Quality of life in Britain 'worse than 20 years ago': Rise in personal wealth outweighed by deterioration on social front, study finds

THE QUALITY of life in Britain has deteriorated substantially since the mid-1970s even though money incomes have continued to rise, according to the UK's first index of 'real' social wealth.

During the period 1975-90, Gross National Product - the conventional method of measuring economic progress - increased by one-third. Sustainable economic welfare, which measures social and environmental as well as economic factors, has fallen by about a half.

According to Ed Mayo - director of the New Economics Foundation, a leading green economics think-tank, which has produced the study jointly with the Stockholm Environment Institute - people in Britain 'appear to be barely better off today than we were four decades ago and considerably worse off than we were in the mid-Seventies'.

The foundation's study is the first application to the UK of the Index of Sustainable Economic Welfare, developed by two US academics, Herman Daly and John Cobb. It measures economic performance against more than 20 indicators, ranging from standard economic ones such as personal consumption and capital growth, to health and education spending, pollution, noise, commuting costs, loss of farmland, urbanisation and loss of natural resources.

Daly and Cobb's study showed that US quality of life peaked in 1979 but declined during the 1980s, despite a continuing rise in GNP. The new study suggests that Britain has performed worse than the US, peaking earlier - around 1974 - but showing an almost continuous decline since then. This is attributed partly to a poorer British record on the environment.

Among the more striking conclusions of the study are that quality of life is scarcely higher now than it was in 1950. The index for 1990 is only 3 per cent above the figure for 1950, even though GNP per head, after allowing for inflation, has more than doubled.

During the 1950s and 1960s, rises in GNP and quality of life were broadly in line with each other. Their divergence since the 1970s, according to the foundation, suggests that the type of economic growth since then has itself contributed to a decline in welfare.

One of the biggest factors, after environmental deterioration, responsible for the decline is increasing income inequality. Income differentials narrowed from 1965 to 1982 but then began to widen.

According to Daly and Cobb, happiness is related to relative, not absolute, levels of wealth: 'Having more is less important than having more than the Joneses.' However, income distribution is included because an extra pounds 1,000 adds more to the welfare of a poor family than to a rich one.

The authors, Tim Jackson and Nic Marks, acknowledge that there is considerable scope for debate about some of the assumptions - assigning a value to environmental damage, for example - but Mr Mayo said it showed that GNP - the 'central indicator' of economic progress - was 'not just inaccurate but a highly misleading guide to society's quality of life'.

Economic growth was now creating a 'rising toll of social and environmental costs that are working their way back into the economic system as losses in real welfare'.

Copies of the study are available from the New Economic Foundation, 88-94 Wentworth Street, London E1 7SA; pounds 12.

(Graph omitted)