· An Adam Smith Institute / YouGov poll has found that the majority of the British public do not see politicians as well-equipped to make personal decisions for them.
· Most Britons do not think government should be telling them how much to drink or what they should be eating.
· The public also believe that securing a job depends on their own efforts, not the government, with 71% of Brits expressing this view.
In a briefing paper released today by the Adam Smith Institute results of a recent poll show that Britons are not supportive of the growing nanny state. By large majorities the British public reject many aspects of the nanny state and prefer to make their own decisions.
Below are some of the key findings:
· The majority of Brits do not believe government should provide advice on what foods people should eat and how much they should drink. 48% stated this, while only 22% believed government should provide advice.
· Older people (those aged 60 & above) disagreed most strongly with government doing this. Social group C2DE also disagreed with government providing advice on what they eat and drink much more than ABC1. Dr Madsen Pirie, President of the Adam Smith Institute says in response to these findings: “Government has no right or mandate to single out some social groups and patronise them by restricting their free choices.”
· Nearly two out of three Britons disagreed with the statement that ‘politicians and civil servants are well-equipped to make personal decisions on my behalf’.
· Strongest disagreement to this statement came from those aged 60 or over (73%) and in Scotland (71%).
· Well over two to one people in Britain think that their pension will come from their own savings. This was especially the case with Tories where 61% said this was the case, and only 19% disagreeing.
· People in Britain think that getting a job depends on their own efforts, not the government. 71% of Britons agree with this position, versus only 7% who disagree.
· Views on whether it is part of government’s job to make secure housing available break along party lines. Only 21% of Tory voters agree with this, but 48% disagree. It is the opposite with Labour voters where 55% agree that it is the government’s duty to supply secure housing, while only 16% disagree.
· Despite the recent financial crisis, the desire to run their own business at some stage is high amongst young people. Of the 18-24 yr age group, 49% agreed with the statement ‘At some stage I would quite like to run my own business instead of working all my life for other people’, versus 27% who did not. The Scots disagreed with this statement the most with 44% of them not wanting to run their own business, and only 28% wanting to.
The paper's author, Dr Madsen Pirie, welcomes the poll's findings. He says: "They confirm that, despite recent economic troubles, there is still considerable self-confidence among the British, coupled with a determination to make decisions for themselves instead of having them imposed by politicians and bureaucrats."
Dr Pirie particularly welcomes the finding that large numbers of young people aspire to running their own businesses. He comments: "It is new businesses that create the jobs and the future wealth of the nation, and this is a very positive indicator for the nation's future well-being, as well as that of the young people themselves."
ENDS
· All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 1,742 adults. Fieldwork was undertaken between 12th - 13th August 2012. The survey was carried out online. The figures have been weighted and are representative of all GB adults (aged 18+).
· Britons say no to nanny is a paper released by the Adam Smith Institute, the UK’s leading libertarian think tank. You can read the full report at: http://www.adamsmith.org/sites/default/files/research/files/Britons%20sa... You can view the full breakdown of results here: http://www.adamsmith.org/sites/default/files/research/files/Britons%20sa...
--
· Proposed Financial Conduct Authority (FCA) should be abolished
· Executives and auditors should be prosecuted for malpractice
· Watchdogs should boost competition, not box-ticking
In a report today (Friday) the Adam Smith Institute says that George Osborne’s plans to replace the Financial Services Authority – discredited over its mishandling of the banking crisis – will make things even worse, increasing bureaucracy and cost on Britain’s key financial-services sector.
The FCA & PRA
Osborne’s Financial Conduct Authority (FCA) for consumer protection and Prudential Regulatory Authority (PRA) for supervision will overlap and conflict. They will do nothing to promote competition. And they seem likely to adopt the box-ticking culture instead of setting clear rules and punishing offenders.
The FCA is pointless and should go. The Financial Ombudsman Service (FOS) provides better consumer protection. The FOS can protect consumers perfectly well without another regulator second-guessing it.
The PRA is conflicted between saving troubled firms and ensuring the health of the market, where occasional failures are inevitable. It should be cut down and become merely the sniffer dog for Bank of England regulators.
Changes to regulation
Regulation would be stronger if made simpler and broader, with regulators setting broad rules and punishing transgressors. Punishing individual executives, rather than firms, would be more effective to guarantee honesty and compliance. Auditors too should be prosecuted when they fail to spot wrongdoing.
The Bank of England must resist regulatory creep from the EU. EU financial regulation must also be enforced equally, not gold-plated in the UK.
