Think-Tank Backs Pay-As-You-Throw

Friday 7 March

According to a new report from the Adam Smith Institute, The Waste of Nations by Gordon Hector, pay-as-you-throw (PAYT) waste charges are the best way to encourage recycling and to boost profitable waste businesses.

The report stresses that PAYT must not be used as a 'dustbin tax' and that its introduction must be accompanied by a corresponding fall in council tax. Evidence from Holland, Ireland and Germany suggests that PAYT should not increase household bills and that, indeed, it may offer an opportunity to reduce them.

According to the report:

• The UK is lagging behind in recycling, sometimes dubbed the 'dustbin of Europe'.
  

• Recycling is good for the environment because it reduces the need for unpopular landfill sites and incinerators and can prompt emissions savings of millions of tonnes a year. It is good economics too, because it allows us to get value from things we would otherwise bury in the ground.
  

• Research from the US suggests a move to PAYT would reduce landfill by 16-17%, increase recycling by 50%, and lead to a source reduction in waste of around 16%.
  

• PAYT would encourage consumers to demand less unnecessary packaging and more recyclables from producers and retailers. Such consumer-led environmentalism is far more effective than government regulation.
  

The report also calls for the full liberalization of the refuse collection sector, so that private companies would have to compete for customers. Such a move would keep prices down and increase customer satisfaction. It would also lead to innovation and encourage refuse collectors to recycle more waste.

As the ASI's policy director, Tom Clougherty, says:

"The government's proposals for variable waste charging have run into widespread opposition because they are half-baked and ill thought out. The ASI's plan is entirely different. Liberalizing refuse collection and introducing pay-as-you-throw charging would dramatically increase recycling and help the environment, but it would also be an opportunity to reduce taxes, save money, and increase the quality of a vital service."

The final section of the report argues that recycling should be put on a commercial footing. Recycling facilities and providers should be allowed to merge and consolidate, and the free movement and trade of recyclables should be established. This would allow economies of scale to be established, bringing down the cost of recycling and recycled goods, and ensuring a market for commercially viable businesses in the long run.

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1993

ASI Welcomes Open Sale of the Tote

Wednesday March 5th 2008

The Adam Smith Institute (ASI) welcomes the news that the government is set to heed its advice and put state-owned betting company the Tote up for auction.
 
The Institute's director, Dr Eamonn Butler, said:
 
“The government has finally seen sense after exhausting the other options. Our complaint to the European Commission prevented the government selling the Tote cheaply to a group of well-off racing interests, at a cost of millions of pounds to taxpayers. Selling the Tote at an open auction will get the best possible deal for taxpayers – and might even help Alistair Darling to plug some of the black hole in the government's finances."

The government's original plan was to sell the Tote to the Racing Trust "for the good of racing". But the ASI argued that a discounted sale to a commercial consortium of racecourse owners would not realize the Tote’s true value, and so would damage taxpayers’ interests and distort the existing competitive market in betting.
 
The ASI submitted a formal complaint to the European Commission, arguing that a cut-price sale to racing interests contravened the EU’s competition rules, and constituted an illegal subsidy to industry, banned under the EU treaties.
 
The Commission twice agreed that there was merit in this case, ultimately forcing the government to abandon their plans.

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1994

Fair Trade Is Unfair

Monday 25 February 2008

According to the Adam Smith Institute's latest report, Unfair Trade by Marc Sidwell, Fairtrade Fortnight is little more than a marketing exercise intended to maintain Fairtrade's predominance in an increasingly competitive marketplace for ethically-branded products. The hype is necessary, because there is every reason for the shrewd consumer to make other choices.
 

The report highlights the inconvenient truths about 'Fair' trade:

• Fair trade is unfair. It offers only a very small number of farmers a higher, fixed price for their goods. These higher prices come at the expense of the great majority of farmers, who – unable to qualify for Fairtrade certification – are left even worse off.
  

