Labour Shadow Levelling Up Secretary says Party would use Bennett Institute’s Wealth Economy Framework to measure success of the nation.
In a keynote address at the Institute for Government Annual Conference, the Shadow Levelling Up Secretary Lisa Nandy announced Labour would create an “independent advisory council” to monitor progress on addressing regional inequality.
As part of this, she said, Labour will change the measure of the success of the nation from GDP (Gross Domestic Product) to the six capitals framework, developed by Cambridge University’s Diane Coyle, Matthew Agarwala and Partha Dasgupta, which forms the foundation of thriving places with strong local economies.
Nandy explained: “GDP can tell you a lot about the relative productivity of a region or a whole nation, but very little about the health of a nation, the strength of a community, the resilience in the economy and family finances. And our overreliance on this one measure is one of the central reasons why we have not succeeded despite a century of trying.
“The levelling up white paper drew on the most interesting work in the field, from the work of pioneers like Diane Coyle, Matthew Agarwala and Partha Dasgupta, to develop the six capitals which form the foundation of thriving places with strong local economies. But these were recycled into vague, disingenuous measures of success – that as the IfG said, would not reduce regional inequality even if they were met. In short, they tell us little about the problem we are trying to solve.”
Says Dr Matthew Agarwala, Project Leader: The Wealth Economy, at the Bennett Institute for Public Policy: “The quality of the Wealth Economy project is that it resonates across the political spectrum. The Government placed it at the heart of their Levelling Up White Paper whilst the Opposition calls for it to be better applied.”
In the autumn of 2020, the Wealth Economy team published their blueprint for post-pandemic investment in a world where structural and regional inequality is rife, and the wealth of nations needs to mean far more than simply GDP.
The report, ‘Building Forward’, lays out six “interconnected capitals”: natural, human, social, knowledge-based, institutional and physical – the foundations for a new economic model of inclusive wealth. It gives a framework that goes beyond GDP to better measure the wealth of a nation and for economic decisions to be based upon.
Their work has influenced the United Nations’ System of Environmental-Economic Accounting (SEEA), the international statistical standard for natural capital accounting allowing a link between environmental data with economic data in a coherent way. Countries have already begun to develop ecosystem accounts including the Biden-Harris Administration’s National Strategy To Develop Statistics for Environmental-Economic Decisions published in February 2022, which also draws on Bennett Institute research.
The views and opinions expressed in this post are those of the author(s) and not necessarily those of the Bennett Institute for Public Policy.