RE-DRAFT ONLINE SAFETY BILL TO REMOVE THREAT TO ENCRYPTION

The Online Safety Bill would undermine encryption, posing a grave threat to privacy, security and the wider UK economy, says think-tank

• End-to-end encryption (hereafter encryption) is foundational to the proper functioning of our online experience;

• In its current form, the Online Safety Bill would undermine encryption by empowering Ofcom to demand service providers use ‘accredited technology’ to give them access to encrypted content in certain circumstances, under threat of large fines;

• This would pose a grave threat to privacy, security and the wider UK economy. 

A new report by the Adam Smith Institute (ASI), Shut the Backdoor: Protecting Encryption from the Online Safety Bill, outlines the ways in which the Online Safety Bill undermines end-to-end encryption. The Bill will empower Ofcom to demand service providers use ‘accredited technology’ to give them access to encrypted content in certain circumstances.

One such technology under consideration is Client Side Scanning (CSS), which works in a similar way to anti-virus software and runs in the background, often completely unbeknownst to the user. Its implementation will be entirely at the discretion of the Secretary of State, meaning that the only barrier between scanning illegal content and scanning for ‘legal but harmful content’ is a political one. 

As report author, John Macdonald, explains, this poses a grave threat to privacy and security. There is no sense in which encryption could be maintained while another party not included in message exchanges has access to the contents, whilst creating a ‘backdoor’ for law enforcement would effectively be creating a blackmailer’s charter, allowing criminals and hostile foreign actors to exploit security flaws. These threats would seriously undermine civil liberties in the UK and provide tacit justification for oppressive regimes, such as Russia and China, to violate civil rights. 

Furthermore, such measures would hinder the growth and competitiveness of the UK’s vital technology sector, potentially resulting in large companies withdrawing from the UK market entirely. 

The paper recommends that the Government should re-draft the Online Safety Bill to ensure encryption is properly protected through removing the most damaging elements. 

John Macdonald , report author and Director of Strategy at the Adam Smith Institute, said:

“Make no mistake, the Online Safety Bill in its current form is an unprecedented threat to civil liberties and the proper functioning of the internet. This would be another Snooper’s Charter, which would not only undermine encryption and facilitate the bulk collection of personal information, it would also compromise national security and make the UK hostile towards tech innovation. 

It needs reconsideration with the utmost urgency”

-ENDS- 

Notes to editors:  

For further comments or to arrange an interview, contact Emily Fielder, emily@adamsmith.org | 0758 477 8207.

John Macdonald is Director of Strategy at the Adam Smith Institute.

The Adam Smith Institute will be hosting an event at Conservative Party Conference entitled Shutting the Backdoor: Redrafting the Online Safety Bill, which will explore the threats the Bill poses to free speech and encryption. Details of the event can be found here. 

The report is live on the Adam Smith Institute website and is available here. 

The Adam Smith Institute is a free market, neoliberal think tank based in London. It advocates classically liberal public policies to create a richer, freer world.

The ASI responds to Sir Keir Starmer's speech to the Labour Party Conference

In response to Keir Starmer’s Conference speech, Emily Fielder, Head of Communications at the Adam Smith Institute, said:

Where Sir Keir diagnoses the problems correctly, his solutions miss the mark. He is right that inflating demand without increasing supply will raise house prices, and that we need to get ‘shovels in the ground,’ but unfortunately his only supply side suggestion is weak, and he’d rather stoke more demand and target the red-herring of second homeowners. 

Similarly, while he pushes for nuclear, hydropower, and innovative solutions, he plans to back it through taxpayer subsidies and a new state-owned energy company. Previous attempts at state-owned energy resulted in massive subsidies and taxpayer-funded bailouts. There is no indication that Great British Energy will fare any differently. 

However, he does at least recognise some limits of Labour’s expensive, taxpayer funded policies, saying himself that they won’t be able to deliver ‘good Labour policies’ until the public finances allow. Labour’s magic money tree may have finally disappeared. 

ENDS

Notes to editors:  

For further comments or to arrange an interview, contact Emily Fielder, emily@adamsmith.org | 0758 477 8207.

The Adam Smith Institute is a free market, neoliberal think tank based in London. It advocates classically liberal public policies to create a richer, freer world.

