Reopening Britain: The economic urgency

The ASI’s latest paper, written by ASI Director Eamonn Butler and Head of Research Matthew Lesh, explains the urgent need for the Government to plan an exit from the economic lockdown:

  • The economy is not a machine that can be simply turned “on” and “off”. It is a complex system, dependent on billions of relationships that are falling apart.

  • The outbreak of a deadly pandemic has necessitated the forced closure of one-third of the economy – causing a sizeable immediate decline in incomes and rise in unemployment.

  • The short-term damage has been universally acknowledged. However, many analysts and politicians are substantially underestimating the damage being done and the challenge of reanimating the economy after the lockdown.

  • The impact of closures spreads through an economy in the same networked fashion as the virus itself spreads between humans: each business’s problems affect several others.

  • The longer the lockdown, the more businesses will run out of cash, lose hope, and shut down. This will cause substantial unemployment – the extent of which may currently be hidden by the ability to furlough employees. 

  • The impact of the lockdown grows deeper and faster over time. Each business that closes causes problems for its staff, suppliers and customers, and their problems in turn knock on to others and on and on.

  • While the Government’s policies are logical and necessary, escalating economic hardship is inevitable. It is necessary to stem the damage as quickly as possible to prevent massive economic collapse.

  • ‘Lives versus livelihoods’ is a false dichotomy — a strong economy is what keeps people fed, housed, and ensures we can afford quality health services. Economic contractions are not only associated with lower quality of life, but also worse health outcomes and loss of life.

  • The UK is falling behind other European countries — including Austria, Czech Republic, Denmark, France, Germany, Italy, Norway, and Spain — who have developed and are beginning to execute strategies to reopen their economies.

  • If the Government wants to safeguard the people’s lives and livelihoods they must:

    • (1) develop, and release, a phased plan for lifting the lockdown to provide greater confidence for businesses and citizens:

    • following the best possible public health research and latest evidence;

      • explicitly aiming to prevent subsequent mass outbreaks and loss of life;

      • including a strategy for decentralised mass testing, and isolation and tracing of cases while protecting privacy;

      • encouraging physical distancing, maintaining limits on mass gatherings and special measures for at-risk groups in early stages;

      • allowing as many businesses as possible, as quickly as possible, to reopen their operations;

    • (2) scale back the state’s extensive role in the economy after the crisis to avoid crowding out the rebooting of the private sector; and

    • (3) introduce policies, both permanent and temporary, that will enable the economy to bounce back after the crisis, including cutting excessive red tape and taxes that discourage investment.


Testing Times: The urgent need to decentralise COVID-19 diagnostic testing in the United Kingdom

The ASI’s latest paper, written by ASI Head of Research Matthew Lesh, makes the case for decentralising COVID-19 diagnostic testing in the United Kingdom:

  • COVID-19 is the biggest public health emergency in modern history. There have already been over 875,000 confirmed cases and 43,500 deaths worldwide. These numbers are expected to grow exponentially in the coming weeks, potentially resulting in millions of cases and hundreds of thousands of deaths. 

  • The United Kingdom is experiencing a substantial growth in cases and deaths. Over 2,350 people confirmed to have died after contracting the virus. This number is doubling approximately every 3 days, putting the UK on a similar trajectory to the worst affected regions in the world.

  • Testing is a key tool to combat infectious diseases. It allows doctors to identify the needs of patients, public health authorities to trace and isolate cases to minimise spread, and epidemiologists to track the spread of an outbreak. It is also essential for healthcare workers to return to the frontline.

  • The UK has fallen to the bottom quarter of OECD countries for COVID-19 diagnostic testing, on a per capita basis. South Korea has tested four times as many people as the UK, Germany almost three times and the United States now almost twice as many, per capita.

  • The early decision to centralise testing to a single Public Health England (PHE) laboratory has hampered the ability to increase testing in the UK. Testing has now been expanded to 12 labs operated by PHE as well as a limited number of NHS laboratories.

  • The most successful countries in testing COVID-19 – such as Germany, South Korea, and more recently, the United States of America – have decentralised testing and embraced a mixture of public, non-government and private laboratories.

  • Since March 16, the United Kingdom has just over doubled daily testing capacity. In the same time, the United States has increased daily testing by a factor of 21.

  • The private sector has shown an extensive willingness to support the Government’s efforts to tackle COVID-19, including the rapid design and manufacture of ventilators and agreeing to transfer beds and staff in independent hospitals to the NHS.

    • If the UK Government wants to meet its testing targets and save lives, it must:

    • fast-track approval for private sector laboratories to conduct COVID-19 testing; 

    • substantially expand usage of NHS and university laboratories to conduct COVID-19 testing; 

    • undertake rapid approval of private sector developed tests, including mutual recognition of tests approved by other regulatory bodies such as the FDA;

    • reduce testing red tape, including any requirements that initial positive tests must be retested centrally by PHE; and

    • explicitly call on companies to help make testing kits and develop lab capacity for COVID-19 testing, modelled on the successful call for businesses to make ventilators.

