Welby: Time for major reforms

Rt Rev Justin Welby declared Britain’s economic model “broken” as a new report was published showing the country is experiencing the longest period of wage stagnation in 150 years.

The report from the Commission on Economic Justice found the UK has “the most geographically unbalanced economy in Europe”,

It showed that since 1997, London and the South East’s share of economic output has risen to almost 40 per cent while Yorkshire’s has remained level at seven per cent and other parts of the country have fallen further behind.

The report pointed to figures showing that average wages are up to 30 per cent lower than in London in some parts of the country.

It suggests the link between economic growth and wages has broken down with the UK’s economic output rising by 12 per cent since 2010 but wages falling by six percent.

Archbishop Welby, a member of the commission, said: “Our economic model is broken. Britain stands at 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.”

The commission was set up by the IPPR thinktank with members including Lord Kerslake, a former head of the civil service and previously chief executive of Sheffield City Council.

Its interim report calls for economic reforms of similar magnigtude to those of the post-war Attlee government and the Thatcher government of the early 1980s.

Recommendations include much greater ‘fiscal devolution’ giving areas much more control over how taxes are raised and spent.

The report calls for an overhaul of the tax system to ensure it gives incentives to those who invest and create jobs while discouraging environmental damage and unaffordable property prices.

It also makes the case for action to curb the dominance of companies such as Facebook and Google.

Tom Kibasi, IPPR director and commission chairman, said:“The British economy needs fundamental reform.

“We don’t have a British economic model. We have an economic muddle. The persistent economic problems we have experienced since the 2008 financial crash won’t be fixed with a bit of tinkering.

“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, where long-term prosperity is joined with justice for all. We want to see the widest public debate possible on our analysis and proposals.”