The Chancellor Giveth and The Chancellor Taketh Away

In response to Chancellor Rishi Sunak’s 2022 Spring Statement, Morgan Schondelmeier, Director of Operations at the Adam Smith Institute, said:

At a time when gas prices are only getting higher, we don’t need to be gaslit by a Chancellor who continuously claims to be a low tax fiscal conservative. 

While the Chancellor is clearly paying lip service to conservative principles of low tax and personal responsibility, we are still facing an impending cost of living crisis with too few immediate solutions. 

The big announcement today will undoubtedly be the 1p cut to the basic rate of income tax. Such a cut won’t go into effect until 2024 and Brits need relief now. It’s a cynical ploy to cut tax just in time for the next election, while at the same time hiking tax on workers through National Insurance. In terms of intergenerational inequality, lowering income tax while increasing NIC shifts the tax burden from the old to the young. 

In an ideal world, the Chancellor would have scrapped the planned National Insurance Contribution rise, although it is encouraging to see that he plans to raise the NIC threshold in line with income tax thresholds. This brings more people out of tax entirely, lets us keep more of our own money and creates a more transparent tax system. 

All in all, the Spring Statement leaves a lot to be desired. There are promising mentions of a review of full expensing policy and increasing private sector investment, but more immediate relief for the rising cost of living and our oppressive tax burden are needed.

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In response to Labour’s call for a windfall tax, John Macdonald, Director of Strategy at the Adam Smith Institute said:

The Labour Party should leave its obsession with windfall taxes behind. Appropriating profit from energy companies might make for good political posturing. In reality it is economic nonsense. Sending signals that the Government might take a chunk of cash at a moment’s notice will reduce the available amount of investment now and discourage it in future.

This is to say nothing of the current energy crisis - only a competitive energy market can channel investment into improving storage capacity, efficient distribution or increasing supply, and ultimately bring down wholesale prices.

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In response to the Government’s pledge to increase the Household Support Fund, Morgan Schondelmeier, Director of Operations at the Adam Smith Institute, said:

“We welcome additional support for the most vulnerable in this country, but an increase to the Household Support Fund goes nowhere near far enough in providing immediate, targeted, individualised support for those on low incomes. It doesn’t put money directly into the hands of household decision-makers, but instead leaves discretionary power with local government. Recipients of means-tested benefits are facing huge hikes to the cost of living without any substantial help from the Government—a disgraceful abdication of responsibility.”

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In response to the Chancellor’s promise to review taxes on business capital investment, Daniel Pryor, Head of Research at the Adam Smith Institute, said: 

“Cutting the UK's eyewatering taxes on business investment is key to addressing our long-standing productivity crisis. When the superdeduction comes to an end, it's vital that the Chancellor commits to abolishing the 'factory tax' in the Autumn Budget—allowing businesses to immediately write off the cost of investments against their tax bill. 

Doing so would supercharge investment, kickstart growth and boost wages whilst levelling up our tax rules so they no longer punish manufacturing firms which tend to be based in the North and Midlands.”

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Notes to editors:  

For further comments or to arrange an interview, contact Emily Fielder, emily@adamsmith.org | 07584778207.

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.

Go for Growth and Cut Taxes to Ease the Cost of Living

Provide a one-off cash payment to low-income households, lower taxes, and pursue a pro-growth agenda to ease the cost of living crisis, says think-tank

• Britain has been plunged into a cost of living crisis, driven by inflation, an increasingly heavy tax burden, and stagnant wages.

• The impact of this will be felt most acutely by lower-income households. Measures to ease the cost of living should therefore be targeted towards those most in need. 

• The Government should pursue a pro-growth strategy and lower tax and spend in order to reduce government debt and the cost of living. 

A new report, Pulling Out All The Stops: How the Government Can Go for Growth and Bring Down the Cost of Living from the Adam Smith Institute (ASI) argues that the Government should provide targeted support to lower-income households, resist calls to raise taxes, and pursue a pro-growth agenda in order to reduce both the cost of living and government debt. 

