Inclusive Growth and SocialValueX™ Dr Jennifer Anderson Director of Economics and Social Value, Jacobs Daniel Fujiwara Director of Simetrica

Inclusive I Sustainable I Ethical Overview 1. Inclusive Growth 2. What needs to change to deliver Inclusive Growth? 3. How do we operationalise the concept of Inclusive Growth? Where did it come from? What is Inclusive Growth? Why do we need a new model for growth? Why does it matter? Inclusive I Sustainable I Ethical

Inclusive Growth – origins and definition Economic Growth that creates opportunity for all segments of the population and distributes the dividends of increased prosperity in both monetary and non-monetary terms A type of growth that not only creates new economic opportunities but also ensures equal access to the opportunities created for all segments of society, particularly the poor Growth that is broad-based across sectors and inclusive of most of a country’s working age population

Key Challenge: Income inequality has remained persistently high Gini coefficient in OECD countries, 2014 (or latest year), 2010 and 2007

The Economic Cost of Inequality – Reduced Growth Estimated consequences of changes in inequality (1985-2005) on subsequent cumulative growth (1990-2010) UK results: Between 1990 and 2010 – rising income inequality in the UK reduced GDP per head by 9 percentage points. Source: OECD, 2014

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How Do We Deliver Inclusive Growth? Work underway across the UK and all over the world to share best practice Guiding Principles to deliver inclusive growth: A whole-of-government approach required Requires a fundamental rethinking/reframing of all public policy and investment choices to meet economic & social objectives Inclusive growth needs to permeate all strategies, policies & projects Central role for regional and local policies/projects - key to address spatial differences in income & well-being Inclusive infrastructure key - a transport system that provides access to jobs, services and consumption opportunities for all Measurement framework – needs broadened to include measures of inequality, well-being and quality of life

Inclusive I Sustainable I Ethical A new robust and fit-for-purpose measurement framework for Inclusive Growth 3. Enables a full assessment of the distributional impacts, not only in terms of income but in terms of all relevant well-being outcomes 2. Enables a full assessment of the economic, environmental and wider societal impacts of projects, including all relevant well-being outcomes 1. Aligned with Treasury Green Book guidance Inclusive I Sustainable I Ethical

Using SocialValueX™ to deliver Inclusive Growth

Measuring Inclusive Growth Inclusive Growth has the combined purpose of increased prosperity with greater equity and improved wellbeing and living standards. Inclusive growth is thus intricately linked to Social Value  an approach to assess how economic, environmental and wider societal outcomes impact on society’s quality of life also acknowledging that fairness, equity and distribution are important. Social Value measurement allows us to go beyond economic impact to understand the ‘inclusivity’ of economic growth and is the lens through which we can assess inclusive growth policy. Three Pillars of Inclusive Growth Inclusive Growth Economic prosperity Equity and distribution Wellbeing and Quality of Life Economic prosperity and equity are key to wellbeing Wellbeing lens means we need to take better account of other issues as well (health, education, crime, community cohesion and social capital) Increased wellbeing drives further economic growth and prosperity Economic policy to date aimed at making the pie as big as possible, but under this new paradigm it is more than this – it is about how we divide the pie and we need to think about new ‘ingredients’ as it’s not just economic growth anymore but wider impacts too.

aligned to… SocialValueX™ is a framework of unparalleled rigour for measuring social value incorporating economic, environmental and wider societal outcomes as well as distributional impacts. SocialValueX™ measures the all of the costs and benefits of a policy in terms of society’s wellbeing and values outcomes such that an overall return on investment ratio (BCR) can be estimated. It is applicable to any policy area. It draws from cutting-edge research in economics, statistics, behavioural science, neuroscience and philosophy. It is the only social value framework that is aligned with best-practice guidelines set out by the Organisation for Economic Co-operation and Development (OECD) and the HM Treasury Green Book. Using SocialValueX™ to assess Inclusive Growth in infrastructure projects will: Produce a wider assessment of the impacts of infrastructure investment. Balance the aims of economic prosperity, equity and wellbeing by quantifying these impacts in the same terms/currency so that they can be directly compared. Allow us to choose between investment options in order to maximise the benefits of infrastructure projects for the whole of society going beyond just economic impact to thinking about impact holistically and the distribution of that impact. Ensure that taxpayers’ money is invested optimally to produce infrastructure projects that are economically, environmentally and socially sustainable, raising living standards for all. Financial and non-financial impacts. CBA was first developed to apply to public works projects in France (1700s). Decision criterion changed from whether the project's financial savings cover its costs  impact of project on society more widely.

Best-practice alignment

Case Studies

PCF Stage 1 assessment of A303 Amesbury to Berwick Down. The first study in infrastructure/transport to look beyond traditional economic impacts to acknowledge wider social and distributional impacts. Contingent Valuation study of visitors, road users, and UK general population for removal of A303 road from the Stonehenge World Heritage Site. Use and non-use values for heritage, visual amenity, and noise reduction aspects of the scheme. Distributional impacts also accounted for. Outcomes Net Value Economic impacts £786m Social impacts £1,277m Scheme costs (tunnel) £1,265m Traditional assessment: -£479m / BCR = 0.6 Full assessment: +£798m / BCR = 1.6 “Poor VfM” = < 1.0 “Medium VfM” = 1.5 – 2.0

Airport expansion appraisal Private housing tenant   General population Private housing tenant Social housing tenant Impact Social cost (annual) Daytime aircraft noise (>55db) -0.147 -£1,626 -0.087 -£979 -0.447 -£4,546 Night time aircraft noise (>50db) -0.101 -£1,132 N/A We can derive evidence-based qualitative assessments based on SWB data from large national data sets Fujiwara & Lawton (2016) Living with aircraft noise. Transport Research

Manchester M60 North West Quadrant (MNWQ) We are applying SocialValueX™ to the PCF Stage 1 assessment of transport options for M60 and MNWQ area (one of six strategic studies in DfT’s Road Investment Strategy). RIS  roads are a critical contributor to social, economic and environmental wellbeing. Quantification and valuation of a large range of wider impacts: (i) journey reliability; (ii) noise & air quality; (iii) physical activity (healthier lifestyles); (iv) social connectivity; (v) built & natural environment (biodiversity, townscape, landscape, historic environment). Full distributional analysis  weighting outcomes for social groups in need to ensure that growth in the area is inclusive. SocialValueX™ will ensure that transport investment in MNWQ maximises benefits for society as a whole and ensures that the benefits are fairly distributed to promote high rates of inclusive and sustainable growth in the region.