CentreRight

Re: Cough up

In the comments people have already pointed out some of the key flaws in Policy Exchange's new report calling for increased taxes on smoking.  The critical table in their report is this one:

 
Their source for healthcare costs - a report from the taxpayer funded political campaign ASH - has an extremely dodgy methodology.  While the report is quite vague about its data and method (often a sign people are up to something dodgy) it compares rates of "hospital admissions, outpatient visits, GP and practice nurse consultations and prescriptions".  That is a problem because smokers don't die more often that non-smokers, we all die once, just of different conditions.  And I'm pretty certain that method won't properly count care for Alzheimer's sufferers for example, which smokers tend to avoid by dying early.

Re: Tax rises are inevitable - the debate should be about the least worst option

There are a few arguments I want to respond to in Lucy Parsons post about Reform's report on tax policy.

"Canada provides a good rule of thumb. The1995 Budget included CA$7 in spending reductions for every CA$1 increase in tax revenues.  The result was public support for the process of restoring the public finances – as the burden was on government getting its own house in order rather than placing the burden on taxpayers."

Canada has arguably the most decentralised system of public finances in the developed world.  Sub-central government accounts for over 60 per cent of spending against under 30 per cent here and that is largely paid for locally.  The real Canadian success stories in the mid-1990s were in the provinces.  For our upcoming book How to cut public spending and win an election (set to be published by Biteback on March 31st), Tasha Kheiriddin and Scott Hennig have written a superb chapter about the experience in Ontario - Canada's most populous province - and Alberta - the most populous and fastest growing of the prairie provinces.  They set out how robust governments "not only campaigned on a promise of tax relief, balanced budgets and smaller government, but delivered on those promises."

The other side of the political equation on Heathrow starts to become apparent

I haven't written about Heathrow for a while, I think this was my last post on the subject.  My view is still that the Conservative policy of blocking expansion would be very bad news for British businesses and taxpayers, as Heathrow is Britain's hub airport and preventing it competing with other hubs in other countries will mean airlines fly to fewer destinations, and less frequently, from London.  We'll all have to put up with less choice and longer, more expensive flights.  That will make Britain a less attractive place to work and invest in and hurt the economy.

The political argument for blocking Heathrow expansion was that it was a way of gaining support from people in the West London marginals (ironically, I think that includes me).  But I've always been a bit sceptical of that argument.  After all, one of the things about flying is that you only need to build infrastructure, and cause disruption from noisy planes, at the start and end of the route.  Even if you think the Conservative plan to substitute new high speed rail links for the airport is credible - and I don't think it is, it will cause disruption along the entire length of the route.  There has to be a pretty serious risk that you create as many political battles with locals who dislike the new project as you avoid by blocking Heathrow expansion.  That seems to be confirmed by the Guardian story this morning:

"One Tory party source acknowledged concerns that the route could go through key constituencies between the home counties and the West Midlands, triggering complaints about property blight from houseowners. "We don't want to lose 10 seats backing a route blindly," said the source."

New TPA video on DEFRA Climate Change Propaganda

We've got a new research note out this morning on the DEFRA Climate Challenge Fund.  They spent £8.6 million funding projects aimed at "raising awareness" or "attitude modification" about climate change.  Some of the projects were as mad as a box of frogs.  There are details in the research note but we've also produced a video highlighting some of the videos and computer games produced with Climate Challenge Fund grants:

This is the first video produced in-house by Andy Whitehurst, who has just joined the TPA.  We're hoping that regular, snappy web videos like this can really help engage people with our research findings and the TPA campaign.  They'll be a great complement to the bigger productions we've commissioned in the past, which you can see on our YouTube channel.

Geoffrey Lean on climate change policy

I was a little disappointed by Geoffrey Lean's column in the Telegraph (via Tim Worstall).  Not because I expected to share his views, but because it dealt with the central point so lazily.  He spends paragraph after paragraph talking about how unpleasant and unproductive the fringes of the debate over global warming science are.  That's fine, though people will differ over which side of the fence bears a greater share of the responsibility for it.  For someone telling a similar story from a different perspective, read Chris Horner's book Red Hot Lies.

