Duncan Simpson, Minister Kevin Hollinrake MP, Saqib Bhatti MP and Richard Harpin provided great analyses of our new report Forgotten Medium: Helping Mid-Sized Businesses to Scale Up.
The Forgotten Medium: Helping Mid-Sized Businesses to Scale Up
A new report from the Adam Smith Institute co-authored by our Executive Director, Duncan Simpson; Director of Research, Maxwell Marlow; and Head of Research, Daniel Pryor, finds that medium-sized businesses (MSBs) and their size-specific challenges are often neglected in public policy debates. MSBs are the “Forgotten Medium”.
Focus is skewed towards both the smallest and largest companies in the UK, who benefit from support not offered to the “Forgotten Medium.”
Scaling up MSBs would boost the UK’s growth prospects, in particular in areas of ‘levelling up’ concern.
Over 83% of MSBs are outside London and the South East. Their products are overwhelmingly in non-services sectors such as retail, wholesale, and transport.
The following policy changes can alleviate these problems:
Implement a recommendation of the 2019 Augar Review for a lifelong loan entitlement. This would allow for 4 years of post-18 education over the course of a lifetime, allowing individuals (especially in MSBs) to re-skill.
Enterprise Investment Allowance & Venture Capital Trust schemes should be modified to remove the cliff-edges facing MSBs who partake in them. To keep current and potential investors, the number of employees allowed should be raised to 999 from 249, as well as increasing the turnover and balance sheet totals.
High Potential Individual visas should have a widened list of elite universities and a lower application fee to attract more high-skilled foreign labour.
The Annual Investment Allowance should be made unlimited from its current level of £1 million. This would improve the growth prospects of MSBs, especially in capital intensive industries.
Richard Harpin, entrepreneur and founder of HomeServe, said of the Adam Smith Institute’s new report:
“Successive governments’ growth policies have overly focused on the biggest corporates or the smallest start-ups. Yet it’s Britain’s tens of thousands of medium-sized businesses that are the lifeblood of the economy and key to more jobs, productivity, and growth.
“Growing HomeServe from an idea into a FTSE 100 company took 27 years but making the jump from medium to large was by far the biggest challenge. Just when businesses are on the cusp of something great, the policy support plug gets pulled.
“The Adam Smith Institute is spot on: if we want to catch up with the rest of Europe, Britain needs to rethink how it supports this crucial yet neglected segment of the economy.”
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Notes to editors:
For further comments or to arrange an interview, contact Connor Axiotes, connor@adamsmith.org | 0758 477 8207.
A Global Minimum Corporate Tax could derail Levelling Up
The Adam Smith Institute’s new report Levelling Down reveals why A Global Minimum Corporate Tax could derail Levelling Up
A new report by the Adam Smith Institute’s Senior Fellow, Dr. Tyler Goodspeed, finds that the UK’s decision to rush the implementation of a global minimum corporate tax rate will undermine the Government’s Levelling Up agenda.
Proposals undermine key areas of UK tax policy including investment zones and free ports, business tax credits, and accelerated cost recovery for new capital investments - which makes up over one-third of all UK investment.
The UK’s early implementation of global minimum tax rules is fraught with risk and the Government should carefully scrutinise current proposals to limit potential economic damage.
It will result in the Levelling Down of the UK rather than the Levelling Up.
A new report from the Adam Smith Institute (ASI) and authored by Dr. Tyler Goodspeed finds that the Government's Levelling Up agenda is at serious risk of being derailed by the decision to rush the implementation of a Global Minimum Corporate Tax rate.
There are two important weapons for the UK's Levelling Up agenda: freeports and investment zones. The Prime Minister wants to use these to incentivise firms to set up shop in run-down regions and coasts in the UK that could use the investment and jobs. Incentives include tax credits and breaks, subsidies, tariff-free zones for imports, the lowering of national insurance contributions when hiring new staff, among other attractive levers.
This report finds clear evidence that the structure of this global tax agreement directly undermines the Levelling Up agenda and hurts the competitiveness of key UK industries by tying the hands of the Government.
Former Secretary of State, the Rt. Hon. Jacob Rees-Mogg MP, in reaction to the Adam Smith Institute’s new report:
“Tax competition between countries keeps rates low and increases prosperity. Agreeing high rates among a cabal of developed nations will keep the world poorer.”
