While immigration has been cited as a key issue for those who voted Leave, economists say the evidence suggests its effects on jobs and wages of UK-born citizens are small. Diane Coyle offers some policy measures for a future chancellor that could more effectively help those left feeling angry and disillusioned by years of stagnation in their living standards.

Almost all economists believe the UK’s ability to trade freely with the EU is vital for the economy, and equally that the EU will insist on the continuing free movement of people if we are to have that. Similarly, the professional consensus is that immigration does not seem to have had a big effect on employment or average wages for the UK-born, and probably benefits economic growth in the long run. What’s more, many immigrants staff  public services such as the NHS and social care.

Setting aside the difficult politics of how to negotiate trade with the EU now, the obvious question for economists is: if immigration doesn’t deserve much of the blame for the sense of economic disappointment that led many poor areas of the country (including much of the North of England) to vote Leave, then what does?

The haves and have nots

In Britain as in many other , large numbers of people have seen no improvement in their living standards for a decade or more. New technologies mean there has been a “hollowing out” of middle-skill, middle-pay jobs, so although the employment rate is at a record level, the increases in jobs have been at the top of the income distribution for the highly qualified and at the bottom. Those jobs at the lowest end are more likely to be zero hours contracts, minimum wage, and with unpleasant conditions.

The economist Branko Milanovic, an expert on global income distribution, has identified what he calls a ‘decile of discontent’, the 10% of the world’s population, mainly middle class and less well off people in rich countries, who have seen almost no increase in their real-terms incomes for 30 years. It is not hard to see why this might have led to festering disappointment and the kind of political consequences seen in the Brexit vote, and also in votes for formerly fringe parties from France’s Front National to Spain’s Podemos.

As many people have pointed out, too, the regional divergence in the British economy is greater than in many other countries, and has been increasing. Everything revolves around London, including key transport and communications infrastructure – the UK is literally wired to be London-centric. Public service cuts have also hit poorer areas the hardest as they have more people who are more reliant on them. The city devolution agenda has barely begun to tackle the regional disparities.

Suggestions for a future chancellor

So what would an economic policy programme to address the people left behind by globalisation include? How can a British government, when the politicians are able to form one, address the economic grievances of millions of citizens in counties across the North, Midlands and South West and Wales?

Here are a few suggestions for a future chancellor:

First, put more money into more infrastructure in these areas, including serious funding of the north of England rail and road network, rather than the token amounts committed so far – small compared to the cost of Crossrail, airport expansion and so on in the South. Building infrastructure creates jobs and a market for related services in the short run and enhances the capacity of the regional economy to grow in the long run.

Second, allow local authorities to borrow money (by issuing bonds) to build more social housing in areas where there is a shortage. This is low risk borrowing because the rent payments will cover the interest due.

Third, introduce a Schools Challenge scheme for schools in all areas where standards are disappointing, aiming to repeat the successful elements of the previous London and City Challenge schemes. Providing young people with adequate skills is absolutely vital for long term economic performance.

Fourth, the idea of more money for the NHS seemed to resonate strongly with voters. Additional funding for health should be directed to chronic illnesses associated with poverty, such as cardiovascular disease, diabetes and mental illnesses, which are more prevalent in the lower income areas of the UK.

Finally, use corporate law to reduce executive pay, which remains at ludicrously high levels unjustified by the performance of those concerned. Economic theory says that pay should be linked to performance only when it is easy to measure and monitor the performance of an individual. This means it might make sense in a factory or shop, but executives running large teams and complex companies are the last people who should be paid through incentive schemes.

Even if the economic effect of tackling this excess is small, symbolism matters a great deal at times of such disunity.