The report’s lead author, John Macdonald, highlights that the UK is currently experiencing a deadly combination of inflation and low productivity, leading to spiralling costs and government debt. A greater percentage of pay is now being spent on goods, both as a result of inflation and because taxpayers are retaining less of their money. The Government’s high-tax, high-spend agenda will only exacerbate this crisis. The goal instead should be to move towards post-Covid transition to boosting growth; more economic activity leads to increased wages and greater revenue for the Treasury. 

The paper outlines a number of measures to cushion the impact of the cost of living crisis and increase economic growth, including targeted support for lower-income households, reducing the tax burden, and reforming childcare regulation to ease the burden on working families. 

The report makes the following recommendations:

1. Consider proposals for a one-off payment to those hit hardest by the rise in the cost of living, rather than pursue more complicated rebate methods.

2. End the moratorium on fracking so that British businesses have extra time to reach Net Zero by supplying and using this cleaner, cheaper and more efficient form of energy. 

3. Cancel the National Insurance hike to prevent British taxpayers becoming trapped in a low wage, high tax economy. Failing that, increase the threshold for paying employee NI.

4. Unfreeze tax thresholds, and index them to inflation.

5. Remove the student loan write-off period, lower the additional interest rate and scrap  the proposed lowering of the threshold for re-payments. This would shift the fiscal burden onto the individual who undertook the degree, and would result in a lower default rate. 

6. Relax the staff:child ratio in order to reduce childcare costs and improve quality of care. 

John Macdonald, Director of Strategy at the Adam Smith Institute and report author said: 

“Pursuing a high spend agenda funded through a heavy tax burden is a fool’s errand at the best of times, let alone during a cost of living crisis. Without a growing economy, rising wages and increased business activity, the Government will find themselves trying to take more from less. Now is the time to let people keep more of their own money and focus on driving down unnecessary costs.”

Notes to editors:  

For further comments or to arrange an interview, contact Emily Fielder, emily@adamsmith.org | 0758 477 8207.

John Macdonald is the Director of Strategy at the Adam Smith Institute. 

Maxwell Marlow is a Development and Research Officer at the Adam Smith Institute, an MA candidate at the LSE, and a Don Lavoie Fellow at the Mercatus Center, George Mason University. 

Charles Bromley-Davenport is a Research Associate at the Adam Smith Institute and Founder of the classical liberal advocacy website friedmanomics.co.uk. 

The report is now live on the Adam Smith Institute website and is available here. 

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.

Extending the Right to Work to asylum seekers is a common sense policy

A letter to the Prime Minister signed by 66 Conservative politicians has called on the Government to consider extending the right to work to asylum seekers and their adult dependents who have been awaiting a decision after six months.

Under current Home Office policy, asylum seekers are prevented from undertaking paid employment for the first twelve months, after which they are restricted to jobs listed on the Shortage Occupation List.

The move has the backing of a broad coalition of Conservative MPs, including Sir Robert Buckland, Steve Baker and Nusrat Ghani. It also has the support of Baroness Ruth Davidson and Lord Johnson, the Prime Minister’s brother.

Lord Bethall today tweeted his support for the Right to Work amendment to the Nationality and Borders Bill, which will be returning to the Commons tomorrow.

In response, Emily Fielder, Head of Communications at the Adam Smith Institute, said:

“Extending the right to work to asylum seekers who have been awaiting a decision for six months is a common sense policy, which would significantly benefit both UK taxpayers and asylum seekers.

Rather than forcing asylum seekers to rely on state benefits, they should be allowed to contribute taxes and integrate fully into the community. By supporting this amendment, Conservative MPs would be standing by their conviction that work is the best route out of poverty.”

The Rt Hon. Sir Robert Buckland QC MP said:

”Given that 60,000 people have waited for longer than six months for a decision on their initial asylum claim, emulating our international partners on the continent and allowing the right to work seems a sensible idea. It will help give the Government some breathing room as they bring about much needed wider asylum reforms.”

