Jonathan Lindsell: Here are some ideas for renegotiating our relationship with Europe, Mr Cameron

Jonathan Lindsell is EU research fellow at Civitas. He tweets and blogs personally here.

Fog and mirrors. That seems to be Government policy on the EU. Was the Bloomberg speech a sign that Cameron is Europhile, or a smiling assassin who’ll praise Brussels while he sticks the knife in? Is the ‘Review of Competences’ a useless vanity exercise, a placebo to muffle the Liberal Democrats, or a veiled attempt to write a ‘shopping list’? Does Hague’s support for the Fresh Start Group illustrate tacit Cabinet approval of their demands?

More importantly: is ‘renegotiation’ a ploy to stay in, as the government waves token concessions in the public’s face? It could equally be a plot to justify exit, if Number 10 purposefully sets renegotiation hurdles higher than Europe can feasibly jump.

It’s understandable that the government shies away from clarifying its EU position – last time they tried, it backfired with Mark Harper’s disastrous ‘GO HOME’ ad campaign. Much better to be vague and (relatively) popular than specific and ‘#racist’.

Recent Civitas publications have sought to put substance behind the renegotiation smogscreen, to hold Whitehall to account in the future and spur Dave to action at present. February’s publication summarised different EU yearly costs, from regulation (£20bn) to CAP (£10bn) to migrant benefits (£55.2m). David Green, Civitas director, wrote What Have We Done? on the importance of true parliamentary sovereignty. He traced our history to demonstrate the British people’s hard-won ability to dismiss ineffective governments – an ability we no longer hold, and must regain.

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Cut aid says new Civitas paper and put money into defence and BBC World Service budgets

By Tim Montgomerie
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A new paper published by the Civitas think tank recommends a sharp change of direction in UK aid policy.

The paper written by Jonathan Foreman - a freelance journalist - makes the following five key recommendations:

1. One-third of Britain's aid budget should be diverted over the next few years from development spending and go to expand Britain's defence capabilities and also the reach of the BBC's World Service.
   • By choosing not to hit the 0.7% target Mr Foreman argues £3bn could be added to the MoD's budget and be used to develop dual use road, air and sea equipment that could both serve military and emergency humanitarian purposes.
   • Foreman also says that part of the money should be used to fund all of the BBC World Service's foreign language services (at a cost of about £250m). The House of Commons' Foreign Affairs Select Committee has made similar recommendations in the past.
2. A Royal Commission on aid that would examine the purpose and effectiveness of Britain's development budget.
3. Reverse Tony Blair's 1997 decision to establish the Department for International Development and re-integrate DfID into the Foreign Office.
4. Recruitment of forensic investigators from the Serious Fraud Office to investigate abuses of British aid by foreign governments.
5. Cut Britain's contributions to wasteful multilateral organisations such as the EU where aid monies do not go to the world's poorest people but often to nations of political importance to France and Germany.

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Civitas report advocates abolition of Trevor Philipps' Equality and Human Rights Commission

By Matthew Barrett
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Jon Gower Davies, a former Head of the Religious Studies Department at the University of Newcastle and a Labour Councillor on Newcastle City Council for 20 years, has written a report for the think-tank Civitas, entitled "Small Corroding Words: the slighting of Great Britain by the EHRC", which advocates the abolition of the Equality and Human Rights Commission, currently chaired by Trevor Phillips, the ex Labour member of the London Assembly.

In the report, Davies systematically critiques the philosophy and practices of the EHRC, and reveals serious research flaws. 

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Here you go George; A Growth Manifesto from London's think tanks

By Tim Montgomerie
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On our Comment pages today Mark Field MP sets out the two great truths of the economic debate:

One: We must carry on with the Osborne deficit reduction programme. When you are in a worldwide debt crisis you have to get your debts under control.

Two: The Coalition hasn't got an adequate growth agenda.

Read Mark's piece.

So what can the Coalition do to achieve growth? I asked some of London's top think tanks to recommend some ideas. The list below is far from exhaustive. Missing, for example, are ideas to modernise trade union laws and the Civitas think tank's thinking on better procurement. I also dismiss the idea that a growth agenda cannot have immediate effects. While it's true that many supply side measures can take years to yield benefits (this is certainly true of the Coalition's excellent welfare and school reforms) some - such as tax reforms and deregulation - can produce immediate benefits. There is also the impact on confidence. If the government looks serious about long-term competitiveness then overseas and domestic investors are more likely to stay and expand in Britain.

