Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what assessment the Government has made of the (a) potential limitations of GDP growth as a measurement of the development of the UK economy and (b) potential merits of using alternative measurements such as the (i) Genuine Progress Indicator, (ii) Green Gross Domestic Product and (iii) Human Development Index.

GDP measures the total value of all of the goods made, and services provided, during a specific period of time. GDP is important because the higher a country’s GDP is, the more resources are available to people in the country – goods and services, wages and profits. Growing GDP sustainably means the government is better equipped to invest in public services such as the police, NHS and schools.

Whilst it remains one of our most important economic indicators, the Government recognises that GDP has its limitations and should not be seen as an all-encompassing measure of welfare. The ONS produce separate measures of subjective well-being, introduced as part of the 2010 National Well-being Programme, to start measuring our progress as a country, not just by how our economy is growing, but by how our lives are improving. This programme encompasses a broad range of measures including, happiness, health, the environment and personal finance.

The Government has provided the Office for National Statistics (ONS) with an additional £25 million to help implement the recommendations of Sir Charles Bean’s 2016 Review of Economics Statistics, including through an initiative called ‘Beyond GDP’ that aims to address the limitations in GDP by developing broader measures of welfare and activity.

As a result of this work, the UK became one of the first countries to publish natural capital accounts as part of its National Accounts (The Blue Book). The ONS is continuing to develop these accounts and also published human capital estimates for 2004-2018 as part of their wellbeing measures. The Dasgupta Review considers that a broader measure of ‘inclusive wealth’, comprising Natural, human and produced capital, can provide insights into a nation’s sustainable economic progress over time. In response to the recommendations of the Dasgupta review, HM Treasury provided further funding to the ONS to continue improving its natural capital estimates. This will improve their relevance for policy making, and ensure continued consideration of a broader measure of economic activity than just GDP.