A budget to increase wellbeing in the UK? #Budget2017

The purpose of our economic growth is to improve the quality of life and prosperity of people in the UK.  This budget has some potential wellbeing gains, but also misses some opportunities which we set out  yesterday. 

The Chancellor’s focus on opportunity through learning and training is backed by the research: evidence shows that continuing to learn throughout life is not only useful for developing skills and improving job prospects, it can improve and maintain our mental wellbeing. Unemployment has a bigger impact on our wellbeing than loss of earnings and it will be interesting to see what difference the support for returning to work makes to wellbeing of those out of the labour market in caring roles where evidence is currently missing. Likewise, the Living wage increase should see wellbeing impacts as the wellbeing impact of increased income is  greater for lower paid than better off, pound for pound.

What this budget does miss is mental health which has the biggest impact on our satisfaction with life – this is important enough that it deserves special mention.

Nancy Hey, Director, What Works Centre for Wellbeing

Work

Unemployment is always damaging to wellbeing. Men tend to suffer more from unemployment, however new evidence suggests women who are committed to their careers suffer more than men. Return to work is good for wellbeing but it has to be good work

Sara Connolly, Professor of Economics at the University of East Anglia. Work, Learning and Wellbeing Programme.

  • £5m for return to work schemes positive for wellbeing. Extended breaks in employment, especially when they are unplanned, have a significant and scarring effect on wellbeing.The support for working parents and return to work schemes could be particularly powerful for certain groups for whom wellbeing is lower. But there is no evidence yet about how the transition into and out of caring roles impacts wellbeing. Research in this area would fill an evidence gap.
  • Business rate changes help local employers. Support of small and medium local businesses through the Business Rates measures could have a positive impact on wellbeing – employees of smaller businesses tend to have higher life satisfaction than those from larger employers.
  • Self-employed are a diverse group.  Some evidence suggests that the self-employed in the UK have higher wellbeing, but one study suggest that the benefits of self-employment are limited to the better off [1] and those in temporary jobs have lower wellbeing. Flexible work is good, but lack of control in work is bad for wellbeing.

Tax changes for female self-employed might discourage women from re-entering or entering the workforce and lower wellbeing. The changes could also have negative wellbeing impacts for learners who are working self-employed to finance part time study.”

Kevin Daniels, Professor of Organisational Behaviour at the University of East Anglia. Lead investigator of Work, Learning and Wellbeing Programme.

Learning and Training

  • The Department for Education will pilot different approaches to encouraging lifelong learning. Evidence shows that continuing to learn throughout life is not only useful for developing skills and improving job prospects; it can improve and maintain our mental wellbeing.  The investment of £40m to pilot different approaches to test what works for different approaches to lifelong learning is a sign that better evidence is key to making better decisions for our quality of life.  
  • Changes to training has the potential to re-balance wellbeing gains for different groups. Currently, lower level and technical qualifications result in lower financial and wellbeing returns than hIgher education qualifications.

Will Vocational Education and Training shakeup convince employers that qualifications have value? If not could be bad for wellbeing of learners. Government investing in VET training will only be good news if young workers can find good quality jobs to put skills to use”

Olga Tregaskis, Professor of International Human Resource Management at the University of East Anglia. Work, Learning and Wellbeing Programme.

  • Education for wellbeing is missing. The most recent Good Childhood Report shows us that girls aged 10-15 are less happy than they used to be. Last year’s report showed us that England ranked 14 out of 15 selected countries for wellbeing at school. This matters for the current lives of these children but also for their future – self-control, perseverance, the capacity to delay gratification, and the ability to cope with shocks are strong predictors of adult wellbeing. A wellbeing budget would focus as much attention on building social and emotional skills as on educational attainment. Which will help with productivity in the long run – we know that increasing wellbeing in children improves exam results, future wellbeing and future earnings.

Community Wellbeing

  • Community assets matter. Local pubs, key hubs for community activities, will benefit from tax breaks, and it would be good if more social spaces – libraries, cafes, and other bumping spaces – could also benefit. Children and people from some demographic groups are less likely to access pubs. There was also no formal valuation of common assets – green spaces, shared community resources, heritage buildings – despite evidence that these are important for community wellbeing.
  • Volunteering and giving. There were no announcements on related issues that could help develop community wellbeing – measures, for example, to encourage volunteering and community groups.
  • Quality of relationships. Good partner relationships are second most important factor in our adult wellbeing, so £20m investment in measures to help women escape violent partners and rebuild their lives are welcome. These programmes speak to early years and the stability of positive parenting – protecting women is protecting children (a shocking 200 children are bereaved each year in the UK by men killing their mothers).  The quality of a parental relationship affects the wellbeing of their children and its violent conflict that is the most harmful.

