- The UK economy is in need of “fundamental reform” following a failure to raise living standards and address inequality since the 2008 financial crisis, a report has said.
- The IPPR commission on economic justice was put together by leaders in society and industry including Legal and General’s $US1.3 trillion fund manager, Helena Morrissey.
- The report called for a rebalancing of power towards workers and trade unions, with more government intervention and devolution of decision making from Whitehall.
- Morrissey said she agrees with the thrust of the report: “I don’t think you’ll find many in business, or the City for that matter, who think the economy is perfect… Like me, they think we need a more responsible and fairer form of capitalism,” she said.
A “fundamental reform” of the UK economy as radical as Labour’s post-war Keynesian reforms and Thatcherism in the 1980s is needed to address inequality and failure to raise living standards in the UK since the 2008 financial crisis, a report from a major think tank has said.
The IPPR commission’s report on economic justice, put together by leaders in society and industry, including the Archbishop of Canterbury Justin Welby, and leading City fund manager Helena Morrissey, delivered a damning verdict on the state of Britain’s economy.
It criticised a model that relies on household debt and property prices, and where sectors of the economy are stuck in a “rut” with low wages and high levels of inequality, which see some households thrive while nearly a third of the UK’s children live below the poverty line after housing costs.
The report calls for a “rebalancing of power: from corporate management towards workers and trade unions, from short-term finance towards long-term investors, from Whitehall towards the nations and regions of the UK.”
“Travel across the UK today and it is impossible to escape a palpable feeling that the economy is not working for most people,” the report said, adding that we need to “achieve ‘escape velocity’ from an economy that delivers neither prosperity nor justice, to one that achieves both.”
The commission proposed a number of reforms which included:
- An increase in the real Living Wage at £10.20 in London and £8.75 outside the the capital.
- A strategy to boost national investment to £15 billion a year more in line with the G7 average of 3.5% of GDP.
- More effective corporation tax and a rule that companies with over 250 employees should have at least two workers elected to their main board.
The IPPR is a think tank that provided agenda forming policy proposals for the Labour governments of Blair and Brown, but has since drifted away from the party. This commission on economic justice was formed two years ago after Brexit, to propose a path forward for the UK.
The release of the report comes almost exactly 10 years after the onset of the 2008 financial crisis .
Helena Morrissey, manager of Legal and General’s $US1.3 trillion investment fund, told the Guardian: “We’ve had some very frank discussions on the commission about Britain’s economy,” adding that she backs the thrust of the report.
“I don’t think you’ll find many in business, or the City for that matter, who think the economy is perfect… Like me, they think we need a more responsible and fairer form of capitalism,” Morrissey said.
“The idea of sitting back and discussing radical proposals was appealing… It is clear the world has changed in the last 40 years and we need to be less command and control. We need to increase the levels of investment. We need to address the needs of people who have been left behind.”
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