A backlash against numerous inequalities – and in particular against perceived unfairness in society – is a significant driver of the UK's current political malaise. Addressing inequalities between income groups, regions and generations will thus be key to re-establishing faith in government and avoiding further decline or even the threat of social unrest.

In income terms, the UK has become much more unequal than in the immediate post-war decades, and it should be a goal to reverse that trend – targeting the OECD average for income inequality and a halving of the number of those living below the poverty line. Measures to deal with perceived unfairnesses could include tighter scrutiny of competition in high-yielding sectors such as technology, and incentives for the appointment of worker representatives to company boards. But a government intent on tackling inequalities will inescapably need to raise public spending and direct taxation of income and capital from their current historically low levels. In particular spending on education and active labour market policies needs to increase, while gaps in the benefits system and regional imbalances are addressed.

Given the scale of technological change and the severe implications for the labour market, the risk is that policy will be insufficiently bold to deal with widespread disenchantment, which could ultimately pose a threat to democracy.

Brexit creates deep challenges for the UK's structure of governance; not least concerning the degree and manner in which powers are devolved within one of the most centralised countries in the world. Departing from the EU is likely to exacerbate regional inequalities and possibly social divide, while at the same time leading to further centralisation of powers, at least in the short term. Most Brexit analysis looks at the reorientation of the UK's external relationships, but the most significant impact may be on its internal constitutional affairs.

While it is generally agreed that the UK needs more devolution, there is little discussion about how and why it sometimes succeeds, but also sometimes falls short of expectations. Ever since Adam Smith it has been known that economic prosperity, justice, and social cooperation are mutually reinforcing. Therefore, policy must be built around community and a sense of belonging, rather than a collection of anonymous individuals. The Core Design Principles set out by Elinor Ostrom provide a framework to transform governance structure at every level from the smallest communities all the way to parliament.

Necessary institutional changes include giving local authorities much greater control over revenue-raising powers and therefore the services they wish to support. National legislatures must have the power to borrow for investment without limit, but with sole responsibility for repayment, to enhance local political accountability. A statutory body should be established, including representatives of the devolved assemblies and English regions, to address regional disparities, and there should be a much stronger regional presence in decision-making by HM Treasury and the Bank of England.

Government post-Brexit will face sustained and difficult challenges as the UK adjusts to its new situation. Yet these challenges risk being exacerbated by fundamental changes in UK political debate that are affecting the perceived legitimacy and effectiveness of the system and structures of government. These include erosion of the clear distinction entrenched for the last 150 years between political choices by elected representatives and impartial administration by the civil service; the disruption of traditional deliberative processes by digital and social media; and increased centralisation of decision-making in No. 10 Downing Street combined with inadequate scrutiny of that decision-making either by the Cabinet or by Parliament.

The centralisation of executive power reduces its perceived legitimacy across the UK, with devolved government in Scotland and Wales seen as contingent on the Westminster Parliament and Northern Ireland under control by central government. Fiscally, the UK has become the most centralised democratic country in the world. As government faces up to the challenge of unwinding membership of the legal and regulatory framework developed during 45 years of EU membership, it is vital that the UK's political structures restore their legitimacy and efficiency.

Necessary reforms start with greater transparency about how government really works today. A PM's Department should be created, separate from the Cabinet Office; senior appointments including the Chief of Staff and ‘Advisors’, as well as instructions from No. 10 to departments, should be subject to effective Parliamentary scrutiny. Legally entrenched structures are required to confirm that devolved powers cannot simply be overridden by the Westminster Parliament. Greater fiscal autonomy should be guaranteed to local government.

Finally, politicians should choose either to recommit explicitly to the original system whereby the civil service remains separate from politics and take steps to make it effective; or acknowledge the drift towards greater political control of the civil service and introduce safeguards to minimise political abuse, for example by taking steps to increase scrutiny of appointments and expenditure.