The budget has missed the major opportunities to increase wellbeing: no large roll-out of preventions of mental illness amongst children, no large initiatives in mental health treatment, where mental health problems are a major cause of low wellbeing; no push for flatter and more trusting organisations and ways of delivering services; no strong push against inequality; no moves to push for more pedestrian zones, jobs near homes, cheaper housing, forced parental leave, or increased mandatory holidays, all of which are moves towards more contented lives that put more value on relations.

Paul Frijters, Professor of Economics at LSE and lead investigator of the Cross-Cutting Wellbeing Programme.

Health and Social Care

Policy that values what matters people prioritises dignity and respect.

  • Potential to improve work conditions in the sector. There are not two cultures in the workplace: how you treat staff is how patients will be treated. The quality of care has often come under scrutiny and many working in care homes are unskilled and hold few formal qualifications. The investment of an additional £2bn for social care packages in England over the next three years opens a window of opportunity if directed toward upskilling in this area.  and thus has a positive impact on those who are currently low skilled working in this area. Forthcoming Centre evidence show the wellbeing and productivity gains possible in this sector, through well designed training.
  • Dedicated mental health provision missing. The Budget did not set out any dedicated investment in addressing the increasing demand for interventions that improve mental health. Early years investment in mental health is key to ensuring wellbeing across the life course, so preventative measures and treatments should be supported.

The Chancellor’s announcement of an extra two billion pounds for adult social care is welcome, obviously. All serious commentators realise that there is a crisis in social care and that this puts huge pressures on the already struggling NHS as well as causing massive personal distress. And investment in social care is probably a very wise priority. We need to welcome this investment, but remember that social care, health care and, perhaps particularly, mental health care, are all crucial elements of central government support for wellbeing.

Peter Kinderman, President of the British Psychological Society, and lead investigator on the Community Wellbeing programme.

Overall economy

The OBR have upgraded their growth forecast from 1.4% to 2% for next year. The level of national income has surprisingly little effect on wellbeing, as long as it does not go down.

Most importantly, the government is not announcing that it will seriously start to experiment with ways to increase wellbeing at all levels of government: no major experiments in teaching, health, the organisation of the civil service, housing, policing, etc. So we are not preparing to learn what works and what we can thus roll out in the future

Paul Frijters,  Professor of Economics at LSE and lead investigator of the Cross-Cutting Wellbeing Programme.

REFERENCES

[1] Blanchflower and Oswald (1998) find a robust positive effect of self-employment using UK data. Blanchflower, D. G., & Oswald, A. J. (1998). What makes an Entrepreneur? Journal of Labor Economics, 16(1), 26–60.

Alesina et al. (2004) find that the positive effect of self-employment is limited to the rich.

Alesina, A., Di Tella, R., & MacCulloch, R. (2004). Inequality and happiness: Are Europeans and Americans different? Journal of Public Economics, 88, 2009–2042.

What would a wellbeing budget 2017 look like?

Over 50 years of research has told us how we can improve wellbeing through Government policy. Will these feature in the budget?

Work and the Economy

  • Think creatively about incentivising ‘good jobs’

This budget needs to prioritise reducing unemployment and creating high quality jobs.

Previous business rate proposals meant that rates for pubs, shops, GP surgeries hospitals could be set for increases as high as 400 per cent. This creates a short-term danger that a business’ biggest overhead could be cut: employees.  Unemployment is one of the most important things the Government should care about in a wellbeing budget.

Becoming unemployed has among the most damaging effects on wellbeing and mental health, alongside health and relationships. The wellbeing impacts of unemployment go beyond the impacts of income.  If someone is unemployed for more than a year, their wellbeing will  permanently be lower – it increases once back in employment, but doesn’t increase back to previous levels. Where a parent has been unemployed in the past, their adolescent children will have lower wellbeing and self confidence, years later and after their parents are back in employment.

Being in a job is good for wellbeing and being in a ‘high quality’ job is even better. We don’t mean a certain skill level, type or industry. It’s about what makes a job worthwhile for us. Things like how secure it is, the social connections we have, autonomy and purpose, among other things.  A people-centred Budget needs to address the fact that  fewer than 3 in 10 (28%) people in the UK reported high satisfaction with their job.

The Budget needs to encourage high quality jobs.   For example, business rates could be lower for organisations taking action to create high quality jobs, or ensuring higher wellbeing for employees at work. This would have benefits for the wider economy as well. Organisations that strive to improve employee wellbeing tend to have better productivity, higher levels of innovation and creativity and lower costs associated with absenteeism, presenteeism and staff retention(1).

  • Improve commuting

We know that a longer commute is negative for wellbeing.  Importantly, we never adapt to a poor commute. As anyone who has to catch the 7.41 from Hove to Farringdon can tell you, it affects us daily. Research shows that merely switching from commuting by car to walking improves our wellbeing. We need a budget that promotes job creation nearer to residential areas, and make sure those jobs are open to local people.

