Treat Planning Like Fantasy Football

Leading Think-Tank says using a Fantasy Football-style platform for Local Plans would give communities more choices over where homes are built;

• This would reduce objections to planning and increase the number of new developments, helping us to tackle the housing crisis;

• The existing local planning process gives residents a binary choice between supporting or opposing new developments. It does not allow them to suggest alternatives or have an insight into the decision-making process;

• As a result, people who get involved in the consultation process generally oppose development, preventing housebuilding;

• Learning from the Fantasy Football model, we should create a simple online platform which identifies all those sites assessed by the planning authority. Local residents could then select their preferred combination of sites that meet planning rules;

• By choosing between a variety of options, residents would be empowered to engage with real trade-offs, encouraging balanced and constructive local input;

• This simplified process would boost engagement and increase transparency, meaning residents would support, rather than oppose, the housing we need.

A new paper from the Adam Smith Institute (ASI) outlines how we can improve planning consultations by learning from Fantasy Football.

The UK’s planning system is complex and opaque, eroding public confidence and stymieing housebuilding. The current Local Plan system gives communities a binary choice between supporting or opposing the council's selected sites, with limited scope for alternative options. Rather than being a collaborative effort, the current process is top-down with planners imposing house building onto communities, creating a backlash that prevents development.

Fantasy Football, on the other hand, is intuitive and popular, allowing players to create a virtual team by selecting real-world footballers within a limited budget. The game’s appeal lies in strategic trade-offs - players must balance their finances and position choices to earn points based on the footballer's real-world performance.

By learning from this model, we can transform planning consultations. Instead of restricting residents' input, a user-friendly online platform would present all sites assessed by planning authorities with relevant information provided. Local residents could then select their preferred combination of sites that meet planning rules, with the platform clearly showing progress towards the settlement’s housing target. This would allow different options to be explored, drawing on local knowledge to build consensus around house building. 

This innovative platform could be introduced without new legislation, simplifying local consultations and enabling residents to easily explore, compare, and provide feedback on potential development sites. By making the trade-offs of site selection transparent, the system ensures that communities have a genuine say in planning decisions while reducing the outsized influence of objectors. Increased local input would also mean that developers would be incentivised to pursue plans that genuinely benefit residents.   

Ultimately, this model would build a stronger consensus around new housing projects, helping address the UK’s housing crisis from the ground up.

Paul Smith, report author, said:

“Learning from the success of Fantasy Football, we can transform how communities engage with Local Plans. An accessible online system would empower residents to take charge of development in their communities, fostering better relationships between local people, councils and developers. 

By offering residents a choice between development options, housebuilders can tap into local knowledge, meeting housing targets while making more informed decisions.

This innovative approach would use the success of a popular online game to increase community involvement in planning decisions and help get Britain building.”

Maxwell Marlow, Director of Research at the Adam Smith Institute, said:

“Our broken planning system underpins the UK’s housing crisis. Time and again, residents' vetoes block essential developments and limit housing supply.

By adopting a Fantasy Football-style system, we can maintain local input while accelerating house building, making the consultation process more open and effective in the process. 

While the planning system requires comprehensive reform, this paper offers a straightforward first step to boost housebuilding.”

-ENDS-

Notes to editors:  

For further comments or to arrange an interview, contact press@adamsmith.org | 0758 477 8207

Paul Smith is the Managing Director of The Strategic Land Group.

The Adam Smith Institute is one of the world’s leading think tanks. It was ranked first in the world among independent think tanks and as the best domestic and international economic policy think tank in the UK by the University of Pennsylvania. Independent, non-profit and non-partisan, the Institute is at the forefront of making the case for free markets and a free society, through education, research, publishing, and media outreach.

Use Development Orders to Build the Homes We Need

The Adam Smith Institute is calling on the Government to use existing legislation to help fix the housing crisis;

• By using Development Orders, a mechanism which already exists in legislation from 1990, the Secretary of State for Housing, Communities and Local Government could circumvent the UK’s restrictive planning regime to build new houses at pace;

• Britain is facing a housing crisis, caused by a restrictive planning system which incentivises local authorities to block new developments and which has made development complicated and expensive;

• Despite the scale of the problem, neither of the two major UK parties have committed to extensive planning reform;

• But the Government could achieve its housing goals without actually having to implement new legislation;

• Development Orders allow the Secretary of State either to grant planning permission to a specific project, or to any project in a defined area that meets whatever conditions the Secretary of State decides in the Order;

• By making greater use of Development Orders, the Labour Government could accelerate the building of the new towns and developments on the grey belt that were promised in its manifesto;

• Development Orders would allow Ministers to bypass the costly and slow planning system, unlocking higher volume of attractive housing at pace- in areas where it is politically viable for them to do so.

Britain’s failure to build the houses and infrastructure that we need has been a national disaster. House prices have spiralled, whilst renters in England are, on average, now working for 125 days a year just to pay their rent.

Our current planning framework, which was established by the 1947 Town and Country Planning Act, is to blame. It has granted local councils powers to block development projects. This has created a bottleneck, where local authorities prioritise short-term local interests over the country’s long-term housing and infrastructure needs. The system also requires developers to use vast resources to prepare proposals and navigate the planning process, making development much more complex and expensive.

