Baroness Tyler of Enfield
Main Page: Baroness Tyler of Enfield (Liberal Democrat - Life peer)
Baroness Tyler of Enfield
That this House takes note of the case for Her Majesty’s Government to use wellbeing as a key indicator of national performance when setting budgets, deciding policy priorities and reviewing the effectiveness of policy goals.
Baroness Tyler of Enfield (LD)
My Lords, I am delighted to open this debate on the case for the Government to use well-being as a key indicator of national performance when setting budgets, deciding policy priorities and reviewing the effectiveness of policy goals. It is a debate of growing salience both overseas and in this country and one that cuts across a wide range of interests for many noble Lords speaking today, including health, the environment, the world of work, education, transport, housing, community, culture and the arts, sport and leisure—the list goes on. I am very much looking forward to hearing the contributions from all noble Lords.
I should say at the outset that I feel it is right that, while Parliament and the whole nation are having to face up to the immense and immediate challenges of the coronavirus pandemic, we pause, however briefly, to consider the long-term well-being of the nation. While it is a timely debate, it is in fact not a new one. In 1968, Bobby Kennedy famously said that measuring a country’s GDP accounts for
“everything … except that which makes life worthwhile”,
highlighting that the orthodox approach included
“air pollution and cigarette advertising”
and “napalm and nuclear warheads”, but failed to account for
“the health of our children, the quality of their education or the joy of their play”
or
“the beauty of our poetry or the strength of our marriages”.
Since then, a growing number of economists and academics have argued that there is something fundamentally wrong with the way we measure economic and social progress. Indeed, leading academics such as Nobel laureate Joseph Stiglitz suggest that measuring people’s well-being is important for determining priorities in public policy, rather than focusing solely on gross domestic product. It is a stance gaining some prominence as Governments and businesspeople alike have joined the chorus suggesting that we reconsider how we evaluate our success as a society and how decisions are made about how public money is spent between competing priorities.
So what do we mean when we discuss well-being? Typically, well-being relates to a set of different ways of measuring quality of life and human flourishing which takes account of the broad spectrum of human needs rather than looking only at economic measures. It is about how individuals evaluate their lives and what really matters to them.
The picture that emerges in the UK is one in which well-being, for too many, is perilously low. Indeed, based on the well-being index set up by the former Prime Minister David Cameron back in 2010, the Office for National Statistics recently reported a fall in both life satisfaction and the feeling that things done in life are worth while. That was according to its most recent February bulletin. Furthermore, the same bulletin reported elevated anxiety at the end of 2019, with around 10.6 million people reporting high levels of anxiety. This of course chimes with current concerns over rising levels of poor mental health.
In 2018, the Intergenerational Foundation used well-being to measure the overall quality of life of young adults in the UK to evaluate improvements from one generation to the next. It found that, rather than improving over the last 20 years, overall well-being had declined by 10%. Satisfaction with well-being had fallen in terms of economics, relationships, health, personal environment and the sense of belonging.
Like other countries, we have historically focused on gross domestic product. However, while accounting for many things that are bad for us in health and other terms, GDP also fails to account for many things which are good for both people’s well-being and the economy. Very recently, journalist Jeremy Hazlehurst wrote about the importance of good metrics in the Work Magazine, identifying four main shortcomings of GDP. His framework provides a useful way of thinking how we can come up with improved and more rounded measures. First, he said that GDP is better at measuring goods and services, having originated to capture value derived from the manufacturing industry; I am sure I do not have to remind any noble Lord of the role that services play in our economy—approximately 80%. Secondly, it quantifies without having anything to say on quality. Thirdly, it is a so-called offline measure, which fails to account for time and money saved by online services, such as booking a rail ticket online. Finally, it deals in averages. This final point is crucial. In an era of increased inequality, GDP fails to capture wealth distribution and gaps in well-being. As we know, societies with the largest discrepancies between the rich and the poor tend to have higher levels of crime and exhibit much less trust and social cohesion. Unfortunately, we are failing to combat this trend of rising inequality. Only last week, a rise in income inequality was reported by the Financial Times, with the average
“disposable income for the poorest fifth of people”
having fallen by 4.3%. It is also worth pointing out that survey evidence shows that a lack of money is a strong predictor of low well-being, but the relationship between money and well-being drops dramatically as incomes rise. I do not suggest we dismiss GDP entirely; it has and will continue to be an important measurement for average growth across the country. Rather, my argument today is that additional and more qualitative measures are needed to help generate a richer debate. While growth can be a useful metric for economic success, we must ask ourselves other questions. What is the purpose of our economic policy? What is the overall goal of government policy? Are there limits to sustainable growth? What do we do with growth? Surely our goal should be to maximise the well-being of our citizens.
