Forbes: Snubbed From The Professions Club

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"There is a decline in social mobility in education, but it's wrong to tinker with higher education funding and admissions; that's meddling far too late in the process," said Tom Clougherty, executive director of the Adam Smith Institute, a British think tank.

Published in Forbes here.

Government told to stop talking and bring on nuclear investment

RELEASE DATE: Tuesday 14 July 2009
 
Government told to stop talking and bring on nuclear investment

New 'low carbon obligation' would boost nuclear power

There could be blackouts in Britain unless the government spends less time producing energy policy documents and more time trying to get the six major energy companies to invest, a new think-tank report says today.

"The UK's energy fate depends upon this sextet, and unless they invest enough in new generation plant, power cuts are not just possible, but probable," says the Adam Smith Institute. But – faced with tougher lending conditions from the banks and better investment opportunities overseas – two of the six are actually cutting back their investment plans.

"It is time for fewer words and more action from the government," concludes the Institute concludes in Re-energizing Britain.

In particular, the government needs to be more pro-active in driving through planning approvals for new nuclear power stations, and helping the companies put together nuclear investment funds, so that new nuclear plant is ready to fill the gap caused by decommissioning older stations.

The report's author, energy analyst Nigel Hawkins, says that nuclear power should be helped further by replacing the existing Renewables Obligation – which requires electricity suppliers to buy from wind, wave, biomass and other 'green' energy sources – with a new Low Carbon Obligation – which would include nuclear power.

Hawkins says that the three key aims of energy policy – security of supply, reduced carbon emissions, and lower prices – would all benefit from this change, since nuclear energy is both low-carbon and less expensive than many other ways of generating electricity, and does not depend on risky supplies of gas from Russia.

The report also argues that we need fewer words and more action on promoting investment in gas storage, where our capacity is just a tenth of that of Germany. This, it says, is "a very exposed position", since an increasing proportion of our gas now comes from abroad, much of it from Eastern Europe and Central Asia. The government needs to work with the energy companies to make sure that they have both planning approval and access to finance to increase Britain's gas storage facilities substantially.
 
END

Re-energizing Britain: Promoting investment in our energy future can be downloaded for free here.

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EU seizing on finance crisis to advance federalist agenda

RELEASE DATE: SUNDAY 12 JULY 2009

EU seizing on finance crisis to advance federalist agenda, says think-tank
 

EU bureaucrats are seizing on the financial crisis to centralise financial regulation in Brussels – a move welcomed by France and Germany as a way of curbing their competition from London. But this new EU regulatory bureaucracy will not improve financial stability and will only cause business to drift away from the EU to the financial centres of New York, Switzerland, and the Far East, says the Adam Smith Institute in a strongly-worded new report.

Despite Lord Mandelson's claims that he will defend Britain's interests – saying that "we have more skin in this game than the rest of Europe put together" – the Chancellor and the Prime Minister seem to have rolled over and accepted the EU proposals, even before the public consultation on them has ended, claim the report's authors, Tim Ambler of the London Business School and regulation expert Keith Boyfield.

"When you look at this you wonder whether Alistair Darling's White Paper on UK financial regulation is a rather pointless exercise," said Boyfield, chair of the Regulatory Evaluation Group. "It seems that we have already handed over our right to police ourselves, despite the fact that London's financial market has more scale, experience and expertise than the whole of the rest of the EU." Under the new proposals, the UK, with its huge financial sector, would have no more voting power than Latvia, which is on the edge of collapse.

Brussels wants to create two new bodies, the European Systemic Risk Council and the European System of Financial Supervisors, despite any evidence that the lack of EU cross-border rules had anything to do with the crisis. The real need, they argue, is to improve the supervision structures  that failed in individual EU countries – including Britain. But "instead of dealing with the fundamental problem, the European Commission is proposing to add new bureaucratic structures" that will be top-heavy and could actually make financial instability worse. "The proposals seem opportunistic, using the financial crisis to provide an opening for long-held political objectives in Brussels," the report suggests. "These proposals are not just a knee-jerk political reaction. They are too well thought out for that."

