Talk of British declinism may be unhelpful politically but it is our economic reality

Our Director of Communications, Connor Axiotes, on the day of the Chancellor’s Growth Speech in the Telegraph:

“Talk of British declinism may be unhelpful politically but it is our economic reality. We have expensive, inefficient public services funded by record high taxation, a chronic undersupply of housing, and a productivity crisis.

“The Chancellor was right when he said a decade of black swan events have impeded British economic progress. But there are measures which are in our control and policy changes can improve our lot.

“This government needs to go further by using the levers at their disposal to turn British declinism around: tackling childcare costs, building houses, lowering the tax burden and increasing private investment in the UK.”

Tame Inflation, Cut Taxes - Connor Axiotes on TalkTV

Our Director of Communications, Connor Axiotes, talks to Peter Cardwell of TalkTV.

Realign Economic Incentives to Improve Young Britons' Prospects

Drastic reforms to planning, tax welfare and education are needed to reduce intergenerational inequality and boost economic growth, says think-tank

• An increasingly large divide has opened up in British society between generations in which the young lose out, while the elderly benefit;

• Intergenerational inequality is not just an issue of fairness between the young and the elderly — the ways in which it is expressed are a drag anchor on the productivity and economic growth that Britain desperately needs;

• Drastic reforms to planning, tax, welfare and education are needed to boost productivity, wages and prosperity, and lower taxes from a postwar high.

A new report, Boomer and Bust: Realigning Incentives to Reduce Intergenerational Inequality, from the Adam Smith Institute (ASI), draws attention to the increasingly large divide between the generations, in which the young lose out, while the elderly benefit. This divide is reflected across diverse policy areas with profound implications for society, covering access to asset wealth and housing affordability, benefit and pension spending, the national debt, Covid-19 lockdowns, and the cost of education. 

The report’s authors highlight that many of the root causes of intergenerational inequality are intimately linked to Britain’s lacklustre productivity growth. The incentive structures that drive this inequality have led to an unacceptably low standard of living and have forced the country to pay higher taxes for worsening public services. These fundamental problems will only be exacerbated as Britain’s population ages. 

While it is not the case that the elderly have been purposefully robbing the young of their future, they have benefited from the unintended consequences of our current political incentive structures. The answer to some of these challenges does not lie in intergenerational conflict, but in policy changes that create mutually beneficial outcomes. 

As part of the paper’s research, public opinion polling of Brits was commissioned, aiming to gauge which changes would be supported and politically viable. The polling found that:

• The majority of people (52%) support more development in their area, at least in principle. This has increased from 38% in 2021.

• There is an overwhelming acceptance (84%) that it is much harder today for young people to buy a home than it was for their parents. 

• There is significant support (70%) for unfreezing income tax thresholds. This suggests that the income tax freeze until 27/28 deserves its moniker as a ‘stealth tax.’ The vast majority of people do not support the policy when it is made clear how it works and how it affects them.

• There is very strong support (66%) for school leavers, who do not go onto university, to get access to a similarly sized loan, to help with professional development and setting themselves up for a career without having to go to university (i.e. to buy tools, tech, courses or a vehicle).

• There is majority support (50%) for a specific proposal of up to £6,000 per annum for three years being loaned to school leavers who do not go on to university. 

The paper recommends the following:

1. See through Street Votes, which would allow local residents to set design rules and financially benefit from densification;

2. Replace the triple lock on pensions with a smoothed earning link;

3. Unfreeze income tax thresholds;

4. Abolish stamp duty;

5. Remove the bias towards the university system by offering personal development loans to school leavers who do not attend university of £6,000 per annum over three years.

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

“The country’s political incentive structures are in urgent need of reform. Politicians too often shy away from taking this challenge on, certain it will lose them votes, and are willing to kick the can down the road for the sake of electoral expediency. 

“This kind of thinking is not only holding the country back, but is politically disastrous in the long term. It is not just that younger generations are crying out for new homes, better infrastructure, more opportunities and higher wages. Continuing to fail in any of these areas will have immense consequences for the entire country — including the current beneficiaries of intergenerational inequality. Without a growing economy and a productive working population, we will be forced into paying ever higher taxes for decaying public services. The best time for these reforms was yesterday. The next best time is today.”