Notes to editors:

Lord Bethall’s tweet and a copy of the letter can be found here.

For further comments, or to arrange an interview, contact our press line emily@adamsmith.org | 07584 778207

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.

The Online Safety Bill is an illiberal mess

In response to the news that the Government is introducing the Online Safety Bill in Parliament today, our Head of Research, Daniel Pryor, said:

"The Online Safety Bill was an illiberal, incoherent, anti-innovation mess when it was first introduced as a White Paper in 2019. After nearly 3 years of Parliamentary debate and scrutiny, it is still an illiberal, incoherent, anti-innovation mess.

Wrong-headed rules on "legal but harmful" speech, more regulatory burdens and the threat of enormous fines for tech executives will scare platforms into being more censorious, hurt competition and ruin the internet for millions of Brits. Politicians still don't understand what they're trying to regulate and without major change to this Bill, we will all suffer the consequences of their good intentions."

Notes to editors:

For further comments or to arrange an interview, contact our press line, emily@adamsmith.org | 07584 778207

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.

Help Ukrainians by Reforming the UK’s Immigration System

Boost the UK’s economy and cripple Putin’s war machine by making it easier for Ukrainians and high-skilled Russians and Belarusians to come to the UK, says think-tank

• Russia’s invasion of Ukraine is causing immense suffering for the people of Ukraine, Russia and Belarus.

• An influx of workers from these countries would bring huge economic benefits to the UK.

• An exodus of skilled workers from Russia and Belarus would undermine their economies and build domestic pressure to sue for peace.

A new report, Let Them Come: How the UK Can Help Ukrainians, from the Adam Smith Institute (ASI) argues that the Government should temporarily waive visa requirements for Ukrainian refugees, and make it far easier for highly skilled Russians and Belarusians to come to the UK. This would boost the UK’s economy and international standing, whilst crippling Putin’s war machine and undermining his credibility. 

Report author, Ben Ramanauskas, makes the moral and economic case for encouraging immigration from Ukraine, Russia and Belarus. Ukranians are fleeing from intolerable conflict, whilst Russians and Belarusians are being driven into poverty and are subjected to imprisonment by their authoritarian governments. These migrants could be welcomed to safety in the UK, where they could also contribute positively to the economy. The UK has a shortage of people studying and working in STEM; a gap which could be plugged, bringing with it additional benefits of boosting innovation in sectors such as engineering, technology and Artificial Intelligence. 

As the paper outlines, encouraging highly skilled workers to leave Russia and Belarus would precipitate a decline in productivity and a negative effect on tax revenues in these countries, putting further pressure on Putin’s regime to end the conflict. This would also garner support for the UK and would encourage Russians and Belarusians to play a leading role in the world as part of a liberal, rules-based order. 

The report makes three recommendations:

1. Temporarily waive visa restrictions for all Ukrainians, and carry out security checks once they have safely arrived in the UK, rather than before. Temporary protection should last for at least five years.

2. Make it easier for highly skilled Russians and Belarusians to come to the UK by adding a ‘Target Nation Status’ characteristic to our points-based system, worth 20 points. Remittances should be banned in order to undermine the economies of these countries. 

3. Create a ‘Liberty Pass’ which would provide a fast tracked £1,875 payment to attract highly skilled immigrants from countries involved in the current conflict and potentially other repressive regimes. 

Daniel Pryor, Head of Research at the Adam Smith Institute said: 

“The UK's response to Russia's invasion of Ukraine has so far been positive but doesn't go far enough. Morally, economically and politically, there is a strong case for following the EU in temporarily waiving visa requirements for all Ukrainians. We should also rob Putin's regime of its best and brightest by doing more to attract highly skilled Russians and Belarusians—who have been properly vetted—to our shores. Now is the time to act decisively as Global Britain.”