"If the Government keeps living beyond the means of British taxpayers and businesses, then growth will continue to be limited.  By reducing the incentive to work and invest, high taxes diminish economic growth.  For some tax cuts, the economic effect is dramatic enough they can increase revenue.  That is the case with a lower corporate tax rate, the Government could cut a lot further and faster than they are, and abolishing the 50p rate of income tax.  But there are other tax cuts that would boost growth as well, such as a cut in National Insurance.  And more broadly the relationship between spending and growth shows that imposing too great a burden on taxpayers depresses growth.  European Central Bank estimates imply Brown’s increase in spending as a share of national income left GDP over £100 billion lower by 2010-11." - Matt Sinclair of The TaxPayers' Alliance

More: The TaxPayers' Alliance's Tax Reform Commission.

"In the current circumstances it is clear that the UK cannot afford, above all unilaterally, to move to a low carbon, let alone a zero carbon, economy. A low carbon economy means a high energy cost economy. At the very least, the Government should phase out all energy subsidies of all kinds, and suspend unilateral targets until such time as all other major nations have signed up to the same course. For the UK to go it alone is not merely suicidal but pointless. Decarbonisation requires growing subsidies from the taxpayer and sharply increased energy bills for business, industry, and households. At a time when painful cuts are unavoidable, it makes no sense to make British industry – and manufacturing in particular - uncompetitive, or to drive it overseas, and thus greatly weaken our economy, by ratuitously driving up energy costs." - Benny Peiser of the Global Warming Policy Forum

"The coalition needs to create an environment much more conducive to enterprise. A systematic programme of deregulation should be at the heart of this. The government should start by dismantling employment regulation. Legislation that makes it more expensive to hire workers, such as anti-discrimination legislation, should be repealed. The minimum wage should be regionalised. If the government has not got the courage for radical reform, wide-ranging exemptions for small firms would be a start." - Mark Littlewood of the Institute of Economic Affairs

More: Deregulating the labour market; deregulating energy and transport; deregulating financial sector; deregulating business; and deregulating business.

"Coherent reform of public services is a necessary part of the recovery. It will enable public spending to be restrained while meeting the demands for improved services and it will increase the productivity of the economy, raising living standards for everyone. Poor performing education, health and welfare systems already impose significant costs on the wider economy.  Demographic changes mean that the costs facing government in areas like pensions and healthcare are accelerating rapidly.  The Treasury has made the right call on the big question of deficit reduction, but has undermined the Government's commitment to value for money by ring-fencing certain public sector budgets.  The commitment to the National Curriculum is just one example of the fact that neither Health nor Education have dismantled central regulation and made services accountable to their users." - Andrew Haldenby of Reform

More: Reform's "It Can Be Done" report on public service reform.

“Any growth strategy has to deal with the problem of excessive employment law. According to the World Bank, UK labour market flexibility has slipped down the international league table – from 17th in 2007, to 21st in 2008, to 28th in 2009 and then to 35th in 2010. What was once a source of strength for the UK has become a source of weakness. A moratorium on new laws combined with some deregulation would boost business performance, job creation and restore the UK’s labour market competitiveness. For example, we need to deal with the fact that too many employers are being held to ransom in employment tribunals by vexatious employees and their ‘no win no fee’ lawyers.” - Alistair Tebbit of the Institute of Directors

"There are two fundamental requirements of competitive markets: first, the possibility of 'free entry' for new players and 'free exit' for those that fail; second, that cartels do not dominate a market. British banks fail on both points. That is why they are still not lending enough to small businesses. Why they are still paying senior staff huge bonuses (on top of salaries that were increased to make up for supposed cuts in bonuses). And how the top five banks control 80% of the market (a percentage that is climbing higher and higher). Deep seated banking reform must break up this cosy cartel. We need a new Financial Competition Commission to carry out investigations of individual firms or of product areas, with the power to make recommendations to the Bank of England to promote competition between banks; to remove barriers to entry (and promote new competition); to take steps to permit the orderly exit of failed institutions (break up institutions that are ‘too big to fail’); and to do more to ensure products and services offered are themselves subject to competition. Finally, state-owned banks must be returned to the private sector as soon as they are strong enough; and at the best possible price and greatest reward for the taxpayer (who took on all the risk when the shares were nationalised)." - Tim Knox of the Centre for Policy Studies

More: Niall Ferguson's Too Big To Live; Andrea Leadsom MP's Boost Bank Competition; and James Conway's Give Us our Fair Shares.

