Preston's plan to be used as a model across the nation

The party will help local councils to bring services back in-house, set up new energy companies and set up co-operatives using a new team of experts.

Speaking in Preston, Shadow Chancellor John McDonnell praised the ground-breaking work of Preston Council.

The authority is reported to have returned almost £200 million to the local economy.

It has also supported more than 1,600 jobs by using the town’s anchor institutions and local government contracts to keep money in the local economy.

Labour’s new Community Wealth Building Unit will borrow from the Preston model and share other innovations with Labour councils.

Mr McDonnell told a conference at the Harris Museum that the Labour party could not wait until it was back in power before taking steps to end austerity and revive the economy.

He said: “There are many creative solutions being used already, like in Preston, and we need to spread this inspiring work around other Labour councils now, so we can bring services back in house, stimulate the economy and provide decent jobs, extend ownership and control, and strengthen local democracy.

“By working together to share these principles where Labour is already in power locally, we can sow the seeds of a country that works for the many, not the few.”

Mr McDonnell told the Post that he became aware of the Preston model two years ago thanks to contact with Preston councillor Matthew Brown, cabinet member for social justice, inclusion and policy .

He said: “He convinced me to come up here and have a look at what Preston was doing.”