Climate Goals: Wellbeing Economy

Helen Whately Excerpts

Tuesday 30th November 2021 Westminster Hall

[The Exchequer Secretary to the Treasury (Helen Whately)]

It is a pleasure to serve under your chairmanship, Mr Betts, and to answer the debate on behalf of the Government. I congratulate the hon. Member for Brighton, Pavilion (Caroline Lucas) on securing a debate on an issue about which she cares deeply and speaks eloquently. I thank other hon. Members for their thoughtful contributions to what has been a good conversation in this Chamber.

I hope that it will not come as a surprise to hon. Members that this is a subject that the Government take seriously and that, as a Treasury Minister, I care about deeply. Much of what we are doing in fact aligns with a wellbeing economy approach. More than that, as a Government, we are clear that the wellbeing of our citizens and the natural environment is a priority as we work to deliver our world-leading climate goals.

Given the topic, this has been a wide-ranging debate. In answering it, I will talk first about how we are already thinking differently about wellbeing and the economy, and then about how we are acting differently, based on that new way of thinking. To be clear, the Government are already taking steps towards a broader understanding of progress and GDP growth. Rather than simply measuring our success in conventional economic terms, we are increasingly focusing on a range of measures, including reductions in carbon emissions, improvements in air quality and increases in skills, among other things.

As a Treasury Minister, however, it would be strange for me not to argue that a traditional economic metric such as GDP remains important and useful. I think that the shadow Minister, the right hon. Member for Wolverhampton South East (Mr McFadden), and I are probably in agreement on that. Nevertheless, GDP has its limitations. It should not be seen as an all-encompassing measure of welfare, which it was never designed to be, and nor is it an end in itself, as several hon. Members have said.

The Government fully supported the recommendations of Sir Charles Bean’s 2016 independent review of economic statistics, which acknowledged some of GDP’s limitations. We are committed to broadening the range of metrics that we use to measure welfare, including better accounting of human capital.

We provided the Office for National Statistics, for example, with an additional £25 million to improve UK economic statistics, including through the Beyond GDP initiative, which aims to develop new and broader measures of welfare and activity, such as a suite of personal wellbeing measures that better account for unpaid work, and estimates for human capital. I heard the hon. Member for Brighton, Pavilion say, “Don’t talk about the ONS”, but I assure her that ONS work on measuring natural capital is ongoing.

We have updated the rules that we use in the Treasury, as set out in the Green Book, to guide individual spending decisions. Those rules already take into account much more than the direct effects of GDP, including estimates of wider economic, social and environmental benefits. This year we introduced to the Green Book new guidance for considering wellbeing in detail as part of policy appraisal.

Several hon. Members have spoken about valuing nature and natural capital. The Government agree unambiguously with the central conclusion of the Dasgupta review that nature and the biodiversity that underpins it ultimately sustains economies, livelihoods and wellbeing. We also agree that only by accounting for the natural environment can we have a more complete view when balancing social, economic and environmental considerations in decision making. In other words, we know that natural capital matters and we are factoring it more and more into our thinking.

In response to the Dasgupta review, the Government are working to deliver a nature-positive economy so that we can be the first generation to leave the natural environment in a better state than we found it. Let us not underplay the significance of that. It is a genuine paradigm shift, and it is being put into action through the Environment Act 2021, including mandating biodiversity net gain for development to make sure that much needed development does not come at the expense of nature. That is why we have been working with the ONS to improve the way in which nature is incorporated in our national accounts, providing funding to explore improvement in its natural capital estimates to improve their relevance to policy making and through the consideration of a broader measure of economic activity than is currently captured by GDP. The recent spending review made investments to improve our understanding of the country’s natural capital with £140 million of funding to map the extent and condition of the country’s natural habitats.

Clearly a big part of our work in this area relates to efforts to tackle climate change by achieving net zero, which is part of my brief at the Treasury. The UK’s comprehensive legislative framework for tackling climate change, which revolves around setting carbon budgets, shows clearly how factors other than GDP sit centrally within our economic policy. That approach has been a success. Between 1990 and 2019, under Governments of different colours, the UK has reduced its greenhouse gas emissions by 44%, faster than any other country in the G20. Since March 2021, the Government have committed to invest £30 billion in our green industrial revolution. That spending, along with action on regulation and green finance initiatives, is about keeping the UK on track for our carbon budgets, establishing our long-term pathway towards net zero by 2050.

There has been widespread agreement in the Chamber about acting sooner rather than later on climate change, and specifically acting to prevent future climate change and investing to that end. I agree with the hon. Member for Stirling (Alyn Smith) that it is not a choice of either growth or the environment—it is not either/or but both. Our transition to net zero is a growth opportunity in itself. We expect to see hundreds of thousands of new jobs in the green economy. Not all growth includes consuming finite resources; doing things better can also boost GDP.

We also want new jobs to be well paid. That is absolutely part of our vision. We are aiming for a higher paid, higher skilled economy. I disagree with the hon. Member for Salford and Eccles (Rebecca Long Bailey) who said that growth means nothing to a struggling family. I disagree. Growth does matter. If we have a shrinking economy, a struggling family is less likely to have jobs, less likely to see their income go up, less likely to see improvements in their standard of living and less likely to have the opportunity to come out of poverty. Growth means more jobs. It means higher incomes. It means the opportunity for people’s wellbeing to improve.

As I said at the beginning of this debate, this is a wide-ranging issue, but I hope hon. Members will recognise that the Government are taking a comprehensive approach. I recognise that sometimes Ministers can fall into a trap in such debates by delivering a long list of policy actions, but I would say that our actions really do speak as loudly as any words. I know that the hon. Member for Brighton, Pavilion and other Members who have spoken today care deeply about the issues, but so do the Government.

On the specifics of the debate, our objective pure and simple is an approach that gives us the very best chance of meeting our climate goals in a way that maximises wellbeing for all—in fact, overall improving the wellbeing of the population of this country. We are thinking differently. We are acting differently. We are investing differently. We do indeed want to do that collaboratively, including by working closely with hon. Members across the House.