The vote to leave the EU should have been a wakeup call. Instead, we’re three years on and little has changed. Brexit is making it harder to deal with our economic and environmental challenges. Miatta Fahnbulleh presents a post-Brexit agenda, where national renewal is driven by a Green New Deal, a new social contract, a democratic economy and a social purpose for business.

Brexit has dominated the political agenda for almost three years with no clear way out of the impasse. As Boris Johnson’s government plays a reckless game of chess with a parliament determined to prevent a no deal’ Brexit, the political infighting of the last few years looks set to intensify over the next.

In all this squabbling over how to leave the European Union, the message sent by voters in that historic referendum has been lost. Yes, the vote was about Europe. But it was about much more than Europe. It was a rejection of the status quo and a clear demand for something better than an economy that does not work and a system that feels rigged against people. The referendum should have been a wake-up call – a pivotal moment for change.

But three years on and very little has changed. The urgency of the domestic agenda has been completely eclipsed by the political fight over Brexit. And for those communities held back, things have got worse not better. 14 million people now live in poverty as families that have seen a decade of wage stagnation struggle to make ends meet. 1 in 3 children now live in poverty – 67% of whom live in working households. Precarious work is on the rise, with 5 million people estimated to be working in insecure jobs. The housing crisis continues unabated. Cuts to public services continue to bite, hitting the most vulnerable the hardest. Meanwhile, wealth has continued to concentrate at the top, with the richest 10% now owning 45% of the country’s wealth, while the poorest half of households own just 9%.

Yes, the vote was about Europe. But it was about much more than Europe.”

Yet Brexit is making it harder to deal with these challenges. All the economic indicators point to the fact that the uncertainty around Brexit is already hitting our economy. The Office for Budget Responsibility’s own assessment is that GDP growth has slowed since the referendum as the UK has moved from being close to the top of the G7 GDP growth range in 2016 to close to the bottom in 2018. And when we do leave, all credible forecasts suggest that this will hurt our economy further – though the scale of the impact will depend on the version of Brexit we choose. Communities already under pressure will struggle to cope with the fallout. The rancour and discontent that erupted in the referendum will become more entrenched.

These formidable economic challenges are coinciding with environmental collapse and a climate emergency that will require rapid change over the next decade. Last year the Intergovernmental Panel on Climate Change concluded that the world must halve carbon emissions in a little over a decade to have a chance of limiting temperature rises to 1.5°C. This year, the UN warned that nature is declining globally at rates unprecedented in human history”. A million species are now at risk of extinction and we are depleting our natural resources 1.5 times faster than the planet’s ability to regenerate them. These are epoch-defining challenges, and responding to them will require far more ambitious action from governments that will touch on every aspect of our daily lives.

Whether we leave the European Union or not, these challenges will not go away unless there is a deliberate effort to confront them head on. In this time of fundamental shift, there is a huge moment of opportunity to refocus our politics away from Brexit and back onto the big issues that matter.

An agenda for national renewal

We desperately need an agenda for national renewal that can transform the economy, calm the rancour and knit the country back together. To be transformative, this agenda must have four key elements – each representing a pillar of a new social settlement that could come out of Brexit.

The first is a Green New Deal in response to the climate emergency: an unprecedented mobilisation of resources – at a scale we have never achieved in peacetime – to decarbonise the economy at pace whilst creating hundreds of thousands of jobs and lifting living standards across the country. The Green New Deal must be ambitious with a stretch target for meeting net zero by 2040 at the very latest. To achieve this, the government must make a just green transition its core mission and commit a minimum of 2% of GDP, ramping up to 5% over the next 5 years, to large scale investment in green infrastructure, technology and skills alongside a package of incentives and regulation to bend markets that have been slow to act in response to the climate imperative. Fiscal policy should work hand in glove with monetary policy, with the Bank of England playing a critical role in guiding finance in support of a Green New Deal through caps and quotas for dirty and clean investment as well as a deliberate policy of directing newly created money into green finance. Through this investment programme, we can create better jobs to replace the ones that will be lost from ending our use of fossil fuels; give people a stake in the green economy that will emerge through common ownership of green assets and co-operative ways of organising the new industries that will spring up; and transform the very nature of our economy in its wake. 

