Local authorities will be given the power to "impose rent regulation to secure fair rents" under Labour proposals, Shadow Chancellor John McDonnell has said. Speaking at a party conference on Labour's economic vision, McDonnell vowed to help people who are "at the mercy of an unforgiving, unrestrained housing market and landlords".

McDonnell repeated the opposition's plan to build 100,000 council homes each year if Labour is elected to government. He also called on councils to take heed from areas such as Manchester, Sandwell and Warrington by offering cheap mortgages backed by the local authority "to first-time buyers in particular".

Taking aim at the Conservative government, McDonnell said: "Labour would make it a mission to ensure that families and young people on ordinary incomes aren't locked out of home ownership."

In a damning admission, McDonnell also criticised previous Labour administrations, led by Tony Blair and Gordon Brown, saying it helped create an "unfair tax system" which ultimately benefited the super-rich. "The last Labour government relied too heavily on tax revenues from financial services, and too heavily on off-balance sheet spending through the private finance initiative," he said.

"It didn't do enough to clamp down on tax evasion and avoidance. It helped create an unfair tax system," he added.

The shadow chancellor also pledged that Labour would be more "radical" if the party wins the next general election in 2020.

"I want us to surpass even the Attlee government for radical reform," said McDonnell. "The situation demands nothing less. Simply undoing the damage inflicted by David Cameron and George Osborne will be a huge task. But we should aim higher than this."

Transforming the way in which capitalism fundamentally works in Britain was a recurrent theme in McDonnell's speech. He said that requires ambition and a need to "rewrite the rules of the economy."

"Prosperity has become too concentrated in the hands of too few, and the best opportunities in life restricted to a gilded set at the top of society," McDonnell added. "This is a bigger project than offering just a few appealing policy tweaks here and there. It means striving for a transformation in how capitalism in Britain operates. That means a fundamental shift in how future governments relate to the economy."