May's rhetoric channels Thatcher but policies deliver Miliband

Following Mrs May’s speech, in which she channelled the spirit of Thatcher but delivered the policies of Ed Miliband. Sam Dumitriu, Head of Research at the Adam Smith Institute, said:

On Ending Freedom of Movement and restricting immigration:

“The Prime Minister was right to unequivocally back business and make the moral case for markets and freedom. But her rhetoric is betrayed by her policy on free movement. Pulling up the drawbridge when Britain has a record number of vacancies is a mistake and trying to plan the labour market from central government will make Britain a worse place to do business.

“Her comments on training and investment simply don’t match up with reality. The Government’s own Migration Advisory Committee found no evidence Freedom of Movement reduced investment or led to firms cutting training budget. In fact, the MAC found that migration led to higher productivity growth for native workers.”

On Stamp Duty on Foreign Buyers:

“Taxing foreign homebuyers won’t make housing more affordable, only building more homes will do that. So-called Buy to Leave is a myth – just 1% of new homes bought by foreigners are left empty. When foreigners buy property they either rent it out or live in it themselves. Advance sales to foreign investors allow more homes to be built for rent. Without that investment, fewer homes would be built, rents would be higher and it would be harder to scrimp and save for a deposit.”

On letting councils borrow to build:

“Too often councils are the barrier to, not enablers of, new housing. Councils with the greatest need for quality new housing are those least likely to build it. Rents have risen the fastest in those areas precisely because those local authorities are most likely to block development and give in to the Nimbys.

“Unfortunately I fear the councils most likely to borrow to build are the ones most likely to build in the wrong places and require taxpayers to bail them out.”

To arrange an interview or further comment, please contact Matt Kilcoyne via 07584778207 or email

Foreigners should not be targeted in tax grab

In response to Theresa May’s plan to tax foreign homebuyers, our Head of Research Sam Dumitriu commented:

“Taxing foreign homebuyers won’t make housing more affordable, only building more homes will do that. ‘Buy to Leave’ is a myth – just 1% of new homes bought by foreigners are left empty – when foreigners buy property they either rent it out or live in it themselves.

“May plans to use the revenue to fund anti-homelessness schemes, but her plan will backfire as it means fewer homes will get built, pushing up rents. Advance sales to overseas investors enable developers to build affordable housing and market-rate homes faster. LSE research for the Greater London Authority (GLA) found that recent growth in the ‘Build to Rent’ sector was driven by overseas buyers.

“When rents rise, so does homelessness. Trying to prevent homelessness by taxing foreign investment is like trying to prevent crime by taxing burglar alarms."

If you would like further comment or to arrange an interview, please contact Matt Kilcoyne on 07584778207 or email

McDonnell plans pension raid with nationalisation and share ownership demands

John McDonnell, speaking at the Labour Party Conference 2018 in Liverpool, today took the party back 100 years when the party first introduced Clause IV. The Adam Smith Institute responds to the Shadow Chancellor’s Chavez-style commitment to nationalise industry, force executives out of jobs at Britain’s utility companies utilities, and to force companies to move to offer share ownership.

Sam Dumitriu, Head of Research at the Adam Smith Institute, said of the forced share ownership plan:

“What is startling about Labour’s plan is just how easy it is to avoid. The reform only applies to public companies listed in the UK. The Shadow Chancellor would have no power to force private companies or foreign-listed companies to do the same creating a powerful incentive for British companies to go private or list in New York or Frankfurt instead of London.

“It would discourage fast-growing startups from going public too, starving them of investment and potentially leading to worse governance. While the 250 employee threshold creates an incentive for firms to outsource and use contractors instead.

“The plan would cut investment too. Firms are less likely to invest if up to 10% of their shares are at risk of re-appropriation. As dividends are capped annually at £500 per worker (the rest going to the state) it would have the unintended consequence of rewarding labour-intensive firms and punishing capital-intensive firms creating low-productivity, low-wage economy.

“The only workers who might benefit are the corporate lawyers and accountants who will help companies avoid McDonnell’s plan altogether.”

