Raise wages of low-paid and increase taxes on wealthy to heal ‘injustice’ behind Brexit, says study backed by Archbishop

Higher pay for low-wage workers and tax hikes on company bosses are needed to tackle the “economic injustice” that fuelled the Brexit vote, a landmark report backed by the Archbishop of Canterbury says today.

Its 10-year reform plan also calls for workers to be included on company boards, the speeding up of automation, the replacement of inheritance tax with a “gift tax” on recipients and a National Investment Bank.

Backed by economists, business leaders and trade unions, as well as Justin Welby, the Commission for Economic Justice warns that – a decade after the financial crash – the time for tinkering is over.

Instead, it demands a radical policy overhaul on the transformative scale of the reforms introduced by the post-war Labour government and the Thatcher administrations of the 1980s.

The Archbishop said: “The widening gulf between rich and poor, and fears about the future among young people and their parents, have damaged our nation’s sense of itself.

“Our report shows that it doesn’t have to be like this. By putting fairness at the heart of the economy, we can make it perform better, improving the lives of millions of people.”

And Frances O’Grady, the TUC’s general secretary, said: “It’s time for a once-in-a-generation rethink of our approach to the economy.

“Working people have had enough of stagnating living standards and massive inequality. And no one’s buying the idea that there’s no alternative. A better deal for a working people is possible.”

The study, the work of a commission set up two years ago by the IPPR think-tank, makes more than 70 recommendations, including:

* An immediate increase of around £1 an hour in the minimum wage, to bring it to the level of the “real living wage” – which currently stands at £8.75 and £10.20 in London.

* Requiring everyone on zero-hours contracts to be paid 20 per cent above that higher rate, alongside measures to “revitalise” trade unions.

* A “decisive shift to investment-led growth”, with a new National Investment Bank and public investment raised by £15bn a year.

* Workers on company boards and a rise in corporation tax, as part of “major changes to how UK companies are governed”.

* The abolition of capital gains tax and dividend tax, which would raise the levy on the profits from selling assets to the same level as income tax.

* The replacement of inheritance tax with a lifetime gift tax, levied on recipients rather than estates.

* A new “economic constitution” for the UK, devolving more economic powers to the nations and regions which would have new “Economic Executives”.

The Commission’s members also included “prominent investor and Brexit champion” Helena Morrissey, from Legal and General, and Catherine McGuinness, head of the City of London Corporation.

Tom Kibasi, the IPPR’s director, said: “The commission has reached a remarkable agreement on a new direction for the UK economy. Our proposals are unashamedly ambitious.”