Ben Ramanauskas, report author, said: 

“The illegal invasion of Ukraine has brought death, destruction, and misery to its people. As such, it is only right that the UK takes a leading role in offering refuge to the people of Ukraine. The Government should go further than its current plan by waiving visa requirements and giving every Ukrainian the opportunity to live, work, study, or claim benefits in the UK for up to five years, with the option to apply for permanent citizenship. 

We should also take this opportunity to reform the UK’s immigration system. The UK should become more welcoming to refugees while also making it easier for talented workers from oppressive regimes to move here. Such a move is not only morally right, it will bring huge economic benefits to the UK, demonstrate to the world that Britain believes in freedom, and weaken the regimes of tyrants such as Putin.”

Notes to editors:  

For further comments or to arrange an interview, contact Emily Fielder, emily@adamsmith.org | 0758 477 8207.

Ben Ramanauskas has worked in numerous roles including public policy, academia, and most recently as an adviser to the UK’s Secretary of State for International Trade.

The report is now live on the Adam Smith Institute website and is available here. 

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.

Privatize space to boost discovery and alleviate poverty

International treaty outlawing property rights in space is unfit for modern world

• Recent technological progress makes space ownership debate more pressing

• The time has come to shift away from a national to an individual focus in space

• A clear system of property rights in space would present vast benefits to humanity

A new report, Space Invaders: Property Rights on the Moon, from the Adam Smith Institute (ASI) argues that creating a clear system of property rights in space could turbocharge scientific discovery and give all of humanity a greater stake in space exploration.

The 1967 UN Outer Space Treaty (OST), which remains in place as the vanguard of space regulation, forbids 'national appropriation' and also, by effect, individual appropriation in space. Although major players in space exploration have recently called for change—with some nations pushing unilaterally for it through domestic legislation—there has been little movement on the ownership question since the OST first came into effect.

Report author Rebecca Lowe takes inspiration from renowned English philosopher John Locke and American political economist Henry George in setting out a detailed framework for how property rights could best be applied to celestial bodies. In an extended case study, the paper explains how rents paid on plots of moon land could be leveraged to benefit the whole of humanity through alleviating poverty on Earth, as well as democratising space travel. 

Under the proposed system, individuals would compete against each other for plots of land on the moon (that have most likely been initially acquired by, or assigned to, particular nations). This competition would consist in paying ‘rent’ for such plots at a rate determined by supply and demand. Rent rebates could be given for improving the condition of land or providing for urgent human needs. Governance would currently depend on international agreement.

The paper concludes by arguing that proceeds from moon rents could be used to democratise space travel, meet current urgent needs and fund future space exploration. It also offers a way of addressing traditional concerns with property rights such as the ‘first come, first served’ problem and the overriding moral priority of addressing urgent human needs.

Rebecca Lowe, report author and former director of FREER, said:

“A clear, morally-justified, and efficient system for assigning and governing property rights in space would present vast benefits that go beyond financial rewards for people who would become owners. Such a system would incentivise responsible stewardship of space, as well as opportunities for new scientific discovery, democratised space exploration, and much more. The creation of such a system is long overdue—progress on this issue is frozen amidst complex legalistic uncertainty. It’s time to find innovative ways to move beyond that.”

Daniel Pryor, Head of Research at the Adam Smith Institute, said: 

“Property rights play a key role in boosting living standards, innovation and human dignity here on Earth. The same would be true if we applied this logic to space, which presents a unique opportunity to start afresh when designing effective rules of ownership. With more countries and companies competing in the space race than ever before, it’s vital for us to move past the outdated thinking of the 1960s and tackle the question of extraterrestrial property rights sooner rather than later.”

Notes to editors:  

For further comments or to arrange an interview, contact John Macdonald, john@adamsmith.org | 0758 477 8207.

Rebecca Lowe works on political and economic research issues as a consultant, is the former director of the FREER think tank, and has just finished writing a PhD thesis on moral property rights. 