But Lean has a bigger point in mind:

"The debate will surely continue. But is there a productive way forward? All sides condemn waste of the world’s resources. Conserving energy, reducing the use of fossil fuels and replacing them with clean sources is important for national security, and reducing other forms of air pollution besides the emission of greenhouse gases. It is also, as more and more economists and entrepreneurs are realising, an effective way of creating jobs and stimulating new, and sustainable, economic growth.

I think such a programme is necessary to head off dangerous climate change. But even if I am wrong, it would make the world a better, more prosperous place. Could all sides back it while continuing to argue about the science? That really would be a shock."

And that's it.  End of article.  Regardless of the science of global warming, he argues that we should put in place these policies in order to create jobs, stimulate growth and accomplish a myriad of other objectives.  But, despite that being the central point in his article, he just asserts that green policies will achieve those things.

"Why do people often vote against their own interests?"

It's hard to imagine the BBC publishing an article as utterly patronising and unthinkingly biased as this one about any country but the United States.

If there is one area where the BBC really could do the British public a service, it would be by helping them understand Americans.  Most Britons are interested in what is going on over the pond and, thanks to the enormous raw economic power of the United States, they have an interest in understanding how its leaders and ordinary citizens think.

Instead, they try and feed us this kind of rubbish.  Describing opposition to the new healthcare bill as being driven by "the ones who think it is socialist, godless, a step on the road to a police state".  Or describing the town hall meetings - which were often heated but were thoroughly democratic - as "an explosion of rage and barely suppressed violence".  Biased BBC have noted just how pernicious that term "barely suppressed" is, it allows someone to be cast as dangerous without them actually having done anything.

Bill Gates on climate change policy

Bill Gates has a new blog called The Gates Notes.  One of the early posts is about climate change policy.  It doesn't deal with the question of whether climate exists and is driven by human activity and doesn't deal with balancing reducing emissions against other objectives.  But, it does highlight some of the key issues which those who are really convinced of the case for radical cuts need to think about.

He makes the really important point that if you focus on the 2020 or 2025 targets or the 2050 targets, then they might recommend very different responses.  His post isn't long and is worth reading in its entirety but, for the sake of brevity, I'll reorder it a little here:

"Should society spend a lot of time trying to insulate houses and telling people to turn off lights or should it spend time on accelerating innovation?

[...]

If addressing climate change only requires us to get to the 2025 goal, then efficiency would be the key thing. [...] Because 2025 is too soon for innovation to be completed and widely deployed, behavior change still matters.

[...]

To make the 80% goal by 2050 we are going to have to reduce emissions from transportation and electrical production in participating countries down to zero. [...] If the goal is to get the transportation and electrical sectors down to zero emissions you clearly need innovation that leads to entirely new approaches to generating power. [...] [You] can never insulate your way to anything close to zero no matter what advocates of resource efficiency say. You can never reduce consumerism to anything close to zero. [...] Innovation in transportation and electricity will be the key factor.

I believe the key one to achieve is 80% by 2050."

Unfortunately, European climate change policy - with Britain an extreme example - is almost entirely focussed on the 2020 targets and trying to push existing technologies like wind power into use immediately, rather than thinking about what it really means if there is an imperative to cut emissions 80 per cent by 2050.  Wind power and increased efficiency aren't going to get us to the kind of cut that has been enshrined in the 2050 target.  That will mean either democratically untenable cuts in consumption or missing the targets as action focussed on the 2020 targets locks in high costs.

Current EU climate change policies are exceptionally expensive and will mean rapid rises in electricity prices in the years to come without really forming a credible strategy to achieve the objective of major cuts in emissions by 2050.  Other countries outside the EU won't follow that lead.  That means it shouldn't just be sceptics outraged at the expensive and inefficient combination of cap and trade and renewable energy subsidies that has been imposed on British consumers, those who take the possibility of catastrophic climate change most seriously should be as well.  As we set out in the TaxPayers' Alliance report Ending the Green Rip-Off, we should reform policy to cut the cost to consumers and focus on putting Britain's scientists and engineers to work on innovations which might offer a more credible alternative to fossil fuel energy than the ones currently on offer.

