We must stand up to those who gain from Britain's broken capitalism

Tomorrow, meanwhile, brings the 80th anniversary of the publication of the Beveridge Report which laid the foundations of the post-war welfare state. Presented to Cabinet on November 16, 1942, and published on December 1, it became the subject of huge public interest and conversation. This anniversary matters because increasingly what remains of the welfare state is threadbare and not fit for purpose – and will be even more so after Thursday.

The British economy is in crisis. Its condition is characterised by 12 Tory years, but the deeper record spanning successive Labour and Tory governments exposes the limits of Treasury orthodoxy, conventional economics and the nature of British capitalism.

Addressing them will be beyond Thursday’s statement and the Tories, and may well be beyond Labour should they enter office, but any reform can only begin by becoming aware of the nature of the problems. Here are a dozen challenges concerning the UK economy.

One: The UK has been characterised by low economic growth since 2010 and 1979. It is now a low-growth economy for all the Tory rhetoric and, because of this, the UK is poorer per head than nearly all our neighbours – Denmark is 32% richer per head, Netherlands 29% richer, and Germany 22%.

Two: The UK has the highest taxes in 70 years, we are continually told. Tories say this to demonstrate their desire for low taxes which they believe are a panacea for higher growth. But most of our European neighbours have higher taxes as a share of GDP and are wealthier and more equal societies with better-funded public services and goods.

Three: The UK is plagued by low productivity rates – something which contributes to the UK becoming poorer and less competitive than comparable countries. The reasons for this are many: low rates of investment, short-termism, the dominance of finance capitalism and a lack of innovation, which means it cannot be turned around by a quick fix.

Four: The UK’s appalling levels of private sector research and development are a major factor in holding back the UK and underpinning low productivity. This has long been a historic problem and beyond the wit of government, policymakers and business to address because it involves moving beyond exhortation to legal forms of corporate governance and ownership which no political party has so far shown a willingness to tackle.

Five: The City of London is, to many UK politicians, “the jewel in the crown” of the economy. Yet the City is part of the problem. It is semi-detached from the day-to-day nature of real business beyond financial speculation, has a tradition of disinvestment from UK-based companies, and sees its horizons as global and beyond the UK: having arisen to fund Empire and colonial endeavours. The City’s footprint and semi-detached nature mean that it “crowds out” more home-grown businesses, enterprises and innovation.

Six: The City is directly related to the burgeoning growth of the offshore economy in recent decades, with the UK implicated in tax havens, shell companies and myriad dark money arrangements. Professor Danny Dorling of Oxford University estimated that this offshore economy is approximately seven times the size of the UK economy we can measure with GDP; he has also estimated that Scotland’s offshore economy is four to five times the Scottish economy we can see and measure. Shouldn’t this latter terrain be something the SNP and Greens should investigate via a commission?

Seven: Treasury orthodoxy has been one of the major factors holding the UK back economically for decades. The Treasury is focused on short-termism, fiscal orthodoxy and retaining market confidence.

Labour governments until Blair and Brown understood that to remake the UK economy they had to take on the Treasury. Harold Wilson understood this in the 1960s and failed, whereas Blair and Brown made peace with the Treasury.

READ MORE: London no longer Europe's largest stock market with gap blown since Brexit

Eight: Related to this is the pernicious rise of “household economics” – the notion that you cannot spend more than you currently have. This is the mantra behind the £60 billion “black hole” in UK finances which is being used as the logic for this week’s bitter medicine of tax rises and public spending cuts.

This “black hole” is an ideological creation presented as homespun truths. The coming austerity is a political choice just like George Osborne’s austerity was, fixated on reducing the UK deficit over a shorter period than necessary and inflicting unnecessary pain on millions.

Nine: Extraction capitalism has long been one of the primary characteristics of the British economic model. This is driven by taking the maximum share of profits out of companies in shareholder dividends, executive rewards and bonuses to the detriment of the longer term. This version of capitalism is short-termist, speculative and shareholder-led, always looking for how to make the quick, easy buck than to build long-term, sustainable businesses.

Ten: Privatisation is a typical creation and product of this short-term extractive capitalism.

Presented as innovation by Tory supporters and the likes of the Institute of Economic Affairs, all it has actually done over the past four decades is give the Treasury a one-off hit and influx of finances for a bigger loss.

Privatisation has passed ownership of key strategic assets out of public hands into private hands as well as foreign governments who have taken the profits, aided by the lax regime of regulation in the UK. A telling example of the latter is the state of English privatised water companies.

Eleven: Added to this is the hollowing out of the UK welfare state compared to the vision of Beveridge. The dismantling of any real sense of a UK social contract between government and people hurts the economy and society.

Unemployment benefit is 14% of average incomes, half what it was pre-1979; statutory sick pay is 16% of average incomes, and the basic state pension is a mere 29% of average incomes – one of the lowest in the developed world.

Meanwhile, Shell paid no corporation tax in the UK in the past year, while a university graduate in England after three years of study earning £30,000 per year will find themselves paying a marginal tax rate of just over 41%.

Twelve: The unravelling of the social contract has one exception in Toryland – older voters. In a climate of Tory cuts, the idea of “the triple-lock” on UK pensions appears near to sacrosanct. There is still pensioner poverty but less per head than in those of working age; pensioners per head are wealthier than those of working age, and there are more millionaires in the pensioner age group than the rest of society. This is the age of Tory gerontocracy.

The British economy will not get out of this plight without a government which can address these long-term problems. None of this will happen on Thursday.

Rather, expect short-termism, obfuscation, and public spending cuts pushed conveniently until after the next UK election in 2024, with the vast majority of us paying for Tory mistakes.

After 12 Tory years, the self-harm of Brexit and a longer pattern of decline and denialism, is it really beyond the wit and imagination of Labour, LibDem, Green and SNP politicians to be able to say with confidence that the conventional take on the UK economy and capitalism IS the problem – and to understand that the British economic model and version of capitalism is irredeemably broken?

That means standing up to the vested interests, speculators and financiers, and the politicians who collude with them who gain from this rotten economic and social order to the disadvantage of the rest of us.