Abolishing The Factory Tax: How to Boost Investment and Level Up Britain

The ASI’s latest paper, written by ASI Fellow Sam Dumitriu and academic economist Dr Pedro Serodio, argues that the Government should Abolish the Factory Tax to level up Britain and boost wages:"

  • The UK has had the lowest level of private investment in fixed capital as a share of GDP in the G7 for over two decades. This low level of investment has contributed to the rapid downfall of the UK’s manufacturing sector, which has declined by more than any other G7 nation.

  • Britain’s corporate tax system is exceptionally hostile to capital investment. The UK is ranked 33rd in the OECD on the Tax Foundation’s Capital Cost Recovery index.

  • The UK’s system of capital allowances fails to account for inflation and a real return on capital, as a result businesses cannot fully deduct the costs of investments in equipment as they can with other day-to-day expenditures such as wages.

  • The capital stock per worker in manufacturing is more than twice as high as it is in other areas of the economy. The UK’s corporate tax treatment of investment in fixed capital is in effect a Factory Tax, holding back growth in parts of the country that are relatively more dependent on manufacturing, such as the North and Midlands.

  • The bias in the tax system against investment is a contributing factor to Britain’s productivity crisis by discouraging investment. Output per hour worker has grown at its slowest rate since the industrial revolution over the last decade, at just 0.3% a year. 

  • Eliminating this Factory Tax, by allowing businesses to immediately write-off capital expenditures, would boost investment by 8.1% and labour productivity by 3.54% (£2,214 per worker) in the long-run.

  • It would also improve the UK’s Corporate Tax Rank on the Tax Foundation’s International Tax Competitiveness Index from 15th to 6th and move us from 33rd to joint 1st best treatment of fixed capital investment in the OECD.

The ASI has also launched a campaign to Abolish the Factory Tax:


Safe to Scoot: How Legalising E-scooters Will Save Lives, Bust Congestion and Help the Environment

A new paper by Matthew Lesh, the ASI’s Head of Research, makes the case for why and how the United Kingdom should legalise e-scooters:

  • Electric scooters — or ‘e-scooters’ — provide low-cost, environmentally-friendly ‘last mile’ transport. They are a central plank of the ‘micromobility’ revolution that is transforming urban transport.

  • E-scooters are among the fastest growing technologies in history. Since the first dockless rental scheme in September 2017, they have provided hundreds of millions of rides and are now available in 350 cities worldwide. 

  • The United Kingdom is the last major European country where it is illegal to use e-scooters on public roads, bike paths, and pavements. This is despite surveys and usage indicating they are overwhelmingly popular where they are legal.

  • E-scooters are safe. They have comparable injury rates to bicycles. The legalisation of e-scooters could itself increase safety by providing clear rules and education. It would also provide ‘safety in numbers’: the higher numbers of a road user type (i.e. pedestrians, bicyclists) associated with proportionally fewer accidents.  

  • One-third (33%) of e-scooter rides replace car rides, helping reduce CO2 emissions, NOx pollutants and busting congestion. 

  • The UK is missing out on the economic benefits of the e-scooters industry, which is worth billions and responsible for thousands of jobs. E-scooter users also spend in local economies helping struggling high streets and, by reducing travel times and road congestion, boost productivity.

  • E-scooters provide a transport option for communities and routes underserved by traditional public transport, helping lower income and minority communities. E-scooters have a complementary relationship with public transport.

  • If the UK Government wants to enable technology of the future, help the environment, and reduce congestion, they should:

    • Amend the outdated Highways Act 1835 and the Road Traffic Act 1988 to legalise e-scooters;

    • Begin open trials in cities across the UK, with associated data collection and independent studies;

    • Allow cities and councils to develop a locally appropriate regulatory regime;

    • Adopt a liberal approach to regulation, avoiding limits on e-scooter numbers, companies or restrictions such as helmet requirements; and

    • Invest in education and appropriate infrastructure, including parking spaces and separated bike lanes.

High Street Heist: How to Save the High Street By Relaxing Anti-Competitive Zoning Rules

A new paper by Thomas Walker, a town planning consultant, argues that the United Kingdom needs to reform restrictive planning rules to reinvigorate our town centres:

  • The National Planning Policy Framework’s ‘primary shopping areas’ (PSAs) designation in town centres concentrates retail and leisure uses in one small zone, creating inactive dead zones outside the PSA and separating retail from the residential areas where its users live.

  • Primary shopping areas are often dominated by one or two large single-owner shopping centres, limiting the rental market. This allows property owners to charge higher rents to small businesses, hurting the high street. The limited space reduces variety on the high street, making high streets less attractive to shoppers.