Matt Kilcoyne, of the neoliberal think tank the Adam Smith Institute, said of McDonnell’s remembrance of Labour’s old Clause IV and his recommitment to nationalisation:

“McDonnell's full throated love-in for Labour's old Clause IV risks clawing the UK economy back into the dark days of strife and stagnation.

“The Shadow Chancellor isn’t handing back power to the people, he is planning a raid on millions of Britons' pension pots. Funds invested in our country’s utilities and the record levels of investment that private ownership has brought, are now at risk from a Labour government that intends to appropriate these assets with a partisan parliament setting any price paid.

“The Chavez-style commitment to readvertize jobs at utility firms taken back into state control will make the roles political and take people with years of experience and track records of success away from where they're most needed.

“At least he was honest about what all this would be called: Socialism.”

11 US & UK Think Tanks produce the ideal free trade agreement

  • 11 Think Tanks in US and UK draft the legal text of an Ideal Free Trade Agreement;

  • Simultaneous launches in the UK and US stress political and commercial will of securing a deal between world’s largest and 5th largest economies;

  • Key policy innovations include:

    • Enshrine the “negative list” approach to liberalization across goods, services, investment, and government procurement, which is conducive to faster, broader, and deeper economic integration

    • Eliminate tariffs on nearly all goods upon entry into force

    • Permit free movement of British and American workers, conditioned on an offer of employment

    • Commit the parties to expedited customs clearance and administrative procedures

    • Mutually recognize professional qualifications and licenses

    • Mutually recognize the efficacy of conformity assessment, and equivalence provisions, which would allow companies to sell and operate in both markets by satisfying either Parties’ regulations in areas where there is agreement as to the objectives of the regulations

    • Are less restrictive on the use of inputs from third countries by lowering “rules of origin” thresholds that must be met to qualify for the agreement’s preferential terms

    • Preclude application of anti-dumping measures between the Parties

    • Preclude the use of investor-state dispute settlement

    • Provide for the accessions to the agreement of other Parties that can demonstrate willingness and capability to meet its market-liberalizing standards

This morning, a collaborative project spearheaded by the Initiative for Free Trade in London and the Cato Institute in Washington, D.C. presents its first fruit. With contributions from policy experts affiliated with 11 U.S. and U.K. think tanks, The Ideal U.S.-U.K. Free Trade Agreement: A Free Trader’s Perspective is the proposed legal text for a bilateral free trade agreement between two of the world’s largest economies and the two richest English-speaking countries.

With both states deeply committed to the institutions of free-market capitalism and the rule of law, the ideal free trade agreement between the United States and the United Kingdom is an opportunity to create greater prosperity for Brits and Americans. Novel, sensible, transparent rules to eliminate costly barriers to trade will help stimulate innovation, encourage competition, provide opportunities for all, and incentivize reform-minded governments around the world.

The agreement includes provisions that foreclose governments’ access to discriminatory protectionism and obligate both parties to refrain from backsliding. Mutual recognition across sectors in developed countries would help achieve maximum market barrier reduction, the report argues, and enables consumers to access goods and services across both markets fully. All the while both states would preserve national sovereignty to legislate and regulate in ways that do not discriminate against imported goods, services, or capital.

As the U.K. government prepares to repatriate its authority over trade policymaking for the first time in 45 years, concluding and implementing a free trade agreement with the United States should be among its highest priorities. Indeed, the Department for International Trade has selected the U.S. as one of four potential trade agreements on which it is currently seeking public consultation.

In many respects, the U.S. and U.K. economies already benefit from a high level of economic integration. U.S. entities are the largest foreign direct investors in the United Kingdom, and U.K. entities account for the largest share of foreign direct investment in the United States. The value of the cumulative investment stands at nearly $1.3 trillion today. More than 1.1 million Americans work for British companies in the U.S. and nearly 1.5 million Britons are directly employed by U.S. affiliates.

It is, in addition, an exceptionally popular proposition for both the UK and the US. In a recent Public First / YouGov Poll, 67% of British people surveyed said that they supported an FTA being signed with America (with just 9% opposed), while 64% of Americans would support an FTA with Britain (with just 7% opposed).