"Domestic competition is seen as good because it keeps producers sharp. So why resist it from abroad? Yet we slap import duties on shoes, cereals, electronics – there’s even a tariff of up to 48.5% on Chinese bicycles. Such protectionism allows our producers to coast along instead of becoming world class. It means less choice and value for consumers. And if we are buying less from abroad, people in other countries will have fewer pounds in their pockets to spend back here, so other UK exporters suffer. Let’s not wait for world agreement, but push for bilateral free trade treaties with any country we can – particularly the poorest, who have most to gain." - Eamonn Butler of the Adam Smith Institute

"Welfare reform should not go faster nor deeper than an £18 billion cut. It should, however, move beyond ‘making work pay’. This would mean: Increasing conditionality by asking more of individuals who spend as little as eight minutes a day looking for work; introducing welfare accounts that re-instate the link between what people contribute through national insurance and what they can get out; and privatising some functions of Jobcentre Plus and re-negotiating parts of Work Programme contracts to allow some claimants to get personalised support from day one of their claim. These reforms would provide a critical boost to growth: they would make the welfare system effective in matching claimants to jobs and make the best of the talent of the UK population." - Matt Oakley for Policy Exchange

"In terms of short term hindrances to growth, the total annual cost of family breakdown is £41.74 billion or £1,364 for every taxpayer. Reducing these direct costs would plug a big hole in national and local finances but there are other harder-to-measure indirect costs which hamper our long term economic prospects. The fallout from broken family relationships can hinder children’s educational achievement, dampen their self esteem and affect their physical and mental health - ultimately threatening their creativity, well-being and future productivity. We need to make sure the next spending review includes specific investment in universal credit to eliminate the couple penalty; local councils should collect data on relationship statuses and be set delivery outcomes by national government so they can demonstrate how their policies  are providing relationship support and stabilising relationships in their area; other initiatives that help families (such as Family Nurse Partnerships and Family Intervention Projects) should specifically include couple support - often most effectively delivered by the voluntary sector." - Samantha Callan of the Centre for Social Justice

More: Action on the family.

"The Government needs to push for a long-term solution to the eurozone debt crisis – bailouts aren’t working, debt restructuring will be needed. The longer the crisis goes on, the worse the prospects for eurozone growth and stability look and, as our biggest trading partner, this will have an impact on the UK economy. In the medium-term the UK needs to seek allies in pushing for a better-functioning single market, including deregulation, removing cross-border barriers to services and digital industries, and protecting the interests of the City of London from the EU’s new financial supervisory architecture. This includes securing the flexibility to apply capital requirements for banks as the UK sees fit. In the longer term, the UK should look to diversify its trade away from the eurozone, tapping into the growth potential of emerging markets, which will be necessary in any case but also provides a Plan B if the eurozone fails to get its act together. The UK also needs to continue to push for a reduction in EU external trade barriers and encourage the expansion of free trade agreements with other economies/trading blocs." - Stephen Booth of Open Europe

More from the Open Europe blog: Liberalising the Single Market, Greek debt restructuring, Financial regulation and Trade.

“The Competition Commission needs to be reformed so that it rewards, rather than punishes, firms who share their knowledge on product development and innovation with other UK firms. At present, the UK’s institutional approach encourages firms to compete with each other at every stage, rather than cooperate. Vital information for businesses tends to remain in a particular sector instead of spreading around the whole economy. This puts UK firms at a disadvantage compared to many of their international competitors. Through better knowledge transfer, they can share their ideas on the best strategies to increase revenues and, hence, economic growth.” - Ian Mulheirn of the Social Market Foundation

"Our Government should start by not making matters worse, which means cutting the 50p tax rate, reducing costly regulation, and reversing climate-change policies that are adding so much to the cost of electricity that our key industries will be forced overseas. It should also pursue our enlightened national interest through industrial policy. It should encourage local enterprise banks to restore the initiative to localities. People in the North East, for example, would rally to a local enterprise bank that provided a safe home for their savings and invested them in providing solid, sustainable jobs in the North East." - Dr David Green of Civitas

Read more about Civitas' ideas for a new industrial policy.

"The discussions about boosting the economic performance of UK economy lack clarity and focus. Everyone understands that entrepreneurship and innovation are important for growth, and also that the government has a formidable aptitude to discourage both by ill-advised tax and regulatory policies. We need to move beyond these truisms towards more specific proposals. While we subscribe to many of the views expressed by our colleagues from other London-based think tanks, we believe that any credible pro-growth policy needs to reflect the following two insights, which are conspicuously missing from our present-day discussions.

