As part of ongoing commentary around the nationalisation of Tata Steel UK, Ben Southwood and Sam Bowman appeared on BBC News, Sky News and the the BBC World Service last night to share their views.
Following the announcement that the government is willing to part nationalise Tata Steel’s UK operations and will be providing hundreds of millions of pounds of debt finance, the ASI's Head of Research, Ben Southwood, made this statement:
“Stepping in to part-nationalise Port Talbot and other Tata Steel operations in the UK, as well providing hundreds of millions of pounds of debt finance, will make Britain poorer in the long run and keep steelworkers dependent on state aid for the foreseeable future.
“If no buyer has approached at the market price, this means that the people who know the steel industry best have judged that Britain's steel sector is not viable in the long run. Sweetening the deal with government guarantees could mean permanently propping up an unproductive industry when the world is moving away from the sort of blast furnace steel production that Port Talbot has.
“There is an alternative: after the steel industry declined in Deeside in North Wales, an enterprise zone was created, which kick-started a revival in different industries with a future. Now, it is a booming site for advanced manufacturing of aeroplanes and cars.
"If there is to be state intervention, it should at least support industries that have a long term future."
Read the full City AM article here.
Read the full Telegraph article here.
Read the full Guardian article here.
Sam Bowman's comments on the latest Treasury report have been featured by a number of national outlets including BBC News, Reuters, the Daily Express and MailOnline.
"The Treasury's numbers are based on a scenario of Britain coming to a limited Canada-style free trade agreement with the EU, which would indeed be a poor outcome.
"The UK is far too deeply economically integrated with the EU for such a limited trade arrangement to work. But this is very unlikely to be what does happen.
"It is only likely if we think the government and civil service would seek a post-Brexit deal that they themselves believe to be against Britain's interests."
Comment from Sam Bowman, Executive Director of the Adam Smith Institute, appeared on the front page of City AM this morning in reference to the National Living Wage.
“If we are already seeing harm now, it’s likely that things will get worse and worse as the NLW rate rises each year. This is in stark contrast to the measured rises we saw under the Low Pay Commission, which was mandated to avoid unemployment. Now the rate is set according to whatever suits Osborne politically.”
Sam Bowman, Executive Director of the Adam Smith Institute, discusses the benefits of building on the green belt on BBC Radio 4 Westminster Hour alongside Vince Cable, Natalie Bennet and Iain Martin.
The ASI's new report titled 'UK PLC: Britain's Debt Time Bomb' has received excellent coverage across a number of national and regional newspapers, including the front page of The Daily Telegraph:
Every person in Britain would have to pay more than £53,000 to cover the cost of public sector pensions and other unfunded government schemes, a think tank warns. The Adam Smith Institute said the £1.85 trillion "hidden debt time bomb" was "staggering".
The Daily Mirror reported:
The Tories risk bankrupting future generations with a £1.85 trillion "hidden debt time bomb", experts warn. Around £1.3 trillion alone will need to be found to cover the 93% of public sector pensions currently unfunded, the Adam Smith Institute will say today. The think-tank's director Eamonn Butler said: "Home-owners worry about their mortgages and cut back when they are overstretched, but governments don't".
The Metro noted:
Reckless government spending risks bankrupting future generations with hidden debt of £1.85 trillion a think tank has warned. Two thirds of the "crippling" debt is made up of "unsustainable" public sector pensions, according to the Adam Smith Institute, which has accused ministers of disguising the true scale of the problem.
Overall the real cost of debt to every man, woman and child in the UK is £53,822, according to the institute. Report author Nigel Hawkins said excessive public debt must be cut "or condemn future generations to staggering financial turmoil".
The MailOnline reported:
The Adam Smith Institute's analysis of the Whole of Government Accounts found "crippling'" liabilities of £1.85 trillion on top of the national debt, two thirds of which is made up of "unsustainable" public sector pensions.
Report author Nigel Hawkins said: 'Successive Governments have failed to tackle the relentless increase in public sector pension liabilities, primarily for political reasons.
"Indeed, had leading PLCs, such as British Telecom, acted similarly in letting their already massive liabilities accumulate further, they would have been pilloried.
As a matter of real urgency the Government must vigorously cut these excessive public sector liabilities or condemn future generations to staggering financial turmoil."
The Daily Express reported:
Public sector pensions are a ticking debt bomb with around £1.3trillion needed to cover 93 per cent of the benefits that are currently unfunded, according to a report by the Adam Smith Institute.The state is taking on new liabilities, while disguising the huge debt that could implode for future generations, the think tank claimed after analysis of the Whole of Government Accounts.
It said the actions are both immoral and reckless with crippling liabilities on top of the national debt, two thirds of which is made up of "unsustainable" public sector retirement monies.
And from City AM:
The UK national liability figure, compiling "debts waiting to happen", brings the nation's total debt to £3.45 trillion, according to the Adam Smith Institute. The report warned the liability, which includes £1.3 trillion in public sector pensions, will cost every person in the UK £53,822.
In addition to public sector pensions, 93 per cent of which the Adam Smith Institute said are unfunded, the report picks out student loans as a major cost. The Adam Smith Institute quotes figures from the Department of Business, Innovation and Skills showing 45 per cent not expected to be repaid.
