irreversible shift in the balance of power and wealth in favour of working people. That means change means investment on a scale never seen before in this country and certainly never seen before in the North and outside of London and the South East.

“To achieve that objective also requires therefore an irreversible shift in the centre of gravity in political decision making and investment in this country from its location solely in London into the North and regions and nations of our country.”

He will add: “Labour’s Treasury ministers will meet outside of London and will have a ministerial office in the North.

“The centre of gravity of political gravity is shifting away from London.

“This is where the investment is needed and this is where those decisions on investment need to be made on the ground.

“Power is coming home. Back to the people.

“We can only deliver the real change we need by putting power into the hands of communities of the people who know their local area best, like those who came up with the tidal barrage idea for the Mersey, which we’ll build.

“It won’t just be public investment, of course. We can’t do it if the private finance sector isn’t pulling its weight too. So the days of the City dictating terms to the rest of the country are over.

“The finance sector will be brought in line with the rest of us in addressing the emergency, with an end to short-termist thinking – the thinking that only prices in risks associated with an investment here and now, rather than the potential for a dramatic change in the price of carbon investments leading to significant stranded assets.”