Dr Eamonn Butler, co-author of the report ‘Simple Rules for Complex Systems’ with Tim Ambler, says:
“The Financial Services Authority was so busy ticking boxes that it did not even see the 2007/8 bank crisis unfolding. Recently it was so busy ticking boxes that it did not see the LIBOR scandal brewing, despite clear warnings in the financial press. There is no evidence that George Osborne’s new regulators are going to be any different.
“In fact the new regulators will get under each other’s feet and make things worse. Our financial sector is vital, but Osborne’s plan will strangle it. We need more competition and transparency among banks and financial firms, not more bureaucratic regulation. We don’t need endless inquiries, we need clear rules and clear punishments when they are broken”
ENDS
Notes to editors
· Simple Rules for Complex Systems: Streamlining the UK’s Financial Regulation Regime is a report released by the Adam Smith Institute, the UK’s leading libertarian think tank. You can read the full report at: http://www.adamsmith.org/sites/default/files/research/files/SimpleRulesComplexSystems_ASI.pdf
· Tim Ambler is a senior fellow of the Adam Smith Institute, who co-authored the report with Dr Eamonn Butler, Director of the Adam Smith Institute.
· Tax Freedom Day falls two days later in 2012 as UK re-enters recession
· Austerity measures cut the Cost of Government Day back to 23rd June, seven days earlier than in 2011
The UK's Tax Freedom Day – the day when Britons stop working for the Chancellor and start working for themselves – will fall on 29th May in 2012.
The Adam Smith Institute has calculated that, for 149 days of the year, every penny earned by the average UK resident will be taken by the government in tax. This year’s Tax Freedom Day falls two days later than it did in 2011. (Note: TFD was 28th May in 2011, and this year’s date includes the extra day for the leap year).
Tax Freedom Day falls later this year down to a number of factors. The double-dip recession, the VAT increase from last year, our high personal taxes, as well as fuel duty and stealth taxes, all mean that the government is taking a larger share of our hard-earned income. Britain’s tax burden is still too high and tax cuts are desperately needed to boost economic growth.
This year’s corporation tax receipts are a good example of how tax cuts can pay for themselves. There were large increases in tax revenue from onshore corporation tax, coinciding with the government’s cuts to the headline rate of corporation tax. Reductions in the corporation tax rate have brought the government higher revenues as more companies choose to invest in the UK. By stimulating growth and investment, tax cuts really can pay for themselves.
However, our Tax Freedom Day still falls long after the USA’s, on April 17th and Australia’s, on April 4th. Our only comfort is that our tax burden isn’t quite as high as France’s, which will have to wait until July to celebrate its own Tax Freedom Day. With Hollande now in power, that day could get even later in years to come.
Cost of Government Day
Tax Freedom Day only measures the money actually raised by the government in taxes, not the full amount it spends. The government borrows one pound for every four it raises in taxes, so if the full cost of government is considered the Cost of Government day, this would fall on 23rd June.
Last year’s Cost of Government day fell on 30th June, meaning that the government’s austerity measures have reduced the cost of government by 7 days. But, when we take into account the extra two days tax burden, the net effect of George Osborne’s austerity measures is a measly five days net cut in the burden faced by taxpayers. “A lot of work still needs to be done,” says the Institute, “ to bring down government borrowing and the Chancellor must make more tax cuts to allow greater economic growth.”
ASI's Director, Dr Eamonn Butler, says "Tax Freedom Day, which the Adam Smith Institute has been calculating for 25 years, is the plainest way to show what the tax burden really is. That is why the Treasury hates it. They of course want to conceal how much tax we pay, which is why they are so keen on stealth taxes."
"But we put in every tax, including stealth taxes – income tax, national insurance, council tax, excise duties, air passenger taxes, fuel and vehicle taxes and all the rest – and show just how long the average person has to work to pay their share of them all. The stark truth is that this burden costs us all 149 days of hard labour every year. That's not how long a rich person has to work – it is the time the average person must labour for the tax collectors."
“In the Middle Ages a serf only had to work four months of the year for the feudal landlord, whereas in modern Britain people have to toil five months for Osborne’s tax gatherers.”
"An increasing number of economists believe that Britain's taxes are too high and are choking off recovery. Some politicians say they need to keep taxes high in order to balance the government's books. But the trouble with governments is that they always spend everything they raise in tax – and then as much more as they can get away with through borrowing. Just as the rest of us have had to cut back, so should the government. The UK economy would be a lot healthier for it."