• Many of the farmers helped by Fairtrade are in Mexico, a relatively developed country. Few are in places like Ethiopia, as people commonly assume.
  

• Fair trade does not aid economic development. It keeps the poor in their place, sustaining uncompetitive farmers on their land and holding back diversification, mechanization, and moves up the value chain. This denies future generations the chance of a better life.
  

• Fair trade helps landowners, rather than the agricultural labourers who suffer the severest poverty. Fairtrade rules actually make it harder for labourers to gain permanent, full-time employment.
  

• Just 10% of the premium consumers pay for Fairtrade actually goes to the producer. People further along the retail chain take the rest.
  

• Four-fifths of the produce sold by Fairtrade-certified farmers ends up in non-Fairtrade goods. At the same time, it is possible that many goods sold as Fairtrade might not actually be Fairtrade at all.
  

• The consumer now has a wide variety of ethical alternatives to Fairtrade, many of which represent more effective ways to fight poverty, increase the poor's standard of living and aid economic development.
  

As the ASI's policy director, Tom Clougherty, says:


"At best, fair trade is a marketing device that does the poor little good. At worst, it may inadvertently be harming some of the planet's most vulnerable people. If we really want to aid international development we should instead work to abolish barriers to trade in the rich world, and help the developing world to do the same. Free trade is the most effective poverty reduction strategy the world has ever seen."

 
You can download the report as a PDF here: http://www.adamsmith.org/images/pdf/unfair_trade.pdf

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1992

Just-Food: Fairtrade leaving farmers “worse off” - think-tank

Febuary 25 2008

Demand for Fairtrade products may be soaring in the UK but the scheme is leaving Third World farmers worse off and does not aid economic development, a UK think-tank has claimed.

A report by the Adam Smith Institute claimed the Fairtrade brand is a "nice idea" but questioned whether it helped farmers. 

"There are a number of inconvenient truths about Fairtrade," the institute's Marc Sidwell said. "Indeed, on closer inspection it may not be that fair at all. It only offers a very small number of farmers a higher fixed price for their goods."

Sidwell added: "Given the way markets work, these higher prices come at the expense of many other farmers who, unable to qualify for Fairtrade certification, are left even worse off."

The report, which coincides with the launch of Fairtrade Fortnight, said the brand sustains uncompetitive farmers on their land, holding back diversification, mechanisation and denies future generations the chance of a better life.

Fairtrade is a brand competing with other ethical schemes and charities for people's money, the report claimed.

"Fairtrade's success rests on its skilful advertising and its ability to persuade corporations, schools, towns and even nations to 'go Fairtrade'," Sidwell said. "But when you look at the evidence it is clear that for all its good intentions, Fairtrade is not the only way to make a difference, and it is not the best way either."

Published by Just-Food here

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2064

Old Teaser

Taking Britain From Welfare To Work

Monday 5 November

In response to a government consultation paper, the free-market Adam Smith Institute has published a new report - Working Welfare – which calls for a radical shake-up of welfare policy  in the UK, making work central to the benefits system. 

According to the Department of Work and Pensions, over three million working-age Britons  have been on benefits for over a year. As the ASI report makes clear, worklessness breeds inter-generational dependency, health problems and crime, among other social ills. By actively deterring people from entering work, welfare is hurting the very people it was designed to  help.  

Under the Institute's plans, all working age people not meeting national disability criteria  would face "immediate work requirements". This requirement would be backed with tough sanctions – "no work, no benefits" – and any absence from mandated work without good cause would trigger a  pro rata reduction in benefit payments. 

For those unable to find a job, subsidized work, work experience, or community service would  be available. Those with serious educational deficiencies would receive training and those suffering from drug or alcohol dependency would be required to receive treatment.  

Similar reforms in the US, which were signed into law by President Clinton in 1994, reduced welfare rolls by half, from 5.5 percent in 1994 to just 2.1 percent in 2000. At the same time, the average income of the poorest 20 percent of families rose and child poverty declined  significantly.  