Climate change policy can undo fiscal policy

The survey that Conservative Home released yesterday is very important.  The top priority for the 141 candidates who answered the survey was cutting the deficit, the lowest priority was reducing Britain's carbon footprint.  That doesn't necessarily mean that new candidates are ardent sceptics of climate change science or policy, it could be that they are all in favour of the current direction of policy but just don't think it is as important as the other eighteen objectives on the survey.

My guess is that they are somewhat more sceptical than the leadership but that their thinking on the way forward politically is probably quite similar.  Don't propose any major changes to the current set of climate change policies (massive subsidies to renewable energy, maintaining the EU Emissions Trading Scheme, get people out of planes and cars and onto trains), make minor changes around the edges (changing the way energy efficiency improvements are financed, for example) and focus on higher priority issues.  They may not be convinced that the status quo is working (academics looking at the issue have described European climate change policy as an abject failure) but who needs to add a battle with Greenpeace to the list of political challenges facing an incoming government, who needs that distraction from the important business of bringing down the deficit?

That is an understandable point of view.  But the rising cost of existing climate change policies is likely to frustrate any attempts to ignore them.  A report for investors from Citigroup argues that energy bills are likely to have to rise 57 to 100 per cent in order to finance the massive investment that is being required by climate change targets.  They think that will cause an "affordability crisis" as even families on average incomes find their energy bills becoming an intolerable burden.  The poor and elderly will be even harder hit and increasing the cost of coping strategies like electric heaters will increase the number of deaths in the winter cold; last year excess winter mortality was over 36,000.

Re: Nick Herbert: I am determined to curb the power of the supermarkets

Nick Herbert is clearly pretty upset with our criticism of his proposal for a Supermarket Ombudsman.  But, most of his arguments in response are pretty spurious.

The comparison Mark made on the TPA blog to the price-fixing that emerged from the First World War wasn't to suggest that the Conservatives were planning on putting exactly that set of rules and regulations in place.  It was simply making the case that Government intervention in agricultural markets tended to cause more harm than good and reanimating that principle is a very dubious idea.  Those policies, just like the regulator being proposed by the Liberal Democrats, will also have been rationalised as attempts to defend the interests of consumers.  But, they wound up proving entirely counterproductive.

This is particularly important because Nick can set out what he expects a Supermarket Ombudsman to achieve, and frame its objectives narrowly to address a particular perceived market abuse, but once such a quango is established it can steadily expand its remit and intervention in the market.

The Competition Commission actually found that most of the criticisms of the supermarkets didn't stand up to scrutiny.  Some examples:

"Many parties raised the strong market position of Tesco as a matter of concern. We did not find there to be competition concerns that apply to Tesco over and above those that apply to other grocery retailers."

"We found that large grocery retailers, particularly the four largest grocery retailers and especially Tesco, generally obtain lower prices from suppliers than wholesalers. We concluded that these differences in supplier prices in themselves do not give rise to an adverse effect on competition (AEC). Further, we did not find evidence that lower supplier prices for the four largest grocery retailers resulted in higher supplier prices for other grocery retailers and wholesalers."

"We concluded that the current and projected financial performance of the grocery wholesaling sector did not support a finding that the financial viability of the sector was threatened."

"We did not find that the pattern of below-cost selling by large grocery retailers represented behaviour that was predatory in relation to other grocery retailers and did not find that it was likely to have unintended consequences that would represent an AEC. Further, we did not find that below-cost selling was likely to mislead consumers in relation to the overall cost of shopping at a particular grocery store. We found that temporary promotions on some products, including fuel, to attract consumers and increase total sales (commonly referred to as ‘loss leading’) may represent effective competition between retailers and may benefit consumers by reducing the average price for a basket of products."

"Competition concerns have only been raised with us in the context of the vouchering activities of one grocery retailer, Tesco. We did not find that these activities were predatory or would otherwise have an AEC. Similarly, we did not find that the fuel price discount vouchering of large grocery retailers had an AEC. In our view, vouchering campaigns, in the absence of predatory behaviour, represent effective competition between retailers that benefits consumers by reducing their shopping bills."

"We found that Sainsbury’s and Tesco’s expansion in convenience store retailing was likely to have been supported in large part by their existing advantages in terms of brand reputations, low purchasing prices and distribution networks. We did not find their expansion in this sector to be anti-competitive, and to the extent that it has resulted in increased competition, consumers will have benefited. Further, we did not find that Sainsbury’s and Tesco’s expansion in convenience store retailing weakened the competitive constraint on Sainsbury’s or Tesco such that it led to a deterioration in their retail offer (either at their convenience stores or other grocery stores) or a loss of choice in grocery stores for consumers."

