Advertisement

Radical new approach to UK economy needed, says commission

Economic growth in the UK no longer leads to a rise in earnings, a report out today has warned.

The interim report by the IPPR Commission on Economic Justice claims the British economy is no longer raising living standards for the majority of the population, and young people today are set to be poorer than their parents.

According to the report, the UK is experiencing the longest period of earnings stagnation for 150 years and while GDP per head has risen by 12% since 2010, average earnings have fallen by 6%.

It adds the share of national income that has gone on wages (73%) is now at its lowest point since the second world war.

‘Growing consensus across business, trade unions and

civil society that a radical new approach is now needed’

The report calls the UK the most geographically unbalanced economy in Europe, with average incomes in the north west and south west of England, the west Midlands and Wales now more than 30% lower than in London.

Around 15% of the British workforce are now self-employed and 3% are on zero hours contracts, it says.

It also claims the UK has more employees who are overqualified for their particular jobs than anywhere else in the EU and warns that while growing automation is unlikely to cause mass unemployment, it will make inequality worse if the financial gains it brings are not re-circulated around the economy.

IPPR director and commission chair, Tom Kibasi, said the British economy needs ‘fundamental reform’.

‘The persistent economic problems we have experienced since the 2008 financial crash won’t be fixed with a bit of tinkering,’ he said.

‘There is a growing consensus across business, trade unions and civil society that a radical new approach is now needed.

‘Change should be guided by a new vision for the economy, whose long-term prosperity is joined with justice for all.’

The report calls for a public debate on the future structure of the UK economy and recommends the country moves to a simpler and fairer and simpler tax system, which incentivises investment and employment, and dis-incentivises pollution and property prices.

It adds a ‘new social partnership’ is required, which binds responsible businesses, stronger trade unions and a more accountable government together.

The interim report states criticises current economic policymaking in the UK as ‘too opaque, too closed and too elitist’ and should be more inclusive of ‘ordinary citizens’, and moots the idea of reforming the Treasury.

It also suggests the creation of regional banks with ‘geographically bounded mandates’ to help support local economies.

‘We are examining the case for specialist domestic financial institutions, such as regional or sector-specific banks, with an explicitly limited geographic or sectoral mandate and long-term horizons, which can help to “crowd-in” private sector finance,’ the report states.

The report also calls for a debate around wages can be increases and workers’ rights protected in the modern ‘gig economy’.

The Archbishop of Canterbury, Justin Whelby, who was part of the commission, commented that Britain is a ‘watershed moment where we need to make fundamental choices about the sort of economy we need’.

‘We are failing those who will grow up into a world where the gap between the richest and poorest parts of the country is significant and destabilising,’ said the archbishop.

Comments

Subscribe
Notify of
guest
0 Comments
Inline Feedbacks
View all comments
Help us break the news – share your information, opinion or analysis
Back to top