The case for measuring well-being is, in part, an economic one. Understanding well-being can help policymakers make public spending more effective at improving the lives of our fellow citizens. If we understand measurements of well-being, we can better understand where to direct public spending. In this sense, we can think of well-being measurement as a means for improved return on investment. The noble Lord, Lord Layard, is highly distinguished and a global authority on this issue, and it has been my absolute pleasure to work with him for a number of years on the All-Party Parliamentary Group on Wellbeing Economics. He has suggested that the Government should evaluate improvement in well-being for every pound they spend, so I very much look forward to hearing his contribution today, which I do not have to wait long for.
Far from being an unaffordable luxury, well-being data has the potential to improve the effectiveness of public spending and, in some cases, save public money. As the noble Lord, Lord O’Donnell—another collaborator on the all-party group and leading expert in this area, who is unable to be in his place today—said, in May 2019,
“we need to understand that some of the big issues, such as improving air quality, are things that may not show up in pounds, shillings and pence. But it will show up by making our children healthier. You get long-term gains that give you a long-term fiscal gain as well”.
I would be remiss not to mention the importance of measuring children’s well-being specifically. A recent report from the Children’s Society found that an estimated 219,000 children across the UK are unhappy with their lives. Children’s happiness with their school and friends is declining, and the UK ranks 40th of 44 countries in the OECD’s PISA rankings for children’s well-being. We know so much more about adult life satisfaction than that of children. My case today is that well-being measurement will not only allow us to inform decisions on where to direct money more efficiently but serve as a tool to understand the outcomes of specific policies. Without a reliable and comprehensive mechanism to collect this data, we will simply not make progress on this issue.
Research has told us that participation in the labour market is a path to life satisfaction. Indeed, good-quality work can build a sense of fulfilment and generate involvement in community that gives people a real sense of purpose. The reverse is also true for poor-quality work and insecure work: it produces low well-being. In this sense, economic progress and well-being are inextricably linked. It may sound trite, but a happy, healthier and satisfied society is also an economically productive one.
As I have just mentioned, well-being is also about fairness between generations, social groups and regions. A successful well-being economy would, for example, ensure sustainable growth. To bring this bang up to date, consider the trade-offs suggested in the Financial Times editorial on 2 March on regional inequalities in the UK. It argued that the current choice appeared to be stuck between a life in the economically dynamic south-east, where high housing costs generate anxiety and unhappiness, or moving to more affordable regions without the same economic opportunities.
Well-being seems highly relevant to the Government’s levelling-up agenda and surely could be used as one means of shifting the dial. I also stress a point made by the OECD’s How’s Life? 2020 report, which came out recently. It says that we must not only measure well-being today but identify the resources needed to sustain it. This is vital when we think about the case for capital investment. It should not just be about physical infrastructure, but should include human and social capital.
It is not just economists and academics who are making the case for well-being; I was really fascinated to read recently in the pages of the Financial Times that an American hedge fund manager, no less—not the kind of person I often quote—made the case for companies, both private and public, to measure well-being. He cited the example of PayPal, a company that chose to gauge the financial stress levels of hourly and call-centre employees. Upon finding that 60% had difficulties and struggled to make ends meet, wages were raised, healthcare costs were reduced, employees were designated as shareholders and financial education was promoted—metrics led to action. The simple question I ask today is: why would the Government not do the same?