The paper recommends the following:
The UK’s early implementation of global minimum tax rules is fraught with risk, and with limited upside. Policymakers should carefully scrutinise current proposals to limit their potential economic damage, damage which will disproportionately impact the poorest regions at most need of Levelling Up, not Levelling Down.
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Notes to editors:
For further comments or to arrange an interview, contact Connor Axiotes, connor@adamsmith.org | 0758 477 8207.
Dr. Tyler Goodspeed is the Kleinheinz Fellow at the Hoover Institution at Stanford University, and a Senior Fellow at the Adam Smith Institute. From 2020 to 2021 he served as Acting Chairman of the U.S. Council of Economic Advisers, having been appointed by the President as a Member of the Council in 2019. Before joining the Council, Dr. Goodspeed was on the Faculty of Economics at the University of Oxford and was a lecturer in economics at King’s College London. He received his B.A., M.A., and Ph.D. from Harvard University; and he received his M.Phil from the University of Cambridge, where he was a Gates Scholar.
Talk of British declinism may be unhelpful politically but it is our economic reality
Our Director of Communications, Connor Axiotes, on the day of the Chancellor’s Growth Speech in the Telegraph:
“Talk of British declinism may be unhelpful politically but it is our economic reality. We have expensive, inefficient public services funded by record high taxation, a chronic undersupply of housing, and a productivity crisis.
“The Chancellor was right when he said a decade of black swan events have impeded British economic progress. But there are measures which are in our control and policy changes can improve our lot.
“This government needs to go further by using the levers at their disposal to turn British declinism around: tackling childcare costs, building houses, lowering the tax burden and increasing private investment in the UK.”
Tame Inflation, Cut Taxes - Connor Axiotes on TalkTV
Our Director of Communications, Connor Axiotes, talks to Peter Cardwell of TalkTV.
Realign Economic Incentives to Improve Young Britons' Prospects
Drastic reforms to planning, tax welfare and education are needed to reduce intergenerational inequality and boost economic growth, says think-tank
An increasingly large divide has opened up in British society between generations in which the young lose out, while the elderly benefit;
Intergenerational inequality is not just an issue of fairness between the young and the elderly — the ways in which it is expressed are a drag anchor on the productivity and economic growth that Britain desperately needs;
Drastic reforms to planning, tax, welfare and education are needed to boost productivity, wages and prosperity, and lower taxes from a postwar high.
A new report, Boomer and Bust: Realigning Incentives to Reduce Intergenerational Inequality, from the Adam Smith Institute (ASI), draws attention to the increasingly large divide between the generations, in which the young lose out, while the elderly benefit. This divide is reflected across diverse policy areas with profound implications for society, covering access to asset wealth and housing affordability, benefit and pension spending, the national debt, Covid-19 lockdowns, and the cost of education.
The report’s authors highlight that many of the root causes of intergenerational inequality are intimately linked to Britain’s lacklustre productivity growth. The incentive structures that drive this inequality have led to an unacceptably low standard of living and have forced the country to pay higher taxes for worsening public services. These fundamental problems will only be exacerbated as Britain’s population ages.
While it is not the case that the elderly have been purposefully robbing the young of their future, they have benefited from the unintended consequences of our current political incentive structures. The answer to some of these challenges does not lie in intergenerational conflict, but in policy changes that create mutually beneficial outcomes.
As part of the paper’s research, public opinion polling of Brits was commissioned, aiming to gauge which changes would be supported and politically viable. The polling found that:
The majority of people (52%) support more development in their area, at least in principle. This has increased from 38% in 2021.
There is an overwhelming acceptance (84%) that it is much harder today for young people to buy a home than it was for their parents.
There is significant support (70%) for unfreezing income tax thresholds. This suggests that the income tax freeze until 27/28 deserves its moniker as a ‘stealth tax.’ The vast majority of people do not support the policy when it is made clear how it works and how it affects them.
There is very strong support (66%) for school leavers, who do not go onto university, to get access to a similarly sized loan, to help with professional development and setting themselves up for a career without having to go to university (i.e. to buy tools, tech, courses or a vehicle).
There is majority support (50%) for a specific proposal of up to £6,000 per annum for three years being loaned to school leavers who do not go on to university.
