Painfully aware of how daunting it is to inherit the Treasury of a stagnating country in the bond markets’ crosshairs, let me dare answer the hard question: “What would you do if you were chancellor?” Any answer depends on your diagnosis. Here is mine.

Britain’s malaise is not due to Brexit, as the Rejoiners would have it, nor immigration, as Britain’s Rightists seem to have convinced themselves. Britain is plagued by the collapse of a business model that Margaret Thatcher launched, Tony Blair and Gordon Brown deepened, David Cameron, Nick Clegg and George Osborne shored up, and Liz Truss tried, albeit farcically, to reboot.

Thatcher’s growth was never the fruit of shrinking the state, of trickle-down, of her fictional “shareholders’ democracy”. It came from liquidating council houses and public utilities, and throwing them, at cut-down prices, into the City’s cauldron — while allowing its bankers to go haywire. In other words, Thatcher’s famous putdown to socialists, that we fail because eventually we run out of other people’s money, became a kind of boomerang: Thatcherites, and their New Labour imitators, failed the moment they ran out of silverware to pawn.

After 2008 established the madness of putting every egg in the bankers’ basket, the Bank of England refloated the City with gargantuan quantities of money plucked from the proverbial moneytree, which miraculously materializes every time the spivs lose their shirt. Then along came George Osborne to impose austerity on almost everyone else.

That’s how Britain landed in the most delicious of antinomies. On the one hand, austerity crushed demand for high-end goods and services, so British firms canceled their planned productive investments. On the other, the City and its big-business customers were drowning in cash. And what happened to all that free money? It was squandered on Britain’s ugly assetocracy.

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CEOs plowed the new money into share buybacks, and bankers into raising house prices, not into factories or any other productive activity. Between 2011 and 2018, as the nation’s net savings turned negative, Britain’s hundred largest companies handed £468 billion to their shareholders. Bluntly put, British capitalism has been devouring itself for decades.

In response, Truss tried to do a Thatcher with a bare cupboard of assets to privatize. Burnham is now trying to do a Wilson without the white heat of technology. The Tories pretend to foster entrepreneurship; Labour pretends to care about social justice. Both keep feeding the same beast — the same assetocracy — impoverishing the country and angering its populace.

Against this bleak background, the first task of a progressive chancellor must be to avoid antagonizing the gilt market, while also refusing to bend to its will — a balancing act requiring innovative public financial tools. The second must be to convert the UK’s ample liquidity into patient, productive investment in people and infrastructure, in innovators and maintainers alike, generating new incomes for the majority.

So, how would I dodge another Truss debacle while boosting public investment? Recall that Truss was not walloped for her ambition but for dropping a new load of gilts — to fund her tax cuts for fat cats — into an already saturated gilt market. And the Treasury has been oversupplying that market for years: in 2025 alone, by an additional £303 billion, or 4% of GDP. My first task, then, would be to refrain from any net increase in the supply of gilts.

How to do so, while also funding large-scale public investment? In three ways. First, stop subsidizing the City. The Bank of England pays Bank Rate on hundreds of billions of commercial bank reserves, while selling gilts below the price it paid for them and sending the losses to the Treasury. The interest bill alone runs to around £25 billion a year. Pay interest on only a small slice of reserves, however, and you’d reduce the Treasury’s need to issue more gilts over the next decade by approximately £210 billion.

Second, swap the £482 billion of gilts the Bank of England now owns with new perpetual bonds that the Treasury issues of the same face value — but at 0.5% interest rate (in other words, a quarter of the average yield of these gilts). Given that the average maturity of the existing gilts held at the Bank is just over 15 years, this translates into one-off gains of a net present value of £362 billion.

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Third, as Jamie Driscoll suggests, offer savers a National Infrastructure ISA, run by National Savings & Investments, holding non-tradeable bonds that no hedge fund can short. Also restrict ISA tax relief — savers who prefer their cash to be wagered on Silicon Valley remain free to do so, just not at the taxpayer’s expense. To absorb about £100 billion of the current annual ISA inflows, meanwhile, have the Bank of England announce that, “if needs be”, it will stand behind this ISA, an announcement which, by itself, will push its yield below the gilt equivalent without the Bank spending a penny. A trillion pounds would thus become available, over a decade, for the infrastructure everyone agrees Britain desperately needs.

These three measures alone would create a trust fund for Britain exceeding £1.5 trillion over the next decade, much of it available early on. These monies must be invested, not frittered away on day-to-day expenditures. Invested in what? The reclamation of public utilities, crumbling infrastructure, social housing, and large-scale training. To this mix, I would add a significant cut in national insurance contributions, which currently leave small businesses unable to breathe.

