IEA, TFA, CPS, TPA, PEN, BBW and the ASI write to the Government about the Lobbying Bill's "fundamental failings"

By Mark Wallace
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As reported by Guido, a range of think tanks and campaign groups have this afternoon written to the Government expressing concerns about the impact of the Lobbying Bill on their work:

We wish to highlight our grave concern about the Government’s Lobbying Bill, a piece of legislation that poses a significant threat to legitimate campaigning freedom of speech, political activism and informed public debate.

Part II of the bill threatens the ability of charities, research and campaigning organisations to inform the public debate, fulfil their missions and raise awareness of important issues. The current drafting would capture a huge number of organisations who would not presently be considered as relevant to electoral law and who do not receive any state funding. It also threatens to dramatically expand the range of activity regulated far beyond any common sense understanding of commercial lobbying. 

We do not regard the Cabinet Office’s assurances as sufficient given the widespread legal doubts expressed from across the political spectrum. It cannot be a prudent approach to legislate on the basis of assurances that enforcement will not be to the full extent of the law. The exceptions offered are unclear and unconvincing.

The lack of clarity in the legislation further exacerbates its complexity, while granting a remarkably broad discretion to the Electoral Commission. The potential tidal wave of bureaucracy could cripple even well-established organisations, while forcing groups to reconsider activity if there is a perceived risk of falling foul of the law. This self-censorship is an inevitable consequence of the bill as it stands. 

We urge the Government to reconsider its approach and to urgently address the fundamental failings in this legislation.

Yours Sincerely,

Mark Littlewood, Director General, Institute for Economic Affairs, Simon Richards, Director, The Freedom Association, Tim Knox, Director, Centre for Policy Studies, Matthew Sinclair, Chief Executive, Taxpayers’ Alliance, Jo Glanville, Director, English PEN, Emma Carr, Deputy Director, Big Brother Watch, Eamonn Butler, Director, the Adam Smith Institute

Keith Boyfield: Why we need to simplify the planning system

Keith Boyfield is a Research Fellow at the Centre for Policy Studies

Britain’s planning laws have proved a gold mine for lawyers and the new sub-species of lobbyists known as planning consultants in recent decades.  Indeed, the Planning Bar has proved to be one of the fastest expanding branches of the UK legal system.  Long-running planning inquiries into airport development or infrastructure schemes, such as power stations or rail links, have helped fund the legal profession’s move into the country house market. In turn, they have benefitted from the soaring total returns to be derived from acquiring ‘amenity’ farms in the Home Counties and Cotwolds.

But for the UK economy as a whole, the labyrinthine complexity of the planning approval system has seriously damaged our economic growth and future ability to attract direct foreign inward investment. No nuclear power station is likely to be completed before 2020, nor for that matter any significant airport runway.

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Centre right think tanks don't like Budget's complexity

By Tim Montgomerie
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Matt Sinclair of the TaxPayers' Alliance liked the populist measures - #Crosbynomics according to Matthew d'Ancona - but worried about the Budget's complexity:

"Unfortunately, the great limitation of this budget was that it relied far too much on complicated targeted reliefs instead of tax cuts across the board. Simpler, strategic tax reforms that reduce the overall burden would be fairer and do more to produce the stronger economy Britain needs."

David Skelton of Policy Exchange also welcomed what he called the "Boddingtons Budget," citing the end of the beer duty escalator and another freeze in petrol duty. He worried, however, that more could have been done on housebuilding:

“Although measures to help first time buyers are welcome, the UK is still on track to preside over the lowest level of housebuilding since the 1920s. More radical planning reforms combined with the introduction of measures such as self-build should be introduced to get Britain building.”

Professor Philip Booth of the IEA is concerned that the Chancellor's housing measures have actually learnt little from recent economic history:

"The decision to provide further Treasury guarantees for mortgages is leading the government to get involved in exactly the sort of reckless behaviour that led to the failure of major banks in 2007-2008. Any attempts to provide support for the housing market whilst not liberalising the planning system will simply lead to higher house prices and rents.”

3.45pm updates....

On behalf of the CPS, Ewen Stewart commented:

“The most significant announcement today was the proposed changes to the Bank of England’s inflation targeting remit. Whilst lip service was paid to maintaining the 2% inflation target, it’s clear Mark Carney will be given significant rope to engage in even more expansionary monetary policy. So far QE, despite being larger as a proportion of GDP than that undertaken in the US, has failed to generate growth. A further loosening risks embedding inflation and sterling weakness.”

