Corbyn's little red book carries a big price tag

Following the release of Labour's manifesto this morning Matthew Lesh, Head of Research at the Adam Smith Institute dives into the manifesto and finds the costs go beyond the costings, and the divisive language used at the launch gives lie to the claim that Corbyn will bring the country together:

“Jeremy Corbyn’s little red book is the most backwards-looking, self-destructive manifesto in Labour’s history. Tens of billions of pounds in higher taxes will scare away entrepreneurs and red tape that will strangle business of all sizes. Everyone will be poorer. Labour is on nobody’s side.

“A higher income tax rate on the rich will scare away job-creating entrepreneurs, higher corporate taxes will discourage businesses from locating and starting in the UK, taxing capital gains and dividends will discourage investment in our economy. Ending tuition fees will mean the poor subsidising the university education of the rich and successful. Rent controls will close our great cities to new occupants with decade-long waiting lists, and discourage house building. Mass social housing will see people stuck in their local area paying rent to landlord Corbyn for their whole lives while crowding out private building that’s just starting to pick up. Scrapping Universal Credit, without any plans for an alternative, will cost billions and encourage welfare dependency. Nationalising everything from the postal service to broadband will cost hundreds of billions, destroy the value of your pension, and lower the quality provided.

“Labour’s industrial relations plans could take us back to the days of double-digit unemployment. The ‘four day work week’ means forcing people to work less and earn less income. Introducing sectorial collective bargaining will leave everyone at the mercy of unions, leaving workers with less choice and fewer job opportunities. Banning ‘zero-hour contracts’ will leave millions of workers with less flexibility at work and threatens Britain's jobs miracle of the past decade."

For further comment or to arrange an interview please contact matt@adamsmith.org, ring 07904099599 or 02072224995.

Liberal Democrats Manifesto: A jump to the left on economics, says ASI

The Adam Smith Institute has today responded to the Liberal Democrats Manifesto announcement.

The Adam Smith Institute’s Head of Research Matthew Lesh said:

“It is disappointing to see the Liberal Democrats becoming increasingly anti-enterprise, promising punishing taxes, more red tape, and higher state spending. The formally orange book is turning into a tinge of dark red.

"While there is welcome news on refugees and drug liberalisation, focusing on harm reduction not punishment, the Liberal Democrats economic policies will hurt Britain’s prosperity. Increasing corporate taxes, forcing workers on boards, and scrapping permitted development rights that have allowed high streets to thrive with more residents, will make us all poorer.

“Seeking to change the purpose of business away from shareholder value will reduce accountability and empower state regulators -- undermining the dynamic free market that allows the country to deliver world class public services.

“The commitment to tax tech companies and create an impractical payment for data will scare away tech entrepreneurs from setting up shop in the U.K. The Uber-riding, Deliveroo-eating generation will be disappointed proposed rules to discourage the sharing economy and flexible work.”

To arrange an interview or further comment, please contact Matt Kilcoyne via email (matt@adamsmith.org) or phone (07904099599).

The Adam Smith Institute responds to the annual CBI conference

The Adam Smith Institute has today responded to speeches at the CBI’s annual conference.

Responding to Boris Johnson’s comments on tax changes at the CBI annual conference, Matt Kilcoyne of the Adam Smith Institute said:  

“The Conservatives plans to reduce National Insurance and urgently review business rates are welcome moves - however, the abandonment of the corporate tax cuts are a retrograde move that cedes ground to socialists as they seek power in next month’s election. 

“Corporation tax is a particularly poor way of raising government revenue. By taxing capital, the government deters firms from investing in their workforce, lowering productivity and wages — nearly 60% gets passed onto lower wages. Britain suffers from a productivity puzzle, and businesses have held back investment already thanks to uncertainty over the Brexit deal. The last thing the economy needs is a tax rate that deters investment. 

“Business rates may stir passion on the campaign trail, but the evidence just isn't there to support a review. A review will find what the last six reviews found, that the system is working well for the treasury. The real problem with business rates is that they fall on property and not land. Any improvement to a shop or pub simply sees an increase in the rate payable and this deters investment. As it stands, any rate cut will just translate into higher rents. A cut in business rates is a subsidy and a sop to landlords.”