Sorry to pull such a large number of quotes from the report, but it is important to make clear that it is dominated by evidence of a well-functioning market, with fierce competition to attract customers.  You can see that in the fortunes of the different supermarkets recently, with Tesco losing ground to other supermarkets then recovering after it improved its proposition to consumers, for example by strengthening the Clubcard scheme.

Help the poor, the elderly, manufacturing industries and commuters; reform climate change policy

Today the TaxPayers' Alliance is releasing a new report (PDF) on green taxes and regulations, Ending the Green Rip-Off: Reforming climate change policy to reduce the burden on families.  The report sets out the huge and excessive burden that green taxes impose on families and business across the UK, it also provides local estimates which show how different areas are affected.

When the TPA has released reports on this subject before we've had a great debate on Centre Right.  You can find the different posts about the last edition, released in August 2008, by working backwards from this post.  It showed the potential of the blogosphere to enable a real "back and forth" debate instead of just a report and then a response with no follow up, which is often all that is possible in the mainstream media.

The key message that Conservatives should take from this report, particularly Greg Clark MP who wrote for the Platform yesterday, is that there is a huge opportunity waiting if they reform climate policy.  Of course, it is easy to read too much into what the polls are saying right now, but it does look like they will have to work hard to avoid a hung parliament.  If they win in the Spring, then the Conservatives will be looking to win a second term after imposing considerable fiscal restraint.  They need something to sweeten that bitter pill, a way of giving voters a significant material reason to vote for them despite having no money to spend.

Rhetoric and reality in Alistair Darling's speech

At the TaxPayers' Alliance website, we've been following some of the nasties in the Budget.  There are a few which are particularly nasty, and run completely contrary to the objectives Alistair Darling set out in his speech.  Let's take a few quotes from that speech, and then look at the actions which will undermine his worthy rhetoric:

Higher VAT is an unacceptable tax on the poor

This morning, the TPA will be releasing a new research paper (PDF) looking at how the different parties have responded to the fiscal crisis.  The scale on which Britain is currently borrowing means that action is essential.  If the structural deficit - at nearly 8% of GDP according to the IMF - is not addressed seriously soon after the next election then we risk losing our current credit rating.  There is then a real risk of getting forced into much more brutal measures than would initially have been necessary as we are forced to take more and more drastic action to control the cost of borrowing.

The situation is worse because it follows a decade of tax rises.  Families and businesses are already living under the burden of perhaps the most complex tax code in the world, the cost of everything from flying to selling a home has been steadily pushed up by tax hikes and we have fallen behind in the race to attract capital with low tax rates.  What that means is that tax rises invariably fit into two categories:

• Increasing taxes on capital or 'the rich'.  These tax hikes might be politically satisfying but they are likely to raise little revenue, no revenue or even lose money and hurt the long term health of the economy.
• Increase taxes on those on low and middle incomes.  This is the only way of reliably increasing revenue, but ordinary families are already facing huge pressure on their finances.

The Government have mostly proposed tax rises that fit in the first category.  The 50p rate won't raise any money, it is an exercise in counterproductive distraction from the actual task of reducing borrowing.

On the other hand, many analysts think that the Conservatives are going to increase VAT to 20 per cent, after it has gone back up to 17.5 per cent.  That would be very regressive, this graph from our report shows just how regressive:

The Public Sector Rich List

By TPA Policy Analyst John O'Connell.

In our recent report with the Institute of Directors – How to Save £50bn (PDF) – we advocated a public sector pay freeze as one of key measures to tackle the fiscal crisis. Politicians from all parties followed suit during the Conference season. But in particular we were told that executive pay in the public sector had to be reined in. The squeeze had to start at the top.

George Osborne promised that under a Conservative Government anyone who is to earn more than the Prime Minister will have to have their pay signed off by the Treasury. More recently, Harriet Harman blocked the proposed remuneration package for the new boss of the now infamous Equality and Human Rights Commission. Vince Cable, rarely without an opinion, has also been vocal on the subject.

