Cost of Rent Day 2024

  • Cost of Rent Day falls on the 5th March;

  • Renters in England work 125 days a year solely to pay their landlord;

  • Cost of Rent Day is the day on which, on average, renters in England earn enough before tax to cover their annual rent bill;

  • Cost of Rent Days have been calculated for 9 regions and 309 local areas across England;

  • This analysis of local areas shows Cost of Rent Day is even later in England’s major cities and the South East;

  • For example, the average Cost of Rent Day in London is the 16th July, more than two months later than the national average. This means that higher salaries are no sufficient to compensate for higher rent prices renters face in the capital;

  • This research has also exposed gaps in ONS housing statistics that need to be addressed, to enable better tracking and understanding of rental costs;

  • It is now incumbent on policymakers to fix the housing crisis, in particular, by addressing the shortage of homes.



On the Rocks: London's Nightlife in Crisis

London’s nightlife is a great national asset, which generates £46 billion for our economy,  and helps to cement the city’s global reputation. Beyond a direct financial contribution, the U.K. night-time economy acts as a catalyst for secondary spending across transportation, security, and  food services. For many Londoners, the opportunity to eat, drink, and socialise with friends, colleagues,  and loved ones is a large part of the city’s appeal. 

However, due to ever-higher costs, restrictive regulations, and broader political  mismanagement, the night-time economy is struggling to recover post-Covid, and  many establishments closing their doors for good. The Night Time Industries Association  (NTIA) estimates that 3,011 pubs, bars, and nightclubs have closed across London since  March 2020.

In recognition of this fact, national and local policymakers should implement a series of  liberalising measures designed to lift the burden on the capital’s night-time economy, and  to offer a much-needed lifeline to the UK hospitality industry more broadly. In particular,  we recommend the following policies: 

1. Reduce costs for the hospitality sector by slashing beer duty, cutting VAT, and  intervening to get rid of local alcohol levies. 

2. Reform our planning and licensing regime to give hospitality venues more control  over what services they can offer and when, taking power away from a vocal minority  of NIMBYs. 

3. Improve transport provision in the capital, through the expansion of the Night Tube,  intervention to stop the harmful ‘taxi tax’, and greater police presence around major  transport infrastructure.

On the one hand, these changes would make it cheaper and easier for consumers to  enjoy London’s nightlife offering; on the other, it would also reduce costs and regulatory  burdens for businesses, helping to keep struggling establishments afloat and stimulating  a sector-wide recovery.

Short-Term Thinking: Analysing the Effect of Applying VAT to School Fees

This paper reviews the proposal to apply VAT of 20% to private school fees in order to raise significant revenue.

We build on a paper from the Institute of Fiscal Studies (IFS) which concludes that levying an effective 15% of VAT on school fees would lead to a 3-7% reduction in private school attendance and raise a net £1.3-1.5 billion;

As the IFS noted, the evidence they drew on was “old” and “thin”.  We raise several further concerns about the relevance of historical small price increases to a much larger price increase in a changed macro environment.  We question the IFS’ confidence that higher migration scenarios, including up to 25% can be excluded from consideration;

The IFS paper mentions some unintended consequences and risks; it would be prudent to consider many more, including school closures and cost-cutting; labour supply withdrawal, and human costs;


This paper focuses on 3 key areas:

  1. The justification for the existing VAT exemption:

  • The UK exempts VAT across the education sector, including but not limited to universities, tutors and commercial language tuition, recognising education is a merit good;

  • Applying VAT only to part of the private sector would distort competition, favouring suppliers of near-identical services (tutoring, pastoral care, music lessons) in different settings;

  • A static analysis, noting that school fees motivate marginal families’ labour supply, which can be withdrawn at any time, shows that independent schools are strongly favourable to the public finances and the broader economy.  

    2. The effect on the public purse:

  • We used the IFS’ data inputs and assessments as a baseline for our own analysis, and explored further quantified variables;

  • In a highly optimistic migration scenario of 5%, we indicate a net fiscal impact of £1.02 billion, a reduction of £0.38bn from the IFS’ estimate;

  • Between 10-15% migration, we indicate that the tax would generate no net revenue;

  • In a 25% migration scenario, we indicate that the tax could generate a loss to the Exchequer of £1.58 billion;

  • We outline several further downside risks that apply in each scenario.

