Index of Social & Economic Well Being – John Mclaren

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It is popular, including within the Scottish Government, to say that we must look beyond GDP to see how successful we are being as a country.

I have compiled the Index of Social and Economic Well-being (ISEW) to do just that. It looks at four key areas of ‘success’ (income, education, longevity and inclusivity ) across 32 OECD countries, including the four constituent UK countries, and over a period (2006 to 2018) of great economic and fiscal turmoil.

So what does this wider measure of success tell us in general and about Scotland?

The top performing countries have remained generally the same, with Nordic countries doing well, alongside Switzerland and Japan.

At the other end, eastern European countries still dominate the lower ranks, although some are catching up fast, and those Mediterranean countries badly affected by Great Recession have not done well over this period.

The UK is very much mid table, but this hides a slightly above average performance by England and poorer ones by Scotland, Wales and Northern Ireland. Scotland in particular has done badly, partly due to the impact of the decline of North Sea activity on income, but also due to education (as measured by its PISA scores) standards slipping. Life expectancy meanwhile continues to be a major weakness for Scotland, with little sign of catching up despite its already low ranking.

Caveats abound with such a broad brush analysis (see the full paper on the Scottish Trends website for greater discussion of these ) but it seems clear that Scotland’s performance, particularly with regards to health and education has been disappointing in comparison to other countries.

Furthermore its not good enough to simply blame UK wide funding cuts on this performance as most other countries (including England) have lived through similar circumstances and managed to do better.

What might be some of the causes of such a relatively weak performance and what might be done to improve matters?

In each case the answers lie both within and out-with the Parliament.

Within the Parliament, there is a need for greater scrutiny and competition of ideas.

On the former point, the current Committee system is highly partisan and needs overhauling to ensure greater independence from the government, or for some form of bicameralism to be introduced.

On the latter point, a review of public funding for political parties is needed which seeks to ensure at least base funding in order for political parties to formulate their own, evidence based, policy program for Scotland. At present, outside of the SNP, Scotland’s political parties are either small operations or effectively branch operations of UK parties and in both cases poorly funded. This has inhibited the development of alternative policy ideas and led to a lack of political competition, as their operations are relatively ineffectual in challenging the well funded and civil service supported (in technical terms) SNP led government.

Out-with the Parliament, the policy development and evaluation landscape is very weak. For example, few think tanks exist and those that do are mostly poorly funded by either the public or private sectors. In contrast, at the UK level, the health system is analysed and held to account by a mixture of the IFS, the Nuffield Trust, the Kings Fund and a variety of other independent bodies. However, all of these bodies concentrate on the English health system and do little in the way of analysis of any of the devolved health systems.

Whether it be the economy, education or health policy, this lack of ‘expert’ (if I can use such a loaded phrase in modern politics times!) external involvement leads to a dearth of new policy development and a lack of existing policy evaluation. In many countries the funding for such work will come from the private sector, but in Scotland’s case there is next to nil private sector involvement in any activity that impinges on the Scottish Parliament or government policy making.

In general, the problem discussed above comes down to too little scrutiny and proper evaluation of the actions of the Scottish Government, of whatever political hue. As this comes down to a variety of shortcomings, including: a weak Committee system in the Parliament; a lack of academic involvement; a dearth of think tanks; poorly funded political parties; and a declining and underfunded media presence, then the solution is wide ranging and will take time to develop and to bed in. But without a shift then the Scottish Government is likely to continue to be second best in terms of innovating and improving policies that impact on key outcomes.

The lack of helpful supporting bodies in the Scottish political system that, in normal circumstances, would complement the Scottish Parliament, may have been understandable initially but, twenty years into devolution, is becoming a handicap to progress. Unfortunately, at present, given the domination of constitutional events, it seems highly unlikely that any such changes are imminent.

Next month’s Scottish Budget is intended to give greater emphasis to well-being. That would be a welcome move but if a Parliament is struggling to come up with successful policies to improve health and education standards then its ability to do so for the more complicated goals associated with well-being must be in some doubt.

John Mclaren is an independent economist at Scottish Trends