Personal wellbeing rather than economic growth should be the primary aim of government spending, according to a report by the former head of the civil service and politicians.

Launching a report urging a sea change in thinking from ministers, Gus O’Donnell, who served as cabinet secretary to three prime ministers, said Britain could lead the world by making wellbeing the goal of government policy.

The call to unseat growth as the main measure of government success comes as the Treasury gears up for a three-year spending review, due this summer, which has been scheduled despite the Brexit turmoil gripping the Tories.

Speaking to the Guardian, O’Donnell said: “This is a particularly important moment in time, where one hopes that this spending review will be taking place – possibly with a different prime minister and with the Brexit issue resolved one way or another.

“We have an opportunity to focus on all the things that we haven’t been focusing on over the past three years, to set a new direction and a new vision.”

The paper, from the all-party parliamentary group on wellbeing economics, written by O’Donnell and other leading MPs and peers, calls on the government to use the spending review to boost its funding for mental health services, teaching in schools and social care by an extra £10bn within five years to raise the wellbeing of citizens.

It found happiness, fulfilment and the reduction of anxiety, rather than growth or jobs, was the main determinant of whether governments satisfied voters, and called on ministers to implement changes to focus on such metrics.

Although Philip Hammond, the chancellor, had planned for a three-year spending review, such a policy exercise would be contingent on the government managing to hold together and pass a Brexit deal – which appears an increasingly unlikely prospect.

The spending review could however be downgraded to focus on a single year amid the political chaos. It is thought that a decision needs to be made before MPs rise for the summer recess in late July.

O’Donnell is among the most influential figures spearheading a move towards new ways of assessing prosperity outside the traditional metric of economic growth. As the top civil servant under David Cameron towards the end of his tenure as cabinet secretary, he helped Britain become one of the first countries in the world to track the wellbeing of its citizens.

“Britain led the world in measuring wellbeing. It should lead the world again in making wellbeing the goal of government policy,” he said.

To bring wellbeing to the fore of policymaking, the cross-party report said Whitehall departments should systematically be asked to justify their spending bids in terms of their impact on people’s wellbeing relative to their cost. All expenditure should be judged by the impact on wellbeing per pound of net cost.

The New Zealand government launched a “wellbeing budget” earlier this month that centred on child poverty, domestic violence and mental health, declaring itself the first nation in the world to measure success by its people’s wellbeing.

It comes amid increasing focus on the shortcomings of GDP for assessing the success of public- and private-sector interventions. The measure of economic output is often used as a proxy for prosperity, although it does not measure several important factors, such as unpaid work, environmental degradation or the distribution of income.

O’Donnell said: “There’s always a temptation to give more weight to things you can measure in pounds than things that are somewhat more subjective.

“But we need to understand that some of the big issues, such as improving air quality, are things that may not show up in pounds, shillings and pence. But it will show up by making our children healthier. You get long-term gains that give you a long-term fiscal gain as well. But that doesn’t show up as pounds hitting the budget straight away.”