The paper recommends the following:
See through Street Votes, which would allow local residents to set design rules and financially benefit from densification;
Replace the triple lock on pensions with a smoothed earning link;
Unfreeze income tax thresholds;
Abolish stamp duty;
Remove the bias towards the university system by offering personal development loans to school leavers who do not attend university of £6,000 per annum over three years.
John Macdonald, Director of Strategy at the Adam Smith Institute and report co-author said:
“The country’s political incentive structures are in urgent need of reform. Politicians too often shy away from taking this challenge on, certain it will lose them votes, and are willing to kick the can down the road for the sake of electoral expediency.
“This kind of thinking is not only holding the country back, but is politically disastrous in the long term. It is not just that younger generations are crying out for new homes, better infrastructure, more opportunities and higher wages. Continuing to fail in any of these areas will have immense consequences for the entire country — including the current beneficiaries of intergenerational inequality. Without a growing economy and a productive working population, we will be forced into paying ever higher taxes for decaying public services. The best time for these reforms was yesterday. The next best time is today.”
METHODOLOGY:
Research Lead
Polling was conducted by Dr Michael Turner, Director at Freshwater Strategy, and Fellow of the Adam Smith Institute.
Fieldwork Dates
21-25 September 2022.
Data Collection Method
The survey was conducted online.
Population Sampled
Adult residents living in Great Britain.
Sample Size
n = 1,001
Weighting
Data are weighted to match the profile of the adult population living in Great Britain.
Margin of Error
The maximum margin of error for this poll is +/- 3.6% when analysing topline results.
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Notes to editors:
For further comments or to arrange an interview, contact Emily Fielder, emily@adamsmith.org | 0758 477 8207.
John Macdonald is Director of Strategy at the Adam Smith Institute.
James Dickson is an independent researcher and commentator and author of the Himbonomics substack newsletter.
Dr Michael Turner is Director at Freshwater Strategy and a Fellow at the Adam Smith Institute.
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.
Image from Wooden Earth - https://www.woodenearth.com/
Britain is Broken says President of the Adam Smith Institute
It is evident that many institutions and policies in the UK simply do not work says Dr Madsen Pirie
In a new discussion paper, Dr Madsen Pirie, the President of the Adam Smith Institute (ASI) outlines the 16 major institutions and policy areas which are not working, including:
The Bank of England
The Treasury
Transport
The NHS
Education
Justice
Immigration
Housing
Social Care
Childcare
Welfare
The Pension System
Energy
Regulation
Civil Service
Government
Within the paper, Dr Pirie draws parallels between the present day and the 1970s and outlines his concerns that the current direction of travel is jeopardising the future of young people in particular.
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Notes to editors:
For further comments or to arrange an interview, contact Emily Fielder, emily@adamsmith.org | 0758 477 8207.
Dr Madsen Pirie is the President and Co-founder of the Adam Smith Institute.
The paper will be live on the Adam Smith Institute website from 10pm 30th November 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.
The Adam Smith Institute Responds to the Chancellor's Autumn Statement
In response to the Chancellor’s Autumn Statement, Daniel Pryor, Head of Research at the Adam Smith Institute, said:
“Today's statement was a return to managed decline.
Entering a recession promising the highest tax burden in three-quarters of a century does not strike the right balance between fiscal credibility and growth. The Chancellor highlighted the harms of inflation, then added fuel to fire by threatening yet more tax threshold freezes—undermining productivity whilst hitting the pockets of people across the income spectrum.
There were some positive steps on making support for vulnerable households more targeted, but little in the way of genuine pro-growth reform: the only sustainable way of tackling debt, improving public services and giving people the chance of a better future.
In five years time, the average household will be poorer than they were before the pandemic. If we want to avoid that scenario, the Conservative Party must address the imagination deficit at the heart of British politics.”
In response to the Chancellor’s welfare announcements, Emily Fielder, Head of Communications at the Adam Smith Institute, said:
“The Chancellor’s decision to move towards a more targeted energy support system is long overdue. The combined approach of targeted cash transfers and benefits uprating protects vulnerable households and moves away from unnecessary subsidies for those on higher incomes. However, the Government should also be means-testing its untargeted £300 payment to pensioners—an unnecessary giveaway to many affluent households in an otherwise stark statement.
