Fat Cat Cod Stats Won't Help Workers

The High Pay Centre and Chartered Institute of Personnel and Development (CIPD) have declared today to be “Fat Cat Friday”.

Matthew Lesh, Head of Research at the Adam Smith Institute, commented:

“Another year, another set of cod statistics on executive pay. If these activist organisations actually cared about workers — and not just the politics of envy against our best and brightest — they would talk about ways to actually increase worker pay.”

“The only way to increase wages is by boosting productivity through innovation, cutting red tape, and making it easier for people to move for jobs.”

“In a global market for CEOs, British firms must be able to compete for top CEOs who provide immense value to companies. Decisions made by Britain’s makers and doers now have global impacts and their value to firms reflects this.”

“Limits on executive pay would drive top British talent and companies offshore, ultimately leading to fewer jobs and lower pay for workers.”

If you would like further comment, or to arrange an interview with a member of the Institute, please contact Matt Kilcoyne via phone (07584778207, 02072224995) or email (matt@adamsmith.org).

Government unskilled at guessing skilled migration needs

After the release of the government’s white paper on immigration post-Brexit, the Adam Smith Institute takes aim at the idea that government knows the skills employers need, better than employers do themselves.

Daniel Pryor, Head of Programmes at the Adam Smith Institute, said:

“Today’s white paper ignores the elephant in room—the Government’s nonsensical 100,000 annual net migration target. Most sensible politicians don’t think we should set arbitrary quotas on the amount of doctors and nurses we can bring into the country, but Number 10 seems determined to apply this logic to our post-Brexit migration policy. Taking back control of our borders means deciding who should be at the front of the queue, not pulling up the drawbridge to those who want to contribute to our economy and public services.”

“Scrapping the cap on high-skilled workers and taking a more liberal approach to post-study leave are long overdue and welcome reforms, but proposals for a £30,000 minimum salary requirement risk creating widespread skills shortages and should be scrapped without hesitation. This is pure central planning. There is a reason the government doesn’t manage hiring for UK natives; it is worse at identifying the skill gaps of businesses than those businesses themselves. This is equally true for foreign-born workers.”

“Restricting low-skilled workers to spending no more than a year in the UK pulls up the ladder and prevents these new Britons from working towards a better life for themselves and their families. Our post-Brexit migration policy looks set to make us all poorer, our society more bureaucratic and our country less open.”

If you would like further comment, or to arrange an interview with a member of the Institute, please contact Matt Kilcoyne via phone (07584778207, 02072224995) or email (matt@adamsmith.org).

Sadiq's food ad ban plan will add to TfL's unhealthy deficit

Health policy has to be based on evidence. But bad data is worse than no data at all, and our current method of measuring childhood obesity relies on bad data. There is no ‘childhood obesity crisis’. Which makes it all the more depressing that Sadiq Khan is pressing ahead with a pointless food ad ban for TfL.     

Daniel Pryor, Head of Programmes at the Adam Smith Institute, said:

“Transport for London are facing a £1bn operating deficit and now stand to lose an additional £200 million from Crossrail delays. Despite this, Sadiq Khan thinks now is the perfect time to sink another £13 million on a paternalistic fast food ad ban despite no credible evidence that it will reduce childhood obesity rates.”

“This multi-million pound hole in TfL’s budget will mean more delays, worse service, and higher fares for ordinary Londoners on their daily commute. Adults do not need the government to protect them from pictures of burgers and parents are capable of dealing with their children’s ‘pester power’.”

If you’d like further comment, or to arrange an interview, please contact Matt Kilcoyne on 07584778207 or email matt@adamsmith.org

Fiscal Phil's mish-mash means a botched budget

Today the Chancellor suggested his budget would help ordinary Britons, but with a Google Tax, a hidden hit on capital losses, and bad economics in a business rate cut, Philip Hammond looks out of touch with how the many millions on these islands live our lives.

Matt Kilcoyne from free market think tank the Adam Smith Institute said that what the Chancellor gave with one hand, he took with the other:

“Quintupling the investment allowance from £200k to £1m will mean businesses invest in equipment and machinery, it’s a promise to kickstart the British economy’s makers and doers. But if Mrs May and Mr Hammond want to see American levels of GDP and wage growth then they should move to have all investment be deducted from profits before tax.”

“What the Chancellor gave with one hand though, he took with the other as he hit firms large and small that make capital losses by restricting their exemptions—meaning less risk taking, less profit and fewer economic dividends.”

“It was a similar story in personal allowances. While the taxman will let us keep more of what we earn from April next year, the Treasury won’t link this with inflation for another two, so millions more will be dragged into higher brackets. The Chancellor’s penny pinching in the here and now will hit us all in the pocket later.”

The Adam Smith Institute’s Daniel Pryor, rebuked the Chancellor’s decision to bring in a digital revenue tax:

“A digital revenue tax—lifted straight from the Corbynite playbook—will punish the millions of people who shop online and use online services every day. The Chancellor should embrace tech firms that find innovative ways of giving consumers what they want at lower prices: not penalise them for having the temerity to scale-up or move beyond the traditional high street business model. He might not intend for the tax to be passed onto ordinary Brits, but economic facts don’t care about fiscal Phil’s feelings.”

