Labour shadow chancellor John McDonnell has set out plans to abolish the North-South divide and ensure the Midlands and the North get a fair share of investment from both government and industry.

Speaking in advance of Labour’s annual conference, he said there was nothing inevitable about the huge wealth gap between the wealthy south of England and the rest of the country.

He described figures revealing the low level of investment in the North and Midlands as “startling”.

And he set out proposals to draw up a “regional plan” for every region of the country, setting out how they would get a fair share of the £500 billion that Labour plans to invest in the economy over ten years.

Labour activists meet in Liverpool this weekend, where party leader Jeremy Corbyn will address a rally on Saturday evening before the conference officially kicks off on Sunday.

Speaking in advance, Mr McDonnell highlighted statistics showing investment in infrastructure is much higher in London and the south east than elsewhere.

He said: “It’s everything. It’s rail, it’s road, its new technology, it’s digitalisation, it’s energy. You name it.

“What we’ve said is we need a consistent plan over a decade for investment around the whole of the country, not just London and the South East.

“The figures are startling for the investment that’s gone on in London and the south east as opposed to the rest of the country.”

Mr McDonnell’s plan to transform the economy involves £500bn of investment in infrastructure over ten years, distributed by a National Investment Bank and a series of Regional Investment Banks. These would provide funding for projects decided at a regional and local level.

A Labour government would also move some functions of the Bank of England to Birmingham.

“We need a regional plan for each of the regions, about what sort of investment do they need, where does it need to be channelled both in terms of infrastructure but also in terms of resources around skills in particular.

“And what sectors of the economy does each region think they can specialise in and then grow upon?”

This work has already begin, with Mr McDonnell and his team talking to local councils, MPs and others.

He said: “People are buzzing with ideas but what they need is a state that will help them.”

John McDonnell
John McDonnell

And he insisted there was nothing inevitable about the north/south divide, the historic division between the wealthy south and the rest of England.

Asked if it was here to stay, he said: “No, no, not at all,

“The first industrial revolution started in the north. It didn’t start in London.

“And the fourth industrial revolution could be the same.

“But it does require longer term thinking. It does require long-term patient investment.

“And that’s what the state will provide.”

While Mr McDonnell’s investment plan involves Government borrowing of £250 billion, much of the funding for infrastructure will come from the private sector - which will make a profit.

He said: “I’ve been meeting with asset managers, firms, banks, etc

“And we’re saying to them, actually when we start investing in the state in that way, you will invest alongside that and you will get a decent rate of return. And they’ve been up for that.”