The Adam Smith Institute responds to the Chancellor's 'mini-budget'

The Adam Smith Institute was encouraged by the pro-growth policies in Chancellor Kwasi Kwarteng’s ‘mini-budget’.

In response to the cancellation of the corporation tax hike and changes to business taxation, Daniel Pryor, Head of Research at the Adam Smith Institute, said:

“The Government is rightly prioritising growth after years of stagnation, and today’s measures are a welcome first step to getting the British economy back on track. The planned corporation tax rise would have hammered businesses, choked off investment and reduced workers' wages—scrapping it was a sensible move. 

It’s also encouraging to see that the Chancellor understands the importance of generous capital allowances, as well as headline rates. Making the £1 million Annual Investment Allowance permanent means businesses across the country have greater capacity and certainty to boost the economy at a time we need it most.”

In response to changes to personal taxation and National Insurance Contributions, John Macdonald, Director of Strategy at the Adam Smith Institute said:

“The Chancellor said it loud and clear—this Government is serious about letting people keep more of their own money. Cancelling the NICs hike is a welcome return to principle —it might not be the most well targeted measure, but a Conservative Government should never have raised taxes in the face of a cost of living crisis in the first place. 

Abolishing the higher rate of income tax is much the same—it should never have existed in the first place, and it shows the Chancellor is committed to returning the Conservatives to a party of low tax and individual freedom.” 

In response to investment zones, Morgan Schondelmeier, Director of Operations at the Adam Smith Institute, said:

“The measures outlined for proposed investment zones show that this Government knows what will really drive growth and prosperity. Liberalising restrictive planning rules, generous tax allowances for investment, scrapping destructive taxes like stamp duty and drastically raising National Insurance thresholds will all turbocharge growth. 

While there are risks associated with the government picking winners––situating the investment zones in politically convenient places––the ‘regulatory sandbox’ nature of investment zones will enable the Government to test and implement what works on the national level.

Ultimately, these reforms would help the entire UK, but fast tracking their implementation is a great first step towards reversing a doldrum economic cycle.”

Notes to editors:  

For further comments or to arrange an interview, contact John Macdonald, john@adamsmith.org | 0758 477 8207.

The ASI recently released the following papers which may be of further interest:

• Seeing It Through: A Plan for ‘Full Fat’ Freeports, which argues that—done right—freeports offer an exciting opportunity to create growth by addressing inefficiencies within the British economy.

• In the Bleak Midwinter: How (and How Not) to Tackle the Energy Crisis, which sets out the most effective policies to tackle the energy crisis and alleviate pressure on poorer households

• A Recipe for Growth: The Economic Effects of Corporate Tax Reform in the UK, which argues that reversing the corporation tax hike and replacing the super-deduction would have significant positive impacts on growth and wages

The Adam Smith Institute is a free market, neoliberal think tank based in London. It advocates classically liberal public policies to create a richer, freer world.

Introduce Full-Fat Freeports to Boost Economic Growth

Create light-touch planning regimes, provide local investment and implement tax and regulatory reforms designed for growth in geographically defined areas, says think-tank

• Some academic economists are skeptical of the ability of freeports to add value to the British economy, arguing that they primarily divert (rather than create) economic activity;

• This does not need to be risked. Freeports offer an exciting opportunity to create growth by addressing inefficiencies within the British economy; 

• Freeports do not have to be literal ‘ports’- it is perfectly feasible to place freeports within the country in areas with sufficiently good transport links;

• This paper sets out four ways this can be achieved:

1. Create a light-touch planning regime, providing fast and certain planning for high value economic activities within the freeport;

2. Provide significant packages of local investment to alleviate concerns about crowing of public services and infrastructure, with short run disruption smoothed by offering payments linked to the freeport’s success;

3. Implement a tax regime designed for growth, including full expensing for capital investment, the simplification of customs processes, and the elimination of property taxes;

4. Establish a regulatory sandpit, allowing the Government to trial regulatory changes across a sample of freeports, testing policy alternatives against one another and getting real world feedback on their performance;

A new report from the Adam Smith Institute (ASI), Seeing it Through: A Plan for Full-Fat Freeports, argues that freeports offer an exciting opportunity to create growth by addressing inefficiencies within the British economy.