The greatest area of benefit could come from an enhanced equivalence model of mutual recognition across all financial sectors. Finance and insurance represented 7.5% of US GDP (or $1.45 trillion) and 6.5% of UK GDP (£119bn). After the financial crisis of 2007-2008 financial regulators have sought equivalent outcomes with high degrees of synchronization on Wall Street and in the City and the report argues fostering greater collaboration between regulators could increase best practice while expanding and access to services for consumers.

In total, the ideal free trade agreement includes provisions to liberalize trade that are spread over 18 different chapters.  Innovative, market-based rules are presented on subjects such as Regulatory Coherence, E-Commerce, Sanitary and Phytosanitary measures, Dispute Settlement, and provisions governing third party accession.

Dan Ikenson, director of the Cato Institute’s Centre for Trade Policy and co-author of the paper, said that the the objective of the project is: “to persuade policymakers and the public in both countries that a comprehensive bilateral trade and investment agreement removing all barriers to trade across all sectors of both economies without exception is in their best interests and to provide the blueprint of an agreement that would be the most liberalizing FTA in the world.”

Beyond providing the formal agreement text and summaries, the paper “provides an intellectual basis for why real free-traders are often skeptical of free trade agreements, which often include protectionist or ‘managed trade’ provisions, and how this FTA overcomes those concerns,” Ikenson explains.

Victoria Hewson of the Institute of Economic Affairs, says:

“This has been a fascinating and important project, cutting through rhetoric and misinformation to point the way towards a genuine free trade agreement to deliver increased prosperity to the people of the UK and the United States. As the British government makes pivotal decisions that will have far reaching effects on trade policy for a generation, a glimpse of what the ideal free trade agreement might look like could not come at a better time.”

Tom Clougherty, Head of Tax at the CPS and co-author of the report, said:

"This isn't just an ideal free trade agreement between Britain and the United States; it is a model for how trade liberalisation can and should work in the 21st Century.

“Our draft agreement would put British and American policymakers at the forefront of a new movement for free trade in goods and services, for unrestrained cross-border investment, and for mutual recognition of national regulatory regimes.

“In short, it represents a modern gold standard for international trade and cooperation."

Matt Kilcoyne, of neoliberal think tank the Adam Smith Institute and co-author of the report, said:

"Together the US and the UK have the clout to rewrite the rules of global trade. This deal would be about freeing citizens of the two largest English speaking countries to trade without impediment, to be able to move for work and change their stars.

“Britain's future is bright, so long as it doesn't just buy into the status quo or joining in trade wars against her own citizens. Instead the UK must seek to bring down barriers and push up prosperity."

Sheila Lawlor, Director of Politeia and co-author of the report, said:

“A mutual recognition free trade deal for services will bring great benefit to the US and UK. And for the financial services sector, in which London and New York are global leaders, Barnabas Reynolds' chapter pioneers an equivalence-based trade deal.

“Already developed and adopted as the UK plan for trade with the EU, the concept is here extended to the US, increasing the depth and range of global financial market activities.”

For further comments or to arrange an interview in the UK, contact Matt Kilcoyne, via| +44 (0) 7584 778 207

For further comments or to arrange an interview in the USA, contact Sheridan Hoover, Media Relations Coordinator @ The Cato Institute, via| +1 (202) 216-1495

Old McDonnell has a broken record at the TUC conference

As John McDonnell took to the stage late at the TUC conference, it turns out that we’d already heard the speech before. Matt Kilcoyne of the Adam Smith Institute, criticised the crack down promised by the Shadow Chancellor on gig workers’ rights and his ill focused cures for the British economy.

“Like a broken record John McDonnell is out again criticising gig economy workers that won't work like he wants them to. But the gig economy has been good for both consumers and workers. Freedom to choose flexibility is not one that workers will want to relinquish easily. It might be called a jobs miracle but Britain's record employment is very much a human achievement.”

“If McDonnell wants to increase people's purchasing power he won't achieve it by pushing up the minimum wage – that will just price people out of the market altogether. Instead he should commit Labour to making it easier to build houses where workers want to live, and reduce the burdens on childcare providers to bring down the bills that working families have to pay.”

