A radical overhaul of Britain’s economy as far-reaching as Labour’s post-war reforms and the Thatcherite revolution in the 1980s is needed to address the UK’s chronic failure to raise the standard of living of millions of workers since the 2008 financial crash, according to a major report.

In a damning verdict on the state of the UK economy, the IPPR commission on economic justice, which includes the Archbishop of Canterbury Justin Welby, senior business leaders and economists, found that the UK is being held back by a business culture dominated by decades of short-term profit taking, weak levels of investment and low wages. Among the report’s 73 recommendations are: a £1 rise in the minimum wage; the replacement of inheritance tax with a £9bn-a-year “lifetime gifts” tax; and greater economic devolution across the UK.

It argues that the shareholder-driven model of capitalism is outmoded and partly to blame for Britain slipping down international league tables for investment and productivity, which measures the output per hour of each worker and is seen as the cornerstone of economic progress because it drives up wages.

Achieving prosperity and justice together is not only a moral imperative – it is an economic one – Justin Welby, Archbishop of Canterbury

Without the investment needed to cope with developments such as automation and the adoption of digital services, the commission warns, the UK is likely to face another decade of stagnant wages, rising household debts and deteriorating infrastructure. Although Britain is experiencing record levels of employment, low wage growth and persistent inequality have been widely cited as reasons for the Brexit vote.

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The commission’s report has been launched by the IPPR thinktank days before the 10-year anniversary of the Lehman Brothers crash. The firm’s on 15 September 2008 triggered the financial crisis and the commission claims its consequences have yet to be fully addressed. It accuses successive UK governments of only making tentative steps to address these shortcomings, which the report says is holding the UK back from a place in the top rank of developed nations.

Proposals from the IPPR formed much of Labour’s agenda under Tony Blair and Gordon Brown when it took office in 1997. However, since then the left-leaning thinktank has become more detached from Labour’s leadership. It set up the commission two years ago after the Brexit vote, with its members drawn from across the political spectrum, including the head of the trade union umbrella body the TUC and one of Britain’s best known fund managers, Dame Helena Morrissey.

The proposed reforms include:

An immediate increase in the minimum wage to the real Living Wage of £10.20 in London and £8.75 outside the the capital.

A requirement that workers on zero-hours contracts be paid 20% above the higher real Living Wage rate.

An industrial strategy to boost the UK’s exports, backed by a new national investment bank that would raise £15bn a year to push public investment to the G7 average of 3.5% of GDP.

Major changes to how UK companies are governed, such as: enshrining a broader purpose in directors’ duties; the inclusion of workers on company boards; a rise in the headline rate of corporation tax and a minimum rate of corporation tax to tackle tax avoidance by multinationals.

Taxing work and wealth on the same basis, with a single income tax for all types of income (meaning the abolition of capital gains tax and dividend tax), and the replacement of inheritance tax with a lifetime gift tax, levied on recipients rather than estates, which would raise £9bn a year.

A new “economic constitution” for the UK, devolving more economic powers to the nations and regions.

Speaking ahead of the report’s launch on Wednesday, Welby said: “For decades the UK economy has not worked as it should, with millions of people and many parts of the country receiving less than their fair share. 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. Achieving prosperity and justice together is not only a moral imperative – it is an economic one.”

The commission argues that reducing inequality and including workers on boards – an idea that Theresa May ditched last year – will improve the status, engagement and wellbeing of employees and with that improve productivity.

It says: “If Britain is to rise to its productivity challenge, then a stronger relationship must be forged between management, workers and shareholders. It is now widely recognised that employee engagement in decision-making is a key contributor to improved productivity and innovation in modern companies.”

Before he joined the commission Welby, a former oil executive, was known to have strong views on welfare and poverty, but it was a surprise when he signed up to consider the broader question of economic justice. Last year following the commission’s interim report he said Britain’s economic model was broken and that the country stood at a watershed moment “where we need to make fundamental choices about the sort of economy we need”.

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Other commissioners included the general secretary of the Trades Union Congress, Frances O’Grady; Legal & General fund manager Helena Morrissey; the head of the City of London Corporation, Catherine McGuinness; Dominic Barton, McKinsey’s Global managing partner; and Mustafa Suleyman, co-founder of artificial intelligence firm DeepMind.

O’Grady 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, and will allow us to build a stronger, fairer economy.”

Case study: how anyone can fall into debt despite working