Also from CPS Kathy Gyngell echoed my concerns from earlier today about the anti-family dimension to the Budget:

“This budget is worse than nothing for the stay at home mother (the single earner couple family). Already grossly penalised in the tax and benefits system for the instinctive and reasonable choice to care for their infants at home, now this couple are meant to subsidise rich working women’s nannies.”

The Adam Smith Institute lists its good, back and ugly conclusions here.

Autumn statement run-up: Reform looks at fiscal rules. The CPS recommends wage and aid freezes - and no carbon price floor

By Paul Goodman
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The think tanks are starting to set out their stalls in the run-up to Wednesday's autumn.  Today, we have a paper from James Zuccollo of Reform on Long-Term Fiscal Sustainability. He says that -

• Fiscal rules must not allow for creative accounting that keeps some government expenses out of scope, as was the case with investment under the golden rule.  "Essentially, the restriction of the golden rule to the operating balance did not ensure counter-cyclical fiscal policy, nor did it ensure a safe overhead before the debt limit was hit. In addition, the rules granted explicit leeway for the Government to depart from the rules, so long as it gave reasons and provided a schedule for return."

• Secondly, arbitrary debt targets, such as the sustainable investment rule, provide a false sense of security and should be avoided. Optimal macroeconomic policy will often involve using debt as a short-term buffer to accommodate unexpected shocks.  A more flexible rule allows that to occur while still maintaining credibility. The difficulty, then, is in designing a rule flexible enough to be credible, strict enough to be binding, and simple enough to be easily monitored.

• Finally, there are lessons from abroad.  Zuccollo cites Switzerland's " 'Debt Brake', requiring a yearly balanced structural budget, ensures that spending growth never eclipses cyclically adjusted tax revenues; Chile and Russia, where "natural resource exports are an important part of economy, so mechanisms are needed to manage large and on-going revenue fluctuations from change in the terms of trade", and New Zealand, which target "a particular operating balance and back[s] this approach with a debt limit."

There is also a recent briefing from Ryan Bourne and Tim Knox of the Centre for Policy Studies.  Three of their main recommendations are:

• Implement cash freezes to several spending streams. "The Chancellor could freeze all benefits which would usually be increased by the September CPI inflation rate for one year, except for the state pension. He could freeze spending on aid, and abandon the 0.7% of GDP target which has no economic rationale." Finally, the Chancellor should set a clear framework and guidelines for how pay freezes should work in the public sector."

• Avoid introducing new punitive wealth taxes or council tax bands. "There is scope, however, to embark on a revenue neutral tax reform programme according to the principles of broadening bases and lowering marginal rates, starting with the full merging of income tax and employees’ National Insurance into a single income tax rate (with employers’ National Insurance replaced with a simple payroll tax)."

• Abandon the unilateral carbon price floor planned for 2013 and "go further in deregulating small businesses and employment law, roll out a framework for ‘sunset clauses’ for new regulations, put forward a new Consolidated Act which rationalises all the 100+ Statutes that impact on planning and development and, in line with Nick Clegg’s recent speech, lay out a framework for new Garden City developments.

New Centre for Policy Studies report shows widespread public misunderstanding of economic issues faced by Britain

By Matthew Barrett
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A poll conducted by ComRes for the Centre for Policy Studies has found that widespread ignorance of our economic situation exists amongst the public.

The poll found that:

The results come as part of an analysis of the public's understanding of the Coalition’s economic policies, "A Distorted Debate: the need for clarity on Debt, Deficit and Coalition Aims", written by Ryan Bourne and Tim Knox, which is published today.

The report contrasts the aim of the Coalition - to eliminate the current structural deficit by the end of this Parliament and stem the increase in public debt as a proportion of GDP - with the reality: the cyclically-adjusted current deficit had only fallen by 13% by the end of 2011/12, and the great majority of the reduction in the deficit has come from cuts to investment spending and tax increases, not from current spending cuts. The report's authors also show that only 6% of the planned current spending contraction has so far been implemented.

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Centre for Policy Studies report proposes ways to boost savings

By Harry Phibbs
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The Centre for Policy Studies this morning released a new report - Put the Saver First - written by pensions analyst Michael Johnson with proposals for reviving a savings culture in Britain. The paper challenges the retirement savings industry to reform itself - with lower prices and greater transparency - to avert tougher regulation.

