Osborne is talking about the long-neglected topic of wellbeing, but his policy needs to match his wordsby James Zuccollo / March 20, 2015 / Leave a comment
In 2010 David Cameron promised to “start measuring our progress as a country, not just by how our economy is growing, but by how our lives are improving.” Unfortunately, as dealing with the deficit became the defining mission of his Government, that promise seemed to fall by the wayside. This week, in George Osborne’s Budget speech, we glimpsed its return.
Trumpeting rising living standards in the UK, Osborne referred not to GDP but to household disposable incomes. That is one of a bevy of measures that the Office for National Statistics have developed over the course of this Parliament to track the living standards of UK citizens. The measures supplement traditional statistics, such as GDP, and paint a fuller picture of the nation’s health. Hearing the Chancellor highlight the measures that truly matter is progress.
It has been some time since the Government has publicly championed wellbeing as a measure of success. In 2010, they were faced with a deficit at levels not previously seen outside war. The sovereign debt crisis in the EU then demonstrated that market confidence in a nation’s debt can be a fragile thing and, understandably, the Chancellor set to reassuring debt markets. He developed a singular focus on deficit reduction that would become his defining ambition.
That focus had costs: the best current estimates are that austerity cost the UK about one percentage point of GDP growth each year from 2010 to 2013. It is commonly known that GDP rose slowly, less commonly known that GDP per head rose even slower, and hardly known at all that the disposable income of the nation remains stagnant to this day. Osborne sacrificed short-term incomes for deficit reduction because that seemed the priority in 2010. In 2015, with UK borrowing rates still extremely low, the situation is different. Debt vigilantes are no longer the currency of conversation and Osborne’s rhetoric has changed to reflect that.
The Chancellor’s speech emphasised not the deficit, as he often does, but debt. He is right to do so: in the long-run what matters is that the public finances are sustainable and that means stabilising debt. The sustainability of the Government’s spending commitments affects its ability to sustain the services it provides for future…