Fiscal Phil's mish-mash means a botched budget

Today the Chancellor suggested his budget would help ordinary Britons, but with a Google Tax, a hidden hit on capital losses, and bad economics in a business rate cut, Philip Hammond looks out of touch with how the many millions on these islands live our lives.

Matt Kilcoyne from free market think tank the Adam Smith Institute said that what the Chancellor gave with one hand, he took with the other:

“Quintupling the investment allowance from £200k to £1m will mean businesses invest in equipment and machinery, it’s a promise to kickstart the British economy’s makers and doers. But if Mrs May and Mr Hammond want to see American levels of GDP and wage growth then they should move to have all investment be deducted from profits before tax.”

“What the Chancellor gave with one hand though, he took with the other as he hit firms large and small that make capital losses by restricting their exemptions—meaning less risk taking, less profit and fewer economic dividends.”

“It was a similar story in personal allowances. While the taxman will let us keep more of what we earn from April next year, the Treasury won’t link this with inflation for another two, so millions more will be dragged into higher brackets. The Chancellor’s penny pinching in the here and now will hit us all in the pocket later.”

The Adam Smith Institute’s Daniel Pryor, rebuked the Chancellor’s decision to bring in a digital revenue tax:

“A digital revenue tax—lifted straight from the Corbynite playbook—will punish the millions of people who shop online and use online services every day. The Chancellor should embrace tech firms that find innovative ways of giving consumers what they want at lower prices: not penalise them for having the temerity to scale-up or move beyond the traditional high street business model. He might not intend for the tax to be passed onto ordinary Brits, but economic facts don’t care about fiscal Phil’s feelings.”

Sophie Jarvis, from neoliberal think tank the Adam Smith Institute said the Chancellor’s cuts in business rates would mean a windfall for rent-seekers:

“The Chancellor thinks that businesses are like babies: he likes them when they’re small and cute, but rapidly loses interest and affection as they grow up (particularly if they’re tech focused). Hammond’s small business rates cut of ⅓ is good politics but bad economics. Cuts to business rates will lead mostly to a windfall for landlords rather than small business owners as they’re able to charge more rent on the properties these businesses use.

“The £675m future high street fund to help transform high streets back into places people live, work and socialise is welcome. In particular we welcome the policy transform unused commercial property to residential.”

If you would like further comment, or to arrange an interview, please contact Matt Kilcoyne via phone (07584778207, 02072224995) or email (matt@adamsmith.org)

Medical cannabis sees Sajid take the tories in the right direction

Following the news that the Home Secretary Sajid Javid is to allow doctors to prescribe medical cannabis to their patients, Daniel Pryor, Head of Programmes at the Adam Smith Institute, says:

“The Home Secretary has delivered a sensible, evidence-based approach to medical cannabis. It’s not a moment too soon. Patients like Billy Caldwell and Alfie Dingley will soon be able to legally access life-changing medication from their GPs. This should be celebrated.

“The UK is finally tip-toeing towards a common-sense reform of drugs policy and momentum is building in the UK and beyond. Nine US states have already legalised, with Canada legalising recreational cannabis next week. We should now follow in their footsteps to protect young people from the drugs trade and take back control of the unregulated black market.”

If you’d like to arrange an interview or further comment from Daniel Pryor please contact Matt Kilcoyne via mobile (07584778207), landline (0207224995) or email (matt@adamsmith.org)

Racial pay gap stats will not solve Britain's prejudice problems

Following the announcement of a review to force companies to reveal difference in pay between different ethnic groups, Matt Kilcoyne of free market think tank the Adam Smith Institute, says that it does little reflect Britain’s changing demographics, does not tackle remaining structural barriers to success, and shows a lack of understanding of the costs of prejudice on large firms:

“Few would deny that those from ethnic minority backgrounds face barriers to success. But we should learn lessons from the gender pay gap debate; crude figures across a whole company mask the different roles that people choose to do and equate CEOs to graduate schemers.

“Racial pay gap reporting won't explain the demographic changes that Britain has undergone. The older you are, the more likely you hold a higher position in a company. And older generations are more likely to be white. Migrants may face natural barriers to success from language, and illegitimate barriers from occupational licensing and discrimination. These figures will mask the complex causes of racial inequality and be used to sour relations between Britons.