The ASI proposals would also revolutionize the delivery of welfare. Responsibility for its provision and administration would be devolved to local agencies, which would be paid according to results. Agencies would be rewarded for getting people into work for a set period  of time, ensuring an ongoing and personalised service for jobseekers. 

According to the report's author, Katharine Hirst, the government's approach to reform has  been too timid:   

Gradual change may appear to be a step in the right direction, but can also create  confusion and contradictory pressures rather than improving things. The time has come for a radical overhaul of the benefits system. If we really want to enhance self-dependence, provide a safety net for the genuinely needy and tackle child poverty,  nothing less will suffice. 

The report also advocates raising the personal income tax allowance to £12,000, to tackle high  effective marginal tax rates for those trying to enter the workforce, and to make life easier for those with low incomes.  

ASI President Dr Madsen Pirie points out that, "In welfare policy, tinkering has been the order of the day.  Lacking any coherent vision of what welfare should aim to achieve, governments of various complexions have merely shuffled the rules and tweaked a system that is socially toxic  to many of its recipients.  The ASI report shows a clear vision of what welfare should be like in future, and sets out the stages by which it can be taken there." 

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1991

Give Parents Open Access to Schools

Monday 1 October

Both major parties must be far more radical in their approach to education reform, says a new report from the Adam Smith Institute. Inspired by Sweden's experience, the report calls for the  UK to implement a universal open access scheme, which would allow parents to send their children to any school of their choice – whether state, private or religious – and make these schools eligible for government funding on a per–pupil basis. Two conditions must be met: the  schools must not charge additional fees, and must accept pupils on a first-come-first-served basis. 

"Our education system is not fit for purpose", the report begins, "too many of our children leave school without the skills they need for life, work, or further education."  One in every five adults in the UK is functionally illiterate. English students perform poorly in maths compared  with those in other developed countries. This is a tragic waste.

The disadvantaged suffer most. While the wealthy can afford to send their children to a private  school, or move to the catchment area of a good state school, the disadvantaged have no choice but to have their children assigned to a school by their Local Education Authority, regardless of its quality. As a result, social mobility in the UK has been declining. If this trend is to be  reversed, the UK's education system desperately needs a "thorough-going reform". 

The UK need not look far for inspiration.  Fifteen years after Sweden implemented its own open  access system, it is clear the reform has been a great success. New, affordable educational possibilities opened up to children from disadvantaged families. Swedish state schools were faced with having to compete in a more vibrant environment, and their quality improved as a  result. Thanks to its spectacular success, the open access scheme is now valued by parents, and embraced by all major political parties.  

Based on the Swedish reforms, the paper recommends the following measures be adopted in Britain: 

1) Let parents choose the best school for their children. Open access means letting parents send their children to the school of their choice. So long as schools accept pupils  on a first-come-first-served basis and do not charge any additional fees, they should receive state funding on a per-pupil basis – regardless of whether they are state-run, independent, or religious. 

2) Make it easier to establish new schools. The Department for Children, Schools and Families should approve the establishment of any new school, provided it meets basic  civic and teaching requirements and would not charge fees.

3) Abolish the surplus places policy, which stops good schools from expanding, or new  ones being established, when there are spare places at another school in the area.

4) Simplify the national curriculum to allow innovation and personalized teaching.  Teachers must be freed from central control and bureaucracy, and allowed to do their job.

Nothing is more important for the future of the UK than improving our education system. The Swedish example shows us that it is possible to encourage the growth of new schools, improve the quality of existing ones, and create a dynamic and innovative school system in which  teachers are highly motivated and students receive the very best education. The UK's children deserve no less.  

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2000

ASI Calls For Tax Simplification

Sunday 16 September 2007

"The UK tax system is well beyond the point at which complexity itself imposes costs and disincentives", says a new report from the Adam Smith Institute (ASI). At 9,973 pages, the UK's tax code is now the longest in the world and, according to KPMG, its administrative burden costs the UK £5.1bn a year.