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.

Resurrecting the Porn Laws will shaft civil liberties

In response to news that the Government is extending age verification provisions in the Online Safety Bill to all commercial pornography sites, Daniel Pryor, Head of Research at the Adam Smith Institute, said:

"The Government seems determined to shaft civil liberties in its misguided crusade against pornography. Age verification is easily circumvented by any tech-savvy teen with a VPN. Adults would be forced to enter personal information like passport or credit card details—a gift to scammers—and would be left at greater risk of being caught with their pants down in the event of a data breach.

The government should focus on weeding out illegal content online instead of punishing law-abiding Brits. Campaigners have beaten off the porn laws before and they'll do so again."

The Adam Smith Institute’s Repeal the Porn Laws campaign sets out broader objections to the new proposals.

Notes to editors: 

For further comments or to arrange an interview, contact our press line, john@adamsmith.org | 07584 778207

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.

Disaster corporatism will make us poorer

Government needs shrink in size and scope if UK is to ‘Build Back Better’

• State failure lies at the heart of the Covid story, undermining the case for a greater role for government following the crisis

• Businesses must return to their core competencies and avoid ‘Woke Capitalist’ distractions if UK economy is to recover from Covid crisis

• Proponents of ‘Disaster Corporatism’—who use the pandemic as justification for more state involvement in the affairs of businesses—will undermine prosperity and fuel backlash against market economy

A new report, Capitalism after Covid: The Case Against Disaster Corporatism, from the Adam Smith Institute (ASI) argues that as restrictions across the UK are lifted, businesses and governments must return to their proper roles in order to kickstart the post-pandemic recovery.

Activists, academics and politicians from the political left have led calls for greater government intervention in the economy and a move towards ‘stakeholder capitalism’ in the wake of Covid. But these calls ignore the litany of state failures that characterised the crisis and downplay the risks of the corporatist model, as highlighted by the Wirecard scandal.

Report author and ASI Fellow Matthew Lesh argues that in an era of low public confidence in governments and businesses, the state must focus on effectively delivering essential public services and safety. Companies should stick to traditional profit-driven shareholder capitalism rather than pursuing ‘Woke Capitalist’ social objectives that often require political collective action—and often leave firms facing accusations of being cynical and hypocritical.

Although state support for businesses during the crisis was laudable and effective, this should not set a model for how governments should act during normal times. The growing size and scope of the state have wasted taxpayer money, misdirected economic activity, incentivised cronyism, held back competition, and limited human potential. 

The paper concludes by calling for new settlement between the state and private enterprise. It suggests the Government protects competition and free markets, rather than propping up favoured corporations and unproductive ‘zombie companies’. It asks for businesses to remember that the pursuit of profit is socially responsible: satisfying our desires, providing wages and funding public services.

Alexander Stafford MP, Member of Parliament for Rother Valley, said:

“I welcome the Adam Smith Institute’s ‘Capitalism after Covid’ paper, which highlights the importance of safeguarding and promoting the role of free markets, limited government, democracy, and individual rights in our society. Many on the left are exploiting the pandemic to make the case for a bigger state and restrictions on the private sector. However, this paper argues powerfully that for a successful recovery, we must allow our liberal free market system to flourish by business and government playing their proper roles.”

Matthew Lesh, report author and Fellow of the Adam Smith Institute, said:

“Covid has demonstrated the futility in overdependence on the state. We have grown poorer and millions have died across the world. A smaller, more focused state could be much more effective in tackling the issues we face. On the other side of the coin, to recover we need the private sector to flourish, free from excessively interventionist policies and focused on developing innovative products, creating more jobs and delivering profit for shareholders.” 

