Corbyn reckless in wage promise - Adam Smith Institute comment

In response to Corbyn's promise to raise the minimum wage to £10 by 2020 Executive Director of the Adam Smith Institute, Sam Bowman, commented:

"Labour’s commitment to raise the minimum wage to £10/hour is reckless and ignores the potential costs of such a move. We know that increases to the minimum wage have to come from one of three places – either through lower wages or employment for other workers, lowered company profits, or higher prices. The evidence is pretty strong that higher minimum wages kill jobs, whether through direct layoffs or by slowing down new job creation, and this effect seems to get stronger the higher the minimum wage level is.

"Higher prices may be even worse for the poor, because they are regressive – poor households disproportionately consume goods produced with minimum wage labour. 

"As well as being bad policy, this is also evidence that we were right when we warned that Osborne’s politicised “National Living Wage” would poison policymaking in this area. Instead of being set by the technocratic Low Pay Commission, with an explicit mandate not to risk unemployment, the National Living Wage is now subject to a political bidding war, with neither the Conservatives nor Labour having any real incentive to keep the level at a level that minimises harm to Britain’s poorer workers."

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Rudd deeply misguided in encryption row warns Sam Dumitriu

Following calls from Amber Rudd to abolish Whatsapp's end-to-end encryption, Sam Dumitriu warns against this deeply misguided move from the Home Secretary. 

Sam Dumitriu, Head of Projects at the Adam Smith Institute, said:

"Amber Rudd's call on Whatsapp to give the government backdoor access to your private communications is deeply misguided.

"It is mathematically impossible to build a backdoor for just the good guys. It means building a backdoor to your private messages for Putin's favourite hacker Guccifer. It means opening up your private photos to perverts like the iCloud hacker. End-to-end encryption keeps us safe.

"Khalid Masood wasn't even on MI5's 3000 strong list of suspected jihadis. Ending end-to-end encryption would not have stopped the Westminster attack, but it would mean a free-for-all for cybercriminals and Putin's hackers."

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Appeal to Cabinet Office over government data leaks grabs headlines

Following an investigative piece in the Wall Street Journal by Mike Bird, ASI Executive Director Sam Bowman wrote to the Cabinet Office asking for a review of current procedures around pre-releases of ONS data to government ministers and civil servants. 

The letter, in full below, was a leading story for The Sun, and Sam's commentary ran across City AM , Guardian and The Daily Telegraph.

Dear Mr Gummer,
I am writing to you in your capacity as Minister for the Cabinet Office and Paymaster General. I wish to draw your attention to new evidence published in today’s Wall Street Journal showing dramatic moves in financial markets in the 24 hours prior to the publication of surprisingly strong or weak market-sensitive CPI and other market data. (
These moves, revealed by the WSJ’s Mike Bird and Prof Alexander Kurov, a professor of finance at West Virginia University, are large and suggest that official, confidential data may be being leaked to certain traders for the purpose of insider trading, before the data is made public. These leaks may be coming from inside the government and as such it is vital that they are investigated.
The UK is unusual in giving advance notice of this sort of sensitive data to a large number of people before it is revealed to the public – 118 different politicians and civil servants are given advance access to labour market data, for example, including ministers and their special advisors at the Treasury, Department for Work and Pensions, and other ministerial departments, and at least fourteen different government press officers. This creates a much greater risk of data leakages, enabling traders to profit illegally from secret information undermining trust in the markets.
In light of this new evidence, will the Cabinet Office review the people it gives pre-release access to, to determine whether these leaks are taking place and, if so, who is responsible? Furthermore, will the Cabinet Office re-investigate the rejected proposal from the UK Statistical Authority (made in 2010) that the maximum pre-release period ought to be cut to a maximum of three hours?
In the US official data is typically released less than 24 hours after it’s completed and physically delivered by courier to the White House, where only the President and the chairman of his Council of Economic Advisors have access to it. Prof Kurov found that evidence of pre-release drift was much less likely in the US. We ask that the Cabinet Office consider US-style security measures to prevent future leaks and ensure that leakers cannot enrich themselves or others through insider trading.
In the long run, the solution may be to move towards greater openness and transparency at the ONS so that leaks of this kind are not possible. There is little reason for the ONS not to make its data collection and generation open to the public throughout the process, so that we can see in real time what the statistics suggest about the health of our economy and ensure that no individuals can profit from corrupt leakages of government data.
Sam Bowman
Executive Director, 
Adam Smith Institute

