Today's GDP figures are the final nail in the coffin of Osborne's credibility

This was all so avoidable, and entirely predictable.

The Q2 GDP growth figures from the ONS today were absolutely awful. Indeed, it was even worse than I had expected, having predicted -0.5 per cent against a consensus view of -0.2 per cent. The number came in at -0.7 per cent, which meant that the economy has had three successive quarters of negative growth - four of the last five and five of the last seven.

The economy has contracted by 1.4 per cent over the last three quarters and by 0.8 per cent since the Chancellor's autumn statement in 2010. The UK and Italy are the only two major countries in double dip recession and growth has been worse in the UK over the last year than it has been in Spain. The decline was broad-based, driven especially by a collapse in construction, which declined by 5.2 per cent in Q2, following 4.9 per cent on the previous quarter. Production fell by 1.3 per cent and services by 0.1 per cent. The IMF forecast of 0.2 per cent growth last week already looks overly optimistic - I have pencilled in -0.5 per cent or worse.

The coalition government took over an economy that was growing and by its inept policies it has killed growth stone dead. In interviews today, the Chancellor claimed he was “relentlessly focused” on sorting the economy out in the same way (presumably as King Canute was also determined to keep the tide back?). This, as ever, was worthless drivel because it is clear to all that the government's economic policy of austerity has failed and they have no clue what to do. The only fix is a fundamental U-turn with tax cuts, especially VAT, and big incentives for firms to invest and hire today – not in three years time. And what about youth unemployment? Policies to get infrastructure going are welcome but they won't have any effect for years; they should have been implemented when the government took office - now it is too late to get the economy growing again anytime soon. The Tory-led government still has no growth plan. If it does, let’s hear it.

The recession deniers were out in force saying that they couldn’t possibly be wrong, so there must be something wrong with the numbers. Of course, the main reason for this is that they supported the government's austerity nonsense and have egg on their faces. Just to make the point for the umpteenth time – the average data revision over the last 20 years is +0.1 per cent and over the last five years -0.1 per cent. In fact, the data revisions have generally been on the low side when the economy is slowing, as occurred in 2008. The statistical chances of the data being revised down further are the same as being revised up.

I do recall the 35 business leaders, who wrote to the Telegraph in October 2010 to say:

It has been suggested that the deficit reduction programme set out by George Osborne in his emergency Budget should be watered down and spread over more than one parliament. We believe that this would be a mistake. Addressing the debt problem in a decisive way will improve business and consumer confidence....There is no reason to think that the pace of consolidation envisaged in the Budget will undermine the recovery.

It hasn't exactly worked out that way. There has been no recovery, the economy is smaller today than it was when they put pen to paper, and business and consumer confidence has collapsed. It would be interesting to hear from them today on why it all went so badly wrong. Their silence is telling.

I now have every expectation that within a few days the UK will lose its AAA credit rating. I never thought it was actually a big deal as proved by the fact that when France was downgraded and bond yields fell. But Slasher Osborne set it up as something he should be judged against and so we should all do that.

This was all so avoidable, and entirely predictable. Our incompetent, part-time Chancellor and his advisers should be removed from office and put out to pasture. Ed Balls was right.

I am very angry that this visitation of evil spirits had to be foisted on the British people. We deserve better. This really is time for the biggest U-turn in history - that's what failure brings. I really have no sympathy for the fools – Cameron, Osborne and Clegg especially – who talked the economy down by claiming it was bankrupt and falsely comparing the UK to Greece.

No more excuses.

 

"Slasher" Osborne has been proved wrong yet again. Photograph: Getty Images

David Blanchflower is economics editor of the New Statesman and professor of economics at Dartmouth College, New Hampshire

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Air pollution: 5 steps to vanquishing an invisible killer

A new report looks at the economics of air pollution. 

110, 150, 520... These chilling statistics are the number of deaths attributable to particulate air pollution for the cities of Southampton, Nottingham and Birmingham in 2010 respectively. Or how about 40,000 - that is the total number of UK deaths per year that are attributable the combined effects of particulate matter (PM2.5) and Nitrogen Oxides (NOx).

