With hindsight, Cable's deficit reduction plan looks better than Osborne's

Osborne's Plan A required the Chancellor to be lucky - and this Chancellor has not been lucky.

This year I am conducting a little experiment. I have two sealed envelopes in my office drawer. In one is a set of economic predictions made by astrologers at the start of the year; in the other a set of similar predictions made by ordinary journalists with no economic background. At the end of the year I intend to compare such random guessing with heavyweight economic soothsayers such as the Office of Budget Responsibility, the Bank of England, OECD, IFS and any economic think tank bold enough to make medium-term economic predictions on the nation's growth, employment, inflation, and so forth.

My money frankly is on the astrologers. The recent record of medium-term economic forecasting is lamentable - even if we ignore the unpredicted banking crash. What success we have seen amounts to little more than the suggestion that things will move in the direction they seem to be moving.

Now, I do not know if George Osborne trusted too much the entrail examining of economic experts, some of whom are now saying that he shouldn't have done exactly what they hitherto urged him to do. Nor can we be as sure as Ed Balls that the government went "too far, too fast" - particularly as Ed never got as far as telling anyone "how far or how fast" a government should go.

What we all can agree on, though, is that things are not going to plan. Yes, jobs are being created in the private sector, unemployment is not moving upwards, the deficit is down, our export markets are engaging with the emerging economies, inflation is low and our credit good.

However, friend and foe alike acknowledge that the plan hinges on economic growth and there's little positive news yet on that.

I write this as someone who has voted in Parliament for every bit of the Chancellor's strategy and bought into its broad objectives. Government MPs cannot meaningfully adopt an a la carte approach to Budgets. I did not know if it would achieve all its major objectives but I certainly did not know it would not. I do not claim to know how crucial events in the EU have been in derailing that strategy.

What I entirely reasonably claim is that George's plan conceived before the 2010 election and implemented after it was bolder and potentially riskier than that advocated by Vince Cable and the Lib Dem Treasury team. Retrospectively and with all benefits of hindsight, slowing a little the pace of deficit of reduction to better protect economically-useful capital expenditure as suggested by Vince looks as though it might have been a better bet.

It is not that Plan A could not have worked or that the sage of Twickenham was necessarily right. It required though a number of other things to go right or not go badly wrong - for the Chancellor to be lucky - and this Chancellor has not been lucky.

It probably did not help that in act of misguided hubris the Regional Development Agencies were given their marching orders from day one - particularly as the replacement Local Enterprise Partnerships have struggled either to find their feet or get real money flowing through the system. RDAs stood in need of reform but the incoming government's penchant for "radical restructuring" has led in more than one area to a lot of time being wasted doing just that.

One cannot help thinking that much of this is a poisonous consequence of the tribalism that bedevils British politics whereby incoming governments are expected to behave like the Taliban blowing up Buddhas. One hoped that coalition could offset this tendency.

That’s why the reasoned tone as much as much as the substance of Alistair Darling's intervention last week matters. Frankly positioned as George Osborne is between supply-side zealots who see manic deregulation as a cure-all and irritating post match analysis from the Lib Dem benches, anything that makes non-partisan discussion and decision-making easier must be welcome.

For regardless of what party we belong to or what sector of the economy we work in, it is becoming painfully clear that facile and easy solutions to our economic plight are not available and for better or worse - we are all in this together.

John Pugh is the Lib Dem MP for Southport

George Osborne hasn't had any luck. Photograph: Getty Images

John Pugh is the Lib Dem MP for Southport.

Getty
Show Hide image

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.