Labour is winning the argument on the economy, John McDonnell told a rally against austerity yesterday.

The shadow Chancellor hailed Tory u-turns over cuts to tax credits, and the move to accept the need for an industrial strategy, but said Labour now needed to set out its “positive alternative”.

He was speaking at a Labour Assembly Against Austerity conference which came hours before a new poll which put the Tories comfortably ahead of the Opposition on the key questions of the economy and handling Brexit negotiations.

McDonnell, who was re-appointed as Labour’s leading spokesman on the economy in the aftermath of Jeremy Corbyn’s re-election, told left-wing activists that Tory concessions showed they were losing the main political arguments.

“We’ve had major successes in the last year because as a Party we hammered away at the Tories for making a political choice to impose austerity cuts and I want to congratulate everyone for all of those hard years of campaigning.

“We’ve reversed cuts to tax credits and Personal Independence Payments.

“This shows what the Labour Party and the whole labour movement can deliver when they are united in opposing Tory austerity.”

Theresa May tried to position herself as a “one nation” prime minister when she entered Downing Street and immediately championed several economic reforms which had been advocated by Ed Miliband when he was leader of the Opposition.

May floated the prospect of giving workers from the shop floor a place on company boards at the same time as she ditched George Osborne’s to record a budget surplus by 2020.

“Theresa May has begun talking about government intervention in the economy in a way we haven’t heard from a Prime Minister for decades,” McDonnell said.

“But she’ll be opposed by her own party. She’s talked about workers on boards but press reports make clear her own Cabinet are opposed.

“It’s up to Labour to lay out the positive alternative for the country. The Tories aren’t capable of it because they are trapped in the past.

“Laying out the alternative is the next step for out movement.

“Through Labour’s national and regional investment banks, underpinned by our fiscal credibility rule and backed up by a comprehensive industrial strategy it’s only Labour who are thinking seriously about this country’s future.”