The ONS needs urgent review - Sam Bowman comments

In response to a report in the Wall Street Journal this morning which revealed that current ONS procedure needs urgent review, Sam Bowman Executive Director of the ASI, made the following comment:

"Reports that markets are moving ahead of official ONS data releases in a way that is consistent with leaks and insider trading must be taken extremely seriously by the government and the ONS. 

"If flaws in ONS procedures are enabling market-moving leaks to take place, allowing some individuals to profit off secret information, then something has gone badly wrong. The Cabinet Office should review ONS procedures and consider substantial reforms in light of this new evidence.

"We could follow the lead of the United States, where these suspicious market movements are seldom seen, and data is released less than 24 hours after completion and statistical reports are physically delivered to the President. 

"An alternative option would be to make the process entirely open, so that the public (and the markets) can see ONS data in real-time as it is generated, and markets can price in new information immediately and openly. The ONS is already working on this, but today's findings should be an urgent call to action for them to speed up the process."

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The ASI Spring Budget Response

Sam Dumitriu, Head of Projects at the Adam Smith Institute, said:

"We knew this would be the dullest budget in recent history - the Chancellor even leaked that in advance. That's not necessarily a bad thing – exciting budgets tend to contain ill thought-out ideas, but there's a lot he should be doing now to prepare the economy for Brexit by cutting the worst taxes to make us more competitive.

"The Chancellor missed an opportunity to make major reforms to our outdated corporate tax system or tackle the thicket of loopholes and exemptions that plague our tax code. But, he has another budget in the Autumn, that'll be where the real action is. He should think hard about deeper reforms then."

On raising National Insurance on the Self-Employed:

"It's right to bring National Insurance on the self-employed in line with that paid by employees. The current system is in effect a subsidy of £1,240, and although the self-employed do have mildly reduced access to some contributory benefits, given the choice almost everyone would plump for the £1,240.

"But the Chancellor must ensure he is not discouraging the self-employed from investing - and allow them to immediately deduct capital expenditures from their taxable income. We shouldn't be looking to increase the overall tax burden - especially not on low income workers. So we should use the extra revenue raised to cut the overall National Insurance rate."

On equalising tax treatment between directors and employees:

"Company directors have substantial scope to avoid tax by misclassifying labour and investment income. Indeed, there's evidence that company directors' wages bunch up around the higher rate threshold, suggesting substantial avoidance. The Chancellor's right to consider reforming it to create a level playing field between employees and managers, but he must tread carefully.

"Taxes on income from dividends and capital gains are rightfully lower in order to incentivise investment. Simply raising dividend and capital gains taxes could discourage investment, reducing productivity and lowering wages across the board. To avoid this, Hammond should should allow company directors to immediately deduct capital expenditures from their taxable income. This would boost investment and deal with his fears of a shrinking tax base."

On business rates:

"It's reasonable that the Chancellor has increased the transitional support. Business Rates are ultimately paid by property owners with rents adjusting eventually. However, in the meantime some businesses may struggle to stay afloat.

"Mr Hammond should set out to reform business rates so that revaluations are more frequent and fluctuate less wildly. But he should also consider scrapping them altogether and replacing them with a tax on unimproved land values. That would reduce the need for transitional relief and encourage property improvements.

"He should reject calls to 'level the playing field' between the high street and internet retailers. Rates should be determined by rental values not special interests. Picking winners by favouring the high street over online businesses would make shopping more expensive, consumers poorer and only help landowners."

On rate relief for pubs:

"The Chancellor's plan to give pubs a £1,000 business rate relief is a mistake. We shouldn't be picking winners and creating an increasingly complex tax code. Landlords are already setting up snail farms to qualify for agricultural exemptions. When he wakes up tomorrow he'll face the hangover of an even more complex tax code that tries and fails to pick winners."

