Alternative Measures to GDP

Debate between Chris Hinchliff and Roz Savage

Tuesday 21st April 2026 Westminster Hall

[Dr Savage]

I completely agree with my hon. Friend’s perspective that, in rural areas in particular, the aspects of our quality of life that are not measured in financial terms are very much overlooked by GDP. He makes an excellent point that, in fact, using GDP as the pre-eminent metric disproportionately impacts on rural ways of life.

As I was saying, if my assumptions about what Governments are for are correct, how well does GDP measure whether Governments are succeeding? My answer to that would be: poorly, partially and, in some important respects—as already mentioned by others—not at all. I want to take each function in turn, looking at how GDP either misses or distorts it, or actively points in the wrong direction. First, on safety, GDP cannot measure whether people feel safe, whether crime is falling or whether justice is accessible. However, it counts the cost of building more prisons and policing more disorder, so a rise in violent crime, followed by the state’s response to it, actually adds to GDP. Secondly, on fairness, GDP is just an average; it tells us nothing about distribution. A country could have record growth, but the majority could be growing poorer while a handful are growing extraordinarily rich. It counts the billionaire’s yacht and the foodbank donation as contributions to national output alike.

Thirdly, public goods are where the distortion is most severe. GDP has no entry for clean rivers, unpolluted air, well-functioning flood defences or thriving natural ecosystems. Instead, it records the cost of remediation when things go wrong, never the value of prevention. In my South Cotswolds constituency, the Thames headwaters and the Cotswolds water meadows absolutely underpin food security, flood resilience and community health, but GDP is blind to all those things. Logging a forest, draining a wetland and concreting a floodplain all register as economic activity and contribute to GDP, while the loss of the natural ecosystems that made those landscapes valuable disappears without a trace.

Fourthly, on stability and risk, GDP counts healthcare spending, but it cannot tell us whether people are getting and feeling healthier. It counts anti-depressants and ambulance call-outs as contributions to output. By the logic of GDP, a pandemic is an economic opportunity. Fifthly, collective choices about the future are possibly where GDP fails most completely. It has no mechanism for accounting for the harm to future generations. By design, it rewards short-term thinking, and it is constitutionally incapable of answering the question, “What kind of a country do we want to be 50 years from now?”

The conclusion is inescapable: GDP was designed to measure the volume of economic activity, no matter what form that activity takes. Using it to assess whether a Government are fulfilling their five core functions is like using a thermometer to tell us whether a patient has recovered. The patient’s temperature may be perfectly normal, but their leg may have fallen off.

I have a couple of quotes worth remembering. Robert F. Kennedy put it with devastating precision in 1968. He said that GDP

“does not allow for the health of our children, the quality of their education or the joy of their play…It measures neither our wit nor our courage, neither our wisdom nor our learning, neither our compassion nor our devotion to our country, it measures everything in short, except that which makes life worthwhile.”

Meanwhile, Simon Kuznets—the economist who actually invented GDP in response to the great depression of the 1930s—had already warned that it should not be used as a measure of national wellbeing, yet we have been ignoring his advice ever since.

Unfortunately, GDP is not just partial; it can be actively misleading, because it creates perverse incentives at the heart of Government. As the Wellbeing Economy Alliance observes, our current system has four interlinked flaws: it is unsustainable, unfair, unstable and creates unhappiness. Critically, neither the brake nor the accelerator works any more. Faster GDP growth will only worsen biodiversity loss and accelerate climate change. In a system where a fabulously wealthy former Prime Minister pays an effective tax rate of just 23%, it will almost certainly also worsen inequality. That is the trap that GDP has built for us. It is a metric that makes it structurally challenging to do the right thing, because doing the right thing does not always show up as growth.

Moves have already been made in Britain in this direction, and we already have the data, but we do not use it. I will give credit where credit is due. When he was Prime Minister, the former Member for Witney, Lord Cameron, launched the Office for National Statistics national wellbeing programme, and also quoted Robert Kennedy. Since 2011, the ONS has published a framework tracking national wellbeing across 60 measures and 10 topic areas, across personal wellbeing, health, relationships, environment, governance and more. In February of this year, the ONS launched a new set of seven headline measures to be updated quarterly, explicitly aligned with the UN high-level expert group’s recommendations.