In response to Jeremy Corbyn’s remarks, Matt Kilcoyne said:

”Corbyn has come out with warm weasel words about a decent society to those gathered at the CBI's annual conference. But the Labour leader has forgotten that a decent society is not one where the government expropriates private property, nor one where politicians can pinch hundreds of billions from your pension pots through nationalisations and equity grabs, nor is it one where government racks up unsustainable debts that undermine the economic stability of the country.

"Anywhere and everywhere that has tried Corbyn's style of socialism has seen economic collapse and the ruin of the nation. The cost of Corbyn is too much for this country."

To arrange an interview or further comment, please contact Matt Kilcoyne via email (matt@adamsmith.org) or phone (07904099599).

Adam Smith Insitute slams Labour's plan to nationalise broadband

The Adam Smith Institute has today slammed Labour’s costly, ill-thought out proposal to nationalise broadband in the United Kingdom.

Matthew Lesh, Head of Research at the Adam Smith Institute, says Labour’s plans would be disastrous for the country:

“Nationalising broadband would be a total disaster for the British people. It will cost tens of billions, lower service quality and leave millions waiting longer for the rollout of high speed fibre internet and 5G. We shouldn't have to call up Jeremy Corbyn every time the internet goes down.

"The Government shouldn't be paying for a service that the vast majority of us can afford. There are so many other more pressing priorities for taxpayer funds like schools, hospitals and police.

“The key issue in broadband is a lack of competition. The last thing we need is a costly government scheme that will scare away booming private sector investment from companies. Just today TalkTalk put on hold the announcement of plans about FibreNation, a multi-billion pound project to invest in fibre. Labour’s plan will be turning back the clock to a time when Britons had to wait months for a phone line connection from the post office.

To arrange an interview or further comment, please contact Matt Kilcoyne via email (matt@adamsmith.org) or phone (07904099599).

Time to prioritise needs not numbers in immigration

Following the news that the Government has committed to an Australian-style points-based immigration system while scrapping the cap on numbers of migrants, Daniel Pryor welcomes what should be seen as a liberal shift on migration:

Good riddance to a bad policy. The never-achieved net migration target was a relic of a flawed approach to migration that prioritised numbers over needs.

The Government seems to have recognised that ending EU freedom of movement will require a more liberal approach to non-EU immigration. In recent months, we've started to see a move towards more sensible policies, from the welcome reintroduction of the post-study work visa to making it easier for those living abroad to come and work for the NHS.

In light of economic reality and changing public attitudes, the Tories must double down on this progress. A good place to start would be pushing through Boris' amnesty proposals and letting asylum seekers work. Both of these measures would boost the economy, prevent exploitation, cut crime and encourage integration.

To arrange an interview or further comment, please contact Matt Kilcoyne via email (matt@adamsmith.org) or phone (07904099599).

Send vape fears up in smoke

A new paper from the neoliberal think tank the Adam Smith Institute says if the UK Government wants to achieve its aim of a smoke-free generation by 2030 it will need a liberal approach to safer alternatives.

• Britain should not succumb to the same moral panic on vaping as has been seen in America.

• There is widespread misinformation about the relative risk of e-cigarettes. Over two-fifths (43%) of UK smokers do not believe that e-cigarettes are less harmful than tobacco cigarettes.

• There is a very strong correlation between the reduction in cigarette usage and the increase in e-cigarette usage in recent years. According to PHE estimates, up to 57,000 more people have quit a year due to e-cigarettes.

• There are 8.56 million smokers in Great Britain, 4.37 million smokers have tried e-cigarettes but gone back to smoking, while 2.88 million smokers have yet to try a reduced-risk product. This means there is a need to expand information about and access to reduced-risk products like heated tobacco and oral nicotine pouches.

• Among young people (16-24 year olds) the smoking rate has substantially increased in the last few years. In 2016, just 16.6% of young people smoked cigarettes, but this had increased to 23.6% by 2018. Since 2016, vaping in this age group has declined from 5.8% to 4.8%. 

Recent concerns about the safety of vaping from the USA are nothing to worry about for UK users. However, a new report by the Adam Smith Institute argues that Britain is at risk of a similar moral panic on vaping as seen over the pond this summer.

