Economists across the political spectrum call for serious structural transformation for Britain

•   Open letter from a coalition of economists, policy experts and public figures call for serious structural reform to Britain’s institutions •   UCL’s Prosperity 2030 report is a ready-to-deliver framework, and proof that the cost-of-living crisis can be tackled at its root without austerity

In an open letter to the next government, a coalition of economists, policy experts and public figures from across the political spectrum call for serious structural reform to Britain’s institutions.

The signatories include Lord O’Neill of Gatley, former Chairman of Goldman Sachs Asset Management  and crossbench peer, Professor Dame Henrietta Moore, Founder and Director of UCL’s Institute for Global Prosperity, Professor Jonathan Portes of King’s College London, Professor John Muellbauer of Nuffield College, Oxford University, Danny Sriskandarajah, Chief Executive of the New Economics Foundation and Barry Knight, Chief Executive of CENTRIS.

Seven prime ministers in ten years have inherited the same structural challenge, a mounting debt crisis and spiralling cost of living, and failed to address it. The signatories argue Britain’s incremental tinkering on fiscal, welfare and infrastructure policies is simply not enough.

The open letter coincides with the launch of Prosperity 2030 by UCL’s Institute for Global Prosperity. It is a fully costed, five-year programme of 30 different policies to rebuild Britain’s social fabric. It would make the poorest fifth of households better off, with no new borrowing and cutting the cost of living for all households by £51 billion a year.

The programme introduces a connected set of nine Universal Services, including free local bus travel with the network doubled over five years with 80,000 new drivers and 35,000 extra buses.

Universal Services are essential services made free at the point of use for everyone, with no means tests or qualifying criteria. Universal Services delivered at cost cut household bills by more than the same money handed out as cash. Every £1 spent reduces household costs by £1.21, a 21% efficiency gain over cash benefits.

Professor Dame Henrietta Moore, Founder and Director of UCL’s Institute for Global Prosperity, said:

Britain has spent too long asking people to cope with insecurity that should not exist in one of the richest countries in the world. Prosperity 2030 is about rebuilding the systems that shape everyday life, work, care, housing, skills and the cost of living. It is a plan for an economy that measures success by whether people can live secure, dignified and hopeful lives.”

Andrew Percy, Co-Chair, Social Prosperity Network at the UCL Institute for Global Prosperity and lead author of Prosperity 2030, said:

The economy is not working because the state is not working. We have a tax system that punishes work, a welfare system that manages poverty rather than preventing it, and a housing market that locks people out of security. Prosperity 2030 is a practical route out of that trap, with lower taxes for workers, Universal Services that cut living costs, and new paid pathways into work for young people.”

It would be funded through National Contributions, a single tax that replaces six existing ones, income Tax, employee and self-employed National Insurance, Dividend Tax, Inheritance Tax and Capital Gains Tax. It treats every pound of income the same, with a progressive 22% base rate and a 46% top rate applied to total income.

The entire bottom income quintile ends up better off, gaining £1,037 per household on average, while the top quintile contributes £4,303 more (£83/week). Lone-parent families gain most of any household type, £1,249 a year on average.

The modelling show taxes on wages fall for most full-time workers. A new police constable, Band 5 nurse, new teacher or firefighter, with no other income, keeps £550 to £720 more a year, and every full-time wage from the minimum wage to about £44,000 pays less tax than today.

A National Food Service would provide 1.83 billion meals a year, including year-round free school meals and at least one public diner in every postcode.

A Universal Energy Service would give every household a free energy tier of 9,100 kWh a year and remove standing charges, and a Universal Water Service would abolish water standing charges, saving the average household £220 a year.

Universal Information and Digital Services would abolish the TV Licence and guarantee connectivity and a device for everyone of school age and over, saving £310 a year. Local Service Hubs would add 3,000 staffed community spaces, and the plan lays the foundations of a Universal Care Service.

Together, these would cut the cost of living by £51 billion a year across all households and create more than 500,000 new jobs, over 90% of them full-time, in transport, food, and care, powered by a national network of Skills Centres that replaces Jobcentres.

National Contributions brings in £52 billion in its first year, rising to £75 billion after five years. Combined with a property value tax that replaces Council Tax and abolishes Stamp Duty, and a tripling of Air Passenger Duty that funds the free buses, the programme raises £101 billion a year. Together with £16 billion redirected from applying National Contributions to cash benefits, that funds £65 billion of Universal Services and national infrastructure, plus £14 billion of capital investment, and still leaves £38 billion of headroom for other priorities, with no new borrowing.

To read the full report visit: https://report.prosperity2030.uk/

ENDS

NOTES TO EDITORS

About The UCL Institute for Global Prosperity The UCL Institute for Global Prosperity (IGP) is a research institute at University College London, part of The Bartlett. It works to redefine prosperity and to design the policy and institutional arrangements that deliver the conditions for people and planet to flourish.

Headline figures (at steady state, end of the five-year programme)

• Total new revenue: £101bn a year (£75bn National Contributions, £18bn property tax, £8bn Air Passenger Duty), 3.8% of GDP
• Gross cost-of-living reduction: £51bn a year across all households
• Household facing Universal Services: £42bn a year; other services: £23bn a year; capital investment: £14bn a year
• Benefits brought into NC: £16bn a year, redirected into the Universal Services
• Fiscal headroom for other priorities: £38bn a year (1.4% of GDP)
• New borrowing: £0; the programme runs a £100bn headroom over the five-year roll-out
• Net new jobs: 547,000, more than 90% full-time
• National Contributions: base rate 22%, top rate 46%; lower than the current system for 72% of full-time workers who depend only on wages
• Distribution: bottom quintile 100% better off (+£1,037/household); lone-parent families +£1,249 (89% better off); top quintile contributes £4,303 more