To arrange an interview or further comment please contact Matt Kilcoyne via email ( or phone (07584778207)

Grow meat in labs to avoid growing crises

New report from the Adam Smith Institute suggests lab grown meat could transform our world, tackling climate change and the looming antibiotic resistance crisis

  • Meat consumption has rocketed as GDP has grown across the world 
  • Meat demands on land are intensive, with beef taking a whole hectare to feed one person against nineteen people fed per hectare of rice produced
  • Cost of a lab grown burger has dropped from £250,000 to around £8 in the past 5 years
  • Lab grown meat can cut greenhouse emissions by 78-96% and use 99% less land
  • UK could solve housing crisis, re-wild the country and help fight climate change by adopting the technology

Agriculture is on the cusp of an historic change that could see billions access meat at affordable prices, while reducing carbon emissions and freeing up land for housing. According to a new report by the Adam Smith Institute, the coming availability of lab grown meat could mean a cut in agricultural greenhouse gas emissions of 78-96% while using 99% less land.

Implications for the fight against climate change could be immense, the report argues, with some 14.5% of human caused greenhouse gases and 60% of biodiversity loss attributed to current intensive farming practices.  

As GDP has risen, so has the demand for meat. During the 1960s meat consumption in East Asia stood at just 8.7kg per person, thirty year later that figure was 37.7kg – an increase of over 330%. This increased demand has meant huge land given over to meat production. While 19 people can be fed from just a single hectare of rice, only one can person can fed per hectare dedicated to cattle.

With demand for meat and milk expected to increase globally 70% by the year 2050 lab grown meat generated by cleaner energy could allow more people to access high quality meat at a sustainably lower environmental cost. 

While growing meat in a lab has been difficult to master, and costly to engineer, the price has been falling. Just five years ago the cost of a burger made with meat grown in a lab stood at $215,000, but now the price tag has dropped to just £8. 

While commercially competitive prices are still some way off, there is room for meat from exotic and endangered species. Meats grown from animals like the komodo dragon or the giant panda might help prove the concept, increase public awareness, drive down long-term costs and provide funds for future production. All the while, importantly for animal rights and conservation groups, not harming any wild or farmed animals in the process. 

Lab grown meat has the potential to solve the looming antibiotic resistance crisis. With farming using up to 70% of antibiotics critical to medical use in humans, the cases of resistance are on the rise, driven by intensive farming practices. In Northern China a study found 88% of E. coli samples showed resistance to the 8 forms of antibiotics commonly found in polluted waters. Cultured meats don’t use antibiotics to speed up muscle growth and the report explains that the move from livestock to lab cultures could save millions of lives.  

Government must shy away from lobbying attempts like those seen in the USA to lock out competition by changing the legal definition of meat to exclude meats produced in labs or factories. EU Law restricts plant-based foods, such as Almond or Oat milk, from being sold using terms such as milk, butter and cheese.

Instead report authors Dr Madsen Pirie and Jamie Hollywood argue that the country needs to recognize new technological developments like cultured meat “are in the process of radically transforming the world economy”. They suggest that government should learn from financial services “sandbox” regulations to encourage experimenting businesses to locate, develop and lead the world from the UK. 

Madsen Pirie, President of the Adam Smith Institute, said:

"The UK should recognize that cultured meats are a game-changer. For 12,000 years humans have reared animals for meat. In future they will not need to. This will release millions of acres of pasture land for other uses. It will resolve all of the ethical issues involved in the rearing and slaughter of animals. It will give the world access to a low cost, high protein diet, and the UK could become a world leader in this multi-billion-pound new industry.”

Jamie Hollywood, co-author of the report, said:

" The direction of technological innovation can be the key to averting many of the major ecological problems currently facing humanity. The herald of cultured meat will lessen the impact of antibiotic resistance, as well as potentially reducing the carbon footprint and levels of pollution caused by the current methods of meat production “

“The policy direction of the government should be to encourage emerging technologies; technologies which seek to provide mass benefit to society. This should be done by removing barriers to their development and introduction. Many innovations which have been impeded by inefficient and short-sighted legislation and state procedure could alleviate problems such as starvation, malnourishment, and climate change.” 

Notes to editors:

For further comments or to arrange an interview, contact Matt Kilcoyne, Head of Communications, at | 07584 778207.

