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.

Papers find MOT not up to the test

Our latest paper, written by Alex Hoagland of Boston University, caused a storm in the British press this week.

We looked at how well the MOT test prevented mechanical failures in cars, looking at the experience of how removing tests affected failure rates in American states and biennial testing in countries like Germany. In essence, we're being ripped-off as the tests have no impact on safety but end up costing motorists over £30 in up front fees and hundreds of pounds in unnecessary repairs. 

The report was covered by papers including the Sun, the Daily Mail, the Times, the Daily Express, the i Newspaper, the Herald, the Scotsman, the Yorkshire Post, and over 100 local titles. 

Sam Dumitriu, Head of Research at the Adam Smith Institute, wrote for the Telegraph to explain why the outdated tests need to be scrapped. He made over 14 appearances on BBC radio and TV stations, including Radio 4 (from 46:54). 

Report author Alex Hoagland explained for the Times that a reliance on the MOT risked ignoring the real danger on our roads – drivers themselves.   

Gene editing is an opportunity not a cost

In light of the European Court of Justice’s ruling, requiring food produced using new and precise gene editing techniques such as CRISPR-Cas9 to go through an expensive and lengthy approval process, the Adam Smith Institute’s Head of Research Sam Dumitriu said:

“By ignoring scientific advice, the EU has shot itself in the foot. The ECJ’s decision will hold back science, innovation, and agriculture in Europe.

“Gene editing has the potential to increase crop yields, reduce pesticide use, and even improve animal welfare. It is safe and fundamentally different to past GM technology. Any crop developed through this process could have been developed through conventional breeding techniques. Gene editing merely speeds up the process.

“Forcing biotech firms to go through a lengthy, expensive approval process will create a huge barrier to entry: locking out innovative startups and creating monopolies. Many will move to the US to take advantage of a pro-science regulatory environment.

“While the ECJ allows the pseudo-scientific precautionary principle to dictate policy, the rest of the world will move forward. After Brexit, when we are out of the European Union, we should follow the US and not require special regulation on any agricultural product that could have been produced through conventional breeding.”

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

Scrap outdated rip-off MOT tests

 Adam Smith Institute report says government mandated MOT tests are outdated and should be scrapped, saving Britons millions

  • Mechanical failures account for just 2% of accidents in both the US (where in most states annual safety inspections are not required) and the UK, with nearly two-thirds caused by driver error 
  • US evidence shows discontinuing MOTs would have no effect on the rate or severity of accidents due to mechanical failure
  • Scrapping MOTs could save Britons £250m a year, and the average driver £143 in unneeded repair costs
  • Government policy should bring itself into the 21st century and focus on driver error, the main cause of accidents
  • As a minimum, the age cars must be tested at ought to be increased and the frequency of inspections reduced to once every two years.

Motorists are forking out over £250m a year on MOT test fees and unnecessary repairs, a new report by the Adam Smith Institute argues. 

Twenty thousand garages throughout Great Britain provide the MOT service, which costs drivers up to £29.65 for motorcycles and £54.85 for cars, with the average fee coming in at £33.60. But on top of the initial fee, the average driver will pay £143 in small repair costs (including backlighting of dashboards and speedometers) before the vehicle is ready to pass inspection.

Yet, the Adam Smith Institute argues, much of this cost is unnecessary. The MOT is outdated and fails to target the main cause of vehicle accidents.

New research by Alex Hoagland (the report’s author) and Trevor Woolley found that MOT-style vehicle tests are unneeded. In a statistical analysis, the researchers found that when Washington D.C and New Jersey abolished their inspections (D.C in 2009 and N.J. 2010) on either the rate or severity of accidents due to mechanical failure, suggesting tests were ill-effective at increasing car safety. 

The main culprit of car accidents in both the US and the UK is driver error. Over 65% of accidents in the UK are caused by driver behaviour including: speeding, driving under the influence of alcohol or drugs, and not using a seatbelt—none of which an annual MOT test can prevent.

But cars are becoming smarter and safer, and accidents are directly declining as a result, the report argues. In Great Britain road accident fatalities have dropped by about 57% in the last ten years alone, from 3,172 in 2006 to 1,792 in 2016. These reductions track the introduction of new cars with better safety features into the UK suggesting that safety of new car models, rather than the MOT test, is driving the reduction in safety. 

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Just 2% of road accidents are caused by mechanical faults in the UK. The same rate as in the  majority of US states that no longer require vehicle safety inspections. On January 1st, 2018 Utah became the 34th US state to scrap the requirement. In 2015 a US Federal Government report compared crash rates between US states and found no evidence that mandatory safety testing reduced traffic fatality rates.

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When the MOT test was introduced in the UK in the 1950s many cars on the road were second-hand and manufactured prior to 1940. Many had defects and hadn’t been serviced since their initial sale. The Ministry of Transport required an annual test of vehicles older than 10 years for steering, brakes and lighting. This quickly spiralled down to cars older than 3 years with extra testing on emissions added in the 1990s. But while safety features have been on the rise the test’s core components have remained unchanged.