The report argues that the Treasury should embark upon a sustained programme of tax simplification. Firstly, this would let people know their liabilities and assent to them – making clear the duties of citizenship and allowing individuals to feel they are partners with, not servants of, government. Secondly, "tax simplification can lead to lower taxes." Lower and simpler taxes stimulate growth by discouraging avoidance and creating greater incentives to industry. "The net effect is that the same revenue, or more, can be raised from a lower overall rate than was taken from the higher rate with its added complexities."

To this end, the report recommends:

·     Raising the personal allowance to half the average wage (about £12,000 a year). Only income earned above that level would be taxed. This would end most of the poverty traps of the present welfare system.

·     The vastly over-complicated tax credit system should be abolished, and replaced with something much simpler. The innumerable tax exemptions that litter the system should also be scrapped.

·     National Insurance should be treated as income tax, and calculated on the same rules and base levels as income tax. The cap on NI payments would be lifted, with top rate income tax payers paying a simple percentage without limit. Ultimately, the separate status of NI should be abolished altogether.

·     All income should be taxed on the same basis, whether it comes from earnings, investment dividends, or capital gains.

·     The arcane and complicated rules for calculating corporation tax should be overhauled. Business profit should be the basis of tax liability, rendering legions of pen pushers and number crunchers unnecessary.

·     Pension contributions should be made from taxed income, with the government matching contributions up to a set level. Growth of the fund should not be taxed, nor should any income subsequently drawn from it.

·     The death tax should be abolished.

ASI President Dr Madsen Pirie comments: "There is no doubt that a tax simplification programme would increase the UK's competitiveness and its economic growth. It would create jobs and wealth, as well as easing the burden which complexity imposes. The UK could easily and rapidly become the tax haven of choice."

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1989

Alternative Vision For Troubled EU Constitution

Friday September 7th 2007

The Adam Smith Institute (ASI) is pleased to announce that John Hopkins has won the Institute's £1000 prize for the best draft EU Constitution under 3000 words in length.

The contest was inspired by widespread and growing concern that both the original rejected constitution and the new draft treaty are far too long and complex to be comprehensible to the citizens of EU member states. The new draft Treaty (English version) is 67,000 words long. The US Constitution, by contrast, is just 7,700 words long.
 
The ASI is not impressed by the argument that the new draft Treaty accumulates and amends previous treaties, and therefore must be a lengthy document. The bureaucratic fudge of sheltering in past verbosity is lamentable. The purpose of the treaty should simply be to state what the EU is for, and what common principles member states are accepting.

We do not accept the argument that the new EU draft is merely an 'amending treaty' and not a 'Constitution' requiring a UK referendum. The original text, rejected by the French and Dutch electorates, and the new draft are substantially the same. Any attempt to argue otherwise is disingenuous.

Our competition had a range of entries broadly spanning the main difference of opinion, namely whether the EU should be limited to economic matters (a single internal market with open competition under standardised rules) or should embrace social and political convergence as well.  Whilst the ASI embraces the former view, we were looking for the most coherent and professional approach, succinctly expressed.  

The full text of John Hopkins' 2094-word constitution is attached.  His key points are:

    a)   The EU should be a voluntary confederation of democracies. A high degree of consent means that         there should also be considerable scope for opt-out.

    b)   “The objectives of the Union are:

        (1) To prevent citizens, organizations or governments of one member state from doing harm to the health, wealth, liberty or environment of others in other member states.

        (2) The provision of public works and institutions which private enterprise and individual member states cannot provide."

   c) “The Union shall have exclusive competence in the following areas:

        (1) Customs Union

        (2) Competition rules necessary for the functioning of the common market

        (3) Common Commercial Policy

        (4) Monetary policy for member states using the common currency.