The report echoes complaints last week from the Mayor of London, Boris Johnson, that London's innovative hedge fund industry had nothing to do with the financial crisis, and would be crippled by the heavy hand of new EU bureaucracy, driving them to New York and Shanghai. He agreed with the report's authors that "what is good for London's financial services sector is good for the EU".

There are also proposals to create three new European Banking, Pensions and Investment authorities, all with executive powers to control firms across the EU, stripping Britain of control over its own financial sector. But, says Ambler, "Since financial crises of this scale come along only every sixty years or so, there is no economic reason for this haste." He suggests that these deals were all stitched up at the G20 meeting in April, where President Sarkozy threatened to walk out unless new EU-wide financial regulations were agreed.

Instead, the report calls on the European Commission to conduct a thorough investigation into the real causes of the crash, which they believe was actually made worse by international regulation such as the Basel II banking code – rather than rush headlong, for political reasons, into new cross-border regulation that could simply increase future instability. It says that the EU should aim for "bottom up" improvements in European countries' financial supervision, rather than imposing "top-down" regulation.

"The UK should lead strongly on a positive agenda for financial regulation in Europe," said Adam Smith Institute director, Dr Eamonn Butler. "That will focus on the need for prudential supervision by central bankers (like the Bank of England) rather than tick-box regulation from the likes of the Financial Services Authority. If we focus on improving supervision in the individual EU countries, then the financial services industry of Europe as a whole will get along fine. But if we shackle the diverse financial industries of Europe with heavy-handed, "one size fits all" regulation, the only gainers will be New York, Switzerland, and the Far East."

END

Financial Regulation: What is the best solution for the EU? can be downloaded for free here.
 

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EU seizing on finance crisis to advance federalist agenda, says think-tank

EU bureaucrats are seizing on the financial crisis to centralise financial regulation in Brussels – a move welcomed by France and Germany as a way of curbing their competition from London. But this new EU regulatory bureaucracy will not improve financial stability and will only cause business to drift away from the EU to the financial centres of New York, Switzerland, and the Far East, says the Adam Smith Institute in a strongly-worded new report.

Despite Lord Mandelson's claims that he will defend Britain's interests – saying that "we have more skin in this game than the rest of Europe put together" – the Chancellor and the Prime Minister seem to have rolled over and accepted the EU proposals, even before the public consultation on them has ended, claim the report's authors, Tim Ambler of the London Business School and regulation expert Keith Boyfield.

"When you look at this you wonder whether Alistair Darling's White Paper on UK financial regulation is a rather pointless exercise," said Boyfield, chair of the Regulatory Evaluation Group. "It seems that we have already handed over our right to police ourselves, despite the fact that London's financial market has more scale, experience and expertise than the whole of the rest of the EU." Under the new proposals, the UK, with its huge financial sector, would have no more voting power than Latvia, which is on the edge of collapse.

Brussels wants to create two new bodies, the European Systemic Risk Council and the European System of Financial Supervisors, despite any evidence that the lack of EU cross-border rules had anything to do with the crisis. The real need, they argue, is to improve the supervision structures that failed in individual EU countries – including Britain. But "instead of dealing with the fundamental problem, the European Commission is proposing to add new bureaucratic structures" that will be top-heavy and could actually make financial instability worse. "The proposals seem opportunistic, using the financial crisis to provide an opening for long-held political objectives in Brussels," the report suggests. "These proposals are not just a knee-jerk political reaction. They are too well thought out for that."

The report echoes complaints last week from the Mayor of London, Boris Johnson, that London's innovative hedge fund industry had nothing to do with the financial crisis, and would be crippled by the heavy hand of new EU bureaucracy, driving them to New York and Shanghai. He agreed with the report's authors that "what is good for London's financial services sector is good for the EU".

There are also proposals to create three new European Banking, Pensions and Investment authorities, all with executive powers to control firms across the EU, stripping Britain of control over its own financial sector. But, says Ambler, "Since financial crises of this scale come along only every sixty years or so, there is no economic reason for this haste." He suggests that these deals were all stitched up at the G20 meeting in April, where President Sarkozy threatened to walk out unless new EU-wide financial regulations were agreed.