Daniel Pryor, Head of Research at the Adam Smith Institute, said: 

“From China’s initial cover-up to the painfully slow rollout of mass testing in the UK, Covid-19 has been a stark reminder of government incompetence. We must learn the right lessons from the pandemic and resist the siren song of ‘Disaster Corporatists’, who would use the pandemic to extend state interference in the economy—making us all poorer in the process. Stakeholder capitalism is a recipe for economic stagnation, rampant cronyism and widespread dissatisfaction with businesses. Government should get back to the basics of providing high quality public services while letting the market do what it’s best at: making us all better off.”   

Notes to editors:  

For further comments or to arrange an interview, contact John Macdonald, john@adamsmith.org | 0758 477 8207.

Matthew Lesh is Head of Public Policy at the Institute of Economic Affairs and Fellow of the Adam Smith Institute, where he was formerly Head of Research.

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.

Falling pay gap between CEOs and their employees is nothing to celebrate

Research published today by the High Pay Centre found that the gap between chief executives’ pay and UK average earnings narrowed in 2020.

In response, Daniel Pryor, Head of Research at the Adam Smith Institute, said:

“Most people intuitively grasp why talented footballers get paid a lot and the same rules apply to CEOs. For large companies, a wide array of economic research shows that small differences in top talent have an outsized impact on results. It’s hardly surprising that they’re willing to offer high salaries to attract the very best in an era of global competition. 

It’s vital that British firms have capable leadership: especially as we begin to recover from an economically destructive pandemic. The right decisions at the top mean more innovation, job creation, productivity improvements and wage growth. 

The fact that High Pay Day falls later this year is nothing to celebrate—ordinary Brits aren’t better off as a result. The falling gap between top and median pay seems to have been largely driven by less bonuses being paid out: challenging economic circumstances in the worst months of the pandemic, pressure on firms that received financial support from the government and public relations concerns are all factors that appear to have played a role.”

Notes to editors: 

For further comments or to arrange an interview, contact our press line, info@adamsmith.org | 07584667326

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.

Response to Joint Committee on Draft Online Safety Bill report: still gigantic threat to freedom of speech, privacy and innovation

The Adam Smith Institute’s Head of Research, Matthew Lesh, has responded to the Joint Committee on the Draft Online Safety Bill’s report:

“The joint committee’s recommendations fail to alleviate the gigantic threats posed by the draft Online Safety Bill to freedom of speech, privacy and innovation. The Bill will continue to undermine most fundamental liberties and strangle start-ups in red tape, while failing to address serious crime. The joint committee’s report is based on the entirely incorrect assertion that existing law does not already apply online, it does — the central question is ensuring enforcement not introducing new legislation that undermines our freedoms.

On the removal of ‘Clause 11’:

“It’s welcome that the joint committee is recommending removing ‘Clause 11’, that would have provided extraordinarily broad powers to censor ‘legal but harmful’ speech. But the replacement — defining a series of ‘reasonable foreseeable risks’ — remains worrying. It would still mean speech being less free online compared to offline, particularly with respect to 'psychological distress,’ ‘disinformation’ and speech that a service merely has ‘reasonable grounds to believe’ could be unlawful. Even the new approach, when combined with gigantic fines and potential jail time, will encourage trigger-happy censorship.

On the scope of the proposals:

“Santa Claus is comin’ to town, but that’s no reason to turn the Online Safety Bill into a Christmas tree. The joint committee's recommendations would substantially expand the scope of the legislation from user-to-user services into other areas like scams and pornography. They would also apply much harsher standards to smaller services, thereby undermining start-ups, competition and innovation. The committee even wants to dictate to online services how they can design their services with extraordinary granular detail. If the Bill is to achieve anything, it should be narrowly focused on actual criminal activity, not on side issues.

On age verification:

“The joint committee seems to have short memories with respect to age verification. Just a few years ago the Parliament legislated for, and the government failed to implement, requirements to use a drivers license, passport or credit card to access adult content. Now they want to bring back age verification not only for pornography but also practically any digital service. Age verification raises serious privacy issues and will not prove effective.

For further comments or to arrange an interview, contact John Macdonald, john@adamsmith.org | 07584778207.