This situation sucks, to say the very least. But while there are no dramatic images to stir up action, these deaths are preventable and we know their cause. Road traffic is the worst culprit. Traffic is responsible for 80 per cent of NOx on high pollution roads, with diesel engines contributing the bulk of the problem.

Now a new report by ResPublica has compiled a list of ways that city councils around the UK can help. The report argues that: “The onus is on cities to create plans that can meet the health and economic challenge within a short time-frame, and identify what they need from national government to do so.”

This is a diplomatic way of saying that current government action on the subject does not go far enough – and that cities must help prod them into gear. That includes poking holes in the government’s proposed plans for new “Clean Air Zones”.

Here are just five of the ways the report suggests letting the light in and the pollution out:

1. Clean up the draft Clean Air Zones framework

Last October, the government set out its draft plans for new Clean Air Zones in the UK’s five most polluted cities, Birmingham, Derby, Leeds, Nottingham and Southampton (excluding London - where other plans are afoot). These zones will charge “polluting” vehicles to enter and can be implemented with varying levels of intensity, with three options that include cars and one that does not.

But the report argues that there is still too much potential for polluters to play dirty with the rules. Car-charging zones must be mandatory for all cities that breach the current EU standards, the report argues (not just the suggested five). Otherwise national operators who own fleets of vehicles could simply relocate outdated buses or taxis to places where they don’t have to pay.  

Different vehicles should fall under the same rules, the report added. Otherwise, taking your car rather than the bus could suddenly seem like the cost-saving option.

2. Vouchers to vouch-safe the project’s success

The government is exploring a scrappage scheme for diesel cars, to help get the worst and oldest polluting vehicles off the road. But as the report points out, blanket scrappage could simply put a whole load of new fossil-fuel cars on the road.

Instead, ResPublica suggests using the revenue from the Clean Air Zone charges, plus hiked vehicle registration fees, to create “Pollution Reduction Vouchers”.

Low-income households with older cars, that would be liable to charging, could then use the vouchers to help secure alternative transport, buy a new and compliant car, or retrofit their existing vehicle with new technology.

3. Extend Vehicle Excise Duty

Vehicle Excise Duty is currently only tiered by how much CO2 pollution a car creates for the first year. After that it becomes a flat rate for all cars under £40,000. The report suggests changing this so that the most polluting vehicles for CO2, NOx and PM2.5 continue to pay higher rates throughout their life span.

For ClientEarth CEO James Thornton, changes to vehicle excise duty are key to moving people onto cleaner modes of transport: “We need a network of clean air zones to keep the most polluting diesel vehicles from the most polluted parts of our towns and cities and incentives such as a targeted scrappage scheme and changes to vehicle excise duty to move people onto cleaner modes of transport.”

4. Repurposed car parks

You would think city bosses would want less cars in the centre of town. But while less cars is good news for oxygen-breathers, it is bad news for city budgets reliant on parking charges. But using car parks to tap into new revenue from property development and joint ventures could help cities reverse this thinking.

5. Prioritise public awareness

Charge zones can be understandably unpopular. In 2008, a referendum in Manchester defeated the idea of congestion charging. So a big effort is needed to raise public awareness of the health crisis our roads have caused. Metro mayors should outline pollution plans in their manifestos, the report suggests. And cities can take advantage of their existing assets. For example in London there are plans to use electronics in the Underground to update travellers on the air pollution levels.

***

Change is already in the air. Southampton has used money from the Local Sustainable Travel Fund to run a successful messaging campaign. And in 2011 Nottingham City Council became the first city to implement a Workplace Parking levy – a scheme which has raised £35.3m to help extend its tram system, upgrade the station and purchase electric buses.

But many more “air necessities” are needed before we can forget about pollution’s worry and its strife.  

 

India Bourke is an environment writer and editorial assistant at the New Statesman.