Will Sunak’s Spending Review choose to pursue happiness?

Over the summer, a rather technical and dry paper emerged from the bowels of the Treasury. Few will have noticed—it had no juicy gossip on the Sunak-Johnson wars and it doesn’t solve the lorry driver shortage—but it could be of profound importance for public policy in the years ahead if its principles are put into practice by the Chancellor in this week’s Spending Review.

The paper is all about how well-being can and should be used to inform policy, make choices among options, and then used to implement and evaluate them. At a stroke, it puts the pursuit of happiness at the heart of what the Treasury at least thinks should be the objective of policy.

Although it does not put it like this, it is a signal that maximising GDP should no longer be the only indicator we care about when appraising policy options. Things have been inching this way for a little while now, with data on what people think about their personal well-being being collected systematically for around a decade. We have also seen the establishment of the What Works Centre for Wellbeing (of which I am a board member) and the inclusion of well-being in the latest version of the Treasury bible on investment appraisal, The Green Book.

The entire policymaking process

This new official paper does more than go into the nuts and bolts. It does not hold back in its enthusiasm, saying that ‘well-being is an important consideration throughout the entire policymaking process, from identifying areas requiring policy action, to defining policy objectives, to assessing long and short lists of policy options, to evaluating implemented policies’. It notes that this sort of thinking should go into areas you might not think about at first, including ‘infrastructure, housing, or productivity’.

In some places it goes a bit far for me. I remain sceptical about overdoing the monetisation of well-being or of calculating well-being impacts in what are called ‘WELLBYs’ and then working out how much a ‘WELLBY’ is worth in pounds.

The lure of having hard cash equivalent numbers about the well-being value of a project, that you can then put into a cost benefit or social return on investment analysis, is strong but pretending we have an exact science is, I think, a slight danger for the longer term. It also leads to a sort of unseemly bidding war of using well-being to get the ‘financial’ impact of your area of concern as high as possible—as this recent work on the ‘costs’ of fraud illustrates. In addition, the key concept of ‘community well-being’ is underplayed in favour of the ‘harder’ personal well-being metrics.

Community well-being

This community concept of well-being is more about the combination of social, economic, environmental, cultural and political conditions that make a community work and allow people to fulfil their potential. It includes things like access to healthcare, how safe people feel and the trust they have in others. It is more than simply the sum of individuals’ well-being. In particular, this is the concept that will matter a great deal to local charities and leaders.

There are problems with using well-being in this way too, many covered in the paper. How long do the effects on well-being last as a result of an intervention to tackle loneliness or a trip to the cinema? How do different groups respond to things? And how do we take account of inequalities in well-being? But many of these are familiar to more conventional approaches so should not be a barrier to taking up this approach.

The die is cast

Will this new approach to well-being by the Treasury bring about a revolution in the direction of policy? How money is spent? How public programmes are judged? Certainly we don’t expect much to change overnight but the die is cast, and the direction is clear.

As the paper says, a focus on well-being means, for instance, that the quality of jobs matters not just the quantity; that mental health and good social relationships need to be taken into account far more; and that planning policy needs to avoid creating spaces where social interaction is minimised.

Usually, these top-level documents have a habit of filtering down into other areas—so decisions by councils, health organisations, the private sector and non-profits should hopefully start to take well-being more seriously in future as a result.

A brilliant early sign that the Treasury is committed to this—rather than a few clever people having published a theoretical document that ministers feel no loyalty to—is if the forthcoming and long-awaited multi-year Spending Review pushes these concepts hard and builds the whole edifice around well-being—as has been done in New Zealand. As we move beyond what we hope is the worst of Covid-19 and aim to rethink and rebuild, that would undoubtedly be a good thing.

A version of this blog was originally published on The MJ.co.uk on 12 October 2021.