    3. The impact on state schools:

  • The geographical distribution of migration and school closures is impossible to predict;

  • We have significant concerns about the ability of local authorities and schools to plan, adapt for and respond to unpredictable demand swings; there is a risk of children stranded without a place

  • We doubt that putting private school children into the state system delivers benefit to the latter

  • There may be even greater competition for preferred state schools, driving talented children from poorer backgrounds from high-performing state schools and grammar schools.

Boosting Brownfield: Full Expensing for Brownfield Development

In partnership with PricedOut, the Adam Smith Institute is sharing this briefing document which outlines the application of full expensing, which was successfully made permanent in the 2023 Autumn Statement, to brownfield development.

By applying this policy to Brownfield development, the Government could:

  • Have a rate of return of up to 17% over the policy’s lifetime, providing significant fiscal benefits to the public purse.

  • Reinforce house builder’s its focus on Brownfield development by improving project viability because of the securer financing pipeline it provides.

  • Send a signal to developers, domestically and internationally, that the UK is serious about solving its housing crisis.

  • Stop, and even reverse, the collapse of the SME building sector by ending the stop-start cash flow caused by Britain’s sclerotic planning regime.

  • Improve placemaking in local communities up and down the country, ensuring that all Brownfield developments are given the investment they deserve.

My Generation: Introducing the Next Generation Centre

  • An enormous political, economic and social gulf has emerged between younger people and their parents and grandparents;

  • Young people are becoming increasingly sceptical of liberal democracy, its institutions and market economics;

  • Political dissatisfaction and disengagement amongst younger people is directly informed by their material circumstances. Many of them feel that our economy no longer works for them;

  • In particular, we have identified six areas of economic life in which young people today face challenging conditions:

    • Housing Affordability

    • Rental Costs

    • Taxation

    • Higher Education and Professional Prospects

    • Family Formation

    • Savings

  • This status quo is not inevitable. With the right ideas and policies, Britain can once again become a country that works for young people;

  • That is why we are launching the Next Generation Centre at the Adam Smith Institute, which will promote bold new ideas written by young people, for young people, with the aim of delivering greater opportunity to the next generation through market economics.

Free Wills: The Case for the Abolition of Inheritance Tax

This paper, newly updated since its initial publication in 1995, finds that many of the arguments made in favour of the abolition of inheritance tax (IHT) nearly thirty years ago are still relevant today- and, in some cases, are even more so.

We outline the following reasons to abolish IHT:

  • It places an unfair burden on those liable to pay the tax, often when their relatives are in the midst of grieving the death of a loved one. The responsibility to pay the right amount in tax falls entirely on the executor of the deceased’s will, often at great administrative expense. The pages of forms that have to be filled in have quintupled from 23 to 118 since the paper was first published;

  • The way the tax is structured encourages individuals to invest their money into less productive areas of the economy, rather than investing in companies and capital;

  • Inheritance tax yields a very small proportion of total tax revenue, raising £7.1bn in revenue in 2022-23, or 0.89% of total tax revenues collected in 2022;

  • Family-owned businesses, and assets in general, that are best and most efficiently looked after by long-term family owners acting to some degree in the quality of stewards. This socially desirable activity of stewardship is inhibited or prevented by death duties.

The Treasury’s current method of costing any changes to IHT assumes that the economy is static, rather than dynamic. For the reasons outlined in this paper, it should at least properly consider the impacts that any adjustments to IHT might have on levels on income, spending and saving.

Cooped Up: Quantifying the Cost of Housing Restrictions

In this new paper, we present the UK’s first calculation of the cost of restrictions on densifying our cities to the UK economy. Written by Adam Smith Institute Next Generation Fellow Duncan McClements and Jason Hausenloy, it is intended to demonstrate the destructive effects of Britain’s planning regulations.

This paper classes the removal of restrictions as allowing owners of existing dwellings to redevelop their properties so they are up to 8 stories tall.

Our model found that

  • Liberalising these restrictions would boost the welfare of every person by 6.5% if limited to London, and 11.7% if extended to all cities;

  • A liberalisation would correspond to annual nominal and real GDP gains respectively of 3.7% (£83bn) and 2.9% (£66bn) with conservative inputs, and 7.4% (£168bn) and 6.1% (£138.5bn) with liberal inputs. In other words, this is how much the UK economy has been losing out on every year as a result of our planning system;

  • It is currently costing the government £15,000 to provide infrastructure  public services such as schools, GPs and utilities, to every new person who moves to a city.

