John McDonnell: Parliament could hold sessions outside London to prevent 'distortion' of economic policy away from regions

Shadow Chancellor says the concentration of decision-making in the Capital may have contributed to the result of the Brexit vote

(Getty)

Sessions of Parliament could be held outside London to prevent the “distortion” of economic policy away from the regions, John McDonnell has said.

The Shadow Chancellor said the concentration of decision-making in the Capital may have contributed to the result of the Brexit vote as institutions failed to take into account the needs of the rest of the UK.

His comments came as a Labour-commissioned report suggested moving parts of the Bank of England to Birmingham, which would sit beside a National Investment Bank and a Strategic Board of Investment, which the party pledged to create if in power.

Speaking at the report’s launch in London, Mr McDonnell failed to rule out relocating the bank completely from its historic headquarters in Threadneedle Street, which he said would be a matter for discussion.

Asked by The Independent if he would support moving aspects of Parliament to Birmingham as well, Mr McDonnell said: “I think there is an argument put forward for ensuring that certainly Cabinet and maybe sessions of Parliament could be held elsewhere.

“I know Jeremy has been talking about holding shadow cabinet meetings around the country on a regular basis and I think you will see that evolve into other forms of direct devolution.

“There is a view that decision-making located in Whitehall, Westminster and the City – and that includes the Bank of England – results often in a distortion of the economic policy direction, not taking into account the real needs of the regions of our country, the regions and nations of our country.

“To some extent that may well have contributed towards the Brexit vote as well.”

Birmingham was put forward as one of several possible sites for an interim Parliament once work begins on the multi-billion refurbishment of the Palace of Westminster. The long-delayed project will be debated in the Commons in January.

Mr McDonnell also faced questions on his party’s apparent softening of its Brexit stance, after Shadow Brexit Secretary Keir Starmer indicated Labour would support “easy movement” of people in exchange for the benefits of remaining in the single market.

The Shadow Chancellor said Labour would support remaining in a “reformed single market”, and seek a “negotiated relationship” to ensure “tariff-free access” to “a single market” and “a customs union”.

He said: “What I said is that remaining within the single market would not respect the referendum result.

“What we’ve been using as the phraseology, a single market, not the single market, and a customs union not the customs union, so therefore a reformed single market or a new negotiated relationship with the single market – and Keir was actually putting our position yesterday.”

Moving the Bank of England and other institutions to Birmingham would create a new ‘economic policy hub’ in the Midlands, as much of the country is outstripped by London and the South East in terms of jobs and investment, said the report by consultants GFC Economics and Clearpoint Corporation Management.

Mr McDonnell said the report “drums home the message that our financial system isn’t delivering enough investment across the whole country, and in the high-technology industries and firms of the future where it is needed most”.

Birmingham has played a significant role in recent Conservative strategy to take on traditional Labour voting areas, partially down to the efforts of Theresa May’s ex-chief of staff Nick Timothy, who hails from the city.