  • Encourage lifelong learning and improve training system

Evidence shows that continuing to learn throughout life is not only useful for developing skills and improving job prospects; it can improve and maintain our mental wellbeing.  Learning throughout life is associated with greater satisfaction and optimism, and improved ability to get the most from life. People who carry on learning after childhood report higher wellbeing and a greater ability to cope with stress. They also report more feelings of self-esteem, hope and purpose whilst setting targets and hitting them can create positive feelings of achievement. Learning often involves interacting with other people and this can also increase our wellbeing by helping us build and strengthen social relationships.

A shake-up of the current training system has the potential to provide young people with a quality learning route. Research shows this is important for personal wellbeing, as well as productivity gains. Typically, lower level and technical qualifications result in lower financial and wellbeing returns than higher education qualifications. It’s argued this stems from the perception of technical qualifications by employers as poorer quality and lower value . Creating a qualification that has value to both employers and employees could yield significant benefits for personal wellbeing as well as productivity.

  • Provide adequate support for those at the end of their careers

Those who are involuntarily forced into retirement, without a financial safety net, experience the greatest drop in wellbeing.  A wellbeing budget would provide incentives for firms to support employees in planning for their retirement – this might include the option of reduced hours or other forms of “bridging’’ employment.

Health and social care

  • Improve work for those in the sector

There are not two cultures in the workplace: how you treat staff is how patients will be treated. Social care is a key priority for many local areas, but care work can be viewed as low paid, precarious and undesirable, making recruitment difficult. The quality of care has often come under scrutiny and many working in care homes are unskilled and hold few formal qualifications.

We know what works to improve conditions, increasing wellbeing as well as productivity in the health social care sector. A forthcoming Centre review of the published evidence will show that training in the workplace, combined with changes in job design, can improve the quality of the job, improving conditions for staff as well as  improving performance, reducing absenteeism and conflict.

  • Think across departments – prevention matters

Acute responses to crises have high costs. Prevention has a long pay-back. Those with higher wellbeing are less susceptible to illness and are more likely to recover faster. Even the emotional support in the first 3 years of a child’s life can hugely influence later outcomes.

We know that physical activity can prevent and improve a range of mental health conditions and music and singing can improve wellbeing, especially for older people. There are clear health and wellbeing benefits from a connection with the natural world, including national parks, local pockets of green space, canals, rivers, or the coast.

The budget would recognise the valuable role which social connections play. Countries where everyone has someone to rely on have significantly higher wellbeing compared to countries where no-one has someone to rely on- around 10% higher, even when other factors like health and income are accounted for. Individuals with higher loneliness have significantly lower wellbeing. In countries where everyone feels that most people can be trusted, the country tends to have around 20% higher average wellbeing compared to those where no-one answers positively to their levels of trust.

And what can Government or local authorities do? What works for social relations? An upcoming Centre review will lay out the existing evidence. We already know that community and housing design play an important role – those living in walkable, mixed use neighbourhoods are more likely to know their neighbours and trust others.

The wellbeing budget would promote cross-departmental cooperation, working together to support social care of the elderly and creating an environment which is sociable. Continuing the positive steps already taken by the Department of Health, the wellbeing budget would continue to recognise the importance of wellbeing and the role of culture, sport and ‘green’ interventions for preventing and improving diagnosed conditions.

Taxes and stability

  • Tax increases, tax cuts, spending… and stability

The main insight from current wellbeing research into taxation is that poor individuals get more wellbeing from an additional pound than rich people. Once we reach a certain income, increases in our income only increase our wellbeing by a small amount – studies have estimated that doubling our household income would increase life satisfaction by a little over 1% (2).

Because we compare ourselves to others, our wellbeing won’t increase if the income of all those around us increases at the same rate. The level of national income has surprisingly little effect on wellbeing, as long as it does not go down. Measures of wellbeing are more than twice as sensitive to negative economic growth as compared to positive growth. Economic stability is important.

Why should the Government care about the wellbeing budget?

Where people have lower wellbeing, the leaders are more likely to be voted out.

The wellbeing budget – what next?

These are just examples of some of the evidence of what influences our individual and community wellbeing. Beyond this, our national wellbeing rests upon how this adds up as a whole – now and going forwards. Based on the evidence, a Government would prioritise investments to improve national wellbeing, current and future. However, there is still a lot to learn. We need to test which approaches work best, in what format, to understand how wellbeing can be improved. Especially for those with the worst lived experiences. We don’t need to roll out new approaches before testing – we need to try new things in a way which lets us understand what works – and what works for wellbeing.

You may also like: How a spending review would look if the government wants a happier Britain 

(1)  Prof. Alex Edmans, London Business School,2015, BITC/Ipsos MORI 2010, The Wellness Imperative: World Economic Forum 2010.

(2) The regression coefficient on log income in a BCS life-satisfaction regression (controlling for other adult outcomes, childhood outcomes and family background) is 0.20
Doubling household equivalent income is predicted to raise life satisfaction by oneseventh of a point.