    The Union may produce binding Law in the following area of cross-border competence:

        (5) Environment

        (6) Transport

        (7) Consumer protection

        (8) Internal market."

    “The Union shall ensure a common market with free movement of persons, services, goods and capital, and freedom of establishment. Discrimination on grounds of nationality is prohibited."

   d) The Central Bank and Euro should continue much as at present.


The Institute is grateful to all those who took part.  They provided valuable and interesting ideas that could be of great service to Europe's politicians, if only they were more open to informed debate. 

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1990

Tax Freedom Day 2007 Will Be 1 June

Tax Freedom Day – the point in the year where average taxpayers have earned enough to cover all their taxes and at last can start earning for themselves – will fall on 1 June this year. That is two days later than in 2005, and over a week later than in 2003.

The Treasury now takes over 40% of the National Income in taxes – income tax, VAT, capital taxes, company taxes, inheritance taxes, and all the rest. That is 152 days’ worth of the average taxpayer's annual wages.

Despite Gordon Brown’s avowed ‘prudence’, the tax burden rose as soon as he took office, to near-record levels in 2000-01. Rapid economic growth then saw wages rising faster than taxes, but over the last four years, the burden has begun to rise rapidly again.

The tax burden is also a postcode lottery. Taxpayers in Wales work eight days less for the tax-collectors than the national average (until 23 May), but Northern Ireland residents have to work much longer (until 5 June). Taxpayers in England are spot on the national average (1 June) while those in Scotland enjoy their tax freedom earlier (26 May).
 
There are significant variations within England, too. Lightest taxed are Eastern England and Yorkshire & Humberside, with a Tax Freedom Day of 24 May, and the North East, on 29 May. The West Midlands is relatively lucky with a date of 31 May, while the North-West and South-West taxpayers have to work a day more, until 1 June. Highest taxed are the South-East (3 June) and London (5 June).

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1996

Call For An Independent NHS

Wednesday May 23th 2007

The NHS should be taken out of the political domain altogether, and run by an independent board, according to the Adam Smith Institute.  A YouGov poll taken on the subject shows massive popular support for precisely such a proposal, with 69 percent in favour and only 12 percent against.

The Institute's new Briefing Paper, Depoliticizing the NHS, published today, documents the bewildering and counter-productive range of political initiatives and interference which has wreaked such havoc on our nation's healthcare system.

"Politicians tend to think that the can improve the health service by simply giving orders, or setting targets. But such measures always have perverse effects, distorting clinical priorities and encouraging creative accounting."

The Briefing Paper highlights the shocking fact that "an answer to a parliamentary question revealed that 85% of the money spent by the government on new hospitals had been spent in Labour constituencies. Meanwhile, as hospitals and clinics close all over the country, the health secretary has been accused of intervening to prevent the closure of hospitals in Labour marginal seats." This, says the Institute, is a sign of something seriously wrong.

The Institute's proposal is for a distinguished panel of health professionals to be appointed to run the NHS, to allocate its budget, determine its priorities, and operate it according to medical needs rather than political aims.

"The panel should be appointed by the government after a period of consultation with various divisions of the medical profession to identify people whose professional standing and distinction commands widespread respect."

The NHS budget would be set by Parliament every five years, and up-rated each year in line with inflation.  The ASI's YouGov poll showed that this idea, too, enjoys widespread popular support, with 74 percent in favour.  The suggestion that "the NHS has become a political football" receives 72 percent backing.  The ASI points out that:
 

"It is not just the public that supports this kind of reform - the British Medical Association recently declared themselves in favour of an independently run NHS and Gordon Brown, the next prime minister, is said to be interested in the idea."

The Conservatives, too, are reportedly looking at ways to distance the NHS from political control and interference. " With support from the public, the medical profession, and from across the political divide, this is an idea whose time has come. The nation's healthcare is far too important to be left any longer in the hands of politicians," the report concludes.

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1997