Although this year’s Autumn Statement failed to live up to its billing to help households who are ‘just about managing’, it did make a renewed attempt to tackle one of the biggest and most damaging challenges we currently face: the UK’s productivity puzzle. Whilst increasing investment is welcome, it is a missed opportunity as it is largely investment in physical infrastructure – trains, cars and telecoms – as opposed to social infrastructure. If we truly want to solve the productivity puzzle, we need to invest in people as well as things.
Today the Early Action Taskforce are publishing a collection of short essays on how acting earlier can promote good growth. This collection is based on our “A Question of Growth” blog series we ran earlier this year, asking members of the Task Force and others to contribute their thoughts on what constituted ‘good growth’ and how taking a more preventative and investment-led approach can provide a solid foundation for growth.
It is clear from the contributions in our report that one of the first problems we must overcome in our quest for good growth is measurement. Many contributors pointed out that GDP is partial and does not capture fundamental elements that contribute to improving people’s wellbeing, arguably an important measure of human progress. As Dan Corry from New Philanthropy Capital argues, we must not throw GDP out entirely, as it risks alienating policy makers and losing a useful if partial indicator of economic progress, but growth that does not contribute to our overall well-being is unlikely to be ‘good growth’. Anna Coote from the New Economics Foundation makes this point most strongly, defining wellbeing as “the way people feel when they lead a good life, functioning well on personal and social levels”.
We should therefore be aiming for, in the words of the London School of Economics’ Anne Power, “a less greedy, more socially just, more equitable and more environmentally sensitive approach to growth”. Focussing on investment in physical infrastructure alone will not achieve this.
Investing in society can improve productivity
Early action provides the opportunity to not only broaden the debate, but to widen the horizons of what we want to achieve and how we want to achieve it.
Two contributors focussed on how we relate the early action agenda to market forces in order to foster ‘good growth’. Debbie Pippard from the Barrow Cadbury Trust argues that the poverty premium, in which poorer people end up paying more for essential goods and services, is hugely problematic for both moral and economic reasons. If we could reduce or abolish it through collective consumption practices then we could free up more money for spending in the wider economy.
Dan Paskins from the Big Lottery Fund calls for early action strategies that ensure “the aggregate benefits of globalisation are shared more equitably”. By investing in early action – an integral part of the social infrastructure of the UK – we can intervene more efficiently in market failures and societal problems, leaving us with more money to invest in classic growth strategies around physical infrastructure, and improving social outcomes too.
The point about investment is crucial. As Caroline Slocock of Civil Exchange notes, early action is not a cost but an economic investment. We therefore need a positive cycle of investment in early action that clearly yields a return on investment (arguments around investing in science and education to increase our human capital already recognises this), and there are already tools out there that can help us to measure this (for example in New Zealand). Other early action areas that are traditionally seen as costs rather than investments include welfare – something the Task Force has written on before – as highlighted by Neil McInroy, employment support, and mental health.
Ben Jupp from Social Finance takes (un)employment as his focus, arguing that the massive inequalities individuals with mental health problems face in the labour market constitute a major drag on our economy Governmental attempts to address this have been patchy to date – the Work Programme for example has been particularly unsuccessful at helping those with health problems – but there is hope if we can invest more money in early action activities such as Individual Placement Support that integrates health and employment support, starts with people’s wishes and aspirations, and aims to get people into work they actually want to do as fast as is appropriate. In doing so we can harness people’s potential and enable them to flourish.
Also thinking about mental health, Cliff Prior discusses Social Impact Bonds (SIBs) as a newish form of investment that can yield social and economic benefits. For him and indeed many of our authors the argument that it is too costly to invest in early action is glib, particularly when you consider the huge economic and social costs of mental health problems. He points to several SIBs such as Newcastle’s Ways to Wellness and the Fair Chance Fund that are aligning funding from different sources for positive social and economic outcomes for individuals, communities, and for society as a whole.
To steal Cliff Prior’s conclusion: “good growth – sometimes you know it when you see it.”