Earlier this year, a cluster of people developed severe and sudden lung injuries after e-cigarette use and several deaths have been linked to this. Following these reports, the U.S Centre for Disease Control’s response discouraging the sale and use of e-cigarettes spread a moral panic without scientific basis. The cause, the paper argues currently is likely to have been the use of unregulated black market e-liquids containing THC (the psychoactive ingredient in cannabis) and other chemicals. 

As e-cigarette use has increased in the UK, the numbers smoking traditional cigarettes has declined markedly. Since 2012 the number of smokers has decreased by 2 million, while e-cigarette use has increased from 800,000 to 3.2 million people in 2018. Over half of vapers are ex-smokers, with nearly four in ten being dual users and less than one in ten coming from a non-smoking background. 

This switching has had marked benefits to those who used to smoke. According to PHE estimates, up to 57,000 more people have quit a year due to e-cigarettes. 

But the Adam Smith Institute says Britain risks going backwards if we don’t keep up and promote switching to safer products, including encouraging further understanding of and a friendly approach to heated tobacco and oral nicotine pouches. Over four in ten smokers do not know that e-cigarettes are less harmful to health than traditional burned tobacco cigarettes. 

Far from the fears about e-cigarettes being a causal gateway into smoking, the report points to evidence that young people are taking up traditional cigarettes at alarming rates again while relatively few opt for e-cigarettes. 

The free market think tank suggests seven ideas that the government may want to implement if they want to achieve their stated goal of a smoke-free society by 2030: 

1. Develop an evidence-based set of generic health claims that can be used by regulated e-cigarette marketers to advertise products; 

2. Commission independent research to develop the evidence base in relation to heated tobacco products, with a view to allowing accurate communication of this information by marketers;

3. Reform counterproductive elements of the EU Tobacco Products Directive post-Brexit; 

4. Implement risk-based taxation to incentivise switching to reduced-risk products, building on the creation of a separate taxation category for heated tobacco; 

5. Legalise snus post-Brexit with a sensible regulatory framework; 

6. Encourage the NHS to take a leadership role in promoting tobacco harm reduction across trusts; 

7. Allow cigarette pack inserts that exclusively advertise reduced-risk products.

Daniel Pryor, author of the report and Head of Programmes at the Adam Smith Institute, said:

“Vaping is a British success story. It gives many smokers an effective and less harmful alternative to cigarettes. Free market innovation and sensible regulation are reducing the demand for cigarettes and saving lives — all the while retaining consumer choice. But there is substantial room for improvement as millions of smokers have yet to try vaping and millions more have tried it but returned to cigarettes. If the Government wants any chance of achieving a 'smoke-free' society by 2030, we urgently need to implement policies that encourage switching from smoking to vaping, and give smokers who don't like vaping more options to switch to other safer products.”

Matthew Lesh, Head of Research at the Adam Smith Institute, says: 

“E-cigarettes are a life-saving innovation that helps people quit cigarettes, but there's so much further to go. If the Government is serious about public health they must take a liberal approach to harm reduction. This means combating misinformation about the harm of e-cigarettes and harnessing the potential of reduced-risk products such as heated tobacco and oral nicotine pouches.”

Notes to editors:  

For further comments or to arrange an interview, contact Matt Kilcoyne, matt@adamsmith.org | 07904 099599.

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.

Don’t railroad it through — rethink HS2

A new paper from the free market, neoliberal think tank the Adam Smith Institute says the UK Government should rethink the controversial HS2 project - and sets out a number of alternatives to save time, save money, and deliver an improved service for rail passengers. The report argues that:

• HS2 risks being a massive black hole for taxpayer money with virtually nothing to show for it returning just 78 pence of value for every £1 of taxpayers' money spent. 

• Under HS2, a number of key northern cities destinations will lose direct trains to London: including Lancaster, Carlisle and Durham.

• The West Coast, East Coast and Midland Main Lines should all be upgraded at current bottlenecks to four tracks to improve capacity.

• The Great Central Railway should be reopened between London and Rugby. 

• Spur lines between the Main Lines and major cities like Birmingham and Manchester have speeds around half of that on the WCML/ECML. Key routes should all be upgraded to high speed electrified lines at 125mph. 

• Open a new London station at Old Oak Common to increase future northern train capacity.

