The Government has been advised to take a leaf out of President Joe Biden’s book and invest £47 billion across the UK to boost the economy.
A new report from the Institute for Public Policy Research (IPPR) think tank said the significant cash injection would boost the economy to full employment and therefore force companies to compete for workers, in turn driving up earnings and working conditions.
The organisation also said a one-off windfall tax on firms that did well out of the pandemic, and a citizens’ wealth fund to invest in strategic sectors, would help to rebalance power and roll out prosperity.
IPPR analysis found that two in five people have had a real-terms pay cut since 2009 while the wealthiest have prospered, and the think tank warned that simply tweaking the economy would not be enough to address inequality.
Carys Roberts, IPPR executive director, said: “The UK suffers from concentrations and imbalances of power that are both a cause of some of our economy’s problems, and a barrier to solving them.
“The pandemic must mark the end of this era of growing inequality and the beginning of a new one, in which sharing opportunity across people and places is a core objective of economic and social policy.
“As well as measures to support and grow the economy, such as a significant economic stimulus and long-term investment, shifting power must now be a priority. By speaking to people’s concerns and their disempowerment, these power shifts have the potential to build towards a better economy that works for everyone. We call this economic justice.”
The IPPR’s report also recommends more UK-wide “moonshot” projects, such as that to develop the coronavirus vaccine, and a stimulus for full employment where ministers should “boost it like Biden” by increasing annual public investment to £47 billion, including £30 billion in green projects and £17 billion in social infrastructure, such as health and care.
Mr Biden signed off a 1.9 trillion dollar (£1.4 trillion) package to help America recover from the pandemic.
George Dibb, head of the IPPR Centre for Economic Justice, said: “During the pandemic we clapped for key workers, but our report shows that even before Covid-19 two in five of those in work had seen a fall in pay. The UK must target full employment, where instead of workers competing for jobs, employers fight to attract workers.
“Most people do not want to see the economy go back to how it was working before the pandemic. There is a need for change, and our plan to hard-wire the economy for justice will ensure that the benefits of the recovery are shared with everyone.
“While some companies have been closed for the best part of two years, others have made bigger profits than ever before. A windfall tax on excess profits would help prevent those firms gaining an unfair advantage and close the gap with the shops, restaurants and cafes that are the backbone of our economy and have suffered the worst.”