The land of broken promises

The coalition may claim to be committed to front-line services and public-sector jobs, but the econo

I listened to the Old and Sad by-election results online on Radio 5 Live from sunny Florida, which, incidentally, was the only US state that didn't have snow this past week. The British electorate was inevitably going to turn against the coalition and Nick Clegg was only able to avoid disaster because the Tories didn't try very hard. Apparently, they were away skiing with their banker friends -- George Osborne was, anyway.

Economic data continues to worsen in four crucial areas -- construction, net trade, business investment and unemployment -- even before the cuts and tax rises take effect. The volume of construction output in the latest data release fell by 0.7 per cent. New work fell by 0.5 per cent and repair and maintenance fell by 1.1 per cent. The biggest fall -- 6.4 per cent -- was in infrastructure new work. Construction was the main driver for the growth that was observed in the second and third quarters of 2010.

New figures for 2010 Q3, published by the Office for National Statistics [PDF] on 22 December, show that business investment, in seasonally adjusted terms, rose by 3.1 per cent. This is good news -- but total manufacturing investment decreased by 2.5 per cent compared with the previous quarter. Apart from a period of strong growth in 2010 Q1, business investment is yet to show any significant momentum since GDP started to recover in 2009 Q4. No individual industry has acted as a catalyst for overall growth. The Office for Budget Responsibility's forecast assumes that investment is a major driver in the recovery and will grow by more than 10 per cent per annum.

The latest net trade data was also bad. The UK's deficit on trade in goods and services was £4.1bn in November, compared with a deficit of £4.0bn in October. On average, forecasters expect the UK net trade deficit to make a 0.5 per cent contribution to GDP growth in 2011, having detracted from growth in 2010.

Worst of all, the number of unemployed youngsters under the age of 25 has hit a record 951,000, surpassing the previous record of 944,000 reached in June and September 2009. This represents an increase of more than 50,000 over the past three months.

More than 225,000 youngsters have been unemployed [PDF] for more than 12 months, increasing fears of a "lost generation". What a shame, then, that Alastair Darling's plan to tax the bankers and use the money to pay for measures to reduce youth unemployment has now been ditched for no good reason by the Con-Dem coalition

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The list of the government's broken promises is growing. Before the election, the Tories promised a "fair fuel stabiliser" to keep petrol tax rises down when oil prices are high. It looks as if they have reneged on that promise, even though David Cameron raised hopes that it would be implemented. And then there are those bankers. In opposition, Osborne and Cameron played a dirty political game, suggesting that they were going to restrict bonuses. They said that no banker's bonus would be higher than £2,000 -- a policy that is still on the Conservative Party website. Slasher Osborne has also delayed plans to force banks to disclose all bonus payments exceeding £1m -- despite the government naming every public official earning more than £55,000.

As my old friend Will Hutton wrote in the Observer this week:

Bankers' bonuses unite everyone in outrage -- from captains of industry, bewildered how top bankers can earn so much more than they do, to the newly unemployed, who wonder what they have done to deserve poverty and hardship while the money men pocket millions . . . The banks, far from serving the real economy, have become a tax on it.

The public has no objection, as far as I can tell, for payment for performance. The objection is mostly about payments for lack of performance.

Comments by the CEO of Barclays, Bob Diamond, in front of the Treasury select committee that the "period of remorse and apology for banks . . . needs to be over" didn't seem to capture the public mood. You would have thought Diamond's advisers would have warned him about other recent PR disasters, including that of BP's Tony Hayward, who said "I want my life back" after the Deepwater Horizon oil rig explosion killed 11 workers and leaked 206 million gallons of oil into the Gulf of Mexico. Similarly, the CEOs of the big three car makers flew in on luxurious private jets to give testimony to the US Congress that the auto industry was running out of cash and needed $25bn in taxpayer money to avoid bankruptcy. The next time they testified, the CEOs of Chrysler, Ford and GM drove the 500-plus miles in their latest fuel-efficient models.

People compare themselves to their friends and neighbours and workers care about the salaries of their colleagues. So taxpayers are angry about bankers getting big bonuses at a time when almost everyone else is experiencing declining real incomes. The recently published earnings data from the Annual Survey of Hours and Earnings (Ashe) for 2010 show how tough things are. Mean annual earnings for the 25 million employees in the UK grew, on average by only 0.2 per cent on the year; while in the private sector earnings fell by 0.8 per cent. Public-sector earnings grew by just 0.6 per cent. However, this wage growth partly reflects the transfer of the publicly owned banks Lloyds and RBS in October 2008 from the private to the public sector -- moving a number of relatively well-paid workers with them. And there is a public-sector wage freeze, along with a hiring embargo, so there is no likelihood of an explosion in wage inflation.

