GDP figures 'distorted' by pollution UK spending

THE CLEAN-UP costs of pollution distort figures on national spending by almost 2 per cent, according to a report published today. Economic growth may disguise the fact that we are getting poorer, writes David Nicholson-Lord.

The paper, from the New Economics Foundation, is timed to coincide with the release of the first quarter's figures on gross domestic product (GDP) which, it argues, is a highly inaccurate measure of national welfare, ignoring social and environmental factors.

UK spending on pollution abatement costs pounds 8.8bn, equivalent to a 1.8 per cent addition to GDP, according to the foundation, which has circulated the report to MPs and peers along with a bottle of mineral water. 'The bottle makes the point that economic statistics can go up while the quality of our drinking water goes down,' Ed Mayo, the foundation's director, said.

The report says that the Government should prepare a 'greener' GNP index measuring welfare and the use of resources, comparable to the system in the Netherlands. 'Our current way of calculating growth treats the Earth as if it were a business in liquidation,' Mr Mayo added.