Water and the grid are natural monopolies. Private ownership brought £78 billion paid out in water dividends, £64 billion of debt loaded onto companies sold debt-free, and sewage pouring into Britain’s rivers. The solution is obvious: place the water companies in special administration, as the law already allows, rather than buying them back at inflated regulatory values. From there, bring the national grid into public ownership, and price electricity from wind and solar at what it costs to produce, rather than at the margin set by imported gs. This should be shadowed by properly funding Great British Railways, introducing the best practices of Chinese and Japanese railways.

Housing is where Britain’s assetocracy bites hardest. Private developers offer a few “affordable” flats at 80% of an exorbitant rent, as a fig leaf for 10 more at the full rate. The average social rent in London is around £550 a month; in the private sector it exceeds £2,300. The only cure is council housing, built by municipalities for local families at rents no higher than a quarter of disposable income: 100,000 homes a year, on land bought at existing-use value. Alongside this, a right-to-rent rule should allow struggling families facing repossession to remain in their homes at a fair rent.

Next, rebuild the productive base without which Britain cannot generate shared prosperity. As Costas Lapavitsas and the other authors of Reindustrialize Britain propose, start modestly, aiming to raise manufacturing from 8% to 11% of national income by 2035, adding about 725,000 jobs. I would also fund a decade-long mass training scheme with a living wage and trades-union rights for apprentices. Because short-term contracting stops firms committing to four-year apprenticeships, Driscoll proposes a “Retrofit Blitz”: a long-term, publicly financed drive, delivered by small businesses, to retrofit whole streets with insulation, heat pumps and solar panels. To keep the program non-inflationary — while boosting local wages, tax receipts and pay elsewhere — I’d further adopt a “capacity guardrail” that releases each funding tranche only when trained workers and supply chains become available locally.

Last but not least, in what’s perhaps the most radical but defensible proposal, I would end the banks’ scandalous monopoly over our payments system. Instead, every UK resident gets the right to a free digital wallet, hosted by the Bank of England but governed as a commons, paying interest at the Bank Rate that now only bankers enjoy. Transactions would be anonymized, with a citizens’ jury deciding when to de-anonymize them: no Chinese-style surveillance, no Visa-style toll.

Naturally, such a Budget would cause a hail storm of criticisms, some well-meant. I would doubtless be accused of violating the fiscal rules. But these should have been torn up long ago and replaced, as Lapavitsas et al propose, with a test of public-sector net worth: borrowing that builds earning assets is not a burden on our grandchildren, instead creating the means of its own repayment.

From there, critics are likely to claim my perpetual bonds swap amounts to a default on the state’s creditors. Not at all: these gilts are already parked within the UK state sector. The state, in other words, would merely be reshuffling debt it owes to itself.

“But you are violating the independence of the Bank of England!”, others will scream. Not really. I would leave interest rates to the Bank. But when it comes to public monies thrown at the City, no, the Bank should have zero independence on that. A chancellor need only insist that the Bank stop subsidizing the City and, if rebuffed, legislate with a simple majority in the House of Commons.

“Won’t your policies bring house prices sharply down?”, the smartest journalists will ask. “The pound will take a hammering,” The Economist will prognosticate ominously. In saying these things, my critics would be threatening me with a good time. Let’s be honest: breaking the assetocracy means a managed decline in house prices and a weaker pound, kept orderly by a scheme to liberate mortgage owners from negative equity and the graduated controls on hot money that Lapavitsas and his co-authors set out. It’s anyway a price worth paying to end Britain’s assetocracy and the aridity that it spreads in its shadow.

It’s clear, then, that there is an alternative to Britain’s continuing malaise. People with inordinate influence over the money markets will hate it. As the party that dares put these policies in its manifesto begins to ride high in the opinion polls, gilts and the pound would wobble. But remember: the funds that move these markets hold just below one third of the gilts, which they buy with money borrowed in the US to use as collateral for purposes that have nothing to do with Britain. Once they realize that the total supply of gilts will not only not rise but, in fact, may fall, yields and the pound would steady. The more pragmatic among them may even appreciate the solid plan to boost productive investment by £1.4 trillion without new taxes. They won’t like any of it — but it will be in their interest to make their peace with it.

Of course, I may be fond of Britain but I can never be its chancellor. So, my message to a future progressive chancellor who contemplates all of the above is simple: hold your nerve! Provided your prime minister keeps her or his cool, you’ll be alright. Then again, I know from experience that it is pure folly to presume your prime minister’s steadfastness!