The table below shows the differing levels of importance of the public sector by regions in Britain, according to the Ashe survey. The public sector accounts for 39 per cent of workers in Wales, 38 per cent in Scotland and 37 per cent in the north east; it accounts for around a quarter in London and the south east. The second column shows that public-sector jobs outside London and the south east, on average, are better paid than private-sector jobs. Public-sector job losses are going to hit hardest regions such as the north east, Wales and Scotland, which have relatively high unemployment rates. We are demonstrably not all in this together.

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In a speech on public services on 17 January 2011, David Cameron said: "As we take the tough but necessary steps to deal with the deficit, our first priority is to protect front-line services and to protect jobs in the public services." Don't laugh.

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

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

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The deafening killer - why noise will be the next great pollution scandal

A growing body of evidence shows that noise can have serious health impacts too. 

Our cities are being poisoned by a toxin that surrounds us day and night. It eats away at our brains, hurts our hearts, clutches at our sleep, and gnaws at the quality of our daily lives.

Hardly a silent killer, it gets short shrift compared to the well-publicised terrors of air pollution and sugars food. It is the dull, thumping, stultifying drum-beat of perpetual noise.

The score that accompanies city life is brutal and constant. It disrupts the everyday: The coffee break ruined by the screech of a line of double decker buses braking at the lights. The lawyer’s conference call broken by drilling as she makes her way to the office. The writer’s struggle to find a quiet corner to pen his latest article.

For city-dwellers, it’s all-consuming and impossible to avoid. Construction, traffic, the whirring of machinery, the neighbour’s stereo. Even at home, the beeps and buzzes made by washing machines, fridges, and phones all serve to distract and unsettle.

But the never-ending noisiness of city life is far more than a problem of aesthetics. A growing body of evidence shows that noise can have serious health impacts too. Recent studies have linked noise pollution to hearing loss, sleep deprivation, hypertension, heart disease, brain development, and even increased risk of dementia.

One research team compared families living on different stories of the same building in Manhattan to isolate the impact of noise on health and education. They found children in lower, noisier floors were worse at reading than their higher-up peers, an effect that was most pronounced for children who had lived in the building for longest.

Those studies have been replicated for the impact of aircraft noise with similar results. Not only does noise cause higher blood pressure and worsens quality of sleep, it also stymies pupils trying to concentrate in class.

As with many forms of pollution, the poorest are typically the hardest hit. The worst-off in any city often live by busy roads in poorly-insulated houses or flats, cheek by jowl with packed-in neighbours.

The US Department of Transport recently mapped road and aircraft noise across the United States. Predictably, the loudest areas overlapped with some of the country’s most deprived. Those included the south side of Atlanta and the lowest-income areas of LA and Seattle.

Yet as noise pollution grows in line with road and air traffic and rising urban density, public policy has turned a blind eye.

Council noise response services, formally a 24-hour defence against neighbourly disputes, have fallen victim to local government cuts. Decisions on airport expansion and road development pay scant regard to their audible impact. Political platforms remain silent on the loudest poison.

This is odd at a time when we have never had more tools at our disposal to deal with the issue. Electric Vehicles are practically noise-less, yet noise rarely features in the arguments for their adoption. Just replacing today’s bus fleet would transform city centres; doing the same for taxis and trucks would amount to a revolution.

Vehicles are just the start. Millions were spent on a programme of “Warm Homes”; what about “Quiet Homes”? How did we value the noise impact in the decision to build a third runway at Heathrow, and how do we compensate people now that it’s going ahead?

Construction is a major driver of decibels. Should builders compensate “noise victims” for over-drilling? Or could regulation push equipment manufacturers to find new ways to dampen the sound of their kit?

Of course, none of this addresses the noise pollution we impose on ourselves. The bars and clubs we choose to visit or the music we stick in our ears. Whether pumping dance tracks in spin classes or indie rock in trendy coffee shops, people’s desire to compensate for bad noise out there by playing louder noise in here is hard to control for.

The Clean Air Act of 1956 heralded a new era of city life, one where smog and grime gave way to clear skies and clearer lungs. That fight still goes on today.

But some day, we will turn our attention to our clogged-up airwaves. The decibels will fall. #Twitter will give way to twitter. And every now and again, as we step from our homes into city life, we may just hear the sweetest sound of all. Silence.

Adam Swersky is a councillor in Harrow and is cabinet member for finance. He writes in a personal capacity.