Why the Treasury needs a Wellbeing Approach to Budgeting

March 8, 2021  

Rishi Sunak’s budget announcement raised familiar debates about how to best secure growth. But what if we were measuring the wrong kind of growth? Luca Tiratelli puts forward the case for New Zealand-style Wellbeing Budgets – as a better way to help communities – and community power – to flourish.

A week after Rishi Sunak held up his red briefcase, the budget fallout continues. Despite the carnage of the last 12 months, the arguments swirling around feel deeply familiar. Are tax rises a good idea? What level of public spending is prudent and affordable? Who deserves more and who less?

The pandemic has caused many old certainties to be called into question – and yet the fundamental focus of this budget remains the same as every other budget for the last 40 years: trying to engineer GDP growth.

But what does growth mean? And when is growth really meaningful? What we choose to measure, and which indices we chose to foreground as ‘evidence’ of ‘impact’ are never neutral choices. They are instead value-laden assumptions that reveal what it is we hold dear and what we think is important. In our most recent report, we at New Local have argued that what we elevate at present is all wrong.

which indices we chose to foreground as ‘evidence’ of ‘impact’ are never neutral choices. They are value-laden assumptions that reveal what it is we hold dear and what we think is important.

For two years now, we have been calling for a revolution in public service design and delivery, built around principles of localisation, devolution and democratisation. We call this ‘Community Power’, and we have amassed a wealth of evaluation findings, case studies and frontline testimonials that attest that this approach ‘works’ in terms of delivering improvements to people’s lives.

However, what we have also found is that the incentives created by current conceptions of ‘evidence’ in the public sector (and in The Treasury in particular) mean that such approaches are always at a structural disadvantage in terms of proving their worth. We call this an ‘evidence paradox’.

At the moment, understandings of evidence and impact tend to focus on immediate, quantitatively measurable solutions to problems. The nature of community power, however, is more long-term, more qualitative and focused more on people than on problems. As such, community power initiatives – be they person-centred models of care or exercises in deliberative democracy – are always trying to prove themselves against criteria designed to exclude them.

What can be done about this? One solution we propose in the report, topically, is for The Treasury to adopt a “wellbeing budgeting” approach.

community power initiatives […] are always trying to prove themselves against criteria designed to exclude them.

The key indicators promoted by The Treasury at present, including the afore mentioned GDP per capita, are, in many ways, deeply flawed. As academics like Kate Pickett and Richard Wilkinson have argued, these metrics have very little correlation with people’s quality of life in countries that have achieved a certain benchmark level of economic development. They also miss a lot of the activity that makes up the backbone of the economy, for example women’s unpaid domestic labour – and as such have large blind spots around inequality.

Wellbeing budgeting can remedy this – and a good model of how this might work in practice can be found in New Zealand. There, ahead of their budget in 2019, they defined wellbeing as a condition in which “people are able to lead fulfilling lives with purpose, balance and meaning”. They recognised that to “meaningfully address complex problems”, it is necessary to move beyond traditional economic forms of ‘evidence’ for what works in public policy, and that taking this approach could help focus minds on real outcomes, whilst breaking down organisational siloes.

In the end, they created a new set of indices built around five key wellbeing objectives selected for that year. These included things like child wellbeing, mental health, racial inequality, economic justice and productivity. These goals then became the responsibility of all policy areas, and they were pursued in a person-centred, cross-silo fashion.

wellbeing budgeting foregrounds an understanding of public services that is about people – their wants, their needs and their potential – rather than about ‘problems’.

Adopting such an approach would be good for the fortunes of community power initiatives in this country for a number of reasons. For one thing, wellbeing budgeting foregrounds an understanding of public services that is about people – their wants, their needs and their potential – rather than about ‘problems’. For another, it signals a willingness to experiment and to innovate within the public sector, and thus creates the kind of permissive environment that will allow community power to flourish.

If we want to see a new paradigm of service delivery arrive in Britain, then we need to see this approach adopted. Better things are possible – better governance, better public services and better budgeting.

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