A new report published by Demos, in partnership with Local Trust and 3ni and written by Andy Haldane and David Halpern, argues that investing in social networks could unlock significant economic growth and improve social mobility.
Building stronger social ties could unlock huge economic potential, transform lives and improve opportunities across the UK, according to a new report by Andy Haldane, CEO of the RSA and Professor David Halpern, President of the Behavioural Insights Team.
The report highlights how “social capital” – the trust and networks connecting people – has the power to drive growth and improve well-being.
What is social capital and why does it matter?
Social capital is simply the relationships, trust and sense of connection between people. It’s what helps communities work better, creates opportunities and makes life easier for everyone – from neighbours lending a hand to local groups bringing people together. It might not be as well-known as financial or human capital, but it plays a critical role in shaping economic and social outcomes.
The report found that:
- a 10% rise in social trust could lead to a 1.5% increase in national economic output and boost economic productivity by over £100 billion annually – matching levels of Nordic countries, where social trust sits at 65%, significantly higher than the UK’s 35%.
- Children from low-income households could increase future earnings by 20% if raised in areas with greater social mixing and trust.
- Communities with higher social capital are linked to lower crime, improved educational outcomes and stronger local economies.
- Higher social capital boosts performance in firms, communities and individuals. For example, organising network-building groups among Chinese businesses increasing revenue by over 8%.
Why it matters now
At a time of economic uncertainty and social divides, when many people feel isolated or ignored, building connections between people can bring significant benefits. From helping someone find a job to supporting local businesses, stronger social ties mean stronger communities.
But social capital in the UK has declined in recent decades, with fewer community groups, shrinking social mobility and less mixing between people of different backgrounds.
For example, the people living in wealthier areas staying separate mean fewer chances for people to mix. Top schools also take 22% fewer disadvantaged students, limiting opportunities for young people from poorer backgrounds to build life-changing connections.
How can the UK build social capital?
Small investments in communities can make a big difference. By supporting grassroots initiatives, like funding a local community group or youth club, trust can be rebuilt and opportunities created.
Professor David Halpern, president emeritus at the Behavioural Insights Team, said:
“Strong communities are a key element of ‘social capital’ – networks and social trust. Social capital has huge impacts on economic growth, as shown by this paper, as well as on crime, health and well-being.
“We should take social capital as seriously as the other ‘capitals’, not least in the delivery of the UK government’s missions – especially growth, health, opportunity and safer streets.”
Small steps like targeting social capital cold spots through enhanced local mapping and support for community organisers could have enormous ripple effects, from reducing crime and improving mental health to boosting job prospects and innovation.
Andy Haldane, chief executive of RSA, said:
“In the UK’s most deprived neighbourhoods, where opportunities are hardest to come by, supporting community groups and developing places and spaces where people can come together helps break down barriers, giving everyone the chance to thrive – improving outcomes for those who need it most.”
Social capital plays a crucial role in driving economic growth and enhancing societal well-being but remains underappreciated in policymaking. The report calls for a dedicated and systematic effort to nurture social capital, similar to existing strategies for other types of capital.
Read more about the importance of social capital in a blog from Local Trust CEO Matt Leach, and access the full report from Professor David Halpern and Andy Haldane.