METHODOLOGY:

Research Lead

Polling was conducted by Dr Michael Turner, Director at Freshwater Strategy, and Fellow of the Adam Smith Institute.

Fieldwork Dates

21-25 September 2022.

Data Collection Method

The survey was conducted online. 

Population Sampled

Adult residents living in Great Britain.

Sample Size

n = 1,001

Weighting

Data are weighted to match the profile of the adult population living in Great Britain. 

Margin of Error

The maximum margin of error for this poll is +/- 3.6% when analysing topline results.

-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.

James Dickson is an independent researcher and commentator and author of the Himbonomics substack newsletter.

Dr Michael Turner is Director at Freshwater Strategy and a Fellow at the Adam Smith Institute.

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.

Image from Wooden Earth - https://www.woodenearth.com/

Britain is Broken says President of the Adam Smith Institute

It is evident that many institutions and policies in the UK simply do not work says Dr Madsen Pirie

In a new discussion paper, Dr Madsen Pirie, the President of the Adam Smith Institute (ASI) outlines the 16 major institutions and policy areas which are not working, including:

1. The Bank of England 

2. The Treasury

3. Transport

4. The NHS

5. Education

6. Justice

7. Immigration 

8. Housing

9. Social Care

10.  Childcare

11. Welfare

12.  The Pension System

13.  Energy

14.  Regulation

15.  Civil Service

16.  Government

Within the paper, Dr Pirie draws parallels between the present day and the 1970s and outlines his concerns that the current direction of travel is jeopardising the future of young people in particular. 

-ENDS- 

Notes to editors:  

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

Dr Madsen Pirie is the President and Co-founder of the Adam Smith Institute. 

The paper will be live on the Adam Smith Institute website from 10pm 30th November 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 the Chancellor's Autumn Statement

In response to the Chancellor’s Autumn Statement, Daniel Pryor, Head of Research at the Adam Smith Institute, said:

“Today's statement was a return to managed decline.

Entering a recession promising the highest tax burden in three-quarters of a century does not strike the right balance between fiscal credibility and growth. The Chancellor highlighted the harms of inflation, then added fuel to fire by threatening yet more tax threshold freezes—undermining productivity whilst hitting the pockets of people across the income spectrum.  

There were some positive steps on making support for vulnerable households more targeted, but little in the way of genuine pro-growth reform: the only sustainable way of tackling debt, improving public services and giving people the chance of a better future. 

In five years time, the average household will be poorer than they were before the pandemic. If we want to avoid that scenario, the Conservative Party must address the imagination deficit at the heart of British politics.”

In response to the Chancellor’s welfare announcements, Emily Fielder, Head of Communications at the Adam Smith Institute, said: 

“The Chancellor’s decision to move towards a more targeted energy support system is long overdue. The combined approach of targeted cash transfers and benefits uprating protects vulnerable households and moves away from unnecessary subsidies for those on higher incomes. However, the Government should also be means-testing its untargeted £300 payment to pensioners—an unnecessary giveaway to many affluent households in an otherwise stark statement.

The Chancellor also promised targeted energy support for businesses. As we have previously highlighted, this should take the form of extensive government-backed loans, rather than further tinkering with business rates or continuing energy price freezes.” 

Notes to editors: 

For further comments or to arrange an interview, contact our press line, Emily Fielder, emily@adamsmith.org | +44 7584 778207

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.

Break Up the Home Office

Split the Home Office into two new, more focused Departments, says think-tank

• The Home Office has presided over numerous policy failures, and shows no signs of improving.

• The Department’s remit is too wide, and the political team at the top is not scaled to the size of the tasks confronting it. Inevitably the Home Secretary of the day over-promises and under-delivers.

• The Home Office should be split into two more manageable departments; Immigration and Security.

• Rishi Sunak’s Ten-Point Plan for Immigration concluded with “commissioning work to look at more fundamental Home Office and Border Force reform.” This would be a good place to start. 