The TPA’s annual Public Sector Rich List 2009 (PDF) will help to inform this debate.  As we limp out of recession, our comprehensive audit reveals that last year over 806 public sector executives earned over £150,000. Our recent groundbreaking work on the semi-autonomous state (PDF) has helped to facilitate a bigger survey than ever, but nonetheless the estimate is still a conservative one.

Those executives in this year’s list managed a 5.4% pay rise last year, which is particularly pertinent when frontline workers across the public services face having their wages frozen to help ease the public debt. Reigning in this culture of guaranteed pay rises and bonuses among public sector executives is an enormous task but one that must be tackled head-on now. Our Public Sector Rich List is the only document that collates high earners in the public sector, and one gets the distinct impression that no politician has a grasp on the true extent of top brass pay. The list is awash with ‘managers’, including those at NHS and Primary Care Trusts. Quango bosses and BBC executives feature heavily too, as do Transport for London (who frustratingly do not disclose the names or positions of any of their 50 staff on over £150,000).

The Conservatives can't avoid the big issues on climate change policy

I share Tim's objective of a "realist" policy on climate change.  But, I'm far less sanguine about Conservative policy on this issue.  Unfortunately, it looks like they're ducking the big issues.  Tim highlights one area in which their policy might help achieve important objectives like cutting energy bills and cutting emissions: energy efficiency measures at home.

What that misses is that the public are already making pretty rapid progress in improving the energy efficiency of their homes.  Nearly 95 per cent of suitable households have loft insulation, and most of those at a thickness of 4 inches or more.  85 per cent of households have double glazing, and most of those have it in 80 per cent or more of their rooms.  Nearly 95 per cent of households with a hot water tank have it insulated, and yet again most of those have thick 3 inch insulation.  The only major efficiency measure that isn't installed by the majority of suitable households is cavity wall insulation, at just over 40 per cent of suitable households, but even there steady progress is being made.  All those figures are from official domestic energy consumption (XLS) statistics.

Exciting estimates of potential savings through energy efficiency gains tend to be premised on entirely redesigning the housing stock, which isn't going to happen with the long lifetimes of houses in Britain.  The low hanging fruit has already been picked.

In light of all that, I'm a bit worried that too much focus on improving home energy efficiency is a bit like callous calls for people to "put a sweater on" when tens of thousands of elderly people are dying from the winter cold each year, an unintended case of blaming the victim for their suffering when energy prices rise.

Big government projects keep going over budget

This morning the TPA has released a new report on the record of big government projects going way over budget.  It finds that the average overrun was a massive 38 per cent.  Bear in mind, that average includes those projects that came in under budget, it includes projects where the amount ordered was cut, it includes projects that have also been massively delayed.  This is a record of a massive failure to properly budget and control costs.

That is an even worse record than the last time we studied this issue back in 2007.  There is no simple solution, fixed price contracts can create as many problems as they solve.  Government will need to be more careful about embracing ambitious projects and improve the skills and incentives for politicians and officials to effectively manage procurement once a project is underway.

Most importantly, and in order to avoid major buyer's remorse, the British public, politicians and officials need to keep the results of this study in mind when new schemes are proposed.  The Olympics should never have been sold to people on the basis of its absurd initial costing of £2.4 billion.  Network Rail have proposed a £34 billion new high speed rail line, in considering whether that represents good value for money everyone should keep in mind that the final bill may be more like £45 billion.

There are huge political opportunities in climate change policy, for any party ready to take them

This morning, Tim blogged about the enemies of the next Conservative government.  One of his entries was:

"The climate change industry or energy consumers. One of these groups will end up unhappy. The Tory leadership can keep the climate change industry happy by pursuing expensive renewables and avoiding coal or it can keep energy prices down. Tory members are convinced that energy consumers should be the group we protect."

As we have discussed in the comments on earlier CentreRight posts, I think there is a huge political opportunity in this area.  The Conservatives currently appear to be stuck around the narrow majority or hung parliament level in the polls.  By promising a reformed climate change policy that cuts people's energy costs, they could really offer ordinary new, tangible reasons to vote Conservative that could change that situation and put them on the path to greater electoral success.