We have the data and what it tells us is striking. Since the pandemic, self-reported health has been in sustained decline. Trust in Government rose briefly after the last general election before falling back to lower than pre-election levels. Those trends are invisible to GDP yet are essential to any honest assessment of how our country is doing. Sadly, those measures, no doubt laboriously collected, sit on the ONS website largely unread and almost entirely ignored by Government. I suggest that it is time to use them.

Elsewhere in the world, countries are moving ahead. They are building better measures, embedding them in law and using them to govern. Last week, I was at the Wellbeing Economy Forum, two days of serious exchange with policymakers, economists and practitioners from across the world. It was tremendously inspiring. Three things were unmistakeable: we have the intellectual case and the technical frameworks but the only thing missing in too many countries, including this one, is the political will.

I will cite three examples of countries showing what is possible. Iceland rebuilt after the economic collapse, not by chasing GDP recovery but asking its people what they wanted. It is now one of the wellbeing economy Governments, alongside Scotland, New Zealand, Wales, Finland and Canada, all of which have introduced wellbeing metrics to guide public policy and budgetary processes. In Wales—not so far away—the Well-being of Future Generations Act 2015 legally requires every public body to act in the long-term interests of the next seven generations. That was initiated by Jane Davidson, a woman I am proud to call my friend. While I was at the conference last week, I had a long conversation with Sophie Howe who was Wales’s first future generations commissioner, and is now an internationally respected voice. If it can be done in Cardiff, I see no reason why it cannot be done in Westminster.

Thirdly, in Sabah, Malaysia, my good friend Cynthia Ong began the Forever Sabah movement, with a single simple question: where will Sabah be in 50 years if it continues down its current development trajectory? That question should be the founding question of every Government; not how fast are we going, but where are we going and what will we leave behind?

I have requests of the Government that would make a significant difference to my constituents, to every person here in Westminster, to the country and to the generations not yet born. The first is to use the data we already have. I am delighted we have a Minister from the Treasury here. Maybe he could relay the request to ask the Treasury formally to integrate the ONS wellbeing dashboard into spending decisions, alongside GDP, not instead of it.

Secondly, to require natural capital accounting in all major infrastructure and land-use decisions, so that the destruction of a flood plain, a peatland or a water catchment carries a recorded cost on the national balance sheet, not just a planning objection. If we value it, we must measure it. Thirdly, to introduce a parliamentary committee for the future, as called for by a coalition of organisations, including the School of International Futures and the Policy Institute at King’s College London. The committee would consider the long-term wellbeing of those who will inherit the consequences of today’s decisions. It should be not just a gesture but a committee with real teeth. Wales has shown that that is entirely achievable.

[Chris Hinchliff (North East Hertfordshire) (Lab)]

Would the hon. Lady add to her list a request that the Minister consider a formal target to cut inequality in this country? We will never grow our way to a good life for all our citizens while we have a fundamentally unjust society; we will only break the environmental boundaries we are already rapidly burning past.

[Dr Savage]

I thank the hon. Member for his very insightful intervention. In the doughnut economics model, we are in many ways in “overshoot”, while the basic needs of many in our society are not even being met. That is one of the major failings of GDP: it does not show how the benefits of growth and the wealth of the country are being distributed. I have been very impressed by the work of Kate Pickett, who spoke at the recent Lib Dem spring conference on this very subject. She spoke about her “spirit level” concept and argued that greater equality in a society works better for everybody, including the people at the top.

If we are honest with ourselves, we can now see the cost of ignoring the warnings of Simon Kuznets and Robert Kennedy. We can see that warning embodied in polluted rivers that once ran clean, in communities that feel left behind and in a politics that too often measures success in pound signs rather than human outcomes. We have the evidence, and we have the frameworks; we just need the willingness to change the definition of what we value, because what we measure shapes what we prioritise, what we prioritise shapes our decisions and our decisions shape the country that we will be in five years, 10 years and 50 years from now. Let us take an active choice to measure what matters: the wellbeing of our people, the health of our planet and the future we hand on to future generations. Let this Parliament be the one that finally aligns how we measure success with what success actually means.