The report says:

"The interests of the nation and the industry are not aligned. Ordinarily this would not be of great importance, but financial services are an exception. Not only does the industry directly benefit from an annual subsidy of over £30 billion (via tax relief), but the Treasury fields the consequences of industry failure, via welfare payments, made manifest by an under-saving nation.

Consequently, the industry has to change, dramatically. The guiding principle for this paper is that change would be more lasting if it were driven by the industry itself, rather than through intervention from another key stakeholder, the state. The industry is in the Last Chance Saloon of public opinion. It now has a brief opportunity (between now and 2017) to take a lead and resuscitate its reputation."

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Think tanks give lukewarm reception to the Queen's Speech, urging more radical economic measures

By Matthew Barrett
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Following the Queen's Speech this morning, several think tanks have reacted to the legislation announced (full details of which can be found here). I've collected them below.

8pm update: Open Europe have given their reaction to the proposed European Union Bill:

"The UK government is likely to sell the measure as a guarantee that it will never again be forced to indirectly contribute to eurozone bailout funds - a few papers have already run with that story. At the same December summit, Britain won a political declaration and an EU decision that the article that forced it to contribute to the EU-wide bailout funds, the EFSM, won't be used again (Article 122 - for background, see here and here). However, the legal status of this guarantee is uncertain. It is not part of the treaty change itself, and MPs may argue that a guarantee that isn't anchored in the Treaties could well prove ineffective. After all, the UK has received guarantees before which proved to be pretty worthless (clue: Charter of Fundamental Rights, Working Time Directive). If MPs wake up to the legal ambiguity underpinning the 'guarantee' they may ask for something firmer in return for ratifying the treaty change."

7.15pm update: Nick Pickles, the Director of Big Brother Watch, has commented on the surveillance aspects of the Queen's Speech:

"So there we have it – the Communication Capabilities Development Programme will have it’s day in Parliament. We don’t know what the draft clauses will be or when we will see them, but the Government remains intent on pursuing legislation in the coming session of Parliament. If someone is suspected of plotting an attack the powers already exist to tap their phone, read their email and follow them on the street. Instead of scaremongering the Home Office should come forward and engage with the debate about how we improve public safety, rather than pursue a policy that will indiscriminately spy on everyone online while the real threats are driven underground and escape surveillance."

2.45pm update: The Centre for Policy Studies' Head of Economic Research, Ryan Bourne has commented:

"What’s needed now is for the Government to use the Enterprise and Regulatory Reform Bill to get serious about deregulation and repealing unnecessary legislation, especially for small businesses. This should include reform of employment legislation and the recommendations of the Beecroft report. Unfortunately, the emphasis on being family-friendly will, in some areas, directly contradict this liberalisation. Flexible parental leave, for example, is unlikely to be popular with many employers. In other areas, such as tax reform, planning, infrastructure and energy policy, it’s a case of wait and hope. Though there wasn’t anywhere near enough in the way of growth bills, it was welcoming to see the Government highlight the need to see through pensions reform. Finalising the creation of the single tier pension is a sensible step. This should be undertaken as soon as possible to put the Government in a better bargaining position with the public sector trade unions on pensioner poverty. The decision to continue with the 10 year period of protection for public sector employees approaching retirement will, however, eliminate much in the way of any early cash savings from public sector pensions reform."

The Institute of Directors has commented on a number of the specific measures announced. Simon Walker, Director General of the Institute of Directors, gave his reaction to the Speech overall:

“The Government is right to place deficit reduction and economic stability at the forefront of their programme. However, we need to see them pursued enthusiastically in practice, not just in principle. To restore business confidence, which is the real key to growth, there must be drastic measures to cut costly regulation and continue to tackle the deficit. Tweaking the edges of the system will not be enough – it’s not the number of Bills that matters, it’s what is in them that really counts.”

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A new report from Jesse Norman MP and the Centre for Policy Studies urges the abolition and replacement of PFI

By Matthew Barrett
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In a new report - After PFI - released yesterday by the Centre for Policy Studies, Jesse Norman MP has advocated the abolition of PFI, and its replacement with a new model of public sector procurement. Norman, the MP for Hereford and South Herefordshire, sits on the Treasury Select Committee, and set up the PFI Rebate Campaign in 2010, which led Tim Montgomerie to label him "the £1.5bn backbencher", after the expected public savings from the campaign.