Despite having large parliamentary majorities, neither the previous Conservative Government or the current Labour Government have delivered comprehensive planning reform. 

But in a new paper for the Adam Smith Institute (ASI), report author Henry Hill shows that there is already a mechanism within existing legislation which gives ministers powers to authorise ambitious new developments.

By using ‘Development Orders,’ introduced in the Town and Country Planning Act (1990), the Secretary of State can grant permission to a specific project, or grant permission- or require the local planning authority to grant permission- to any project that meets any requirement that the Secretary of State sets out in that order, in any area of land they choose to specify. That can include all of England. 

This regime is used only to provide limited Permitted Development rights for home modifications and a few other uses, but it could be much more widely applied.

The ASI is calling on the Government to use Development Orders to build the homes in England we need at pace. This could include automatically approving mansard roofs or creating a bespoke regime for any houses built within a 10 minute walk of a railway station.

Development Orders could also be used to make sure that Labour’s proposed new towns and developments on the grey belt are built quickly. Ministers could grant approval to proposals that fit their criteria on grey belt land, rather than waiting for changes to the National Planning Policy Framework (NPPF) to filter through the system. And, rather than setting up even more quangos, the Secretary of State could apply a Development Order to a given site for a new town, granting permission to build there, subject to whatever conditions the Secretary of State wishes to attach. 

Henry Hill, report author, said: 

“Our systematic failure to build enough houses in this country has been a national disaster. Britain’s young are facing a double-whammy of never being able to afford to buy a house, and being barely able to afford sky-high rents in our most productive areas either. Even so, it still seems that neither Labour or the Conservatives will commit to full-fat planning reform.

But there is a potent weapon in the Government’s arsenal that ministers have so far used only to a very limited extent: Development Orders. These can be used to unlock a high volume of new homes at pace, precisely where the Government has political space to build- and can be laid down by the Secretary of State without a vote in Parliament.

Just as the Conservatives could, and should, have used Development Orders to their advantage, so should the new Labour Government now use them to deliver on their manifesto commitments.”

Maxwell Marlow, Director of Research at the Adam Smith Institute, said:

“The nationalisation of the planning system in 1947 has been catastrophic for Britain. Local councils are incapable- and unwilling- to approve enough new developments to keep up with demand. 

We’ll keep campaigning for comprehensive planning reform- but while politicians refuse to touch it, we urge them to make use of Development Orders instead. 

This would mean that ministers are able to cut through red-tape and bypass our current sclerotic planning system in order to build the new homes and infrastructure we need at pace, and without having to introduce any new legislation.”

-ENDS-

Notes to editors:  

For further comments or to arrange an interview, contact press@adamsmith.org | 0758 477 8207

Henry Hill is the Deputy Editor of ConservativeHome. 

The Adam Smith Institute is one of the world’s leading think tanks. It was ranked first in the world among independent think tanks and as the best domestic and international economic policy think tank in the UK by the University of Pennsylvania. Independent, non-profit and non-partisan, the Institute is at the forefront of making the case for free markets and a free society, through education, research, publishing, and media outreach.

The Adam Smith Institute Responds to the 2024 Budget

Commenting on the Budget, Maxwell Marlow, Director of Research at the Adam Smith Institute, said:

“The scale of the challenge facing Britain is enormous. GDP per capita, wages, productivity and living standards have all stagnated and our public services aren’t working. The Chancellor is right to say that the only way to get our country out of this quagmire is to go for growth.

Unfortunately, many of the measures outlined in this Budget will have the complete opposite impact to that which is intended by the Chancellor and will worsen - rather than fix - Britain’s problems. The abolition of the non-dom regime will drive away highly-mobile wealth creators, and so their tax contribution will decrease and they will invest less in our economy. The Minimum Wage rise will increase the cost of goods and services, and make it harder for businesses to employ more people, or to move people off minimum wage jobs. Anti-private sector measures, namely levying VAT on private school fees, will not improve state sector provision. Instead, the Government risks overwhelming state schools, increasing class sizes, and reducing opportunities for under-privileged children, all whilst potentially raising no money at all. And a tax on vaping liquid will increase the cost of products that smokers use to help them give up cigarettes.

We welcome the Chancellor’s decision to unfreeze Income Tax thresholds from 2028, preventing more workers being dragged into higher Income Tax bands. But the tax rises in this Budget will actively hurt working people. An increase in Employers’ National Insurance Contributions, which is a tax on jobs, will suppress wages and job creation. The hike to Capital Gains Tax too will keep productivity and wages low. 

The Government needs to outline a radical plan to boost growth and wages. This Budget is not it.”

Commenting on the Budget’s impact on the UK’s long-term competitiveness, Sam Bidwell, Director of the Next Generation Centre, said:

“The short-sighted policies outlined in this Budget will drive away investment, stall growth and continue to erode the UK’s competitive edge.

Abolishing the non-dom regime is unlikely to raise revenue in the medium to long-term, as highly-mobile wealthy individuals will simply relocate to countries with more competitive tax offerings. In fact, it will cost the UK money, as there will be fewer non-doms contributing tax revenue and investing in our economy. 