“Rather than engaging with the hard task of removing structural barriers to opportunity many still face, this headline-grabbing measure will simply increase costs on businesses that already know the price of discrimination. Companies that deny themselves talent based on skin colour hit their bottom line, and they know the reputational risk of failing to tackle prejudice.”

To arrange further comment or an interview please contact Matt Kilcoyne via mobile (07584778207), office phone (02072224995), or email (matt@adamsmith.org).

Adam Smith Institute at Conservative Party Conference

This year at Conservative Party Conference in Birmingham the Adam Smith Institute ran three events. Firstly on the Sunday, a call for Britain to learn the lessons from cannabis legalisation around the world (more on the others later). Our event led the Evening Standard’s diary on Monday.

On Monday we released our 100 policies for Mrs May. On CapX our Matt Kilcoyne explained that if the Prime Minister backed some of our radical but reasonable policies she could go down in history as one of the great transformers. And on the Telegraph, he described the mood of conference where, for the first time, it seemed like Nimbys were on the run. Today Guido Fawkes covers our call for 10,000 refugees from Venezuela to be allowed to come to the UK.

Sam Dumitriu spoke to JOE.co.uk on about how to win young voters. It’s quite simple, paint an optimistic and positive vision for the future. Meanwhile the Guardian’s look at young Tories noted that Adam Smith Institute events attracted those least likely to be in suit and tie.

Our Ananya Chowdhury appeared on LBC with Jacob Rees-Mogg (from 7m:30s) and on the BBC alongside former intern Connor Axiotes.

And Sophie Jarvis, Head of Public Affairs at the Adam Smith Institute, spoke to LBC about Brexit and the Chequers Deal alongside Matt Gillow, journalist at the opinion site 1828.

Sophie Jarvis playing Matt Gillow at Chequers checkers

Our second and third events were held on Tuesday. The first with Octopus co-founder Chris Hulatt, John Penrose MP, Bim Afolami MP, and Fingleton Associates’ Eleanor Mack on Boosting Consumer Capitalism and making markets work for consumers.

Daniel Pryor, Martin Cullip of the New Nicotine Alliance, and the UKVIA’s John Dunner, joined a panel chaired by the Centre for Policy Studies’ Emma Revell on how harm reduction in tobacco policy could help save a million years of life.

After the Prime Minister’s speech our Sam Dumitriu’s reminder the rents had risen fastest where councils were mostly likely to be blocked made it into the Financial Times’ coverage of Mrs May’s conference speech. His comments on freedom of movement, on stamp duty and on letting councils borrow to build can be found here.

To arrange interviews or comment pieces with any Adam Smith Institute staff members please contact Matt Kilcoyne via phone (07584778207) or via email (matt@adamsmith.org).

May's rhetoric channels Thatcher but policies deliver Miliband

Following Mrs May’s speech, in which she channelled the spirit of Thatcher but delivered the policies of Ed Miliband. Sam Dumitriu, Head of Research at the Adam Smith Institute, said:

On Ending Freedom of Movement and restricting immigration:

“The Prime Minister was right to unequivocally back business and make the moral case for markets and freedom. But her rhetoric is betrayed by her policy on free movement. Pulling up the drawbridge when Britain has a record number of vacancies is a mistake and trying to plan the labour market from central government will make Britain a worse place to do business.

“Her comments on training and investment simply don’t match up with reality. The Government’s own Migration Advisory Committee found no evidence Freedom of Movement reduced investment or led to firms cutting training budget. In fact, the MAC found that migration led to higher productivity growth for native workers.”

On Stamp Duty on Foreign Buyers:

“Taxing foreign homebuyers won’t make housing more affordable, only building more homes will do that. So-called Buy to Leave is a myth – just 1% of new homes bought by foreigners are left empty. When foreigners buy property they either rent it out or live in it themselves. Advance sales to foreign investors allow more homes to be built for rent. Without that investment, fewer homes would be built, rents would be higher and it would be harder to scrimp and save for a deposit.”

On letting councils borrow to build:

“Too often councils are the barrier to, not enablers of, new housing. Councils with the greatest need for quality new housing are those least likely to build it. Rents have risen the fastest in those areas precisely because those local authorities are most likely to block development and give in to the Nimbys.

“Unfortunately I fear the councils most likely to borrow to build are the ones most likely to build in the wrong places and require taxpayers to bail them out.”

To arrange an interview or further comment, please contact Matt Kilcoyne via 07584778207 or email matt@adamsmith.org