On social care funding:

"The Chancellor is right to ditch Labour's proposed death duty hike to fund social care. Taxes on inheritance discourage long-term investment and are notoriously easy to avoid."

Lackademia paper stirs up interest across major national papers

The ASI's latest paper, Lackademia: Why do academics lean left?, has been causing a stir in the media this week garnering print coverage across the Financial Times, Sunday Times, Daily Telegraph, The Times, City AM, City AM, Daily Mail and Express.

The Daily Telegraph reported:

Eight in ten university lecturers are “Left-wing”, a survey has found as it warns of the dangers of “group think” in British institutions. A report by the Adam Smith Institute said that the number of British academics are liberal or Left-wing has been steadily on the rise since the 1960s.

Charles Moore wrote in The Daily Telegraph:

It is a cliché to speak of "political correctness gone mad". But it is much more serious when it goes institutional. This week, a report ("Lackademia" by Noah Carl) from the libertarian Adam Smith Institute argued that British universities are largely staffed by the Left.

And further articles appeared on The Daily Telegraph online.

City AM reported: 

An estimated three-quarters of academics are left-liberals, according to the Adam Smith Institute, which said the figure reveals the dangers of groupthink in the UK's universities.

By contract, just 12 per cent of British academics consider themselves conservatives, generating a substantial disparity with the wider public.

The Times reported:

A report issued by the Adam Smith Institute presents a grim snapshot of this political bias in higher education. It should sound a warning that young minds are being blinkered rather than challenged. Those with right-wing and conservative views make up only 11 per cent of academics, according to the survey, even though 50 per cent of the general public vote for parties on the right of the political spectrum. Voting behaviour is a crude measure of political belief but the report has hit on a truth: the signs of skewed scholarship have been apparent for some time.

The Times also reported:

The analysis, published by the Adam Smith Institute, a free-market think tank, sought to look at the political opinions of British university academics over the past five decades and charted a threefold decline in support for the Conservatives in the period.

Although the underlying data is sketchy and not directly comparable, higher education experts said that the broad trend appeared to be correct and urged a wider debate on the issue.

The Times third article read:

Academia has come to be seen as a haven for those with strong left-wing attitudes. The Adam Smith Institute refers approvingly to the suggestion that the attitudes are what they are because academics are highly qualified, but lowly paid. They are naturally drawn to minimising status differences and distinguishing themselves from the bourgeoisie. There is even some evidence from the United States that right-wing views are discriminated against in hiring, funding and promoting academics.

Michael Gove wrote in The Times:

The most useful role in any society is not doctor or judge, merchant or monarch. It is the dissident. The person prepared to place themselves outside the consensus and articulate the case against the conventional wisdom is the true hero of history. Because it is only when authority is challenged that progress is secured.

The Daily Mail reported:

Proper debate at universities is in danger of being stifled because three-quarters of academics are now left-wing liberals, a report has warned. The Adam Smith Institute said there has been an increasing ‘skew’ towards the left in higher education since the 1960s, which has resulted in a ‘homogenous’ academic community. The free market think-tank said only 12 per cent of lecturers and researchers are conservatives, prompting fears those with certain views may be being discriminated agains

Tom Utley wrote for the Daily Mail and Mail Online:

Why should hard-working taxpayers go on financing an academic elite that poisons their impressionable minds with political correctness and fills them with idiotic, identical views that could ruin our nation? One last question. Which great philosopher has added more to the sum of human happiness? Adam Smith, the 18th-century prophet of free trade, whose ideas are still spreading prosperity today? Or Karl Marx, the advocate of an ideal egalitarian society, in whose name tens of millions have been condemned to poverty and violent death?

The Daily Express reported:

Cardiff Metropolitan University, formerly South Glamorgan Institute of Higher Education, has advised that language should be "gender-neutral" and students should avoid using heir "cultural background" to make their choice of words. It says that the terms "forefathers", "mankind" and "sportsmanship" should be not be used, as part of efforts to "embrace cultural diversity" through language.

Ben Southwood appeared on BBC Radio 4's Today Programme to discuss the topic:

Sam Dumitriu appeared on BBC Radio Scotland to discuss the paper, whilst the author Noah Carl appeared on BBC Radio 5 Live.