Sophie Jarvis, from neoliberal think tank the Adam Smith Institute said the Chancellor’s cuts in business rates would mean a windfall for rent-seekers:

“The Chancellor thinks that businesses are like babies: he likes them when they’re small and cute, but rapidly loses interest and affection as they grow up (particularly if they’re tech focused). Hammond’s small business rates cut of ⅓ is good politics but bad economics. Cuts to business rates will lead mostly to a windfall for landlords rather than small business owners as they’re able to charge more rent on the properties these businesses use.

“The £675m future high street fund to help transform high streets back into places people live, work and socialise is welcome. In particular we welcome the policy transform unused commercial property to residential.”

If you would like further comment, or to arrange an interview, please contact Matt Kilcoyne via phone (07584778207, 02072224995) or email (matt@adamsmith.org)

Medical cannabis sees Sajid take the tories in the right direction

Following the news that the Home Secretary Sajid Javid is to allow doctors to prescribe medical cannabis to their patients, Daniel Pryor, Head of Programmes at the Adam Smith Institute, says:

“The Home Secretary has delivered a sensible, evidence-based approach to medical cannabis. It’s not a moment too soon. Patients like Billy Caldwell and Alfie Dingley will soon be able to legally access life-changing medication from their GPs. This should be celebrated.

“The UK is finally tip-toeing towards a common-sense reform of drugs policy and momentum is building in the UK and beyond. Nine US states have already legalised, with Canada legalising recreational cannabis next week. We should now follow in their footsteps to protect young people from the drugs trade and take back control of the unregulated black market.”

If you’d like to arrange an interview or further comment from Daniel Pryor please contact Matt Kilcoyne via mobile (07584778207), landline (0207224995) or email (matt@adamsmith.org)

Racial pay gap stats will not solve Britain's prejudice problems

Following the announcement of a review to force companies to reveal difference in pay between different ethnic groups, Matt Kilcoyne of free market think tank the Adam Smith Institute, says that it does little reflect Britain’s changing demographics, does not tackle remaining structural barriers to success, and shows a lack of understanding of the costs of prejudice on large firms:

“Few would deny that those from ethnic minority backgrounds face barriers to success. But we should learn lessons from the gender pay gap debate; crude figures across a whole company mask the different roles that people choose to do and equate CEOs to graduate schemers.

“Racial pay gap reporting won't explain the demographic changes that Britain has undergone. The older you are, the more likely you hold a higher position in a company. And older generations are more likely to be white. Migrants may face natural barriers to success from language, and illegitimate barriers from occupational licensing and discrimination. These figures will mask the complex causes of racial inequality and be used to sour relations between Britons.

“Rather than engaging with the hard task of removing structural barriers to opportunity many still face, this headline-grabbing measure will simply increase costs on businesses that already know the price of discrimination. Companies that deny themselves talent based on skin colour hit their bottom line, and they know the reputational risk of failing to tackle prejudice.”

To arrange further comment or an interview please contact Matt Kilcoyne via mobile (07584778207), office phone (02072224995), or email (matt@adamsmith.org).

Adam Smith Institute at Conservative Party Conference

This year at Conservative Party Conference in Birmingham the Adam Smith Institute ran three events. Firstly on the Sunday, a call for Britain to learn the lessons from cannabis legalisation around the world (more on the others later). Our event led the Evening Standard’s diary on Monday.

On Monday we released our 100 policies for Mrs May. On CapX our Matt Kilcoyne explained that if the Prime Minister backed some of our radical but reasonable policies she could go down in history as one of the great transformers. And on the Telegraph, he described the mood of conference where, for the first time, it seemed like Nimbys were on the run. Today Guido Fawkes covers our call for 10,000 refugees from Venezuela to be allowed to come to the UK.

Sam Dumitriu spoke to JOE.co.uk on about how to win young voters. It’s quite simple, paint an optimistic and positive vision for the future. Meanwhile the Guardian’s look at young Tories noted that Adam Smith Institute events attracted those least likely to be in suit and tie.

Our Ananya Chowdhury appeared on LBC with Jacob Rees-Mogg (from 7m:30s) and on the BBC alongside former intern Connor Axiotes.

And Sophie Jarvis, Head of Public Affairs at the Adam Smith Institute, spoke to LBC about Brexit and the Chequers Deal alongside Matt Gillow, journalist at the opinion site 1828.

Sophie Jarvis playing Matt Gillow at Chequers checkers

Our second and third events were held on Tuesday. The first with Octopus co-founder Chris Hulatt, John Penrose MP, Bim Afolami MP, and Fingleton Associates’ Eleanor Mack on Boosting Consumer Capitalism and making markets work for consumers.

Daniel Pryor, Martin Cullip of the New Nicotine Alliance, and the UKVIA’s John Dunner, joined a panel chaired by the Centre for Policy Studies’ Emma Revell on how harm reduction in tobacco policy could help save a million years of life.

After the Prime Minister’s speech our Sam Dumitriu’s reminder the rents had risen fastest where councils were mostly likely to be blocked made it into the Financial Times’ coverage of Mrs May’s conference speech. His comments on freedom of movement, on stamp duty and on letting councils borrow to build can be found here.

To arrange interviews or comment pieces with any Adam Smith Institute staff members please contact Matt Kilcoyne via phone (07584778207) or via email (matt@adamsmith.org).

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 matt@adamsmith.org

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 matt@adamsmith.org

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.”