Some academic economists are skeptical of the ability of freeports to add value to the British economy, arguing that they primarily divert (rather than create) economic activity. It is true that the UK is already focused on lowering barriers to trade, has policy levers for significantly reducing the distortions created by tariffs which mean that the pure benefits in customs terms to locating businesses in new UK freeports are likely to be slim. However, freeports could still play a role in generating genuine growth by targeting the UK’s own domestic policy inefficiencies. 

Report author, Sam Ashworth Hayes, identifies four policy areas where a noticeable difference could be made:

1. Create a light-touch planning regime within the freeport to remove a major barrier of growth. This would both benefit areas which are already successful, such as Oxford, Cambridge and London, and left-behind areas.

2. Provide significant packages of local investment to alleviate concerns about crowing of public services and infrastructure, with short run disruption smoothed by offering payments linked to the freeport’s success. 

3. Implement a tax regime within the freeport which is laser-focused on growth, in order to justify the cost to the exchequer. This should include introducing full expensinging for capital investment, simplifying customs processes and eliminating property taxes.

4. Establish a regulatory sandbox, under which the Government can alter regulation within geographically defined locations. The key benefit to this policy is not the creation of a loophole in regulation for small clusters of firms scattered across the country, but the generation of evidence on the success or failure of these policies that is then used to inform decision-making for the country as a whole. 

Sam Ashworth-Hayes, report author and economist, said:

“Freeports offer Britain a chance to boost growth by addressing inefficiencies in our economy, punching through red tape and government restrictions. Tariffs on trade are low and the government’s ambition is to get them lower still; some academic economists think this makes freeports less useful than they are elsewhere in the world. But this just means they need to target different problems facing our own economy. 

By liberalising planning, providing a focus point for local investment, and a tax regime engineered at driving investment, freeports can drive growth in their local areas. And for the country as a whole, freeports offer the government a sort of regulatory sandbox for testing policies, giving it a chance to see how they work on the ground.”

Daniel Pryor, Head of Research at the Adam Smith Institute said: 

“If we unleash the full potential of freeports, the entire British economy stands to benefit. The Government should grasp the opportunity to go beyond low tariffs and use freeports as a proof-of-concept for pro-growth planning reform, a tax system that encourages investment and a sensible regulatory regime. Done properly, freeports won’t just make local residents richer—they’ll boost living standards across the country.”

-ENDS- 

Notes to editors:  

For further comments or to arrange an interview, contact John Macdonald, john@adamsmith.org | 0758 477 8207.

Sam Ashworth-Hayes is an economist and writer. He has previously co-founded a start-up using machine learning to measure biodiversity, and worked as a senior economist at a consultancy. He holds an MPhil in Economics from the University of Oxford, and a BSc. from York in the same.

The report is live on the Adam Smith Institute website and is available here. 

The Adam Smith Institute is a free market, neoliberal think tank based in London. It advocates classically liberal public policies to create a richer, freer world.

The Adam Smith Institute responds to review of anti-obesity strategy

In response to reports that the Prime Minister could scrap the anti-obesity strategy, Daniel Pryor, Head of Research at the Adam Smith Institute, said:

“The Government’s anti-obesity crusade was always light on evidence but it weighs heavily on the wallets of hard-pressed consumers. It’s encouraging that the new Government could reverse the trend of politicians meddling with our weekly shop.

Ordinary people have seen prices go up and choice go down whilst businesses have been burdened by yet more red tape. Multiple impact assessments—often based on questionable science—have failed to demonstrate significant impacts on public health. This has left a bitter taste in the mouth of Brits struggling with the cost of living crisis.”

Notes to editors:

For further comments or to arrange an interview, contact Emily Fielder, emily@adamsmith.org | 0758 477 8207

The Adam Smith Institute is a free market, neoliberal think tank based in London. It advocates classically liberal public policies to create a richer, freer world.