Similarly, raising capital gains tax will increase the cost of capital, deterring investment and suppressing productivity. Furthermore, evidence from other countries shows that hikes to capital gains tax actually reduces revenue.

As the UK’s global competitiveness declines, it becomes less attractive to the investors who drive growth and productivity. Ultimately, these proposals are self-defeating, and will fail to boost tax revenues or promote economic growth.”

Commenting on Budget’s Implications for the hospitality sector, Sebastian Charleton, Digital and Communications Manager at the Adam Smith Institute, said:

“The measures outlined in today’s budget represent a mixed picture for the struggling hospitality sector.

Raising both National Insurance contributions for employers and the minimum wage will be a double whammy for hospitality businesses. These decisions will keep wages low, and discourage hiring- and will be especially damaging for the hospitality industry which is already grappling with high energy and staffing costs, and arduous noise and licensing regulations.

The Chancellor has announced plans to cut draft beer duty - but this will only remove a single penny from the cost of a pint. Considering that the UK has some of the highest alcohol duties in Europe, this is simply not enough. Meanwhile, duties on other alcohol, including whisky, have been increased in this Budget.

The announcement of business rates reform will undoubtedly receive a warm welcome from the sector. This is a step in the right direction, but must be accompanied by a real plan to address the underlying causes of the hospitality sector’s difficulties.”

-ENDS-

Notes to editors:

For further comments or to arrange an interview with one of our team, contact press@adamsmith.org | 0758 477 8207

The Adam Smith Institute recently published the following research papers which relate to the measures announced in the Budget:

• The ASI’s Millionaire Tracker found that the UK is set to lose the greatest proportion of millionaires in the world by the end of Parliament. By 2028, the share of Britain’s population who are millionaires will fall from 4.55% to 3.62%- a decrease of 20%.

• ASI research on the potential economic impact of abolishing the non-dom status conservatively estimated that it could cost £6.5 billion by 2025 and 23,000 jobs by 2030.

• Further ASI research highlighted that the government’s proposals for reform as part of the expected abolition of the non-dom status could have unintended, undesirable and unfair consequences. The ASI outlined a number of proposals which would make the UK more attractive to highly-mobile wealth creators, including an annual Italian-style flat fee and a move to a sliding scale tax rate. 

• The ASI’s research previously found that levying VAT on private school fees could cost, rather than raise, money, overwhelm state schools and reduce opportunities for underprivileged children. 

• The ASI submitted to the Government’s consultation on levying VAT on private schools.

• The ASI’s recent paper on capital gains tax found that the tax is increasing the cost of capital in the UK, leading to lower productivity, investment and wages, and that evidence from other countries shows that increases to the rate of CGT actually decreases tax revenue, whilst cuts to the rate increases revenue. The report called for the phased abolition of CGT, finding that this could increase annual national income by 0.9%- the equivalent of £25 billion.

• The ASI’s has published research on the problems facing the hospitality industry- from high taxes to stifling regulation.

• The ASI has previously called for Inheritance Tax to be abolished.

The Adam Smith Institute is one of the world’s leading think tanks. It was ranked first in the world among independent think tanks and as the best domestic and international economic policy think tank in the UK by the University of Pennsylvania. Independent, non-profit and non-partisan, the Institute is at the forefront of making the case for free markets and a free society, through education, research, publishing, and media outreach.

Labour Peer Joins Adam Smith Institute as Patron

Labour life peer Lord Mendelsohn has joined the Adam Smith Institute (ASI), a leading economic policy think tank, as a Patron

Lord Mendelsohn, a Labour life peer in the House of Lords, has joined the Adam Smith Institute (ASI), one of the world’s leading economic policy think tanks, as a Patron.

With decades of experience bridging the worlds of politics and business, Lord Mendelsohn brings a wealth of expertise to the ASI.

As a Working Peer in the House of Lords, he has served as Shadow Minister for Business, Energy and Industrial Strategy and the Shadow Minister for International Trade between 2016 and 2018, having previously been Shadow Minister for Business, Innovation and Trade between 2015 and 2016. He has also sat on the House of Lords International Relations and Defence Committee.

Today, he holds a number of roles in the business world, including as a Senior Adviser to Value Retail plc and as Chairman of Evoke plc, and is an investor and advisor in a wide range of sectors.

As a Patron, Lord Mendelsohn is eager to expand the reach of Adam Smith’s ideas, working across political divides to promote innovative market reforms that serve all of society. His blend of business and trade experience, both in politics and in business, makes him uniquely well-placed to support the ASI’s work.

The Adam Smith Institute is an independent, non-partisan think-tank, which was ranked as the top independent think-tank in the world by the University of Pennsylvania. It works to promote free-market economics through research, publishing, media outreach and education, and prides itself on putting forward bold and radical policy ideas to deliver real change.

The Institute is famous for its pioneering work over the last few decades on housing and planning, infrastructure, intergenerational inequality, taxation, internal markets in healthcare, education reform, future markets, and emerging technologies and AI. It continues to influence public policy today, demonstrated by the government’s recent adoption of proposals to empower local authorities to buy farmland at farmland prices before giving it planning permission for development.

