The only growth we want is the growth that enhances our wellbeing

What Ed must say to Rachel

There is tension between Energy Minister Ed Miliband and Chancellor of The Exchequer Rachel Reeves. An inevitable tension in the conflict between a commitment to faster economic growth and a commitment to Net Zero?

The month of ?January 2025 was the hottest ever. ?One climate scientist, UCL’s Professor Bill McGuire described this as ‘both astonishing and, frankly terrifying’.? Professor James Hansen, once of NASA, ?and his team are now warning of dramatic sea level rise by 2050 as ice caps melt and key ocean currents are reversed. This would directly damage ?food production, nuclear power and many other routes to the economic growth ?that this government wants to promote. House building, transport and trade would all suffer. Oh, and there would be a massive increase in climate-driven migration! It’s hard to see how we can achieve growth without tackling climate.

It is fine to seek to simplify regulation. But when the government starts telling regulators to be ‘pro-growth’ it shoots itself in the foot. The Climate Change Committee has just warned MPs that new homes are being built at a constant rate in areas of high flood risk. The warning is that with no policy or regulation to stop this over 100,000 of houses will have been built in places at a high risk of flooding by the time the government achieves its target of building 1.5 million new homes. Ironically under conventional measurement of GDP, the flooding and its aftermath will, like road accidents and an increase in cigarette sales represent progress towards ‘growth’. Is that really the kind of growth that anyone wants? ?

If you want our regulators to prioritise growth, then first insist that they focus on the long term, and the needs of future generations. If only OFWAT had been required to do this, the public of today, let alone tomorrow, might have been better protected from the sewage-spewing legacy of the water companies and some of their greedier owners.

The Conversation Between Ed and Rachel ?

So let’s imagine the conversation.

Rachel : ?don’t ?you understand why growth is vital?.

Ed: I accept that without it we can’t improve public services. But ultimately what do we want? ?We want an economy that flourishes because human beings are ?flourishing.

Rachel: what makes people flourish?

Ed: You know the answer. It begins with health, nutrition, decent homes and a chance to learn. Plus we want to pass on to those who come after us a reasonably safe, settled breathable and nature-rich place to live in. That doesn’t all come from better public services.

Rachel: Yes. People need activity and opportunities to flourish. They need physical exertion, mental challenge, work, love, community, and self-esteem. And, of course, an income to pay for many of the things that make human flourishing possible.

Ed: now you’re talking. So shouldn’t we explain to people that this is the prize??

Rachel : You try doing my job. Living standards threatened by inflation, ballooning energy costs; ?a housing shortage. The black hole in the public finances. The care crisis. ?NHS waiting lists. Over-crowded prisons; school and hospital buildings crumbling and you want me to focus on what makes people flourish? Give me a break!

Ed: Most people don’t even know what GDP growth means. In a?study?of the public’s understanding of economics funded by the Office for National Statistics in 2020, GDP was one of the economic concepts people understood the least.?You won’t get out of this corner unless you give them some vision. Show people how their lives can be happier and there’s a future worth working for. Growth doesn’t start with financial activity. It starts with creativity and enterprise. There has to be richness in the soil before new growth emerges. Finance may be an enabler or fertiliser, but there has to be new energy from somewhere within. And anyway more GDP growth doesn’t? lead to more people flourishing.

Rachel: I know. ?If more people die on the roads, GDP goes up.

Ed: If growth in GDP were the key to flourishing, I might choose the USA as the country that had got things right. Yet the USA has once again fallen to 23rd ?in the?2024 World Happiness Report. India has recording the fastest GDP growth spurt - and the most dramatic decline in happiness. Imagine if you achieve a big increase in GDP but you can’t point to any increase in wellbeing or happiness? In the end it isn’t just ‘about the economy, stupid’. It’s about the wellbeing of people. Most of whom have a vote! .?

Harvest Economics - A Different Language

I hope Ed wins this argument. It might help if he got Rachel to listen to what John Kay says about obliquity. There are important things that are achieved by aiming not directly at them, but as a by-product. Create a flourishing society and you will have economic growth as a by-product. Create a few more data centres and little changes.

So, Rachel, stop trying to convince people on the importance of a concept they don’t identify with . Start using a different language.

How about the imagery of Harvest Economics?

Most people do understand about sowing and reaping – the language of the harvest. Start thinking of economic growth in these terms.

We need to plant now in order to reap benefits later. We have to enhance the quality of the soil so that our children can enjoy future harvests. The harvest implies unpredictability. That’s true of the economy too. Bond markets and labour shortages. Hailstones and drought.

We need to think about?harmony?—?with nature, with communities, between generations, and with all the complex systems upon which our economy depends. That is a language that relates the economy to human flourishing. It is a language that both Rachel and Ed could usefully adopt.

PS: Ed used to work in HM Treasury. He should get one of his Treasury contacts to spray-paint this message, Banksy-like, on the walls of the building.

The only growth we want is the growth that enhances our wellbeing

Mark Goyder is a senior advisor to?the Board Intelligence Think Tank. He’s the founder of Tomorrow’s Company and co-author with Ong Boon Hwee of?Entrusted: Stewardship for Responsible Wealth Creation.