• Incentives for private-sector employment for high-productivity individuals. In present times, highly skilled individuals are often likely to end up in professions with low social rate of return and in rent-seeking occupations, instead of going into the private sector and contributing to higher rates of innovation and entrepreneurship. Those occupations might include lobbying, tax advisory services, certain elements of legal counselling, and also the work for the underperforming branches of the public sector. Very often, government jobs bid away labour away from marginal private sector jobs. This is especially worrying in situations when the private sector jobs involve significant positive externalities, which are not reflected in employees' paycheck - such as jobs in private R&D. Tax changes, and removing many of the advantages of public-sector employment, as well as employment in some of the rent-seeking professions, could partly correct for this distortion. Also, a flat subsidy could be given to individuals who migrate into private occupations that can reasonably be seen as productive.
• Restoring the approbation associated with entrepreneurship and innovation. This might just require a simple change of rhetoric on the part of the coalition. The government should be more vocal in praising succesful entrepreneurs and innovators as the true heros of our societies, instead of lambasting them for not paying their "fair share" in taxes."

- Dalibor Rohac of Legatum

Civitas offers Government a growth manifesto

Matthew Barrett

Civitas recently set out some recommendations for George Osborne to boost economic growth:

• Reduce company taxation
• Eliminate unnecessary workplace regulations
• Reduce the cost of energy
• Cut personal taxes to make it easy to start new businesses
• Focus on manufacturing for export-led growth
• Intelligent procurement - give more government tenders to SMEs
• Reduce imports, to lessen the the import-export deficit
• Bank reform
• Focus on the manufacturing sector as a whole, not just research and development
• Apply a public interest test to all foreign direct investment
• Be more selective in giving government assistance to companies, based on clear tests

To read the whole report, click here. 

Significant reductions in prison populations tend to be associated with spikes in crime rates

Tim Montgomerie

In today's Sunday Telegraph I ask the question: Is it safe to send fewer people to jail? The answer is no.

Earlier this week Civitas released a short report rebutting Ken Clarke's claim that crime has fallen throughout the world, whatever the prison population. In fact the evidence shows that "significant reductions in prison populations tend to be associated with spikes in crime rates". The graphs tell the story:

More at Civitas.

Civitas casts doubt on the benefits of replacing prison sentences with community punishments

By Jonathan Isaby

Civitas has just published a paper by Professor Ken Pease, a former Home Office criminologist, which casts doubt on the idea which Ken Clarke is mooting about increasing the use of community punishments in place of short prison sentences. Prof Pease asserts that this will not necessarily  either reduce re-offending or save money.

In fact, according to his paper, Prison, Community Sentencing and Crime, 13,892 offences resulting in convictions could be prevented by keeping offenders on short sentences in prison for one extra month. He calculates that it would be cheaper to keep offenders in prison for longer periods than to opt for non-custodial sentences where they have the capacity to re-offend.

He also asserts:

"In short, community sentences as currently delivered have no evident effect on rates of reconviction."

And in his conclusion he states:

"It is important for any move away from the use of custody  to be based on something more than short-term political exigency. The debate about imprisonment costs and effects has been distorted by the received wisdom that prison is expensive, community sanctions are as effective as custody in protecting the public, and that dissent from these convenient fictions marks someone out as a penal sadist."

Click here to download the full paper or read a summary on the Civitas website.

Volume of hate legislation is threatening freedom of speech, warns Civitas

A New Inquisition: religious persecution in Britain today is a new Civitas report written by the former Head of Religious Studies at the University of Newcastle. The report warns that the increasing volume and complexity of 'hate' legislation is making it dangerous for people to discuss religion in the way they once did.

The volume of legislation: "There are now more than 35 Acts of Parliament, 52 Statutory Instruments, 13 Codes of Practice, 3 Codes of Guidance and 16 European Commission Directives which bear on 'discrimination'. And most recently, the Single Equality Act was passed by Parliament in April 2010. Yet legal definitions of 'hatred' are elusive. A government action plan states: 'A (religious) hate crime is a criminal offence which is perceived, by the victim or any other person, to be motivated by a hostility or prejudice based on a persons religion or perceived religion.'. In addition, 'hatred' is not only presented as an offence on its own account, but can also be seen as something which aggravates ordinary public order offences. When an ordinary offence is aggravated by 'hatred' based on race, religion, gender, or age, then the sentence too is 'aggravated' (i.e. increased)."