Commenting on his appointment, Lord Mendelsohn, Patron of the Adam Smith Institute, said:

“I am excited to be joining the Adam Smith Institute, an organisation that champions the ideas of a philosopher whose great contribution to economic thinking has influenced across the political divide.

Adam Smith’s writings were an attempt to reflect a changing world, and they are as relevant today as they were then. In this new political era, there’s an opportunity for progressives to modernise Adam Smith’s legacy, moving beyond the laissez-faire caricature and making the case for Smith’s core ideas: that true prosperity must be inclusive and that markets must serve society, not the other way around. To resolve the UK's growth and productivity problems, it is essential that we harness the power of markets for the benefit of all, embracing the opportunities of initiatives such as public-private partnerships and infrastructure investment to help businesses thrive.

Good functioning markets require government to play a regulatory role to promote efficiency and fairness as well as prevent exploitation, including strengthening the voice of labour. This is the pro-business agenda the UK needs.

I look forward to working with the ASI across party lines to promote innovation and make free markets work at all levels of society.”

James Lawson, Chairman of the Adam Smith Institute, said:

"We are delighted to welcome Lord Mendelsohn as a Patron. His exceptional combination of political insight and business acumen will be a real asset to the ASI. Lord Mendelsohn’s experience will enable us to pioneer bold ideas to revitalise the UK economy, from fostering innovation to promoting entrepreneurship.

Lord Mendelsohn keenly understands the role of markets in boosting living standards and wages, and unlocking opportunities for society’s poorest. He will be instrumental in advancing our mission to champion market solutions that benefit everyone."

 -ENDS-

Notes to editors:

For further comment, please contact press@adamsmith.org | 0758 477 8207

Find out more here about the Adam Smith Institute' research.

Lord Mendelsohn will be our keynote speaker at the Adam Smith Institute’s ‘The Next Generation' Drinks for u35s on the 5th November. Please email press@adamsmith.org if you would like to attend.

Lord Mendelsohn became a Peer in September 2013 and sits as a Labour Working Peer in the House of Lords. He was Shadow Minister for Business, Energy and Industrial Strategy and the Shadow Minister for International Trade from 2016-2018, having previously been Shadow Minister for Business, Innovation and Skills from 2015-2016 and was a member of the House of Lords International Relations and Defence Committee from 2019-2021.

He formerly served as a Policy and Communications Adviser to the Rt. Hon Tony Blair MP (1995-1997) and also served as Director of General Election Resources (2007 - 2010) and as an Assistant Treasurer of the Labour Party (2009 – 2011).

Lord Mendelsohn is the Chairman of Evoke Plc, the owner and operator of the 888 and William Hill businesses. He was formerly a Partner at Oakvale Capital, a corporate finance boutique. He serves as adviser to a number of companies and is also Senior Adviser to Value Retail Plc, the owner and operator of Bicester Village and shopping villages across Europe and China and soon the US. He is also an entrepreneur and investor with interests in sectors including agritech, energy, leisure and technology.

He serves as the President of the Commonwealth Jewish Council and a Director of the UK Abraham Accords Group.

The Adam Smith Institute is one of the world’s leading think tanks. It was ranked first in the world among independent think tanks and as the best domestic and international economic policy think tank in the UK by the University of Pennsylvania. Independent, non-profit and non-partisan, the Institute is at the forefront of making the case for free markets and a free society, through education, research, publishing, and media outreach.

New Report Outlines How to Make the UK More Attractive to Wealth Creators

• Ahead of the Budget on the 30th October, the Adam Smith Institute (ASI) is calling on the Government to make the UK a more attractive place for highly-mobile wealth creators to live, invest, and build a business in;

• In a new report, the leading think tank outlines a number of separate proposals, including tax cuts, a move to a sliding scale tax rate, and an Italian-style annual flat-fee; 

• This report builds on the Adam Smith Institute’s recent work which showed that the UK is set to be the worst in the world for millionaire exits as a proportion of the population, and that abolishing the non-dom regime could cost £6.5 billion and 23,000 jobs;

• The UK’s current offering to high net worth individuals is uncompetitive, and the proposed abolition of the non-dom tax status will make it even more so;

• It is crucial for the UK’s economic prospects that we seek to keep as many highly-mobile wealthy individuals in the country as possible and attract more from overseas;

• Non-doms are wealth creators who contribute billions of pounds to the UK economy in tax revenue and business activity;

• In an accompanying quote, former Chancellor of the Exchequer Nadhim Zahawi encourages the Chancellor to consider the ASI's proposals, rather than measures which would drive our highly mobile wealth creators away."

The Adam Smith Institute (ASI), a leading UK think tank, has been warning that high-numbers of highly mobile wealthy individuals will seek to leave the UK due to its high taxes and the proposed abolition of the non-dom regime, taking their tax revenue and investment with them. 

The ASI’s Millionaire Tracker found that the UK is set to lose the greatest proportion of millionaires in the world over the course of this parliament. The share of the population who are millionaires is forecast to fall by 20% by 2028. And the ASI’s recent report into the economic cost of the abolition of the non-dom regime conservatively estimated that it would cost £6.5 billion by 2035, and 23,000 jobs by 2030. 

