Shadow Chancellor John McDonnell has laid out an extraordinarily bold package of investment for the British economy. If carried out, the scale being proposed would be sufficient to radically transform the economic geography of this country – shifting power and wealth out of a few tiny corners of our capital city, and placing both into the hands of working class communities across the country.

We would emerge, at the end of the ten-year period envisioned for the whole programme, into a radically different Britain: the investments would lock into place the fairer, sustainable economy at the centre of Labour’s vision. With £400 billion of capital investment overall, including £150 billion in a five-year Social Transformation Fund necessary to rescue our public services, the shift in the balance of economic power implied would be the biggest since the Industrial Revolution briefly challenged the supremacy of the City of London.

Doubts have come from predictable quarters. Today’s headlines have centred on the expense of this – but as even Tory Chancellor Sajid Javid points out, with government borrowing costs so low as to be below zero in real terms, now is the ideal time to borrow to invest. Paul Johnson of the Institute of Fiscal Studies (IFS) has raised a different objection to the plans, expressing his disbelief in The Times that this scale of spending contemplated by Labour could be attempted. Yet a sober assessment of the economic mess the next Labour government will inherit suggests it will have little choice but to commit to major investments – and that’s even before we think about creating an economy for the future.

Report after report have made clear how big the problem of underinvestment now is. The Institute of Public Policy Research has estimated that the NHS needs another £5.6bn a year in investment, every year, to keep up with demand. The IPPR researchers found that while the NHS today has some of the lowest numbers of CT and MRI machines in Europe, it has one of the highest number of fax machines – a glaring example of why continuous investment is needed to keep up with technology. There is now a backlog of £6 billion of critical maintenance issues on NHS sites – from cracks in ceilings to sewage leaks – that funding is not currently available to fix.

An alliance of charities, including Cafod and WWF, have called for £42 billion a year to address what they rightly describe as the “climate emergency”. This would include £11.6 billion on transport improvements, £2.6 billion on rewilding and land management schemes, and billions more on improvements for housing. Labour itself has already committed to a £60 billion, multi-year programme to insulate every home in the country to the highest standards of energy efficiency. This would not only reduce carbon emissions, but save households on their heating bill – and create, on Labour’s estimates, 440,000 jobs, right along the supply chain from insulation manufacture to installation.

If we want to install fibre optic broadband across the whole country, the bill could be £28 billion. Transport for the North have proposed a costed and hugely ambitious plan to create high-speed rail links across the North of England, linking the Northern cities from Liverpool to Hull and Newcastle. This would be transformational, generating (on their forecasts) an additional 850,000 jobs across the North, as the knock-on effects of a functioning, properly-funded transport system filter out into the economy. But the cost would be £70 billion.

Set against the wreckage of our economy and public services, from the crumbling hospitals to the clapped-out trains, and then looking ahead at the challenges bearing down on us – climate change being the most obvious – the gap between where we are now, and where we ought to be is painfully apparent. The sad and simple truth is that a large part of Britain’s failure as an economy is not just a near-decade of austerity under Conservative-led governments, brutal and appalling as this has been. It is also the decades and decades of neoliberal governments that failed to invest, saddling us with a legacy of failing infrastructure and regions left far behind.

Such investment as government has provided has ended up concentrated in a few privileged spots – the legacy of old-school Treasury thinking, biased towards London and the South-East. As a result, while London is set to receive £3,600 of planned transport per person, Yorkshire and Humber will receive only £511. There is simply no reasonable excuse for discrepancies like this and it is good to see Labour is prepared to directly challenge Whitehall thinking – moving key decision-makers out of central London. And there is no excuse for the style of decision-making that can only think about making marginal tweaks when confronted by systemic failure.

To help that shift in government thinking, Labour has critically repurposed its existing fiscal rules – its fundamental guidance on how the government will spend its money, and manage its borrowing. The original Fiscal Credibility Rule has been subtly rewritten: the target for removing the deficit on day-to-day spending in five years remains, but the additional target for reducing government debt (relative to national income) has been changed. Labour in government will now target “public sector net worth” instead. This means that instead of only looking at how much debt the government has, it will also take into account its wealth.

This sensible move, in line with emerging thinking in economics, means that the next Labour government will have far more capacity to invest its money. Only looking at debt is not always useful in economics terms – it’s the equivalent of berating someone for being in debt for taking out a mortgage, but ignoring the fact that they have acquired a house. A full assessment would look at both the mortgage and the house. So it is with a government: at present, if the government borrows to invest in, say, a new railway line, the fiscal rules would only see the debt – and ignore the valuable new asset that is the railway.

But sensible as this is, this shift is another blow against neoliberal thinking. The rule change locks into place the idea that governments can invest in productive assets – that government spending isn’t just a pure cost. After years of neoliberal nonsense about how the “unproductive” public sector merely parasites off the “productive” private sector, it starts to place government and public ownership back where they should be – as essential parts of the economy. But we have to turn these big, abstract ideas into real, tangible projects. Labour has created the political space where it can fill in a bold, new picture of the kind of economy it wants; it now has to fill in the details, right down to the level where people can see how their city or town or even street might look different – and better.