Instead, the report calls on the European Commission to conduct a thorough investigation into the real causes of the crash, which they believe was actually made worse by international regulation such as the Basel II banking code – rather than rush headlong, for political reasons, into new cross-border regulation that could simply increase future instability. It says that the EU should aim for "bottom up" improvements in European countries' financial supervision, rather than imposing "top-down" regulation.

"The UK should lead strongly on a positive agenda for financial regulation in Europe," said Adam Smith Institute director, Dr Eamonn Butler. "That will focus on the need for prudential supervision by central bankers (like the Bank of England) rather than tick-box regulation from the likes of the Financial Services Authority. If we focus on improving supervision in the individual EU countries, then the financial services industry of Europe as a whole will get along fine. But if we shackle the diverse financial industries of Europe with heavy-handed, "one size fits all" regulation, the only gainers will be New York, Switzerland, and the Far East."

END

Financial Regulation: What is the best solution for the EU? Is published by the Adam Smith Institute, 23 Great Smith Street, London SW1P 3BL. The full report can be downloaded for free at: http://tinyurl.com/mme94a

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The Times: Non-exec cull

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Keith Boyfield, chairman of the Adam Smith Institute’s Regulatory Evaluation Group, said there was a case for a return to old-style structures for investment banks.

“One advantage of partnership arrangements was that it was their own money they were risking and they had a stake in the long-term profitability of the business," he said.

Published in The Times here.

EU uses crisis for political gain, says think-tank

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The European Union's plan for a new machinery of financial regulation is an "opportunistic" attempt to extend EU power and is largely based on unsubstantiated claims, according to a hard-hitting report by the Adam Smith Institute and the London Business School.

The study said the British Government has responded with incoherent or irrelevant objections as Europe's elite seize on events to rush through laws that greatly increase EU control over the City of London.

"The proposals seem opportunistic, using the financial crisis to provide an opening for long-held political objectives," it said, accusing Brussels of trying to transform the financial system "while it is too weak to object".

"Since financial crises of this scale come along only every 60 years, there is no economic reason for this haste," it said.

The European Commission has made no attempt to validate its claim that lack of EU cross-border rules was a key cause of the credit crisis, ignoring evidence that the real damage stemmed from the failure of countries to enforce their existing rules properly. "Instead of dealing with the fundamental problem, the Commission is instead proposing to add new bureaucratic structures."

The key bone of contention is the creation of three new "Authorities" with a permanent staff and binding powers: a European Banking Authority in London; a European Insurance and Pensions Authority in Frankfurt; and a European Securities Authority in Paris.

While they look like the current advisory committees made up of chief regulators from the 27 member states, they are in reality executive agencies able to impose their agenda, with powers to "settle the matter" in the case of disputes. They effectively strip Britain of ultimate control over much of the City, leaving "day-to-day" matters to the Financial Services Authority.

Keith Boyfield, co-author of the report and chair of the Regulatory Evaluation Group, said the raft of proposals coming from Brussels together amount to an extremely serious assault on the City.

"When you look at this you wonder whether Alistair Darling's White Paper is a pointless exercise," he said.

The Government appears confused by the rush of events. Rather than fight the core issue of transferring control to Brussels, it has been arguing over whether the bodies should be run by the Commission or the Council. Either way, London loses ultimate control.

Gordon Brown agreed to the plans at last month's Brussels summit, provided that they do not impinge on "fiscal sovereignty". Lord Mandelson has since said Britain should forge an alliance with those EU states in our camp to limit it saying "we have more skin in this game than the rest of Europe put together".

An EU insider said the credit crisis had thrown up an unholy alliance between nationalist politicians from France, Italy and Spain hoping to chip away at the City, and Left-wing forces opposed to market capitalism.

The two together are a formidable bloc.

Moreover, Socialist Euro-MPs have forced Commission President Jose Barroso- an Iberian Thatcherite -to back their demands as the price for clearing the way for his reappointment.

CNBC: UK bank regulation under fire

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Published on CNBC here.