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:
(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.
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).
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.
Wednesday May 16th 2007
The Adam Smith Institute today proposes a new body, composed of retired senior judges, to review that state of civil liberties in Britain following the recent spate of legislation. In its Briefing Paper, Safeguarding Civil Liberties, the Institute itemizes how recent government acts have compromised or removed many of the legal protections traditionally enjoyed under common law. These include habeas corpus, right to trial by jury, right to remain silent, freedom from double jeopardy, among many others.
The Institute proposes that a new judicial panel be established, independent of government, to review the effect of recent legislation on long-standing liberties, and to make recommendations as to how the impairment of liberties might be redressed. While the body's recommendations would not have the force of law, it is envisaged that it would be so prestigious that governments would find it impossible to ignore or sideline their pronouncements.
"The liberties review panel would sit, hear witnesses, evidence and argument, and would deliver interim reports on various aspects of our traditional liberties," says the Briefing Paper, and "would establish the broad principles which apply, and under which newly proposed legislation could be challenged." It is proposed that the new body, in addition to reviewing recent legislation, would include within its remit any new legislative proposals which might compromise long-standing liberties.
76 percent support
A YouGov poll was commissioned to ascertain popular support for such a proposal. People were asked "Would you support or oppose a proposal to establish a judicial body, tasked with reviewing the state of civil liberties in Britain, the effect on them of recent legislation, and authorized to make public recommendations of ways to safeguard them?" The results were overwhelmingly in favour. Of those expressing an opinion (more than three-quarters of those polled) 76 percent were in favour of the initiative.*
The ASI makes it clear that this would not solve all the problems faced by our traditional liberties, but it would be a good step towards the restoration and entrenchment of the liberties which were once our birthright.
Monday May 7th 2007
In a new Briefing Paper the Adam Smith Institute has called for an English Parliament, but in a novel form. Unlike proposals which involve a new layer of representatives, a fresh set of elections, and a new building to house it, the ASI proposal uses existing institutions. Under the ASI plan, following the next general election the MPs representing English constituencies should meet in the Palace of Westminster as the Parliament of England, having equivalent powers over health, education, policing and transport as the Scottish Parliament presently has.
They would elect a First Minister, as the Scots do, who would then put together a cabinet which would govern England in the designated areas of responsibility. The UK Parliament would remain responsible UK-wide matters and would control the various departments in charge of them: security and immigration, foreign affairs, international development, defence, employment and social security, energy, constitutional affairs, and tax and the economy.
The English Parliament would meet and do its work in the same building as the UK Parliament, with each of the two bodies meeting at different times. Part of the attraction of the proposal is that it does not involve the expense of a separately-elected body meeting in a separate building. Taxes would continue to be set by the Chancellor of the Exchequer, the revenues collected by HM Revenue & Customs and then divided between the home nations.
The ASI tested the popularity of this proposal by asking YouGov to conduct a survey. That survey found a huge majority in favour. When the 30 percent "don't knows" were eliminated, the figures showed 69 percent in favour, versus 31 percent against, a better than two-to-one majority.* The Institute notes that there is a widespread feeling that the present asymmetrical devolution is widely perceived to be unfair and unsustainable, and suggests that an English Parliament, constituted along the lines suggested, would be the simplest way to redress that unfairness.
Saturday 28th April
The Scottish economy could enjoy record growth if Scotland became independent, leaving the average Scot many thousands of pounds better off each year. This is the finding of a research Briefing Paper published today by the Adam Smith Institute, the free market economic think tank.
The paper, "Independent Scotland: The Road to Riches," is by international economist Gabriel Stein of Lombard Street Research. It examines the comparative performance of Scotland and England, finding that from 1992-2004, Scotland's gross value added grew at 4.7 percent, compared with a UK average of 5.4 percent, giving Scotland only 87 percent of the UK's growth.
If an independent Scotland chose to follow the Republic of Ireland's low-tax route, as SNP leader Alex Salmond has indicated it would, Scotland's growth rate might be expected, over a five-year period, to move closer to Ireland's trend growth rate of 7 percent. Given a further five years of Scottish growth at that trend level, and before diminishing returns set in, Scotland's growth over the ten-year period would put its index 71.5 higher, more than a two-thirds increase in GDP.
By contrast, says Stein, the rest of the UK would be expected to have grown rather less, by just over a quarter. The result would be dramatic for Scotland. Measured in household income per head, Scotland, which started £1,700 behind the rest of the UK, could be expected to be £6,000 ahead of it at the end of that period.
The Adam Smith Institute says that the new research study shows just what can be achieved if countries choose to follow the low tax route to prosperity, a route which took the Republic of Ireland from the poorest country in the EU (per head) to the richest. Scotland, it says, could match that performance.
Saturday 7 April 2007
The majority of EU countries are flouting a European Directive designed to stop them blocking takeovers by companies from other member states, according to the Adam Smith Institute (ASI).
The economic think-tank says that eight of the 25 EU members have failed to adopt the Directive at all, while the majority of the rest have conveniently neglected key parts of it. This means that they can block UK takeovers of their own companies, while the UK has to accept takeovers by theirs.
The Institute’s Regulatory Monitor reports that EU countries, including Italy, Poland and Spain, have completely failed to adopt the European Takeover Directive. Indeed, Spain has clashed repeatedly with Brussels over its moves to prevent the acquisition of Spanish firms by companies from other EU member states. Last year, Spain imposed no less than 19 blocking conditions on the bid by German energy company E.On for the Spanish utility group Endesa.
Meanwhile, many of the seventeen countries who have signed up for the Directive have failed to adopt the key Article 11, which is designed to prevent so-called ‘poison pill’ defences by a target company, and which prevents minority shareholders from having too much control and blocking takeovers.
“The Takeover Directive was supposed to be a key part of the EU’s Financial Services Action Plan," says ASI Senior Fellow Keith Boyfield. “It aimed to increase competition and deliver economies of scale by preventing the petty economic nationalism of EU countries."
“But the practical reality is that many countries have opted out of crucial parts of the Directive, others have not adopted it at all. There is simply no consistency – no level playing field at all."
“This puts countries who do obey the rules, like the UK, at a considerable disadvantage. Frankly, we might well be better off without any EU Takeover Directive at all."
Regulatory threat to London
The failure of Brussels to create a level playing field on company takeovers has increased UK scepticism against the EU’s ambitious Financial Services Action Plan. While the plan aims to extend the European Single Market to insurance and banking, critics say it is too complicated, with at least 42 separate regulatory initiatives.
Regulations being introduced under the Plan include the Markets in Financial Instruments Directive, the Insurance Mediation Directive, and the Second Money Laundering Directive. While the compliance costs of such measures run into the billions, some argue that the net benefits negligible, and perhaps even negative.
Boyfield calculates that complying with the Plan could cost the UK’s important financial market as much as £23.5bn by 2010, and is concerned that this regulatory burden may drive business to other, lower-cost financial centres, in the Far East for example or in tax havens such as Bermuda – and even Paris – as some firms have already threatened.
Even the EU’s own internal market commissioner, Charlie McCreevy, has expressed doubts about the regulations, particularly the Markets in Financial Instruments Directive, which he says could turn into a "nightmare", with each member state interpreting the law in different ways.
Speaking in London recently, Mr McCreevy said: "I fear that there is a real risk that the dream of a single new rule book replacing 27 existing rule books could be turned into a real practical nightmare. This will certainly happen if we end up supplementing the single rule book with the handiwork of a dozen or more gold-platers, with manuals of interpretative guidelines, with a multiplicity of different types of numbers of reporting fields - demanded by 27 different regulators."