Angel Gurría, the OECD Secretary-General, remarked recently that “It’s time to rethink how governments make policy, moving away from pursuing economic growth, towards people-focused policies that promote well-being and sustainable development.” His comments indicate that the ‘Beyond GDP’ movement has now reached the top level of policymakers.
This year CPP has been working with a range of local, national and international partners (including the OECD) to develop new economic measures that capture a broader notion of progress. Our inclusive growth metrics provide new insights on shared prosperity at the country, community and employer level.
Yet metrics alone are not enough to deliver positive change. New measures such as these must be embedded into the fabric of economic decision making at all levels. And so it is encouraging that Gurría made his comments at the OECD’s recent conference on ‘Putting Well-being Metrics into Policy Action’. The Wellbeing agenda is gaining significant traction and in many important ways it is complementary to notions of inclusive growth. In fact, our research shows that inclusive growth at a national and local level is far more closely aligned to measures of wellbeing than GDP.
CPP was pleased to attend the OECD conference to learn more about how countries around the world are changing the way they make economic policy. Here are three key lessons:
1. Legislative changes can ensure new measures carry weight
The most high-profile example of moving beyond GDP is New Zealand, which recently introduced their wellbeing budget. The New Zealand finance minister Grant Robertson updated the conference on progress made so far. They have introduced new social, cultural and environmental indicators and taken steps to reform the public finance system to reduce risk aversion and promote innovation in the wellbeing context. Robertson also outlined the legislative changes New Zealand are making, including requiring the finance minister to report on progress made on reducing child poverty at each budget and for the Treasury to report on progress on wellbeing periodically.
Another country leading the charge on the legislative front is Wales, via the Well-being of Future Generations Act. Sophie Howe, the Future Generations Commissioner, explained how the act requires 44 public bodies in Wales to consider (and set targets in line with) their long-term impact on Wales’ seven wellbeing goals. Howe provided concrete examples of how this has changed decision-making, including requiring economic contracts to focus on inclusive growth, blocking the infrastructure project on the M4 motorway connection and changing the definition of preventative spend. Lord Bird’s recently introduced Future Generations Bill, which is gaining good momentum, proposes a similar act for the UK.
2. Approaches must endure through the electoral cycle
The progress Scotland is making on the beyond GDP agenda was a common theme throughout the conference, with Derek Mackay, the finance secretary, outlining the government’s National Performance Framework (NPF). They have focused on ensuring this is a “national mission agreed on a consensus basis”, with all parties and organisations on board with the approach. To achieve this, a shared sense of values and purpose is important. For Scotland this has meant agreeing on what kind of country they want to be. Their approach not only encourages cross-party and cross-organisational working, it has also ensured that the NPF has survived since 2007.
Another way to ensure that these approaches endure through political cycles is to involve organisations that are independent of government. The Welsh case is a good example, with the Future Generations Commissioner standing independent from the Welsh government.
3. Developing practical metrics capable of real change is key
As Jeffrey Sachs stressed in his comments to the conference, traditional measures of economic growth are too imprecise to be useful for understanding improvements in people’s lives. To make a difference, we need metrics that both offer a broader perspective on progress while retaining practical applicability. Konrad Pesendorfer, Director General of Statistik Austria, argued that to achieve buy-in it is important to keep the number of indicators low to ensure clarity of purpose and focus. The 230 indicators in the sustainable development goals, for example, are simply too many. This need for both practicality and clarity is part of the reason why the CPP indices combine different datasets into a single figure capable of reflecting inclusive growth.
Changing the way a country makes policy to truly go beyond GDP is a long, complex process. But the OECD conference shows that it is possible. Ultimately, the countries that are making most progress on this agenda – Scotland, Wales and New Zealand – are combining each of the three elements above. They are developing clear, practical new metrics, embedding them in legislation and building a shared sense of mission and purpose. It’s now up to the rest of the world to follow their lead.
We’ll be exploring these issues at our upcoming annual inclusive growth conference: ‘Levers for change: delivering inclusive growth’. Join us in London on 26 November as a wide range of high profile speakers discuss how to make inclusive growth a reality.