Scottish budget needs to put country on a path towards a wellbeing economy – Dr Lukas Hardt

The latest Programme for Government promises to build a “fairer, greener Scotland”.

The Covid pandemic highlighted deep-seated inequalities affecting people like care workers on the frontline of dealing with the disease (Picture: Peter Byrne/PA)

This can only be achieved by building a different kind of economy that has our collective wellbeing at its core. This week’s budget needs to be the first important step in delivering such an economy. Will it be bold enough?

With Madagascar in the grip of a climate change famine, villages washed away in Germany, and recent storms causing multi-day power outages in Scotland, we can no longer avert our eyes from the urgent need for reducing greenhouse gas emissions.

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At the same time, the pandemic has shone a light on the deep-seated inequality in our society, with essential workers forced to face the brunt of Covid dangers, often without protection and in return for poverty wages that are barely enough to keep their families afloat. And so it was welcome that the recent Programme for Government led with a commitment to fairness and sustainability.

The challenges of climate change and inequality are both driven by an economic system that was not designed to be green or fair. But we can reprogramme our economy so it puts the health and happiness of people and planet first. A wellbeing economy would be designed to provide us with what matters most – dignity, connection, nature, fairness and participation.

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The movement for such a transformation is gathering pace across the political spectrum. Last week, MPs at Westminster debated the benefits of a wellbeing economy approach as a means of tackling the climate emergency.

MPs from all parties acknowledged the limits to growth. And the Scottish government is a founder member of the Wellbeing Economy Governments partnership – a collection of nations who are united in their ambition to redesign their economies.

Transitioning to a new kind of economy will require attention to questions of power, ownership and business models. It requires embedding the purpose of our collective health and happiness in all our institutions, whether it is government, businesses or the third sector. It requires processes that allow meaningful participation for everyone, in the communities where we live as well as in the organisations where we work.

In a few days’ time, the Scottish government will present its first budget of the new parliament. Martin Luther King is widely reported to have said “budgets are moral documents with numbers attached”. This week’s budget will show the true priorities of this government. It will show whether it is prepared to use all the levers at its disposal to refocus economic activity in Scotland towards those areas that really matter.

Given the urgency of the challenges we face, the budget needs to provide a bold first step to deliver on the promise of a fairer and greener Scotland.

Currently government budgets are caught in the trap of our outdated economic model. They focus on fostering indiscriminate growth and ignore the mounting costs of this approach.

As a result, large parts of government spending need to be focused on fixing “failure demands” – these are damages that could be avoided if our economy was designed better.

A recent report by the Wellbeing Economy Alliance shows that every year the Scottish and UK governments spend billions of pounds in Scotland on topping up poverty wages, housing the homeless and building flood defences.

As the report puts it: “We are caught in a cycle of paying to fix what we continue to break.” A wellbeing economy is about making choices that prevent such damage from occurring in the first place.

The tax and spending decisions of the Scottish government are a key lever for shaping the direction of our economy. The budget can support investments in low-carbon infrastructure and high-quality housing. It can support innovators to develop the technological and social solutions that we need to deliver what matters most to people.

It can level the playing field for businesses that put decent jobs and a healthy environment at the top of their priority list, rather than joining the race to the bottom. This would, in turn, reduce failure demands and free up more resources to deliver the things we really need.

In her recent report, Dr Katherine Trebeck, shows what a wellbeing budget could look like in practice. The Scottish government already has a compass for following the purpose of collective wellbeing – the National Performance Framework.

This framework captures the outcomes that matter most to Scottish people for a good life. Past Scottish budgets have considered those outcomes, but only for estimating the impacts of the budget after the fact. The outcomes in the National Performance Framework should be hard-wired into the budget process from the beginning.

A wellbeing budget would be built on participation, to ensure that it meets the needs of all citizens. The Scottish government is doing great work on citizen participation in many areas, for example in the use of citizen assemblies. But this openness does not extend to the budgeting process which is opaque and largely hammered out by civil servants and politicians. We need new conversations to ensure that budgets meet the needs of those at the sharp end of our economic system.

Addressing the root causes of the challenges we face is a long-term project. The budget process needs to reflect that reality, with all policymakers taking decisions “as if they mean to stay”. To facilitate that, annual budgets need to be recast as steps towards longer-term goals and need to be scrutinised against longer-term trends.

Building such a wellbeing budget would be bold. But it is only by being bold that we can hope to deal with the urgent environmental and social challenges ahead of us and build a fairer and greener Scotland.

Dr Lukas Hardt is policy and engagement lead at Wellbeing Economy Alliance Scotland

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