It is crucial for the UK’s economic prospects that we seek to keep as many non-doms in the country as possible and attract more from overseas. Non-doms are innovators, financiers and start-up founders, who contribute billions of pounds in tax revenue and business activity. They are also highly internationally mobile, as they typically live in the UK but have not decided to live here permanently or indefinitely. This is why it is so important to create the right incentives for them to stay here.

As a new report from the ASI highlights, the government’s proposals for reform as part of the expected abolition of the non-dom status could have unintended, undesirable and unfair consequences. Non-doms will be incentivised to cease being UK tax resident by reducing the number of days they spend in the UK, tax liabilities will be imposed on the family of a deceased non-dom who have no actual legal right to receive financial gains from a trust, and UK tax resident owners of UK businesses will still be in a ‘worse’ tax position than their non-UK tax resident business-owning counterparts.

The ASI’s Director of Research Maxwell Marlow outlines several proposals to attract more highly-mobile wealth creators to come to the the UK, in a way that maximises tax revenue for the Exchequer, including:

• Give HMRC powers to agree British ‘forfait’ agreements, inspired by the Swiss model. This would be a tailored regime, under which individuals are taxed on what they spend in the UK, rather than on their capital. They would not be allowed to work in the UK;

• Move to a ‘sliding-scale’ tax rate, under which non-domiciled individuals pay tax on income and gains at sliding rates, depending on the number of years they have spent in the UK;

• Charge lower rates of tax to newcomer high-earning immigrants in their earlier years, but withhold certain public services such as non-emergency access to the NHS. This may be particularly enticing to mobile individuals in the financial services sector;

• Introduce an Italian-style flat-rate annual fee of £150,000 for individuals who are resident, but not domiciled, in the UK, as the ASI has previously called for;

• Make the UK tax regime generally more competitive. For example, the ASI recently proposed the gradual abolition of capital gains tax. This will benefit British businesses as well as attracting  more investment;

• Simplify the UK’s tax system to make it easier to understand and reduce transaction costs.

The Rt Hon Nadhim Zahawi, Patron of the Adam Smith Institute and former Chancellor of the Exchequer, said:

“The Adam Smith Institute is doing vital work sounding the alarm about the UK’s increasingly uncompetitive tax regime, the number of highly-mobile wealthy individuals who are set to exit the UK, and the concerning economic impact that this would have. 

Non-doms are often business-owners, start-up founders and entrepreneurs, driving investment into this country and increasing our tax revenue in the process. It is in Britain’s interests to keep them here.

Ahead of the Budget next week, I would strongly encourage the Chancellor to seriously consider these interesting proposals for reform, rather than measures which would drive our highly mobile wealth creators away.”

Maxwell Marlow, Director of Research at the Adam Smith Institute and paper author, said:

“As the non-dom regime comes under further scrutiny and a high number of highly mobile wealthy individuals consider leaving Britain altogether, it’s important to provide positive solutions to the question of how to tax them in a way which both encourages them to come and set up a business in the UK, whilst benefiting our economy. 

Our new report outlines a number of positive reforms which would boost the UK’s economy through business activity and increased tax revenue, drawing on successful tax regimes from across the world including Switzerland and Italy

We urge the Government to listen to our concerns about the economic harms that would be caused by driving wealth-creators away, and consider our proposed reforms.”

-ENDS-

Notes to editors:  

For further comments or to arrange an interview, contact press@adamsmith.org | 0758 477 8207

Maxwell Marlow is Director of Research at the Adam Smith Institute. 

The Adam Smith Institute is one of the world’s leading think tanks. It is ranked first in the world among independent think tanks and as the best domestic and international economic policy think tank in the UK by the University of Pennsylvania. Independent, non-profit and non-partisan, the Institute is at the forefront of making the case for free markets and a free society, through education, research, publishing, and media outreach.

Abolishing Capital Gains Tax Could Boost UK Economy by £25 Billion

• Eliminating capital gains tax (CGT) in the UK could increase national income by 0.9% every year, according to new analysis by the Adam Smith Institute (ASI);

• This would amount to £25.08 billion in the 2024/25 tax year, equating to £1000 for every family in Britain;

• CGT is increasing the cost of capital in the UK, leading to lower investment, lower productivity, and lower wages and standards of living;

• It is also having a disproportionate effect on start-ups and small businesses, limiting innovation, job creation and entrepreneurship;

• Evidence from other countries such as Ireland, the USA, Australia, Sweden and Britain itself shows that increases to the rate of CGT actually decreases revenue, while cuts to the rate increases revenue;

• Creating a competitive tax regime is crucial for the UK to attract investors and high-net-worth individuals, support job creation, raise wages and increase productivity;

• Ahead of the Budget on the 30th October, the ASI is calling on the Chancellor to rule out an increase to CGT, and to instead put forward plans to abolish CGT altogether;

• The ASI advocates for a phased elimination of CGT, with immediate steps to raise allowances and target exemptions for small businesses and start-ups, and a complete abolition by 2028.

As outlined in new the existence of capital gains tax (CGT), which is the tax on the difference between the acquisition price of an asset, and its price on its realisation or sale, is actively harming the UK’s growth prospects. It is increasing the cost of capital, meaning that less of it is being invested in machinery and technology in the UK, reducing productivity and wages.