Fast-Track Approvals for 'Plug and Play' Nuclear Reactors to Meet Decarbonisation Goals

BEIS should replace older generation reactors with modern, and safer, Small Modular Reactors and Advanced Modular Reactors to meet decarbonisation goals and prevent black-outs, says think-tank

• The Department for Business, Energy and Industrial Strategy (BEIS) is underestimating the UK’s electricity demand in 2050. In particular, it appears to be failing to take into account the fact that we will not be able to rely on Variable Renewable Energy, such as wind and solar, to provide adequate baseload;

• As a result, BEIS is also underestimating how much nuclear power will be required if the Government intends to maintain its goal of decarbonising the UK’s electricity system by 2035;

• Rather than replacing our current nuclear capacity with older generation nuclear reactors, the Government should look to fast-track approval for modern Small Modular Reactors (SMRs) and Advanced Modular Reactors (AMRs);

A new report from the Adam Smith Institute (ASI), Keeping the Lights On: Testing the Government’s Projections for Electricity Supply and Nuclear Capacity, argues that BEIS is underestimating the UK’s electricity demand in 2050. In particular, it appears to be failing to take into account the fact that we will not be able to rely on Variable Renewable Energy (VRE), such as wind and solar, during periods of Dunkelflaute (when the sun doesn’t shine and the wind doesn’t blow). As a result, it is underestimating how much nuclear power will be required if the Government intends to maintain its goal of decarbonising the UK’s electricity system by 2035. If the Government intends for nuclear power to make up 25% of electricity generation by 2050, then eight times more nuclear generation than what Hinkley Point C and Sizewell C will generate is required. 

The authors highlight the need to fast-track approval for Small Modular Reactors (SMRs), which would address the shortfall in zero energy carbon generation, and Advanced Modular Reactors (AMRs), which would be a better solution in the medium term. 

As the paper outlines, SMRs are quick to build, and have far smaller capital costs and space requirements. Owing to their modern safety design and the fact that they are mostly low pressure, SMRs should also be less of a safety hazard and their regulation could be streamlined if the UK fast-tracked any design that had been approved in the USA or Canada. Similarly, AMRs, which also operate at low-pressure, could be supplied from 2030 onwards if the UK were to fast-track regulatory approval. This would require rapid decision-making and action along the lines of finding, approving and manufacturing the Covid vaccine. 

Daniel Pryor, Head of Research at the Adam Smith Institute, said:

“Under current plans the UK looks unlikely to produce enough electricity to meet future needs or decarbonise the electricity system by 2035. Politicians must urgently explore alternatives to traditional nuclear reactors if they want to rectify this situation. 

Small modular reactors—including advanced modular reactors—offer a potential solution in terms of faster construction time, lower cost and enhanced safety. By working with our international partners, we can create a nimble regulatory framework to bring these emerging technologies to market more quickly.”

-ENDS- 

Notes to editors:  

For further comments or to arrange an interview, contact Emily Fielder, emily@adamsmith.org | 0758 477 8207.

Simon Clanmorris has a Law Degree from Cambridge University, qualified as a Chartered Accountant, and is now retired.

Peter Edwards is an Emeritus Professor of Inorganic Chemistry, Oxford University and a Fellow of St Catherine’s College.

Dr Paul Norman is Professor of Nuclear Physics & Nuclear Energy at the University of Birmingham, where he runs two postgraduate MSc courses in Physics & Technology of Nuclear Reactors, and in Nuclear Decommissioning & Waste Management. 

The Adam Smith Institute is a free market, neoliberal think tank based in London. It advocates classically liberal public policies to create a richer, freer world.

The ASI responds to Liz Truss' Energy Policy

In response to the Liz Truss’ “energy price guarantee” announcement, Emily Fielder, Head of Communications at the Adam Smith Institute, said:

“Whilst a large-scale intervention to help households and businesses struggling with their unprecedentedly high energy bills is clearly necessary, it is vital that the Government does so in a way that preserves incentives for reducing demand and suitably targets those most in need of help. 

Unfortunately, capping energy prices at £2,500 does neither of these things. Freezing energy bills at a lower rate creates an artificial price signal for end users, who will have therefore have little incentive to reduce consumption, which could lead to energy rationing and blackouts this winter. This also subsidises affluent households which use more energy, while still effectively raising the energy price cap to a level which is still unmanageably high for those on very low incomes. Overall, the unpredictability of energy prices over the next two years means that this policy is also prone to ballooning to unsustainable levels. 

The Government should instead pursue a combined approach of immediate, targeted, and costed support through cash transfers and the benefits system, combined with tax cuts designed to allow people to keep more of their own money.”

