John McDonnell has rejected suggestions that Labour’s economic policy would increase prices and lower wages, arguing that structural changes would challenge “extreme inequality” and unstable investment.

Speaking after Labour’s manifesto was unveiled on Thursday, the shadow chancellor said people would have much more control over their lives and the economy as a result of the party’s plans to restore trade union rights and collective bargaining.

“We’re democratising the economy and providing people with a greater range of basic rights so they have much more control over the economy,” he told BBC Radio 4’s Today programme.

“This is basically following the overall model which other countries have taken. Let’s have a far more democratic, accountable economy than the one we’ve experienced recently.”

Challenged over analysis from the Institute for Fiscal Studies that Labour’s plan was “simply not credible”, with “colossal” spending funded by higher taxation inevitably affecting ordinary people, McDonnell said the thinktank had got it wrong.

“In terms of income tax, the top 5% will pay a bit more, and actually not a great deal more,” he said. “95% of earners will not pay more in income tax rates, VAT or national insurance. We’re being straight with people: we are reversing some of the corporation tax cuts that have been given away by the Conservatives and Liberal Democrats over the last 10 years.”

He added: “This argument that if you cut taxes to corporations they will start investing again hasn’t been proved to be right.”

The rate of corporation tax is currently 19% and was slated to fall to 18% next year. It follows a cut from 28% – which is around the average in comparable economies – in 2010 by the coalition government.

“Instead of investing those resources, we’ve seen corporations sitting on that earned income, to the level of about £600bn,” McDonnell said, adding that the money had been used to fund share buybacks to boost bonuses.

“Instead of being driven by short-term profiteering and shareholder interest only, they will think for the long term, invest and grow the economy, and that’s what’s happening elsewhere.”

Asked whether Labour would restore secondary picketing, he said: “We’ll make sure that people have the right, as in the [International Labour Organization] conventions, to withdraw their labour, yes.”

Speaking before the expected launch of the Conservative manifesto on Sunday, the chief secretary to the Treasury, Rishi Sunak, claimed Labour’s plans would increase the tax burden on ordinary people and outlined his party’s “fully costed” plans.

“Fiscal responsibility is very important to us,” he told Today. “We’ve said we will not borrow to fund day-to-day spending. We’ve paused a reduction in corporate tax so we can increase funding on the NHS, we’re taking the lowest paid out of paying national insurance, and we will ensure that debt at the end of the parliament will be lower than it is now.

“We will not be like the Labour party, putting up the tax burden on ordinary taxpayers. These are extraordinary, unprecedented and colossal rises in spending and Everyone will end up paying the price.”

Sunak added that Tory plans to increase stamp duty by 3% for overseas buyers would both help take the heat out of the property market and fund measures to reduce rough sleeping

“There is evidence from universities that in general a higher volume of foreign transactions puts up house prices and reduces home ownership rates for people living here building a life here,” he said.

“We believe strongly in home ownership, that is in clear contrast to Jeremy Corbyn who has called it a ‘national obsession’. We don’t think that’s right.”

The Richmond (Yorks) MP went on to defend the government’s record on rough sleeping, which has risen 165% since 2010 according to Shelter.

“I’m glad that rough sleeping in the last numbers we have, we saw the first fall in rough sleeping for eight years, it’s a complex problem with a range of reasons that people end up in that situation,” he said.

However, the chair of the UK statistics authority last year warned that claims that rough sleeping is falling in England should not be trusted due to concerns councils had deliberately underreported the scale of the crisis in their area.