A new report, A Broken Home: Why It’s Time to Split up the Home Office, from the Adam Smith Institute (ASI) outlines how the Home Office has been facing criticism from those on both the left and right of politics on its handling of a wide range of issues, including channel crossings and police failings. The principal problem is not that it is staffed by bad people. The Department’s remit is too wide and the political team at the top is not scaled to the size of the tasks for which it is responsible. The Ministry of Justice has a similar number of political staff, despite the much smaller Whitehall operation those working there need to oversee. The outcome is that the Home Office often makes no forward movement on major policy agendas at all. Secretaries of State make bold promises and then under-deliver, creating a gap between rhetoric and reality which both undermines public faith in Government and the Conservative’s reputation on law and order. 

Report author, Henry Hill, argues that the Home Office should be broken up into two separate departments- an Immigration Department and a Security Department. The former would be responsible for immigration policy and enforcement, asylum, passports and the Home Secretary’s existing broad powers to set immigration rules. The latter would be responsible for policing, counter-terrorism and the security services. 

The chief advantage of this reform would not be that it would automatically produce any particular change in policy. But it would mean that each Department would have a narrower and more coherent portfolio of responsibilities, and would be able to get on with huge policy challenges, including MET police reform, small boats and security. It would also improve accountability to Parliament, as Ministers would be able to have a much clearer oversight over the Department’s work. 

Henry Hill, Deputy editor at ConservativeHome and report author said:

“Today's Home Office is a relic from an era when government was smaller and departments fewer. It oversees too much, and encourages secretaries of state to try and micro-manage controversial issues. On immigration, policing and security we need better policy, faster delivery, and clearer accountability - and breaking up this leviathan is the way to do it.”

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

“For far too long, the Home Office has failed to make substantial progress on vital policy areas which have real quality-of-life implications. Instead it has continued to over-promise and under-deliver, undermining faith in our institutions. It is high time that this sprawling empire is broken up. The new Prime Minister now has the opportunity to deliver real reform and create a more efficient government.” 

-ENDS- 

Notes to editors:  

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

Henry Hill is the Deputy Editor of ConservativeHome. He also writes widely for other outlets and was the co-author, with Andrew Yong, of the ASI’s previous paper ‘Global Britons: A Fairer Path to British Citizenship.’

The report will be live on the Adam Smith Institute website from 10pm Thursday 27th October 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 Mini-Budget Reversal

In response to Chancellor Jeremy Hunt’s statement on the Mini-Budget,  Emily Fielder, Head of Communications at the Adam Smith Institute, said:

“The Chancellor has said that there will be difficult decisions on tax and spend in the coming years as we move towards a more secure financial footing. But there is plenty this Government can do which doesn’t involve changing tax thresholds or spending pledges ––moving forward with supply-side regulatory reforms would boost economic growth and activity at a time when it is desperately needed.

The decision to properly target the energy price guarantee from April is welcome. Whilst it is right that the Government continues to support the most vulnerable households and businesses over a period of high energy prices, it should never have subsidised the energy use of affluent households at such a vast cost to taxpayers.” 

Notes to editors: 

For further comments or to arrange an interview, contact our press line, Emily Fielder, emily@adamsmith.org | +44 7584 778207

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’ Party Conference Speech

Commenting on Prime Minister Liz Truss’ final speech at Conservative Party Conference 2022, Daniel Pryor, Head of Research at the Adam Smith Institute, said:

“After a week of difficulties, the Prime Minister has used her speech to reset, reaffirm, and reassure the Party.

Growth, freedom, and a renewed belief in British enterprise is a welcome shift away from years of higher taxes and economic stagnation. Rather than detract from her message, hecklers helped embody the ‘anti-growth coalition’ the Prime Minister referred to. But while these mantras signal an important change in our economic approach, it remains to be seen if she can ‘deliver, deliver, deliver’ on her promise. 

Beyond the rhetoric, it’s vital that she follows through quickly with policies that focus on making work pay, supercharge investment and see through planning reform to make infrastructure and housebuilding possible, whilst giving direct support to those who need it most.”

Notes to editors: 

For further comments or to arrange an interview, contact our press line, Emily Fielder, emily@adamsmith.org | +44 7584 778207

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.

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.