In response to Liz Truss’ plans to increase domestic energy supply, Emily Fielder, Head of Communications at the Adam Smith Institute, said:

“It’s encouraging that the new government recognises, and is taking immediate action to remedy, our lack of domestic energy supply. 

By pursuing fracking and North Sea oil field exploration, along with investing in renewable and nuclear energy, the UK will be better able to withstand international energy shocks seen world-wide, which are likely to be long-term.

The emphasis on nuclear power, as a safe, clean, and sustainable energy source is particularly welcome, even if it comes decades too late.

ENDS

Notes to editors:  

For further comments or to arrange an interview, contact Emily Fielder, emily@adamsmith.org | 0758 477 8207.

The Adam Smith Institute has released a paper, In the Bleak Midwinter: How (and How Not) to Tackle the Energy Crisis, which focuses on the energy crisis and the impact on households and businesses. 

The Adam Smith Institute is a free market, neoliberal think tank based in London. It advocates classically liberal public policies to create a richer, freer world.

Combine Targeted Support, Business Loans and Tax Cuts to Ease the Cost of Living

Extend the cash payments scheme, introduce business loans and cut taxes to help households and businesses through the cost of living crisis, says think-tank

• Since the publication of the Adam Smith Institute’s previous report on the cost of living crisis, households and businesses’ economic woes have been exacerbated by rising inflation and energy costs. 

• The Government will need to help mitigate the impacts to reduce economic scarring. However, policy proposals such as freezing energy prices will have long-term negative consequences. 

• A combined approach of immediate, targeted support through cash transfers and the benefits system, combined with tax cuts designed to allow people to keep more of their own money, is the preferable option. 

A new report from the Adam Smith Institute (ASI), called In the Bleak Midwinter: How (and How Not to) Tackle the Energy Crisis, argues that a combined approach of immediate, targeted support through cash transfers and the benefits system, combined with tax cuts designed to allow people to keep more of their own money, is the best way to ensure households get the help they need over the coming months.

Our report authors highlight that some of the policies that have been touted over the course of the leadership campaign, including ‘nuclear’ VAT cuts, and an energy bill freeze, are distortionary, not properly targeted and increase the risk of winter blackouts through failing to incentivise cutting down on energy consumption. 

It further makes the case for support for households and businesses based on their previous energy use. For households, this means the Government would transfer cash based on the difference in bill payments relative to 2021. For businesses, similar criteria would be used in an extensive Government backed loan scheme, to help spread the increased cost of energy bills over a longer period. 

The report makes the following suggestions:

1. Extend the cash transfer scheme to include quarterly cash transfers of £350 over the next year under the same targeting scheme. 

2. Tie further relief to households to their levels of energy consumption in the previous year. We propose a 75% coverage of rises for those eligible for the £350 cash transfer, 50% for households with a higher income taxpayer. 

3. Provide 100% backed loans to businesses struggling to meet monthly energy payments. 

4. Implement an emergency uprating of benefits in line with current inflation figures, rather than waiting until April 2023.

5. Index the personal allowance rate of income tax to inflation in order to eliminate fiscal drag.

6. Bolster national energy supply through securing emergency electricity from Norway and opening discussions with the Dutch to reopen Groningen gas field.

John Macdonald, Director of Strategy at the Adam Smith Institute, said:

“The stakes for Liz Truss and her new Cabinet are incredibly high; pursue the wrong policy, and the country could drive itself further into debt, fail to avoid energy rationing this winter or push thousands of businesses into bankruptcy. Rather than pursuing un-targeted and expensive policy options, such as an energy price freeze, the Government should instead consider direct cash transfers, indexing benefits and income tax thresholds with inflation, energy relief based on previous consumption and loans for struggling businesses.”

-ENDS- 

Notes to editors:  

For further comments or to arrange an interview, contact Emily Fielder, emily@adamsmith.org | 0758 477 8207.

John Macdonald is Director of Strategy at the Adam Smith Institute.

Emily Fielder is Head of Communications at the Adam Smith Institute.

Alex Hughes is a Research Associate at the Adam Smith Institute.

The report is now live and available here.

The Adam Smith Institute is a free market, neoliberal think tank based in London. It advocates classically liberal public policies to create a richer, freer world.