The Adam Smith Institute's latest report – Privatization - Reviving the Momentum – calls on the government to embark on a new wave of privatizations, which could net the exchequer in excess of £20bn. Given the worsening state of the economy and the increasing tightness of the public finances, the report notes that such an inflow of funds would be very welcome.
In addition to the revenues generated for the government, a new wave of privatizations would also deliver significant operational benefits, the report says. Previous privatizations have delivered a wide range of improvements, including increased investment, lower prices, greater choice and better service for customers – as well as underpinning billions of pounds worth of economic activity.
The leading privatization candidates identified by the report include the Royal Mail, Channel 4, BBC Worldwide, Scottish Water, Northern Ireland Water, Glas Cymru, the National Air Traffic Control System, as well as government stakes in British Energy and the Nuclear industry.
The report's author, investment analyst Nigel Hawkins, said:
"Privatization in the UK remains unfinished business. The task for Government, of whatever colour, should be to complete it and to reap the many benefits - including proceeds of some £20 billion."
For Sunday’s papers, Sunday 16 March 2008
The Adam Smith Institute has calculated Tax Freedom Day since 1991, and has figures going back to 1963 – when Tax Freedom Day was more than a month earlier, falling on 24 April. For more information and details of how Tax Freedom Day is calculated, visit http://www.adamsmith.org/tax-freedom-day/
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 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.
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.
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:
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
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."
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.
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."