The report was also featured in print and online across 140 regional titles.
Read the full DailyTelegraph article here.
Read the full Daily Mirror article here.
Read the full Mail Online article here.
Read the full Daily Express article here.
Read the full City AM article here.
Read the full report here.
The Treasury's numbers are based on a scenario of Britain coming to a limited Canada-style free trade agreement with the EU, which would indeed be a poor outcome. The UK is far too deeply economically integrated with the EU for such a limited trade arrangement to work. But this is very unlikely to be what does happen. It is only likely if we think the government and civil service would seek a post-Brexit deal that they themselves believe to be against Britain's interests.
The best and most likely arrangement for the UK after Brexit would be to remain inside the Single Market – the so-called "EEA Option" – while disengaging politically from the EU. By maintaining economic union, at least for the foreseeable future, the UK can take the economic risk out of Brexit and voters can focus on the real question: whether political union with the rest of the EU is right for Britain and that the House of Commons would never vote through.
For further comments or to arrange an interview, contact Head of Communications Flora Laven-Morris at email@example.com / 07584 778207.
Study reveals crippling national liabilities of £1.85 TRILLION on top of the national debt and warns that feckless government risks burdening our grandchildren with mammoth public pensions bill
- National liabilities of £1.85 trillion out-strip the national debt by £250 billion but are concealed by government
- Two-thirds of national liabilities made up of unsustainable public sector pensions
- 93% of public sector pensions currently unfunded, with no government money put aside to pay £1.3 trillion of inevitable debt
- 45% of student loans predicted to be a write-off by Department of Business, Innovation and Skills, forcing the taxpayer to fund vanity degrees
- Real cost of debt to every man, woman and child in the UK £53,822 each
The government’s total liabilities, better understood as debts waiting to happen, are even larger than its mammoth public debt at £1.85 trillion, according to a new investigative paper from the Adam Smith Institute.
The report exposes the true state of affairs which consecutive Chancellors, including George Osborne, have struggled to keep out of the public eye for years. By exploiting jargon and downplaying its own reports to the public, the government has consistently disguised the true size of the monolithic debt the UK’s young must pay, with the total cost standing at a staggering £3.45 TRILLION, more than double the national debt figure that George Osborne usually cites. The total cost of these liabilities, on top of the national debt, to every man, woman and child in the UK is a massive £53,822 each.
Public liabilities can be considered inevitable debt as they refer to inexorable costs and losses to the public purse such as student loans that will never be repaid and public sector pensions, as well as expensive current obligations such as Network Rail, whose £38 billion debt has just been incorporated into the public purse, and RBS shareholdings, which based on current share prices rack up another £22 billion loss to the taxpayer.
The paper, which critically analyses the Whole of Government Accounts published by the government, applies best practice auditing standards to the government’s own assets and liabilities, concluding that the majority of UK national liability is made up of £1.3 trillion in public sector pensions. These public pensions will severely impair the financial prospects of future generations and are yet to be addressed in any meaningful way by the current government despite their proclamations of being in a time of austerity.
An eye-wateringly high 93% of public sector pensions are currently unfunded, meaning that the government is yet to put any money aside to pay for them, choosing instead to bury their head in the sand safe in the knowledge that they’ll not be in office when it’s time to cough up the cash.
In order to deliver on its public sector pensions promises the government will have to raise £1.3 trillion through increased taxation and further cuts to public spending, on top of the cuts already being made to tackle the more widely publicised £1.6 trillion public debt.
Student loans also come under fire in the report as recent figures from the Department of Business Innovation and Skills indicate an expected write-off ratio of up to 45%. In effect it would mean that almost half of those in higher education to whom loans were extended actually received large grants irrespective of their means. The taxpayer is ostensibly fully funding increasing numbers of meaningless degrees for financially capable students whilst having their own welfare cut.
Dr Eamonn Butler, Director of the Adam Smith Institute, said:
Homeowners worry about their mortgages and cut back when they are overstretched, but governments don’t. Instead they keep taking on new liabilities, with schemes that buy votes today but mortgage the future of our children and grandchildren. This is not just wildly reckless, it is deeply immoral too.
Every law going through Parliament should have a price tag showing not just what it costs us today, but what it will cost us far into the future. Then, like the rest of us, politicians will have to live within their means.
Author of the report, Nigel Hawkins, said:
Successive Governments have failed to tackle the relentless increase in public sector pension liabilities, primarily for political reasons. Indeed, had leading PLCs, such as British Telecom, acted similarly in letting their already massive liabilities accumulate further, they would have been pilloried. As a matter of real urgency the Government must vigorously cut these excessive public sector liabilities or condemn future generations to staggering financial turmoil.
Notes to editors:
For further comments or to arrange an interview, contact Flora Laven-Morris, Head of Communications, at firstname.lastname@example.org | 07584 778207.
To report ‘UK PLC: Britain’s Hidden Debt Time Bomb’ will be live on the Adam Smith Institute website from 09:30 18th April 2016.
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.
Ben Southwood, Head of Research at the Adam Smith Institute, discusses CEO pay on BBC News following BP shareholders rejecting CEO £14m pay package.