Other Governments have been taking steps forward in well-being economics. Here in the UK, Scotland and Wales have become examples of the practical implementation of well-being through things like the Scotland Performs framework and the Well-being of Future Generations Act in Wales. Tomorrow, of course, we have the Second Reading of the Wellbeing of Future Generations Bill of the noble Lord, Lord Bird, to which I am very much looking forward to contributing. Further afield, New Zealand Prime Minister Jacinda Ardern has set aside 4% of the national budget as a well-being budget for a sustainable and low-emissions economy, a reduction in child poverty and improvement in mental health. More recently, Prime Minister Justin Trudeau of Canada charged one of his Ministers with leading work within the Department of Finance to better incorporate quality-of-life measurements into government decision-making and budgeting in preparation for their budget. Surely we now have an opportunity to join close partners in the Commonwealth and beyond to be leaders in well-being.
We have just had a Budget that, for obvious reasons—and quite rightly—was dominated by measures to combat the impact of coronavirus. Another particularly noteworthy aspect was the Chancellor’s whacking great £640 billion capital investment in physical infrastructure over the next five years for things like building roads, bridges, housing, broadband and so on. But the Budget had little to say on building human and social capital and was sadly silent on social care, one of the greatest challenges of our time. We have another opportunity though coming up soon to focus on well-being and on human and social capital infrastructure in the forthcoming spending review, which looks at longer-term spending. What would a spending review focused more on well-being look like? Happily, the APPG on Wellbeing Economics, which I have been involved in since joining your Lordships’ House, last year produced a paper with recommendations on that in a wide range of areas, including mental illness, children and schools, entry into skilled employment, social care, community services and improved well-being at work.
The current approach encourages a damaging short-term approach. In practical terms, there is much that the Treasury—and indeed the whole of Whitehall—could do in the way it operates to shift the dial on well-being, including by publishing data on well-being, reviewing the Green Book rules on how spending is categorised, providing guidance and technical support to departments on how to categorise the impact of policy on well-being, and asking departments to justify their spending review bids in terms of impact on well-being relative to their cost. We could introduce well-being impact analyses into legislation and departmental business plans and we could have a national strategy for reducing well-being inequalities.
There is much that we could do, and I conclude by saying that well-being has the potential to reconnect people with politics and to create a shared vision for what society and the economy are for. It is not an add-on to be considered once economic policy objectives have been achieved; it offers a new approach to policy across the board and has the potential to make government more effective in improving people’s lives. I very much hope that, 50 years on, the spirit of Bobby Kennedy’s visionary insight can start to bear fruit in this country.
Baroness Tyler of Enfield
My Lords, I thank all noble Lords for participating in this debate. It has been hugely thoughtful, stimulating and wide-ranging, and I hope other noble Lords have enjoyed it as much as I have. I thank, in particular, the Minister for her very thoughtful response.
We have heard a very wide range of perspectives—you would expect that. I particularly welcome the noble Lords who contributed perspectives that challenged the notion of well-being. They were sceptical around it, but it is an important part of this emerging debate. There are, without a doubt, tricky definitional issues around well-being and how it is used as a measure. I hope the point has struck home about the need for better children’s well-being indicators.
There has been a lot of refreshing agreement across Benches and parties in today’s debate. I very much hope this will translate into a wider, national debate, as one noble Lord referred to, which was part of my purpose today.
Finally, I am very pleased that various noble Lords agree with me that well-being is not a bourgeois trap or something pink, fluffy and cuddly but something fundamental to the purpose of Government and economic policy. If I ever need to find a way of ramming that point home in the future, it will be the words of the noble Lord, Lord Tugendhat, that will ring in my ears for some time. He said that if the Government had had a greater focus on well-being, rather than balancing the books, then the austerity programme of recent years may not have been pursued with quite some vigour. Frankly, there is nothing pink or fluffy about that.
Motion agreed.