Steve Baker, Conservative MP and member of the executive of the 1922 committee, adds: “Many congratulations to The Adam Smith Institute for making transparent the cost of government and just how far government lives beyond its means. It's time to ask whether society is well served by such a huge state or whether we wouldn't all be better off with institutions which know their limits. A wealth of evidence is currently emerging which suggests we should stop fibrillating and make a near-revolutionary commitment to ending crony capitalism and embracing social cooperation through business.”
· “Sin taxes” on cigarettes and alcohol are designed to boost revenue, not improve public health
· Minimum alcohol pricing will exacerbate poverty and entrench inequality without discouraging binge drinking
· Most of the costs of drinking and smoking fall on individual consumers, not the public. There is no economic justification for increasing taxes on smokers and drinkers.
In a report released today, “The Wages of Sin Taxes”, the Adam Smith Institute condemns the government’s decision to increase taxes on cigarettes and alcohol this year and to introduce minimum alcohol pricing.
The report argues that ‘sin taxes’ (taxes on commodities seen as harmful to health) are ineffective in reducing consumption and are not necessary for recouping lost revenue. The taxes are highly regressive and force the poor to pay for the government’s mishandling of public finances.
The taxes don’t work
Cigarette taxes are now so high that increases drive smokers to the black market instead of discouraging consumption or raising more revenue. Sin taxes are more likely to deter moderate users than heavy users, whose demand for cigarettes and alcohol is relatively inelastic.
A heavy smoker or an alcoholic is unlikely to reduce consumption because of a price rise, making sin taxes an unreliable way of reducing consumption or improving public health.
The victims of cigarette and alcohol duty
Sin taxes hit moderate and heavy users alike. Research has shown that previous rises in cigarette tax have made only 2.3% of smokers quit, with the other 97.7% just paying more in tax.
Taxes on cigarettes and alcohol are regressive and hit the poor hardest. The average smoker spends £1660 a year on cigarettes – 20% of the bottom 10%’s income. Sin taxes are the most regressive indirect taxes, as they tend to target products that are disproportionately consumed by the poor.
Minimum alcohol pricing is also deeply regressive, only affecting the cheaper drinks consumed by the poor. Punishing poor people for enjoying a drink or a cigarette exacerbates poverty and treats the poor like children who need to be controlled by the state.
The public cost of smoking and drinking
Taxes on cigarettes and alcohol have often been justified by studies that claim to estimate the “social cost” of these vices. These studies include intangible costs borne by individual consumers, such as “emotional distress”, lost years of life, and individual expenditures on cigarettes and alcohol. These are personal costs, not social costs. They also fail to include the economic benefits the alcohol and cigarette industry gives to the UK in terms of employment and government revenue. Most of these studies should be relegated to the bin of junk statistics.
In fact, smokers and heavy drinkers do not cost the state more. Though smokers may cost more during their working lives, but non-smokers require greater expenditure in pensions, nursing care and welfare payments. Chronic diseases associated with old age are far more expensive than the lethal diseases associated with smoking and alcoholism. Smokers and drinkers are not a burden on the state, and the myth of saints subsidising sinners should not be used to justify tax rises.
The appeal of ‘sin taxes’
Despite the fact they hurt the poor and do not change consumer consumption, sin taxes have always been popular with governments as a source of revenue.
Sin taxes and minimum alcohol pricing should be recognised for what they really are - stealth taxes and paternalism designed to control the poor.
Chris Snowdon, author of the report and Adam Smith Institute fellow, says:
“Campaigners for sin taxes and minimum pricing often claim that “healthy citizens” are forced to bear the cost of other people’s lifestyles. In fact, the evidence shows that smokers take less from the communal pot than the average Briton and the money raised from alcohol duty comfortably pays for any burden drinking places on public services. If the aim of policy is to make individuals pay their way, the government should slash the beer tax and subsidise cigarettes. We are not seriously suggesting the government does this, but if politicians insist on increasing taxes on these products, they should admit that the purpose is to raise revenue. Essentially the government is forcing the people who are least likely to live to extreme old age to pay for the escalating costs of an ageing population.
“As we show in the report, amongst EU countries there is no relationship between alcohol prices and alcohol related harm, nor is there an association between cigarette prices and smoking rates. The only significant effects that sin taxes have are to make the poor poorer and black marketeers richer.”
9 May 2012
In response to the Queen’s Speech, the Adam Smith Institute gives its reactions to some of the key areas:
Coalition plans need to be far more radical to ensure economic growth
“The government seems determined to tinker around the edges of business and employment regulation. The tepid piecemeal modifications the government is proposing will do virtually nothing to make doing business easier in Britain, and that's the only hope we have of generating a strong recovery. Our export markets are weak and domestic demand is stagnant – without a supply-side revolution that slashes business taxes and employment regulation, we will not see growth.