The report “Don’t have a cow man: the prospects for lab grown meat” can be accessed here.

The Adam Smith Institute is a free market, libertarian think tank based in London. It advocates classically liberal public policies to create a richer, freer world.

Corbyn's backward looking future plan for the press

Commenting on Corbyn’s plan to hit Netflix, Google, and Facebook with a new tax to fund the BBC, the Adam Smith Institute’s Head of Research Sam Dumitriu said:

“This is an anti-innovation, anti-consumer, and anti-youth move. Younger viewers now spend more time watching Netflix than the BBC. But rather than respecting their choice, Corbyn’s Digital License Fee forces young people to pay more for the programmes they want to watch in order to subsidise the programmes they don’t.

“As more and more viewers switch to Netflix, Amazon, and YouTube, the government should consider scrapping the License Fee and turning the BBC into a subscription service. This would force the BBC to stay lean and focus on what its viewers actually want.”

On the Labour leader's idea to create a taxpayer-funded social media service to compete with Facebook and Twitter:

“This would be a colossal waste of public money. Corbyn may fret about receiving ads for hotels in Somerset, but most people don’t. If they did they might switch to one of the many ad-free competitors to Facebook, Twitter, and Google, like Mastodon or Ello. 

“Consumers are concerned about privacy, but they worry more about government surveillance than targeted ads. I doubt any privacy-conscious web user would willingly hand over their personal data to Corbyn’s knockoff Facebook.”

If you want any further comment or to arrange an interview contact Matt Kilcoyne (07584778207; 02072224995 OR

ASI welcomes Science and Technology Committee report recommendations on e-cigarettes

Welcoming the report and recommendations of the Science and Technology Committee on e-cigarettes, Daniel Pryor, Head of Programmes at the Adam Smith Institute and author of the ASI’s recent paper “1 Million Years of Life: How harm reduction in tobacco policy can save lives” says today that:

“Today’s report is fantastic news for public health and consumer choice. If its recommendations are adopted, many lives will be saved.”

“Most importantly, the Committee is urging a rethink on how these products can be advertised to cigarette smokers. The majority of UK smokers don’t know that e-cigarettes are significantly safer than smoking, and this situation is getting worse. Public health authorities are clear on the relative risks, and we're throwing lives away by preventing vendors from relaying this information to smokers.”

“Taxing e-cigs and heat-not-burn products based on their relative risk would be a smart move, but contrasts with worrying rumours of a proposed vaping tax from the Treasury. Lifting EU restrictions on tank size and nicotine limits—which make vaping less appealing—would also encourage more smokers to make the switch.”

“The UK can lead the world in tobacco harm reduction, and it’s encouraging to see politicians getting behind a liberal approach: one that is based on hard evidence, not scaremongering.”

For further comment or to arrange an interview please contact Matt Kilcoyne via email ( or phone (02072224995, 07584778207).

We shouldn’t fret about CEO pay

Commenting on today’s news that executive pay has risen by 11% in the past year, Sam Dumitriu, Head of Research at the Adam Smith Institute said:

“We shouldn’t fret about CEO pay. CEOs command massive wages because they are massively important to the firms that employ them. Take Angela Ahrendts, when she left Burberry to move to Apple it wiped £536m off Burberry’s share price. When one individual can be so important to a firm, then it’s no surprise that shareholders are willing to pay top dollar to get the best.

“Today’s news is part of a long-term trend. As businesses face increasingly rapid technological change and stiff international competition, CEOs have become more important. Research looking at the impact of unexpected executive departures (e.g. private plane crashes) on firm values has found that CEOs have become much more important over the past few decades.

“There is a growing body of evidence highlighting the impact of management on productivity. If we foolishly rush in and cap CEO pay, we risk chasing away the best managers to Europe and the US. That would be bad news not only for the millions of Brits who hold shares through private pensions, but also workers who might see their firms lay off staff as they fall behind to better-run international competition.”