The Chancellor also promised targeted energy support for businesses. As we have previously highlighted, this should take the form of extensive government-backed loans, rather than further tinkering with business rates or continuing energy price freezes.”
Notes to editors:
For further comments or to arrange an interview, contact our press line, Emily Fielder, emily@adamsmith.org | +44 7584 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.
Break Up the Home Office
Split the Home Office into two new, more focused Departments, says think-tank
The Home Office has presided over numerous policy failures, and shows no signs of improving.
The Department’s remit is too wide, and the political team at the top is not scaled to the size of the tasks confronting it. Inevitably the Home Secretary of the day over-promises and under-delivers.
The Home Office should be split into two more manageable departments; Immigration and Security.
Rishi Sunak’s Ten-Point Plan for Immigration concluded with “commissioning work to look at more fundamental Home Office and Border Force reform.” This would be a good place to start.
A new report, A Broken Home: Why It’s Time to Split up the Home Office, from the Adam Smith Institute (ASI) outlines how the Home Office has been facing criticism from those on both the left and right of politics on its handling of a wide range of issues, including channel crossings and police failings. The principal problem is not that it is staffed by bad people. The Department’s remit is too wide and the political team at the top is not scaled to the size of the tasks for which it is responsible. The Ministry of Justice has a similar number of political staff, despite the much smaller Whitehall operation those working there need to oversee. The outcome is that the Home Office often makes no forward movement on major policy agendas at all. Secretaries of State make bold promises and then under-deliver, creating a gap between rhetoric and reality which both undermines public faith in Government and the Conservative’s reputation on law and order.
Report author, Henry Hill, argues that the Home Office should be broken up into two separate departments- an Immigration Department and a Security Department. The former would be responsible for immigration policy and enforcement, asylum, passports and the Home Secretary’s existing broad powers to set immigration rules. The latter would be responsible for policing, counter-terrorism and the security services.
The chief advantage of this reform would not be that it would automatically produce any particular change in policy. But it would mean that each Department would have a narrower and more coherent portfolio of responsibilities, and would be able to get on with huge policy challenges, including MET police reform, small boats and security. It would also improve accountability to Parliament, as Ministers would be able to have a much clearer oversight over the Department’s work.
Henry Hill, Deputy editor at ConservativeHome and report author said:
“Today's Home Office is a relic from an era when government was smaller and departments fewer. It oversees too much, and encourages secretaries of state to try and micro-manage controversial issues. On immigration, policing and security we need better policy, faster delivery, and clearer accountability - and breaking up this leviathan is the way to do it.”
Daniel Pryor, Head of Research at the Adam Smith Institute said:
“For far too long, the Home Office has failed to make substantial progress on vital policy areas which have real quality-of-life implications. Instead it has continued to over-promise and under-deliver, undermining faith in our institutions. It is high time that this sprawling empire is broken up. The new Prime Minister now has the opportunity to deliver real reform and create a more efficient government.”
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Notes to editors:
For further comments or to arrange an interview, contact Emily Fielder, emily@adamsmith.org | 0758 477 8207.
Henry Hill is the Deputy Editor of ConservativeHome. He also writes widely for other outlets and was the co-author, with Andrew Yong, of the ASI’s previous paper ‘Global Britons: A Fairer Path to British Citizenship.’
The report will be live on the Adam Smith Institute website from 10pm Thursday 27th October 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.
The Mini-Budget Reversal
In response to Chancellor Jeremy Hunt’s statement on the Mini-Budget, Emily Fielder, Head of Communications at the Adam Smith Institute, said:
“The Chancellor has said that there will be difficult decisions on tax and spend in the coming years as we move towards a more secure financial footing. But there is plenty this Government can do which doesn’t involve changing tax thresholds or spending pledges ––moving forward with supply-side regulatory reforms would boost economic growth and activity at a time when it is desperately needed.
The decision to properly target the energy price guarantee from April is welcome. Whilst it is right that the Government continues to support the most vulnerable households and businesses over a period of high energy prices, it should never have subsidised the energy use of affluent households at such a vast cost to taxpayers.”
Notes to editors:
For further comments or to arrange an interview, contact our press line, Emily Fielder, emily@adamsmith.org | +44 7584 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.