Burden of proof reversed: "To demonstrate the oppressive oddity of judicial attempts to regulate religious hatred, Jon Davies describes the 2009 case of Ben and Sharon Vogelenzang, owners of the Bounty House Hotel in Liverpool. Following a discussion between the Vogelenzangs and a guest at their hotel, Mrs Erica Tazi, about the respective merits of her religion (Islam) and theirs (Christianity), Mrs Tazi made a formal complaint to the Merseyside police about what she said were offensive remarks made by the Vogelenzangs... whilst by long-established practice the Vogelenzangs should have been regarded as innocent until proven guilty: '[There was a] public presumption of culpability... the local NHS authority [which provided 80 per cent of the Bounty House income] cancelled their bookings'."

Free conversation about religion is discouraged: "When Judge Richard Clancy dismissed the case against the Vogelenzangs in December 2009, he commented that it might be best for individuals not to engage in discussions about religion! ...It becomes "wise" to "be careful", to restrict the compass of what we say about what we believe, or do not believe, or about what others believe or do not or should not believe, and to turn what were once vigorous public conversations into a frightened, if safe, if amiable and fundamentally humourless chat about small and dwindling things."

Civil society once regulated differences of opinion: "Throughout most of human history the suppression of unwelcome opinions has been the norm. Therefore, open societies in which we try to settle our differences without violence have been a great human achievement. For some centuries we in this country have been accustomed to dealing with such matters 'amongst ourselves', in a public sphere regulated by our own good sense and law legitimised by general consent and softened by a live-and-let-live ethos."

More here.

Civitas warns against Lansley's NHS reorganisation plans

Health Secretary Andrew Lansley was on BBC1 this morning discussing his plan to transfer control of NHS purchasing to GPs. Mr Lansley said that because of Labour's increased NHS spending, Britain now spends European quantities of money without achieving European standards of treatment. It is time, he said, to sweep away Labour's bureaucracy and targets and trust the clinicians who care for us with the NHS' budget. He is planning a £1bn cull of bureaucrats and diversion of that money to the frontline.

The Civitas think tank has warned, however, that Mr Lansley's reorganisation plans could "set the NHS back three years". 

Analysing the impact of the last reconfiguration of commissioning on performance, Civitas worries that it took three years for merged Primary Care Trusts to achieve levels of performance comparable with the pre-merger period.

James Gubb, Director of the health unit at Civitas, said:

"The NHS is facing the most difficult financial times in its history. Now is not the time for ripping up internal structures yet again on scant evidence base, but for focusing minds on the task ahead and really getting behind the difficult decisions PCTs, as commissioners, will have to make."

Civitas also worries that fundholding may have worked under the last Tory government when it was voluntary but may be less effective as a compulsory measure:

"GP fundholders were self-selected volunteers for the programme, tending to be well-organised practices in middle-class areas, enthusiastic about taking on commissioning budgets. There is no evidence to draw on to support GPs across the country taking on commissioning as consortia, as is proposed by the government."  

Gubb points to the Mid Staffordshire hospital crisis where 1,200 people died unnecessarily. He quotes the Frances Inquiry's warning about the dangers of reorganisation, causing a "lack of capacity and organisational memory".

A PDF of Mr Gubb's full report.

Britain IS socially mobile says Civitas report

The report - Social Mobility Myths - by Peter Saunders of the University of Sussex notes the following:

• Dividing the working population into three social classes (professional-managerial, intermediate, and 'working'), more than half of us are in a different class than the one we were born into.
• Movement between classes in Britain is roughly the same as elsewhere in the western world.
• At least 3 different studies show social fluidity is still increasing (especially for women).
• If we look at all children in the top quarter of the ability range, 65% of them end up in professional/managerial jobs and only 5% end up in manual working class jobs.
• Ability is well over twice as important as class origins, three times more powerful than the degree of interest parents show in their child's schooling, and five times more powerful than parents' level of education or the aspirations which parents have for their children. Talent and hard work are the two key factors in class placement.

Saunders worries that wrong beliefs about social mobility have led to bad public policy including:

• The preoccupation with expanding entry into higher education, even at the expense of academic standards;
• The 'grade inflation' unleashed by pushing ever-increasing numbers of pupils through GCSEs and A-levels;
• Moves towards 'positive discrimination' in university selection designed to make it harder for bright, middle class applicants to get accepted;
• The fallacious belief that flattening the income distribution through higher taxes and more generous welfare benefits will promote mobility.

The full report can be purchased via Amazon.