This article was originally published by the New Economics Foundation.
On Wednesday Phillip Hammond will face his first major test as new Chancellor of the Exchequer.
His first autumn statement comes at a critical time for the UK. Millions of people feel they have lost control over their lives, left behind by changes in the economy, technology and climate.
Post-Brexit vote, most economic forecasts predict a bumpy road ahead for the UK.
There has never been a greater need for a new economy or a more important moment to act than right now.
So what should be Hammond’s immediate priorities? Here’s our suggested in-tray:
1. INVEST IN THE COMMUNITIES WE’VE LEFT BEHIND
Many areas that voted overwhelmingly for Brexit were those left behind by a decline in British industry since the late 1970s – and those suffering the most from government spending cuts.
But these regions have also benefitted the most from EU regional development funding – and therefore stand to lose the most from leaving.
With interest rates at record lows now is the ideal time for the Chancellor to draw a line under austerity and launch an ambitious programme of public investment in health, education and green infrastructure to alleviate the clear concerns raised by voters in the referendum campaign.
Crucially, this must be designed to truly regenerate communities up and down the country.
A few big-ticket items like HS2 will not be enough – especially if, like a third runway at Heathrow, they lock us into a high-carbon future.
2. MAKE A PLAN FOR GOOD JOBS IN NEW INDUSTRIES – STARTING WITH A BLUE NEW DEAL
The Brexit vote was a protest by those abandoned by a London-centric economic model, driven by private credit and housing price bubbles.
We need a new industrial strategy and a plan for regeneration that will boost the incomes and opportunities of these alienated communities and enable people to really take control of their own lives.
This should be targeted towards new technologies, renewable energy and supporting local supply chains. The Chancellor’s aim must be to reduce inequalities and increase real wages across the country.
Given that the top five areas that voted for leave were all coastal communities, the Chancellor could start by launching a Blue New Deal – harnessing the potential of the sea to revitalise our coast by boosting industries like small-scale fishing, tourism, acquaculture and renewables.
3. HALT THE FIRE SALE OF PUBLIC LAND AND BUILD AFFORDABLE HOMES
The UK faces an unprecedented housing crisis: a combination of financial deregulation and ill-thought out policy has meant house prices have risen twice as fast as average incomes over the last century. Cuts to public funding for house building and rising rents mean more and more of us are trapped in overpriced, overcrowded and poor quality homes.
The Chancellor must take immediate steps to address the housing crisis. His first should be to halt the ongoing fire sale of public land.
Making this land available for non-profit housing would begin tackling the housing crisis today, putting residents back in control of development in their communities.
The New Economics Foundation has identified 10 plots of publicly-owned land that could provide 4,631 good quality, low cost homes. Our calculations show that in just 20 years, developments of low cost rental homes on these sites – which could be owned by the residents as a cooperative or as social housing in partnership with local authorities – would become income generating.
4. TAKE CONTROL OF RBS
Recent revelations that the Royal Bank of Scotland (RBS) Global Restructuring Group intentionally sought to destroy healthy businesses to boost its own finances confirmed RBS is still failing its customers and its owner – the UK public. The collapse in the share price of the 73% taxpayer owned bank following the referendum means that it now can’t be sold without incurring a £30 billion loss to the taxpayer.
RBS cannot be sold in the foreseeable future. It’s time the government put all options for the bank’s future back on the table and gave serious, urgent consideration to the alternatives.
“HAMMOND’S FIRST AUTUMN STATEMENT COMES AT A CRITICAL TIME FOR THE UK. THERE HAS NEVER BEEN A GREATER NEED FOR A NEW ECONOMY THAN RIGHT NOW.”
Our plans to take control of RBS and transform it into a network of local banks with a public interest mandate would rebalance the UK economy. A new model of banking would invest in the disenfranchised communities left behind by our London-centric economic model – exactly the kinds of communities who voted to Leave the EU.
5. AVOID A RACE TO THE BOTTOM IN A HEDGE-FUND ECONOMY
Former Chancellor George Osborne’s mooted response to Brexit was to slash corporation tax further to 15%. The new Chancellor will faces pressure to roll back regulation on business, workers and the environment, as talk of a ‘Great Repeal Bill’ puts huge swathes of existing EU law at risk.
This is a race to the bottom in terms of regulation, corporation tax and labour costs, and will only jeopardise the long-term social and economic health of the UK.
The Chancellor must aspire to more than a hedge-fund economy.