  • Local planning policies are based on retail capacity assessments that can become out of date before the plans are even adopted. These policies then restrict the ability of town centres to adapt to changing market conditions and consumer behaviour.

  • PSAs are applied inconsistently, including and excluding existing retail areas and failing to respond to the geography of high streets.

  • The designation of primary frontage streets and PSA boundaries is arbitrary, limiting the potential growth of high streets and town centre economies. 

  • Expanding the PSA and creating secondary shopping areas would encourage increased activity and revive struggling high streets.

  • Abolishing the PSA policy and retail zoning would make high streets better able to adapt to a changing retail market, as well as creating a fairer environment for small businesses.

  • Mixed use development, combining retail, office, leisure and residential uses, creates more viable, safe and liveable spaces with night-time activity and the ability to adapt to changing economic and social circumstances.

  • This paper looks at two concerning case studies of overregulation of the town centre, Stafford & Stone and Milton Keynes, and one welcome case, Aylesbury, of less restrictive local planning rules that shows the benefits of more widespread retail.

Up in Smoke: Unlocking Tobacco Harm Reduction

A new paper by Daniel Pryor, a Research Economist and Head of Programmes at the Adam Smith Institute, argues that the United Kingdom defends vaping and argues that the UK should redouble efforts to unlock further tobacco harm reduction:

  • The United Kingdom is a world leader in encouraging smokers to switch to alternative, less harmful nicotine products.

  • Britain’s success is closely linked to the broad, evidence-based consensus in favour of e-cigarettes as a smoking cessation tool. Public Health England has declared that vaping is “at least 95% less harmful”. 

  • There is a very strong correlation between the reduction in cigarette usage and the increase in e-cigarette usage in recent years. According to PHE estimates, up to 57,000 more people have quit a year due to e-cigarettes.  

  • The available evidence does not substantiate recent concerns about e-cigarettes. The vast majority of e-cigarette users are former (53%) or current ‘dual users’ (39%) of cigarettes. Relatively few young people in the UK have taken up vaping and less than 1% of young people who have never smoked have tried vaping products. Furthermore, safety risks related to illicit products have not and are unlikely to become a concern in the UK.

  • There is a need for further progress in harm reduction: there are 8.56 million smokers in Great Britain, 4.37 million smokers have tried e-cigarettes but gone back to smoking, while 2.88 million smokers have yet to try a reduced-risk product.

  • There is widespread misinformation about the relative risk of e-cigarettes. Over two-fifths (43%) of UK smokers do not believe that e-cigarettes are less harmful than tobacco cigarettes.

  • The most common reason for e-cigarette users returning to smoking is that vaping “didn’t feel like smoking a cigarette.”

  • Leaving the European Union presents an opportunity for the UK to liberalise the treatment of reduced risk products, including harnessing the potential of alternative reduced-risk products such as heated tobacco and oral nicotine pouches, and ensuring high levels of public awareness about the relative risk levels of different products.

  • If the Government wants to turbocharge tobacco harm reduction and achieve its stated goal of a ‘smoke-free’ society by 2030, they should:

    • (1) Develop an evidence-based set of generic health claims that can be used by regulated e-cigarette marketers to advertise products;

    • (2) Commission independent research to develop the evidence base in relation to heated tobacco products, with a view to allowing accurate communication of this information by marketers;

    • (3) Reform counterproductive elements of the EU Tobacco Products Directive post-Brexit;

    • (4) Implement risk-based taxation to incentivise switching to reduced-risk products, building on the creation of a separate taxation category for heated tobacco;

    • (5) Legalise snus post-Brexit with a sensible regulatory framework;

    • (6) Encourage the NHS to take a leadership role in promoting tobacco harm reduction across trusts;

    • (7) Allow cigarette pack inserts that exclusively advertise reduced-risk products.

Don’t Railroad It Through: Rethinking HS2

A new paper by Adrian Quine, a rail expert, should rethink the controversial HS2 project - and sets out a number of alternatives to save time, save money, and deliver an improved service for rail passengers:

  • High Speed 2 (HS2) is substantially over budget, over time and will deliver limited benefits. Based on the latest cost estimates, it will return just 78 pence of value for every £1 of taxpayers' money spent. Its motivation is political, not based on need, and it suffers from poor management and an excessively complex design.

  • HS2 is unnecessarily fast for the relatively short distances it covers, will undermine access to intermediate stations and is likely to result in increased fares for travellers.

  • Under HS2, a number of key northern cities destinations will lose direct trains to London, including Lancaster, Carlisle and Durham

  • There is a need to expand capacity in rail lines. More capacity and speed improvements can be achieved in a smarter, quicker and less costly manner than is currently proposed by HS2.