Recently we released a report on the Emissions Trading Scheme, and the burden it has imposed on consumers across Europe.  In Britain, the bill is about £3 billion, equivalent to around £117 per family.  That means higher electricity bills and spells trouble for manufacturing companies, as energy is often one of their biggest costs.  Important policy objectives like diversifying the British economy so it is less reliant on financial services and reducing fuel poverty are being undermined by the ETS and other regulations like the Renewables Obligation.  Climate change policies make up 14% of domestic electricity bills and 21% of industrial electricity bills.

At the same time, these policies aren’t doing much to curb climate change.  As research (PDF) for the LSE Mackinder Programme and the Institute for Science, Innovation & Society at the University of Oxford has argued, existing policy has abjectly failed to decarbonise the European economies that have adopted it most enthusiastically.  Our report shows the big problem with the ETS - the carbon price is hopelessly volatile, and that isn’t going to change.  As the supply of allowances is capped any change in demand is reflected entirely in the price, leading to wild swings.  The Renewables Obligation provides huge subsidies for wind farms that do little to cater for our need for reliable base load power.

The EU Emissions Trading Scheme cost British consumers £3 billion in 2008

Most Britons will never have heard of the EU Emissions Trading Scheme.  But it is costing them a fortune.  Our new study estimates that the bill in 2008 was £3 billion, equivalent to around £117 per family.  Across the EU the cost was around €93 billion between January 2005, when the scheme was introduced, and the end of 2008.  When the ETS is added to other climate change policies such as the Renewables Obligation, they amount to 14 per cent of the average household electricity bill.

That burden has fallen disproportionately on the poor and elderly.  They spend a far larger proportion of their income on electricity, often twice as much as those who are on a higher income or younger.  That means that there are serious social consequences as the poor face greater hardship thanks to government climate change policies.

Another group who suffer are manufacturing industries.  Energy is a significant part of the cost base of a range of firms.  While attempts are made to help them in various ways, that is a poor substitute for not having their competitiveness undermined in the first place.

The ETS is therefore not just expensive, but also undermining key policy objectives: We're imposing a significant burden on people with low incomes, thereby increasing welfare dependency.  And, we're hurting industry which will only make us more dependent on the City and increase regional inequality.

For all that, it is pretty ineffective at cutting emissions.  Prominent environmentalists and energy companies have called for a floor on the price, as it keeps collapsing.  That would bring into question the whole point of the trading scheme.  The volatility of the price both makes it that bit harder for families and businesses to manage their budgets and weakens the incentive to invest in cutting emissions.

The scheme should be abolished.  Making sure developed and developing countries are rich, free and democratic enough to deal with whatever nature throws at them and investing in technology, so we have better options than the uneconomic alternatives to fossil fuels available now, is a better way forward.

“Dodgy” bacon was heroin

I think this is a new candidate for best government press release title ever.

Alphabet soup government

Today at the TaxPayers' Alliance we've released a new report on the range and scale of the semi-autonomous bodies (SAPBs) that do so much of the work of government these days.  The 1,152 national SAPBs (the term "quango" is responsible for a lot of the confusion that surrounds this issue) employ over half a million staff and spend more than £90 billion.

There are a series of problems with so much of government being conducted through these organisations:

• Accountability. Too often, SAPBs are used to avoid Ministers being held to account for the performance of public services.  The SATs fiasco, and the Government's attempt to avoid its share of responsibility for that failure, is a classic example of this problem.

• Once SAPBs are established they are incredibly difficult to kill off, even if they aren't performing, and their cost and scale tends to grow.  Regional Development Agencies are a good example of this, as we set out in our earlier report The Case for Abolishing Regional Development Agencies (PDF).

• A lot of the taxpayer funded politics in our recent report (PDF) on Taxpayer Funded Lobbying and Political Campaigning was supported by SAPBs.

• There have been ongoing concerns at the amount of cronyism in the SAPB sector. Forthcoming TPA research will be exploring this problem in much more depth.

• Too many SAPBs replicate the work of other SAPBs, local government or the central government departments.

The Conservatives need to be a lot more ambitious about cutting back SAPBs.  In our recent work with the IoD and today's report we've suggested some dead wood which could be used to start a decent sized bonfire.