“The Communications Bill is particularly concerning. One of Britain's best comparative advantages internationally is its dynamic and fast-growing tech sector. So far, the government has talked the talk about protecting this sector, but not walked the walk. The Communications Bill should establish the exceptionalism of the internet and protect it from the stifling regulation that is holding back the rest of the economy.
“Instead of more regulation like the immigration cap and the Communications Bill, the government should be throwing out the regulation book and starting from the ground up. It should determine which regulations are absolutely necessary and ditch the rest. In the meantime, companies with 100 employees or fewer should be encouraged to register their employees as self-employed under contract, to side-step much of the existing employment regulation. Growth won't come from anywhere else, so we can't afford not to unleash British business. Unless we tackle the regulatory blockages, competition and enterprise policy will bear little fruit.” Sam Bowman, Head of Research
On the Groceries Code Adjudicator – what will they think to regulate on next?!
“So now we are going to have an OfGrocer. What will they think of to regulate next? At this rate, almost the entire country will be employed in regulatory quangos, with hardly anyone left to produce things at all.” Dr Eamonn Butler, Director
On the Vickers Report – it won’t cure the problems
“The Vickers Report will not cure the problem of systemic failure. Only more sensible government policy on money, public borrowing and interest rates will do that. It was government excesses on both sides of the Atlantic that caused the false exuberance of the banks that ultimately could not be sustained and produced the inevitable crash. If anything, the proposals will make the situation worse, by making it explicit that taxpayers will bail out the 'retail' banks. The problem is that most governments round the world are broke, including ours, so we are in no position to insure everyone's losses in the event of another banking crisis, perhaps sparked by the collapse of the euro.” Dr Eamonn Butler, Director
On public sector pension reforms – long overdue, and must be in line with private sector
“The bill to reform public service pensions is long overdue, though it will be hugely controversial. But the pensions for public sector workers have to be in line with what people in the private sector can aspire to. Right now, the perceived superiority of public pensions – larger, inflation-proofed, with more generous sickness provisions and available at an earlier age than most private pensions – causes enormous resentment.” Dr Eamonn Butler, Director
On Freedom of Speech – welcome news but they won’t go far enough
“I am pleased to see measures to protect freedom of speech and reform the law of defamation. No doubt the government will not go far enough, but freedom of speech is essential for a healthy public debate on the important issues of the day. Right now people are unable to speak their mind for fear of being prosecuted or sued.” Dr Eamonn Butler, Director
In response to Cameron’s announcement today on plans for a minimum price of 40p per unit of alcohol, Sam Bowman, Head of Research at the Adam Smith Institute argues that it is a terrible policy idea:
“Minimum alcohol pricing is intensely regressive. It only hurts poor and frugal drinkers, leaving drinkers of expensive wines and other drinks untouched. Minimum alcohol pricing is anti-fun Victorian paternalism, and the government is engaged in a misguided moral crusade against drinking.
“In fact, there is no significant drinking problem in Britain. We drink less than we did ten years ago and less than we did one hundred years ago. Britons drink less per person than the French, Germans, Spanish, Belgians and Czechs.
“Minimum alcohol pricing is the beginning of a slippery slope: the minimum pricing rate will creep upwards and affect currently-untouched drinks. All drinkers should oppose this, because by the time the minimum price rises to affect them directly, it will be too late.”
20th February 2012
· There is no evidence that the proposals will reduce consumption or give any public health benefit.
· Plain packaging may lead to an increase in the counterfeit cigarette trade, making cheap tobacco more easily available to young would-be smokers.
· The policy creates a dangerous precedent – plain packaging could be extended to other products such as alcohol and fatty foods.
Ahead of a public consultation on the plain-packaging of cigarettes, the Adam Smith Institute have released a report today (Monday) arguing that the proposals will do nothing for public health and are profoundly illiberal. There is no evidence that plain packaging will have any effect on existing smokers or the smoking rate. The policy represents a desperate attempt by the public health lobby and government officials to be seen as ‘clamping down’ on tobacco in an increasingly maniacal war on smoking.
No Health Benefits
The plain packaging rule is aimed at stopping non-smokers from making a decision to engage in a habit. However, there is no evidence that the colour and logos on a pack of cigarettes is an influencing factor on people choosing to start smoking. Indeed, in the case of increasing the graphic warnings on packs, a comprehensive Canadian study found that “the warnings have not made a discernable impact on smoking prevalence”. Previous studies show that packaging design does little to impact the smoking rate.
