Speaking at the Labour Party conference in Brighton today, he pledged to “control exorbitant rents” and crack down on “£13bn tax breaks given to buy to let landlords for repairing their properties, whether they undertake the repairs or not”.
The Residential Landlords Association launched a scathing attack on proposals, as a spokesperson said: “Mr McDonnell failed to remind delegates that, in the words of Paul Johnson, director of the Institute for Fiscal Studies, ‘rental property is taxed more heavily than owner occupied property’.
“He failed also to tell the conference that Labour’s own ministers in the Welsh Government have argued against rent controls as they reduce the quality of housing and stifle the supply of much needed new housing.”
Rent controls will divide opinion within Labour, as in February Lesley Griffiths, minister for health and social services and Welsh Labour MP said: “I do recognise that rent control can look attractive initially, but I think previous experience shows that rent controls reduce the incentive for landlords to invest and can then lead to a reduction in quality housing.
“I think that could give possible unintended consequences to the supply of private rented properties.”
At the Labour conference McDonnell proposed introducing a higher minimum wage and he accused the Conservatives of making the poorest in society bear the brunt of cutting the deficit.
He said: “Austerity is not an economic necessity, it’s a political choice.
“The leadership of the Conservative Party made a conscious decision six years ago that the very richest would be protected and it wouldn’t be those who caused the economic crisis, who would pay for it.
“Although they said they were one nation Tories, they’ve demonstrated time and time again, they don’t represent one nation, they represent the 1%.
“When we challenge their austerity programme, the Conservatives accuse us of being deficit deniers.”
He added: “First we are throwing off that ridiculous charge that we are deficit deniers.
“Second we are saying tackling the deficit is important but we are rejecting austerity as the means to do it.
“Third we are setting out an alternative based upon dynamically growing our economy, ending the tax cuts for the rich and addressing the scourge of tax evasion and avoidance.
“Fourth having cleared that debris from our path we are opening up a national discussion on the reality of the roles of deficits, surpluses, long-term investment, debt and monetary policy.
“Fifth we will develop a coherent, concrete alternative that grows a green, sustainable, prosperous economy for all.”
McDonnell also said he would set up a review of the Bank of England, suggesting that Labour would instil new targets for the Bank to hit.
He said: “Let me be clear that we will guarantee the independence of the Bank of England.
“It is time though to open a debate on the Bank’s mandate that was set by Parliament 18 years ago.
“The mandate focuses on inflation, and even there the Bank regularly fails to meet its target.
“We will launch a debate on expanding that mandate to include new objectives for its Monetary Policy Committee including growth, employment and earnings.”