While campaign groups like the Royal Society for the Prevention of Accidents continue to push the idea that recent declines in vehicle crashes and casualties in Great Britain were thanks in part to the MOT system, most recently in a government consultation in 2018, recent statistical analysis has shown these claims to be on shaky ground.  

Hoagland and Woolley highlight the repeal of mandatory inspections in New Jersey which had little—if any—effect on the car failures of fatalities rate, and that annual safety inspections have no effect on reducing either the rate of severity of accidents due to mechanical failures.

The paper suggests a number of reforms that the government could pursue to save Britons millions in garage fees and unnecessary part replacements, including:

  • Scrapping the MOT test altogether for all vehicles, except vehicles older than 3 years entering the United Kingdom from abroad.
  • Reducing the rate of vehicle safety inspections from annually to a less frequent interval (e.g., every 3 or 5 years).
  • Increasing the testable age of new vehicles from 3 years to 5 years (or more).
  • Separating the MOT into two tests: one less frequent test for vehicle safety inspection, the other testing only carbon emissions.
  • Focusing more resources on campaigns intended to reduce travelling without a seat belt, speeding, and/or substance abuse while driving.
  • Dedicate additional resources to the development and testing of driverless vehicles to remove driver-related accident factors.

Alex Hoagland, author of the paper, said:

“The UK has required MOT testing for decades, in order to prevent crashes and fatalities from unreliable vehicles. Nowadays, vehicles are safer than ever, leading some governments to re-inspect these programs. When these safety inspections were done away with in some US states, accident rates did not change. There’s no evidence that vehicle safety inspections improve vehicle safety.”

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

“MOT Tests are meant to prevent crashes and save lives, but they’ve never been put to the test themselves. New evidence from the US found that scrapping similar mandatory vehicle safety inspections had no impact on crash rates. Evidence, not gut feeling, should guide policy.”

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

To read the full paper, click here

Corbyn's policy picks the pockets of the many to subsidise the few

After Corbyn's swing to full Trump this morning with his Britain first announcement, Sam Dumitriu, Head of Research at the Adam Smith Institute, slammed the position of the leader of the Labour party:

“Corbyn’s Trump-style protectionism is a bad deal for consumers, taxpayers and the developing world. 

"His cronyist plan to dole out public contracts to British firms, even if it means taxpayers paying more, will effectively rule out any future trading relationship with the EU, US, or China – hitting exporters hardest.

"Free trade has lifted millions out of poverty while making ordinary consumer goods from t-shirts to food cheaper. 

"Corbyn’s policy would end up picking the pockets of the many to subsidise the few.” 

We've also sent the Labour leader a copy of the condensed Wealth of Nations as we know he's a busy man. 


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

EU's record fine for Google is anti-consumer and anti-innovation

In response to the EU's decision to fine Google €4.3bn for 'anti-competitive behaviour', Sam Dumitriu, Head of Research at the Adam Smith Institute, said:

“The European Commission’s decision to fine Google €4.3bn will make smartphones more expensive and make the market less competitive. Thanks to Android, it’s now possible to buy a new smartphone for under £50. Without it, smartphone makers would have to create their own or buy operating systems with the costs passed on to ordinary consumers. 

“Switching web browsers may have been too much for most Windows users in 2001, but in 2018 switching from pre-installed default apps is commonplace. After all, one billion WhatsApp users did it.

“Restricting Google’s ability to pre-install its own apps through agreements with manufacturers will reduce the incentive for Google to invest in and improve the Android platform. It could even lead Google to charge manufacturers upfront licensing fees to use the Google Play store. 

“It could even lead to an increasingly fragmented marketplace where app developers are forced to create multiple versions of each app, increasing costs for smaller players.”

Please get in touch with Sam Dumitriu (02072224995) to arrange an interview or further comment.

Smoke and mirrors in Khan's taxi congestion charge plan

Following the news that London Mayor Sadiq Khan wants to introduce congestion charges for Private Hire Vehicles, we welcome the change but are puzzled why it doesn't extend to London's Black Cabs too. 

Sam Dumitriu, Head of Research at the Adam Smith Institute, says:

"Sadiq Khan is right to try and tackle congestion through road pricing, but exempting Black Cabs is unwarranted and unfair.

"We need a level-playing field between Black Cabs and Private Hire Vehicles. Singling out Black Cabs for special treatement could mean more smog-spewing Diesel trips and fewer trips in cleaner Priuses."

For further comment or to arrange an interview, please contact Matt Kilcoyne via email( or on his mobile (07904099599).

Uber ruling shows London is open to competition and innovation

The Adam Smith Institute welcomes the sensible ruling by Transport for London on granting a 15 month license for Uber in the capital. 

Head of Research, Sam Dumitriu, says:

"Uber have rightfully had their license reinstated, albeit on a short-term basis. Transport for London’s original decision to revoke their license sent a message that London was not open to innovation and competition. They should now open London’s minicab market up to other foreign operators such as Lyft and Estonia’s Taxify. In the long run, competition will be the best regulator."

If you would like to arrange an interview or further comment please contact Matt Kilcoyne, Head of Communications, via email ( or phone (07904099599, or 02072224995).