Why I stopped reading the Economist and the attitude that led to the financial crisis

At one point I was an avid reader but, as the Economist descended into nothing more than a witty distillation of the conventional wisdom of the moment, it stopped being interesting.  This piece really exposes their thinking:

"Here's the thing: as history progresses, things change. And societies try to adapt to those changes. Experts come up with solutions to the problems the societies face. Those solutions often entail discomfiting established interest groups. And the solutions the experts come up with almost always entail some degree of perverse counterreaction, some kinds of problems or inefficiencies or whatever. It can be very interesting to focus on those counterreactions; it can generate fascinating, eye-grabbing journalism. But in the overwhelming majority of cases, the counterreactions aren't as big as the first-order effects of the solutions. The minimum wage may price a few people out of the labour market, but it mostly raises low-income people's wages. Raising marginal income taxes does slightly lower rich people's incentives to generate income, but it mostly raises government revenue. In other words, the little contrarian thing is almost never anywhere near as important as the big first-order thing it rides on. And as journalism has come increasingly to focus on contrarianism, it has become less and less adept at actually describing the world."

We can argue about the specific things claims they've made.  For example, the effect of tax cuts and hikes on revenue clearly depends on which tax and over which time period.  There is plenty of evidence (PDF) that corporate tax cuts increase revenue quite quickly, for example.  And, abolishing the 50p rate would increase revenue as well.  I haven't read the Superfreakonomics book that is the main subject of their article.  But what really struck me was their overall argument that journalists should pay less attention to second-order, unintended consequences of proposed policies. 

Keeping Britain moving: the roads are the key

At the TaxPayers' Alliance we're working with the Drivers' Alliance to produce new research on transport and environmental policy.  The first product of that new partnership is a new research note (PDF) out today setting out how much is spent on different forms of transport per passenger kilometre.

The transport budget is likely to face cuts as part of the response to the fiscal crisis.  Leaked reports have suggested that transport as a whole might lose as much as £29 billion in over ten years.  That means politicians will need to set priorities.

The key priority should be easing congestion and overcrowding.  We need to keep Britain moving despite the fiscal crisis and the roads are gridlocked and commuter trains packed out.  That means the key criteria should be how many passenger kilometres each mode of transport can provide for a given amount of public spending.  Our report shows that more than ten times as much is spent on the trains for every passenger kilometre travelled on them as is spent on the roads.  The roads move a lot more people a lot further for every pound spent.  The same goes for freight, the roads move more goods further for every pound spent.

People might argue that we need to prioritise railways in order to make up for the environmental costs of motoring.  But, motorists more than pay in taxes for both the roads and the social cost of their emissions - with £18.4 billion to spare.

Politicians in Westminster need to understand that for most of the country driving is by far the most important mode of transport.  The road network has to take priority over flashy new rail projects if we are going to make the best use of whatever resources are available.

£6m of our money spent to scare the children

Nature have called it the Worst. Climate. Campaign. Ever.  The Register's report has more detail of what has happened, including a quote I gave earlier today.

£6 million of our hard-earned cash went on this.  That's a lot of money.  We're facing arguably the greatest fiscal crisis in our history and the Government spend millions on an attempt to scare children into thinking that if they leave the lights on it'll drown their dog and make bunnies cry.  The mind boggles.

China and climate change

It's worth trying to read between the lines in Hu Jintao's speech at the UN climate change conference in New York yesterday.  Leaving aside the waffle that you always get in any politician's speech on the subject, the BBC cuts to the important bit about what China might be prepared to do:

1. Cut carbon intensity (emissions per unit of GDP) from the 2005 level by 2020.  This probably doesn't require any policy interventions at all.  As technology continues to increase efficiency, giving us better cars and better power plants among other things, most countries produce more with less.  Across the OECD, between 1993 and 2005, emissions intensity fell (PDF) by around 1.64% each year.  The difference between unspecified cuts in emissions intensity and specific cuts in emissions, of the kind we have signed up to, is huge and this pledge doesn't really mean anything in terms of reaching the kind of global targets people are throwing around.

2. Increase the amount of renewable and nuclear energy, rising to around 15% by 2020.  Currently, about 6% of China's power comes from hydroelectric plants and 1% from nuclear.  Other renewables produce 0.06%.  This pledge will mean more dams and more nuclear plants, not more windmills.  Again, that's a very good idea but it's very different to the direction of policy in the West.  Environmentalists tend to be sceptical of some dams and nuclear power.