To arrange an interview or further comment please contact Matt Kilcoyne via phone (07584778207) or email (


Equity Release sector hiding huge losses from under-valued guarantees

New report from the Adam Smith Institute reveals a major scandal in the Equity Release sector due to firms under-valuing their No-Negative Equity Guarantees

  • Under-valuation of guarantees in Equity Release Mortgages is a ticking time bomb
  • The Prudential Regulation Authority made half-hearted attempts to address these undervaluations, but permitted them anyway
  • The recent Treasury Committee report into the UK life industry missed a chance to scrutinise the sector and instead suggested that the Equity Release sector was one to be promoted
  • The UK’s Equity Release market nearly trebled in size between 2012 and 2017 and was forecast to grow a further 40% by 2020
  • PRA stress tests in 2017 indicated that a 30% house price fall could lead to losses of between £2 billion and £3 billion
  • The industry had snowballed the Treasury Committee and the Committee’s recent report reflected industry spin
  • This scandal highlights serious failings on the part of Equity Release firms, their regulator and the actuarial profession

A new report released this morning from the free-market Adam Smith Institute suggests that the UK’s Equity Release sector is in deep trouble, with the regulator having missed opportunities to effectively manage the risks in the sector.

Asleep at the Wheel: The Prudential Regulation Authority and the Equity Release Sector” reveals that firms are greatly under-valuing their No Negative Equity Guarantees – guarantees that ensure that borrowers’ debt can never exceed the value of the mortgaged property.

These problems have been well-known to the regulator, the Prudential Regulation Authority, for years and the report argues that the regulator has knowingly allowed firms to use valuation methods that are unfit for the task.

“Nearly two decades and one Global Financial Crisis later it seems like history is repeating itself,” says report author Kevin Dowd.

Not pulling any punches, Professor Dowd says that the Equity Release fiasco is yet another case of incompetent management, undervalued long-term guarantees and regulators who are not up to their jobs.

The UK’s Equity Release market had nearly trebled in size between 2012 and 2017 and had been forecast to grow a further 40% by 2020. PRA stress tests in 2017 indicated that a 30% house price fall could lead to losses of between £2 billion and £3 billion, with the exposures skewed towards firms with larger house price or ERM exposure.

The Prudential Regulatory Authority is confused about the capital requirements it imposes upon the industry, the report argues. When asked at a parliamentary Committee in 2017 about the size of these capital requirements, Deputy Bank Governor Sam Woods suggested the requirement was £126bn, while moments later his colleague David Belsham suggested it was just £80bn.

The Treasury Committee is accused by Professor Dowd of botching its scrutiny of the impact of Solvency II on insurance companies, and having been captured by corporate lobbyists.

The regulator, the Prudential Regulation Authority, has itself made half-hearted efforts to address this under-valuation problem. Yet for years the PRA failed to rein in firms that continued to use inadequate valuation methods for their No Negative Equity Guarantees.

In most financial regulatory scandals the regulators are caught off-guard and never see the problem coming. In this case, not only did the regulator identify the problem of poor NNEG valuation practices years ago, but the PRA allowed them anyway.

Questions must now arise about the Prudential Regulation Authority’s capacity to regulate the industry competently.

The report’s author Kevin Dowd, professor of finance and economics at Durham University, said:

"We never seem to learn. Equitable Life hit the rocks two decades ago because it under-valued its long-term guarantees. Now the Equity Release sector is in deep trouble for the same reason. In both cases, the firms involved got into difficulties because they were using voodoo valuation methods that had no scientific validation. Same causes, same results.

In the aftermath of the Equitable Life fiasco we were assured that lessons had been learned and the vastly expensive Solvency II regulatory regime was installed to ensure there would never be a similar disaster in the future.

The PRA and Solvency II have failed spectacularly.

“The most astonishing thing about this scandal is that the PRA knew about these poor valuation practices but permitted them anyway. It would be interesting to know why.”

The Dowd report follows a joint investigation with BBC business journalist Howard Mustoe.

BBC Radio 4 will broadcast a programme on the Equity Release story, The Equity Release Trap, this evening at 8pm. 

Notes to editors:
For further comments or to arrange an interview, contact Matt Kilcoyne, Head of Communications, at | 07584 778207.

The Adam Smith Institute is a free market, libertarian think tank based in London. It advocates classically liberal public policies to create a richer, freer world.