ALL private firms with more than 250 staff would have to set up “ownership funds” to give workers a financial stake in their companies under plans set out by John McDonnell yesterday.

The shadow chancellor said he wants to deliver an “irreversible shift in wealth and power in favour of working people” as Labour prepares for a general election within months.

Mr McDonnell also told the Observer that Labour must be ready for an election because the Tories are on the brink of collapse.

He said: “What this [policy] will ensure is that, in large companies, in addition to rewarding workers with wages, they will reward them with shares that will go into a pool that will allow them to have an ownership role.”

Mr McDonnell predicted that the Tories will “rip themselves apart” in the autumn following party conference season.

He said: “My argument is that they should move on and let us get on with the negotiations and, if not, call a general election.”