3. Increase forest coverage.  If you look at this measure, then we may seriously need to reappraise the performance of the United States.  In his book Hard Green, Peter Huber argues that America releases about 1.6 Petagrams of carbon into the air each year by burning fossil fuels but then takes about 1.7 Petagrams in through terrestrial uptake.  That is thought to be driven by a number of factors including regrowth of forest cover on abandoned farmland and previously logged forests.

4. Spend on technology.  This is going to happen, most of the spending will come from the private sector but it would be reasonable to complement the existing incentives produced by the patent system with a rigorous system of prizes.

The background to all this is that China is playing climate change poker ahead of the negotiations at Copenhagen.  They want to make a deal that involves little or no action that might imperil economic growth while making plenty of pledges that sound serious, and allow them to demand payment from the West for their trouble.  This is all about a hard headed assessment of what is in China's national interest.

Environmentalists have a democracy problem

Most politicians, of all parties, are certainly signed up to the idea we should do radical things to cut greenhouse gas emissions.  The Climate Change Act - which could easily require (PDF) cutting the size of our economy by over 75% in 2050 to meet the 80% target - was passed with overwhelming support despite unseasonable October snows that evening.  The environmentalists aren't doing quite as well at convincing ordinary people.

Recently the IPPR did some focus group research (PDF) into how to design "climate-change communications" and encourage people to make choices that will cut emissions.  Their very first point?  "Don't focus on climate change".  Apparently, the best way to convince people is to tell them they'll save money.  Even if you can do that though, they'll just spend the money on a foreign holiday or - according to one quote - an Audi TT.

Public opinion on policy is also far from encouraging for the environmentalists.  YouGov found (PDF) that the public were against increased taxes on petrol, increased airline fares and increased taxes to subsidise wind and solar energy.  Only greater use of nuclear power was supported on balance.

The democratic response to this would be to try and convince ordinary people.  Green groups pay lip service to attempting to convince ordinary people, and churn out plenty of press releases of varying quality, but their real focus is still on the richest and most powerful.  A government press release tells me that the ridiculously named global 'tck tck tck' campaign is trying to sign up Britain's top 100 business leaders and top 100 media personalities.

Preventing violent extremism

The TaxPayers' Alliance has today released a new report on the Prevent strategy, particularly grants from local authorities to community groups.  Our report presents the full data showing how much each group has received for each project in each of the three years Prevent has been in operation.

Paul Goodman MP has, for some time, been fighting in the Commons to get this kind of information.  The Department has only given him the amount of funding provided to each council and then a list of the groups the council has funded.  They have also stalled on releasing the data for 2008-09.  Freedom of Information requests to the Department get the same response, a list of councils and the amount of funding they have received.  All this suggests that either the Department doesn't have information on the amount each group has received or it is ignoring its duty to respond fully under the Freedom of Information Act.

It clearly isn't acceptable for there to be so little information on the extent of funding to different groups under Prevent, so we sent Freedom of Information requests to every single council and challenged those who refused to provide the information.  That way, we managed to get a full and detailed account of what has happened to the £12 million spent on grants under Prevent that the Department couldn't, or wouldn't, provide.

That detail has been invaluable in better understanding how the scheme has operated.  Now we know, for example, that affiliates of the Muslim Council of Britain have received around £850,000.  Also, some misleading statements from Ministers can now be corrected.  The Cohesion Minister told the Commons:

“We are aware that Tower Hamlets council terminated the funding agreement they had in place with Cordoba Foundation for 2007-08.”

I think most people would take that to mean that the Cordoba Foundation received no funding in 2007-08.  In fact, Tower Hamlets council have told us that only £4,000 was withdrawn and they still received £34,000 that year.

In light of all this, it is our view that the scheme should be scrapped.  Given the difficulty central Government has had in finding reliable partners, we can't expect councils to really be able to control who their grants support.  Taxpayers' money can't wind up in the hands of radicals.

There will definitely be plenty more to discover in the data set that our research has produced.  It will take time and the right expertise to get the full picture.  Hopefully, with transparency the debate about Prevent can really begin.  The full report is available on our website.