As HS2 continues to run substantially over budget and fail to meet deadlines, rail expert Adrian Quine argues for a rethink on the UK’s rail policy. Ahead of the planned review to HS2, he writes for the Adam Smith Institute and sets out a number of less costly alternatives to the failed project — including upgrading existing routes with new signalling, doubling the number of tracks, reopening mothballed lines, and timetable redesigns.

HS2 is a product of political thinking, poor management and overly complex design. The project has been mismanaged from the outset, with too much emphasis on a misguided belief that it was the only solution to Britain’s ailing rail network, the free market think tank argues. 

The paper argues that the failure to deliver HS2 on-time and on-budget is just another example of a long string of failed rail projects. Including Crossrail, which was allocated a budget of £15.4 billion and was supposed to have opened in December 2018. It has currently spent £17.6 billion and is still under construction with opening delayed until early 2021.

Instead of focussing on a single project with rapidly escalating costs — government should instead admit that the project is no longer fit for purpose. 

HS2 was designed to increase capacity and reduce time spent on trains. The new report details smarter ways of achieving the same outcome for less money and in less time. 

UK rail passenger numbers have doubled in the past 15 years and are predicted to grow substantially going forward. 

There are a number of ways to improve Britain’s railways, without breaking the bank or causing undue disruption to towns and cities. The Adam Smith Institute report sets out a five point plan to replace HS2:

1. Upgrading existing routes with new signalling, doubling the number of tracks, reopening mothballed lines, and timetable redesigns;

2. Building new sections of conventional high speed, including between the mainlines and Manchester, Leeds and Birmingham, and upgrading northern sections of the mainlines;

3. Maximising current infrastructure by targeting bottlenecks on conventional lines,  including building flyovers at key junctions, upgrading the Chiltern route to Birmingham or reopening the southern section of the Great Central railway, raising line speeds to at least 125mph;

4. Upgrading stations in London, Birmingham and Manchester; and

5. Updating train facilities like wifi, seat quality, and charging points to improve passenger experience.

New conventional high speed between major cities like Manchester, Leeds and Birmingham, upgraded northern sections of the mainlines and reduced bottlenecks would, the think tank argues, altogether cost less than the projected £106bn pricetag for HS2.

In addition to existing lines there is potential too to look again at reopening the Great Central route between London and Rugby, with a new London terminus opened at Old Oak Common to increase capacity on northern trains coming into the capital. 

In order to deliver the rail infrastructure of the future, the Government should also look to private sector to fund projects. The Adam Smith Institute says that if private sector players are trying to get involved with a specific project it is an indication it would receive enough patronage to be profitable in its own right.

The paper comes out as the government is reviewing the viability of HS2 as currently envisaged. New options on high speed rail securing the same objectives at a lower cost, at just the right time.

Adrian Quine, rail expert and report author, said:

“HS2 has become the most out of control project of our generation. There is no disputing that the UK needs new rail infrastructure but HS2 does not deliver what it claims. It is ideologically driven, over engineered and will not solve the problems facing rail travellers today.

“Britain does need new lines in places and does need investment in rail to support the economy and social mobility. So much can be achieved with our existing network rather than applying an HS2 sledgehammer to crack a nut.”

Matthew Lesh, Head of Research at the Adam Smith Institute, said:

“HS2 is a massive white elephant - but it’s not too late to abandon this project that’s over budget and missing deadlines before it causes any more national embarrassment. It is broadly accepted that we need to increase capacity on the intercity rail lines, but this can be done without a £106 billion price tag for the taxpayer. 

“We can upgrade bottlenecks in existing lines, build new lines into major cities like Manchester, Birmingham, and Leeds, and reopen unused lines. It’s time to say goodbye to the failed HS2 model and think of innovative, cost-effective solutions to deliver the railway network of the future.” 

Notes to editors:  

For further comments or to arrange an interview, contact Matt Kilcoyne, matt@adamsmith.org | 07904 099599.

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.

Boris can talk the talk, but can he walk the walk?

Boris set out a strong defence of free market economics as the UK leaves the EU. It's a positive vision but one that can't just be words, but needs deeds too. The Adam Smith Institute looks at what the Prime Minister’s speech to Conference said and what it should mean.