Second, we need a new social contract to replace the one that has broken. The promise that if you work hard and play by the rules, you will get ahead and that your children will do better than you, no longer holds for huge swathes of our society. To renew it, we must start with a better deal for workers to tackle sluggish wages and the power imbalance in the job market. This will mean actively using the levers of the state – corporation tax, regulation, subsidies – to incentivise businesses to reward their workers fairly. In this time of fundamental shift, there is a huge moment of opportunity to refocus our politics away from Brexit and back onto the big issues that matter At the same time this will strengthen the power of workers to protect their interests through automatic union recognition and stronger collective bargaining in the workplace. A fairer share of the rewards from their labour should not just come in the form of higher wages but in reductions in working time. The post-war trend of reductions in working hours was halted in the 1980s with the free market deregulation agenda that began under Thatcher and was sustained by successive governments for over 40 years. We must reverse this trend through national policy – including a Working Time Commission that would increase statutory holidays in response to gains in the economy – and industrial campaigns led by unions in their workplace. 

The promise that if you work hard and play by the rules, you will get ahead and that your children will do better than you, no longer holds for huge swathes of our society.”

Critically, this social contract must seek to give workers greater ownership of the organisations in which they work. Employee Ownership Funds, which would see a share of profits each year transferred to workers as equity into a worker or stakeholder trust, is a potential catalyst for this change. Shares would come with voting rights, enabling employees over time to become the dominant shareholder, with the power to shape the direction of their business. Finally, a new social contract must extend beyond the workplace to the creation of a wellbeing state which enshrines and guarantees everyone the basics for a decent quality of life. This would include a minimum income floor below which no one can fall irrespective of whether they are in work or not, delivered in part through a weekly national allowance. This should be combined with universal basic services – guaranteed access to social housing, health, social care, education, childcare and public transport for all – funded and provided collectively.

Third, any programme of national renewal must seek to push power down to people and communities in order to give them a real stake in the economy. This will mean a rapid and radical devolution of power to regional and local government. Devolution of certain taxes could be combined with devolved funding and new powers over education, skills, employment support, immigration, energy, housing, planning and local transport. And to ensure that further investment flows into local areas, the government should renationalise RBS and turn it into a network of 130 local co-operative banks, owned by communities with a clear environmental and social mission. To be meaningful, devolution must come with the creation of strong local institutions, tasked with driving economic change in different places. The creation of city and county regional authorities would create the institutional architecture to drive change from the local level upwards. These authorities should work alongside reformed local enterprise partnerships that would bring together civic leaders, representatives from local business and trade unions in a social partnership focused on transforming their economy. Local leaders, in turn, must seek to use the procurement and investment power of the local state to boost jobs, shift ownership and green their local economy. This could be achieved through municipal corporations owned by and accountable to local people providing everyday essentials such as renewable energy, housing and transport. But it could also be achieved by pump priming workers co-operatives through their supply chain. 

Finally, any agenda for national renewal must have at its heart a new deal with businesses that enables corporations to regain social purpose and build social and environmental responsibility into their business model – with social value taking primacy over shareholder value. This will mean using legislation, regulation and taxation to incentivise all businesses to operate in ways that the best businesses already do. It will also mean local defaults, with local authorities setting out their expectations of businesses in return for the license to operate in their area; as well as businesses actively setting new norms and industry standards.

The scope for an ambitious agenda for national renewal is clear. Our politicians must lift their heads above the Brexit fog to rise to this challenge. But this will only happen if a growing social movement of people who believe change can and must happen are willing to come together to demand it. We have a window of opportunity to change the rules of the economy – we must act to seize it.

This is an extract from the New Economics Zine. Read the full issue here

Image: Charlot Kristensen