The negative impacts of this tax are greatest on high-risk investments, such as venture capital, and small businesses and start-ups. High rates of CGT discourage potential entrepreneurs from setting up businesses in the first place, reduce the quantity of resources available to high-risk start-ups and small, growing companies, and make it more difficult for start-ups to hire and retain highly skilled staff.

CGT also creates a ‘lock-in’ effect, where investors hold investments in place and wait for the tax to be lowered to sell them on. This means that capital stays in place, rather than moving to more productive uses.

As report author Peter Young highlights, the evidence from both the UK’s previous changes to CGT rates, and other countries, including the US, Australia, Ireland and Sweden, demonstrates that cutting CGT raises tax revenue and, vice versa, increasing CGT actually reduces tax revenue. 

The ASI’s modelling reveals that eliminating CGT could increase national income by 0.9% every year permanently. This would amount to £25.08 billion in the 2024/25 tax year. 

The paper presents a phased strategy to eliminate CGT:

• Phase 1 (Immediate Reforms by 2024): Increase the annual CGT allowance to £20,000, index capital gains to inflation, and set CGT to 0% for investments in start-ups, small private companies, and AIM-listed and FTSE fledgling companies;

• Phase 2 (Targeted Reductions by 2026): Reduce CGT on residential property to 15%, eliminate CGT for companies listed on the FTSE Small Cap index, and reduce CGT to 0% for assets held for over 4 years, with tapering starting after 2 years;

• Phase 3 (Complete Abolition by 2028): Fully abolish CGT to foster a more favourable investment environment and stimulate long-term economic growth.

Ollie Austen, entrepreneur and co-founder of Startup 2 Standup, a peer 2 peer community for business founders, said:

“What struck me most about this report is how it reframes the debate around capital gains tax as something that affects everyone, not just the wealthy. The reality is that the benefits of capital investment are widely distributed. 

When businesses invest in productivity-enhancing technologies and processes, it leads to higher output, greater efficiencies, and ultimately, better pay for workers.

 In other words, cutting CGT isn’t just about boosting profits for investors, it’s about creating the conditions for businesses—large and small—to thrive, and for workers to share in the rewards of that success.”

Peter Young, former Head of Research at the Adam Smith Institute and author of the paper, said:

“Our economy is on the wane, growth is anaemic at best, our capital markets are dying, and productivity is sharply declining in global terms. Scrapping CGT is a key part of the radical action required to attract investment and jump-start economic growth. Moreover, It can be done without a big hit to tax revenue. What’s not to like?”

Maxwell Marlow, Director of Research at the Adam Smith Institute, said:

“Taxes on capital remain some of the most economically destructive and disruptive interventions a government can make. The pernicious capital gains tax in particular has all sorts of negative impacts on the economy, from stifling entrepreneurship and innovation, to keeping productivity- and workers’ wages - low.

We urge the Chancellor to outline steps to scrapping capital gains tax altogether at the next Budget. This would be a pro-growth, pro-business move that would pay for itself through enhanced economic growth and investment.”

-ENDS-

Notes to editors:  

Peter Young is the former Head of Research at the Adam Smith Institute, for which he has written a number of reports on tax policy.

For further comments or to arrange an interview, contact press@adamsmith.org | 0758 477 8207

The Adam Smith Institute is one of the world’s leading think tanks. It is ranked first in the world among independent think tanks and as the best domestic and international economic policy think tank in the UK by the University of Pennsylvania. Independent, non-profit and non-partisan, the Institute is at the forefront of making the case for free markets and a free society, through education, research, publishing, and media outreach.

Expansion of Class Action Lawsuits is Damaging Trust in UK’s Business and Legal Environment

A new report from leading UK think tank recommends changes to the UK’s corporate law in order to limit the worst excesses of the rapid class action expansion

• The number of class action cases, those in which multiple people seek compensation from a business after having suffered the same or similar harms, have surged;

• Legal reforms in 2015 expanded access to ‘opt-out’ claims in particular. Claimants can apply on behalf of a speculative class of people who may have suffered harm;

• This increase in class action cases has been driven by a growing industry of third-party litigation funding (TPLF), the primary goal of which is to profit from these lucrative lawsuits; 

• UK class actions in 2023 involved claims totalling £123.17 billion, more than twice the UK’s entire Defence budget for that year;

• And in the same year, the total value of opt-out class actions reached £56.32 billion, marking a 48% increase from £38.09 billion in 2022;

• Total class actions have also involved 540 million people since 2015. This a ratio of 8:1 when compared to the size of the British population;

• Contrary to claims from some advocates of TPLF, this funding mechanism does not meaningfully improve access to justice;

• Litigant funders only support 2% to 4% of the cases pitched to them, demonstrating that they are interested in cases with high profit potential, rather than those that are just;

• Litigant funders also stand to make a considerable sum from these cases. For example, funders received 80% of the damages awarded to claimants in the high-profile Mr Bates v The Post Office case;

• An expansion in class action access could also harm business confidence and the broader UK economy as investment is driven abroad to countries with less aggressive legal regimes;

• And there have already been signs that UK firms are spending more of their available capital on legal costs, rather than research and development, job creation or business expansion;

• A new report from the Adam Smith Institute (ASI) advocates that we hold TPLF to the same standard as other investment products, while updating corporate law to give businesses appropriate flexibility in providing compensation without the need for class action litigation.