Deputy Director of the Adam Smith Institute, Matt Kilcoyne, said:

“It’s refreshing to hear a Conservative Prime Minister backing dynamic free market capitalism and damning failed socialism. If the Prime Minister wants to send Corbyn into orbit, he needs to match his words with deeds. A high skill and low tax economy is possible post Brexit. But it will mean bringing down the fifty year high tax burden on businesses and individuals. It will have to mean reducing trade barriers with the USA, Commonwealth and Asian markets.  

“It will also mean making sure we’re paying our way. It may not fit the zeitgeist, but Britain is still running a deficit, and government debt stands at over £1.8tn. We must not pass the buck to the next generation. The best way to do this is through growth, so it’s good to hear the Prime Minister reiterate his commitment to decreasing red tape, increasing in capital allowances, founding new freeports, and championing free trade.”

Daniel Pryor, Head of Programmes at the Adam Smith Institute, questioned the love-in for the NHS:

“Boris set out a bombastic Conservative case for the NHS, but he left out some crucial stats. Cancer survival rates in the NHS are behind the likes of Australia, Denmark, Ireland, New Zealand and Norway. Healthcare free at the point of use, but using private providers, is an elegant solution to a simple problem. It’s tried and tested right across Europe and it means longer healthier lives. Boris’ love for free market capitalism and the dynamism of service and innovation it provides should extend to our national health rationing service.” 

For further comment, or to arrange an interview, please contact Matt Kilcoyne on 07904099599 or email matt@adamsmith.org

Corbyn's calls would crash the economy

Jeremy Corbyn’s calls for hundreds of billions of pounds of taxpayers’ money to be spent on his pet projects, as well as extra red tape, attacks on the media, and dismissing future trade deals, shows he is still stuck in the past doesn’t understand how the modern economy works. Matthew Kilcoyne, Deputy Director of the Adam Smith Institute, said:

“With a Christmas election looming, today Corbyn delivered his wishlist of unaffordable, uncosted, unworkable policies. He's written a list and obviously not checked it twice, but he's already decided who he thinks is naughty not nice — run a business he doesn't understand and you'll be nationalised, earn a wage he dislikes and he'll tax you the hilt, if you've got a pension or investments in British companies he'll be picking your pocket.

“Corbyn talked about healing the divides in the country, but his rhetoric and plans for the economy suggest nothing but more discord, division, and debt. Undermining patents will undermine care for patients. Drugs are very expensive, time-consuming things to create but the capitalist system has produced more techniques and more medicine than ever before in history — with more people living longer and better lives as a result. Less profit from discovering new medicines now will lead to fewer new medicines in future.

“After promises worth over £500bn in just the one sentence, pension raids, and regulation that will crash the economy, it's clear now that the Tories will never outspend or regulate more than communist Corbyn. At their conference next week the Conservatives have a chance to make the case for sound money, for boosting economic growth through tax cuts, and setting the individual free to live their lives as they wish and not at the beck and call of Corbyn.”

Morgan Schondelmeier on the debt Labour plans on passing to the next generation via Corbyn’s commitments:

“Corbyn's Labour would have you believe that they can provide a world of services and improvements - but we should ask: with what money? His sums don't add up. Either he's lying about the rate at which he will raise your taxes, or he is planning on relying entirely on borrowing from future generations. It's ironic that Corbyn fancies himself the champion of the youth when his policies will see them saddled with unimaginable debt.”

Adam Smith Institute commentary was picked up by The Sun, Daily Mail, on the BBC and on TalkRadio.

For further information, to arrange further comment or an interview, please contact Matt Kilcoyne via email matt@adamsmith.org or ring 07904099599.

When Labour went Caracas

Following a Labour conference filled with bans, spending pledges, and a total economic revolution, the press picked up on some healthy Adam Smith Institute scepticism.

The Sun picked up on our analysis that Labour was now committed to spending more of our taxpayer cash than the Tories in every area (and send borrowing soaring again as they’ll struggle to raise the cash to meet their obligations).

The Telegraph picked up our reminder that Labour’s plans for an enforced four-day working week would mean people put back on the dole after a decade long period of growth in employment, and near record low unemployment.

And the Daily Mail quoted Matthew Kilcoyne warning that Labour’s experiments with our economy would end exactly the same way they do wherever in the world they’re tried: in disaster.