  • There are still sections of railway where 4 tracks are reduced to 3 or even 2 creating bottlenecks and severely limiting further growth. The mainlines do not directly serve cities such as Birmingham, Manchester or Leeds, requiring the use of slower regional connecting lines that halve speeds for the final 20-40 miles.

  • There are a number of substantially less costly alternatives to current HS2 plans that could increase capacity. These include:

    • (1) upgrading existing routes with new signalling, doubling the number of tracks, reopening mothballed lines, and timetable redesigns;

    • (2) building new sections of conventional high speed, including between the mainlines and Manchester, Leeds and Birmingham, and upgrading northern sections of the mainlines;

    • (3) maximising current infrastructure by targeting bottlenecks on conventional lines, including building flyovers at key junctions, upgrading the Chiltern route to Birmingham or reopening the southern section of the Great Central railway, raising line speeds to at least 125mph;

    • (4) upgrading stations in London, Birmingham and Manchester; and

    • (5) improving passenger experience.

  • In order to deliver the rail infrastructure of the future, the Government could also look to private sector to fund projects that are specifically tailored to passenger needs and save the taxpayer billions in the process.

The Neoliberal Manifesto: A freer and more prosperous Britain

A new volume edited by Matthew Lesh, Head of Research at the ASI, Jack Powell, Founder of 1828, and Matt Gillow, Founder of 1828 and Research Associate at the ASI, outlines how to build a freer and more prosperous Britain:

Neoliberals are champions of freedom.

We believe that the role of government is to protect and facilitate your liberty to flourish – as long as you do not interfere with others doing the same.

Politics as we know it is realigning. Ideologies that were long thought to be dead are re-emerging. There is a growing dislike of our politicians and institutions.

With uncertainty comes opportunity, particularly for those willing to spell out a persuasive and positive vision. This manifesto tackles today’s policy challenges.

Each chapter outlines the issues along with the neoliberal goals and solutions. These ideas will deliver a freer and more prosperous Britain.

Free to Consent: The case for legalising body modification, BDSM, and transhumanism

A new paper by Ben Ramanauskas, an independent researcher, makes the case for reforming the law to allow people to consent to activities such as body modification, BDSM, and transhumanism:

  • Under English law, consent is not a defence to a charge of actual bodily harm (ABH) or grievous bodily harm (GBH), except for certain socially sanctioned activities.

  • Judicial findings that body modification (i.e. the Dr Evil case) and types of BDSM (i.e. R v. Brown) are unlawful raise philosophical and legal questions about consensual activities in which neither party is aggrieved.

  • The law is applied inconsistently. People can consent to some potentially harmful activities, such as: ear piercings, contact sports and religious flagellation, but cannot consent to body modification or pleasurable sexual activities.

  • The type of activities in which consent is a valid defence has been arbitrarily determined by the judiciary, reflecting their biases and prejudices, rather than an objective determination of consent and harm.

  • Although undoubtedly well intentioned, and designed to protect individuals or society from harm, past verdicts that prevent people from consenting to certain activities represent a serious infringement on personal liberty. Individuals should be free to consent to sadomasochistic encounters and body modification. 

  • The people who are most likely to suffer from laws that do not allow individuals to consent are sexual minorities and members of subcultures - whose activities fall outside of cultural norms and therefore attract an instinctive disgust reaction.

  • The development of transhumanism - technology to evolve beyond our current physical and mental limitations - could also be limited by existing laws that prevent body modification. 

  • If the Government wishes to enable greater personal freedom, protect minority expressions, and enable emerging technologies, the Offences Against the Person Act should be reformed so that consent becomes a valid defence to charges of ABH and GBH. The onus would be on the defendant to prove that the alleged victim had consented to the acts.

  • Practitioners of body modification should be allowed to apply for a licence from their local authority in the same way as tattooists and body piercers.

  • These steps would ensure that vulnerable people are still protected and that consent cannot be used inappropriately as a defence, while also upholding the rights of individuals.

Doing our duty

A new paper by the Adam Smith Institute says Hong Kong nationals should be given British citizenship rights.

  • The United Kingdom has a duty under the Sino-British Joint Declaration to uphold the rights of Hong Kong citizens until 2047 as a joint signatory and ex-colonial power.

  • While the United Kingdom cannot act within the territory of Hong Kong it can still act to maintain and enhance the rights of Hong Kongers within the territory of the United Kingdom.

  • The United Kingdom should offer British National (Overseas) status to all Hong Kongers born before and after the 1997 handover, along with an extension of full residency rights to British National (Overseas) persons equivalent to the status of full British citizens.

  • This would follow precedent in the face of extreme violence to ex-British citizens as seen in Uganda in the 1960s and 1970s.

  • Hong Kong residents, with high levels of education, skills and wages would be a net contributor to the UK economy.

  • The Chinese Government would face an increased incentive to act leniantly to Hong Kong in order to not lose face should a large number of citizens choose to abandon rule from Beijing.