A new report by the Adam Smith Institute (ASI) outlines how the expansion of class action lawsuits is undermining trust in the UK’s business and legal environment. This increase in class action access and third-party litigation funding has damaged private sector confidence and imposed enormous settlement bills on businesses. At the same time, the greatest beneficiaries of this shift have not been individual claimants, but claimant-focused law firms and litigation funders. 

The number of these types of lawsuits, in which multiple claimants who have suffered the same or similar harms can seek compensation from a business, have significantly increased. While traditionally class actions have required claimants to ‘opt in’ to proceedings, reforms introduced in 2015 have expanded access to ‘opt-out’ claims, in which claimants can apply on behalf of a speculative class of people who may have suffered harms. ‘Opt out’ claims leave businesses exposed to large-scale litigation from large groups of claimants, which are often ill-defined.

The scale of the increase is staggering. By 2023, class actions accounted for claims totalling £123.17 billion - more than double the UK’s defence budget for that year. By the same year, the number of individuals involved in these cases reached an unprecedented 540 million since 2015, an increase of over 170% over the 2022 200 million figure.

This has been driven by a growing industry of Third Party Litigation Funding (TPLF), the primary goal of which is to profit from these lawsuits. Although some have argued that TPLF widens access to justice, litigation funders typically back just 2% to 4% of the thousands of proposed cases, often focusing on cases that offer the most profit rather than the most merit. 

And the greatest financial beneficiary of a successful claim tends to be the litigation funders. For example, litigation funders received 80% of the damages awarded to claimants in the high-profile Mr Bates v The Post Office case. In turn, this risks undermining trust in the UK’s legal system more broadly, as cases are seen to be litigated on the basis of profit, rather than in the interests of claimants.

As report author Sam Bidwell also highlights, investor confidence in the UK is already falling, and the uncertainty created for businesses by the expansion of class action cases is a barrier to the recovery of that confidence moving forward. There have been signs that UK firms are spending more of their available capital on legal costs, rather than research and development, job creation or business expansion. And firms which would have otherwise considered investing in the UK may increasingly turn to other countries instead which have less intrusive class action regimes. This would materially damage the UK’s growth prospects. 

To restore business confidence in the UK’s legal and business environment, the ASI recommends the following measures:

• Consistent regulation of TPLF, holding it to the same rules and standards as other investments;

• Increase transparency in TPLF-backed class actions, with a blanket requirement to disclose third-party funding;

• Apply anti-money laundering regulations consistently, ensuring TPLF isn’t used as a loophole for financial fraud;

• Ensure competition law protects businesses from class actions while regulatory investigations are ongoing;

• Allow businesses the chance to offer their own compensation packages without the immediate threat of judicial interference.

These reforms would create a fairer class action system that protects aggrieved claimants, while preserving the foundations of the UK’s legal system and British businesses.

Seema Kennedy OBE, Executive Director of Fair Civil Justice, said:

“As this report shows, the growing appetite for class action lawsuits in this country is having a dramatic impact on UK plc. We know that more businesses are concerned about rising business litigation, with nearly three quarters reporting an increase in cases brought against their companies over the past five years.

Money that would otherwise be spent on R&D, opening new factories or creating new jobs and apprenticeships is being spent by British businesses defending themselves in endless litigation. It is a drag on growth and only benefits lawyers and those funders that are bankrolling the claims.

If Britain is to remain truly open for business, it is important to tackle the predatory claims culture which is causing such alarm among businesses.”

Sam Bidwell, Director of the Next Generation Centre at the Adam Smith Institute and report author, said:

“The UK stands to suffer enormous reputational and material damage from an ever-expanding class action regime. Its rapid expansion over the past decade is only damaging our ability to attract investment from big, mobile international companies - without meaningfully expanding access to justice for ordinary people. This is the worst of both worlds.

At a time when the UK’s appeal as an investment destination is in question for many businesses, we need to be doing everything that we can to remain competitive, whilst making sure that the legal system still leaves appropriate space for meritorious claims.

The system is in dire need of reform. We must regulate TPLF on the same footing as other investments, and ensure greater transparency across the system. Furthermore, we must reform our corporate law to ensure that it is fit for purpose, giving businesses greater responsibility for providing compensation if they fall foul of regulatory requirements.”

Notes to editors:  

For further comments or to arrange an interview, contact press@adamsmith.org | 0758 477 8207

Sam Bidwell is Director of The Next Generation Centre at the Adam Smith Institute. He holds a BA from the Faculty of Law at the University of Cambridge.

The Adam Smith Institute is one of the world’s leading think tanks. It is ranked first in the world among independent think tanks and as the best domestic and international economic policy think tank in the UK by the University of Pennsylvania. Independent, non-profit and non-partisan, the Institute is at the forefront of making the case for free markets and a free society, through education, research, publishing, and media outreach.

