Shift to a Wellbeing Economy: put the health of people and planet first

We urgently need the Government to prioritise the health and wellbeing of people and planet, by pursuing a Wellbeing Economy approach. To deliver a sustainable and equitable recovery, the Treasury should target social and environmental goals, rather than fixating on short-term profit and growth.

A narrow focus on GDP growth has led us to environmental, health and financial crises. The UK is the 6th largest economy in the world, yet roughly a third of our children live in poverty. Two thirds of the public want the Treasury to put wellbeing above growth. Scotland and Wales are already part of the Wellbeing Economy Governments alliance. As host of the COP26 climate summit, the UK Government should build and champion a Wellbeing Economy - at home and globally.

Traditional economic measures, such as GDP, remain some of the most useful indicators of economic performance. GDP is closely correlated with employment, incomes and tax receipts and is comparable across time periods, making it useful for the government and Bank of England when setting economic policy and managing the public finances. During the current COVID-19 pandemic for example, GDP, along with a wide range of other economic indicators, has been used to inform government action aimed at mitigating the damaging effects of the pandemic on peoples’ wellbeing by supporting their jobs and livelihoods.

Nonetheless, the government recognises that GDP has its limitations and should not be seen as an all-encompassing measure of welfare – in fact this is something that GDP was never designed to be.

Sir Charles Bean’s 2016 Independent Review of Economic Statistics acknowledged some of GDP’s limitations, such as the challenge of capturing activities where no market transaction takes place and the fact that GDP estimates make no allowance for the depletion of natural resources that may be inherent in many forms of economic production. The full report can be found here: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/507081/2904936_Bean_Review_Web_Accessible.pdf

The government fully supported the recommendations of the Bean review and, to date, has provided the ONS with an additional £25m to help improve UK economic statistics - including through an initiative called “Beyond GDP” that aims to address the limitations in GDP by developing broader measures of welfare and activity.