After PFI shows that PFI has been one of the costliest experiments in public policy-making, causing more than £200 billion of public debt - the equivalent of £8,000 for every household in the country.

Amongst the detailed recommendations in the report are:

• Placing all past and future liabilities on the government balance sheet as soon as practicable
• Establishing a new central unit across government to monitor all PFI-style projects, to advise on best practice, to educate actual and potential public sector clients on contract management, and to generate greater “shared client power”
• Far greater transparency of existing and future contracts, and of costs to the public sector within contracts
• Mandatory disclosure to government of data on secondary market transactions

Tim Knox, Director of the Centre for Policy Studies, comments:

“The extraordinary cost and opacity of PFI under New Labour must never be allowed to happen again. Over £200 billion of new infrastructure is needed over the next decade. We cannot afford to get it so wrong again.”

The full paper can be downloaded here.

Ryan Bourne: The CPS share scheme idea is still the least bad alternative, as taxpayers, for disposing of our stake in RBS

Ryan Bourne is the Economic and Statistical Researcher at the Centre for Policy Studies. You can follow him on Twitter here.

The only certainty that seemed to stem from the financial crisis was that the UK banking system had to undergo a process of posthumous but very necessary regulatory reform. What was not clear from the start was what the cost of such regulation would be.  Now that we are seeing that this necessary but costly process has begun to impact on the long term return on equity of banks in general, it becomes clear that money invested in the crisis era may be hard to recover for a good while yet.

The cost of de-risking RBS, both in terms of its balance sheet (selling riskier business) and its regulatory capital (raising a larger buffer) has eaten into perceived future earnings and ‘book value’ – both of which drive the share price. UKFI has already made the point to HMT that the cost of a "safer" regulatory environment for banking (which may well save us money in the long run) has been to wipe value off the asset it owns - that same asset which prior to 2008 was the natural beneficiary of the lightest touch regulatory regime. Even George Osborne has begun to talk about the ‘social value’ of RBS, perhaps aware that obtaining a huge windfall to fund tax cuts in the build-up to a 2015 election now looks pie-in-the-sky.

However, RBS and Lloyds continue to suffer from further headwinds as many investors struggle to decide whether these are commercial enterprises or, in effect, government ministries. The size of the balance sheet in RBS in particular and the ruinous systemic effect that any misstep might have on the UK economy, make this an even more pressing issue. For instance, if Hester and the current management team were to walk due to political pressure, the credit market’s loss of confidence in the ability to contain the risks could be catastrophic. As such, the real questions for the taxpayer are not “what did I invest?” and “when will I get my money back?”, but rather, “are my chances of recovering my money better if the banks are back in private hands?” and “how dangerous is it to leave these companies in public hands?” With the shares in both banks far below the government’s “in-price” it becomes hard to see how all these questions can be answered simultaneously.

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Round-up of reactions to negative credit rating outlook announcement

By Matthew Barrett
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Following the release of a report by credit rating agency Moody's, which adjusted Britain's credit rating outlook to negative, several think-tanks and campaign groups have reacted to the news.

The Institute of Economic Affairs' Editorial Director, Philip Booth, said:

"The downgrade threat from Moody’s should come as no surprise. Whilst Moody’s are correct to cite the difficulties in the eurozone as a potential threat to the stability of government finances, many of the problems facing the UK government are home grown. Public spending continues to rise and the Office for Budget Responsibility has shown that there are huge pressures forthcoming from the effects of ageing populations due to increased health, long-term care and pensions costs. Furthermore, the pressures on business coming in the form of increased regulation – including in the vital banking sector – are supressing growth. All these things mean that the UK’s top-notch credit rating is deservedly on a knife-edge."

The Centre for Policy Studies' Head of Economic Research, Ryan Bourne, wrote:

"This intervention by Moody’s is therefore a timely reminder that the Government is doing the bare minimum to address our debt problem. In the upcoming Budget, George Osborne must at the very least indicate that he would be willing to make further spending cuts should circumstances require. Furthermore, he must take opportunities to enhance medium-term growth prospects through the only non-costly, pro-growth policies at his disposal: supply-side reforms. Whether reforming the tax system, deregulating, labour market reforms or policies to improve international competitiveness, the Chancellor must surely see the need to be bold."

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