Smoking numbers have not changed since 2007 with the rise of the ‘denormalisation’ of tobacco and aggressive anti-smoker policies. Aggressive anti-smoking policies don’t appear to work. Furthermore, plain packaging has been recognised as the weakest and least popular of ASH’s (Action on Health and Smoking) 12 anti-smoking policies proposed in 2008.
The Slippery Slope
Apart from the lack of health benefits there is also the risk that such a policy would be introduced for alcohol, fatty foods or sugary drinks. What happens today in tobacco tends to happen to other unhealthy products tomorrow. In fact, this slippery slope trend has already started in Australia, where they are currently planning to introduce plain packaging. As soon as the Australian government had approved the policy they swiftly moved on to look at how this could be applied to alcohol. Once plain packaging is enshrined in law for tobacco it will be easily extended to other lifestyle choices. That’s why the Adam Smith Institute argues the nanny state juggernaut must be stopped in its tracks.
Counterfeiting and intellectual property
In order to introduce plain packaging the government would need to breach international trade rules and confiscate tobacco companies’ intellectual property, without any proof that this would yield public health benefits. Furthermore, there is reason to believe the policy will have a negative effect both on public health and the tobacco industry.
Already 1 in 9 cigarettes around the world is counterfeit, with counterfeit cigarettes often having two to three times the level of heavy metals found in legitimate brands. Plain packaging will mean the standardising of cigarette packaging, which will help illicit trade. The policy is likely to boost the black market in the UK, offering cheaper cigarettes more likely to lure young and new customers. Any illicit trade can only hinder efforts to reduce smoking, so plain packaging proposals may in reality be damaging for public health.
Plain packaging, if introduced, would be a triumph of a dogmatic minority over the public. It would be an indiscriminate, illiberal law with no basis in evidence, reason or commonsense, whilst masquerading as a public health initiative. Author of the report Plain Packaging: Commercial expression, anti-smoking extremism and the risks of hyper-regulation, Christopher Snowdon, adds:
“It is extraordinary that a government which claims to be against excessive regulation should be contemplating a law which even the provisional wing of the anti-smoking lobby considered unthinkable until very recently. It seems that fanaticism has become institutionalised and a handful of extremists have become the de facto policy makers in matters related to tobacco. The public are gradually waking up to the fact that these neo-prohibitionists will never be satisfied. There is always another cause to campaign for, always new demands to be met. If it is not smoking, it is drinking. If it is not drinking, it is eating.
“Plain packaging is the most absurd, patronising and counterproductive policy yet advanced under the disingenuous pretext of ‘public health’. It will serve only to inconvenience retailers, stigmatise consumers and delight counterfeiters. Those who would dictate what we eat and drink are already incorporating plain packaging into their plans. It’s time to say ‘Enough.’ The monomaniacs have had their own way for too long.”
14 December 2011
An Adam Smith Institute report released today (Wednesday) claims that the failings of the International Financial Reporting Standards (IFRS) allows banks to overstate their profits by recognising years of often very uncertain future income as current profit. As well as having the potential to deceive investors and lead to misallocations of capital, this overstatement of profits benefits company executives whose performance is typically measured and rewarded on this basis. Recent developments in accounting rules have encouraged, rather than tried to prevent this. In addition, the latest developments of the Basel international rules specifying banks capital and liquidity minima only exacerbate the problem.
Though standardised accounting standards effect many sectors, any unintended consequences they throw up are especially problematic for banks, since such failures are magnified by banks taking exposure to each other. Moreover, in the case of banks attracting state bailouts, real transparency is clearly needed to protect the taxpayer.
The Adam Smith Institute report is structured around six shortcomings in the rules governing bank profit and capital reporting, which must be addressed:
With much of the activity in the banking sector aimed at nothing more than exploiting these accounting rules, the report suggests the introduction Steve Baker MP’s bill to bring about simple legislation to reveal the extent of mark-to-market and mark-to-model banking activity.
Author Gordon Kerr adds: “Accurate accounting is at the root of the legal and scrutiny framework; without accurate accounts basic laws are incapable of enforcement. As this report shows, banks have been using loopholes in these rules to inflate their accounts and create illusory profits, which pay for bonuses and short-term gains for their shareholders, but give a very misleading view of their real financial health.
"The accounting regulation system needs radical reform so that banks are not encouraged by the rules and regulations to invest in risky assets to make themselves seem more profitable than they really are. Honest balance sheets are the cornerstone of a healthy financial system – right now, we don't have the transparency we desperately need to avoid a repeat of 2008.”