Our findings outline the huge gains to be made from liberalising housing restrictions.

World Traders: The Case for the UK's Participation in the WTO MPIA

The World Trade Organisation (WTO) has long been a central pillar of wealth-maximising free trade amongst its member nations. But without the WTO's ability to settle disputes between states, via the Dispute Settlement Body, the benefits of tariff reduction and the elimination of non-tariff barriers would never have been realised.

Until recently, the Appellate Body (AB) was the highest ‘court’ in the WTO’s dispute system. States which were unhappy with a legal judgement on a dispute could submit an appeal to be heard by the AB, which is composed of 7 experts in WTO law and is intended to be broadly representative of the world’s chief legal systems. It has the authority to uphold, modify, and reverse the panel’s judgement, but it is not permitted to deviate from any WTO treaties.

But, as of 2019, the AB has no longer been able to hear appeals, owing to the US Government’s vetoing of the appointment of any new judges. There are fears that the current absence of the AB could threaten the very existence of the WTO. The availability of a route of appeal is key to the legitimacy of the WTO’s dispute settlement procedure.

This new paper makes the case for the UK to join the Multi-Party Interim Appeal (MPIA) arbitration mechanism, the alternative to the AB set up by the world’s leading economies in 2020. This system, which has already issued its first brief but reasoned judgement, offers a feasible solution to the AB crisis, helping establish predictable and legally coherent outcomes which should act as a basis for a more secure global trading environment.

Saving the Golden Goose: how the UK's Crypto Rules Narrowly Avoid America's Securitarian Trap

The UK currently stands at the forefront of competition for cryptocurrency and digital asset investment- and it is already the world’s third largest digital asset economy.

Britain’s success is due to our more permissive regulatory regime, compared with our international peers, most notably the US.  Although concerns were raised that the October 2023 reforms by the Financial Conduct Authority (FCA) have made the UK more restrictive, these measures concentrated on countering fraud. The UK has a good balance between consumer protection and support for business growth and development.

This advantageous approach contrasts with that of the USA, which is stifling innovation in the digital currency sector. Rather than treating crypto as a currency, the US regulates it in the same way it would an unstable asset such as a bond or a stock. This means it can be taxed if it fluctuates in value, and adds further layers of complex regulation, making the US less competitive in the process. 

As this paper highlights, if the Prime Minister wishes to achieve his stated goal to make the UK a ‘global crypto asset technology hub,’ the government must resist calls to over-regulate.

Fission Impossible: Building Better Nuclear for the Future

According to the 2020 Energy White Paper, electricity demand could double by 2050. In order to meet these new requirements, and the government’s own ambition to have nuclear make up 25% of Britain’s energy mix, it is imperative that we build more nuclear in this country.

But nuclear power is still playing second fiddle to other sources of energy. Most existing sites are currently scheduled to close by 2030. And even tacit support from the government for new nuclear power development is difficult to gain. Approval for the construction of nuclear power is sclerotic and too often inhibited by government bureaucracy and inaction. 

According to a new report from the Adam Smith Institute (ASI), the government’s current approach, namely its Great British Nuclear competition, ‘picks winners’ by co-funding favoured technologies and granting site approval. Whilst a competitive tendering process can be beneficial, the combination of this scheme and a sclerotic planning system limits the ability of privately-funded nuclear developers to proceed at pace.

In order to accelerate the nuclear development we need in this country, this report includes the following recommendations:

  1.  Establish a ‘Contracts for Difference’ (CfD) approach, under which more potential producers are able to sell power for a certain price. This method would be far more ‘technology neutral,’ allowing developers to enter the UK market without the need for taxpayer-funded subsidies;

  2.  Encourage developers to create plans to deliver a full fleet of reactors, rather than forcing them to undergo a piecemeal approval process. This would increase investment in nuclear facilities, as economies of scale reduce costs for developers and energy bills for consumers;

  3. Introduce a mutual recognition of standards for Advanced Modular Reactors by looking to international best practice, such as in France;

  4. Remove existing sites from the Office for Nuclear Regulation and the Nuclear Decommissioning Authority ownership;

  5. Make better use of the UK's nuclear waste stockpile. We should reprocess the waste into nuclear fuels to be used in domestic energy production, as other countries such as France and Japan do, instead of storing it for thousands of years underground.