Abolition of Non-Dom Status Could Cost £6.5 Billion by 2035

If the Government enacts its plans to abolish non-dom tax status, this could cost the UK £6.5 billion by 2035, and 23,000 jobs by 2030;

• This will be due to lower investment in capital, a drop in tax revenue, reduced consumption across the economy, and a corresponding loss of jobs;

• These figures are drawn from new research by the Adam Smith Institute, a leading economic think tank, which assessed the potential economic impact of just 5,800 of the 21,100 remittance basis non-doms exiting the country;

• Non-doms are expected to leave for a number of reasons, including the abolition of their current tax status, increased taxes on High Net Worth Individuals (HNWIs), the UK’s poor economic outlook, and hostility towards wealth-creators;

• It is in Britain’s interest to attract and retain as many non-doms as possible, given that the contribute billions each year through taxes and economic activity;

• However, the UK’s current offering to HNWIs is uncompetitive, especially when compared to European rivals such as Switzerland, Spain and Italy;

• This paper proposes an Italian-style annual flat fee of £150,000 for highly mobile wealthy individuals who are resident, but not domiciled, in the UK. If all current non-doms were willing and able to afford this fee, this could raise £12.45 billion a year in tax revenue, while attracting more non-doms to our shores;

• Former Chancellor of the Exchequer Nadhim Zahawi calls on the Chancellor to heed these warnings, and consider the Adam Smith Institute proposals to prevent an exodus of  High Net Worth Individuals from the UK,  and to boost revenue and investment in the UK. 
  

A new paper from the Adam Smith Institute (ASI), entitled Farewell Non-Doms: How Non-Dom reforms can damage Britain's finances, reveals the economic cost of scrapping the non-dom status.  Its research suggests that if this policy was introduced, some 5,800 of our 21,100 ‘remittance basis’ non-doms - those taxed only on income and gains made in the UK - would leave this country. This estimate of a 26% drop is based on evidence from Denmark’s introduction of a targeted tax increase for high-income foreigners.

Under this scenario, the ASI forecasts that the UK economy will be losing £600 million a year by 2030 including some 23,000 jobs. By 2035, Britain will be losing almost £1.3 billion every year. This will lead to a cumulative loss of £6.52 billion.

Abolishing non-dom status would clearly harm the UK’s economic prospects, resulting in reduced capital investment, job losses and lower overall consumption. This decline would also correspond with a reduction in tax revenue. Currently, the top 1% of earners, many of whom are non-doms, contribute 29.1% of total tax revenues.

While the proposed abolition of the non-dom regime is a key driver of non-dom flight, it is exacerbated by wider economic challenges, such as falling productivity, an inefficient planning system, and a skills gap in the labour market. Furthermore, a growing hostility towards wealth creators has weakened the UK’s attractiveness to HNWIs compared to countries like Switzerland, Spain, and Italy, which have more favourable tax and investment climates.

Keeping non-doms in the UK is vital, as they contribute billions to the economy through taxes and spending. Their presence underpins public services, drives investment, and stimulates broader economic activity.

This paper advocates for an Italian-style annual flat fee of £150,000 for wealthy UK residents who are not tax-domiciled. The policy could raise £12.45 billion a year while attracting more non-doms, generating further tax revenue and boosting the wider economy too.

The Rt Hon Nadhim Zahawi, former Chancellor of the Exchequer, said:

“The proposed abolition of the Non-Dom tax status is a serious risk to our international competitiveness. It will repel investors, strangle growth and hit the Treasury’s coffers by reducing the revenue it collects each year. 

The Chancellor should heed these warnings, and consider other proposals to prevent an exodus of  High Net Worth Individuals from the UK.

The Adam Smith Institute’s proposal for an Italian-style system would be a far better alternative, and would boost Britain’s prosperity and encourage more wealth creators to move here.”

Maxwell Marlow, Director of Research at the Adam Smith Institute and report co-author, said:

The Prime Minister says that wealth creation is the ‘number one priority of this government.’ He should therefore ditch his current plans for a non-dom raid that will cost the UK billions in lost revenue. 

Instead, he ought to replace the existing model with a flat fee system. An Italian style scheme would allow Britain to maximise its competitiveness, rather than push millionaires overseas to our European rivals.

This proposed alternative would be a win-win for both non-doms who want to stay in the UK but are currently being put off from doing so, and the UK economy, which would benefit from increased revenue and investment. 

According to Andrew Amoils from wealth intelligence firm New World Wealth, which tracks the movements of the world’s wealthy as part of the Henley Wealth Migration Dashboard:

"There is a larger question at play here. Is it possible to thrive as an economy in today’s world if one has higher tax rates than the USA?

Considering that the United States of America is almost completely dominant in high-value sectors such as tech, financial services and media & entertainment this seems unlikely unless one offers fantastic public services of course – possible examples that could get away with it include the likes of Australia, Switzerland, Iceland, Norway and Sweden.

 In the UK, public services are relatively poor so it would not fit into this category. Also, with the VAT exemption on private schools now being scrapped and wealthy Brits increasingly moving to private healthcare due to the deteriorating NHS, one could argue that UK millionaires don’t get much value for their tax. In our view, this cost-benefit analysis will almost certainly push many non-doms to leave."

Methodology:

The Adam Smith Institute used a ‘Solow Residual Model’ to dynamically estimate the effects of 5,800 remittance basis non-doms exiting the UK. This model analyses long-term data on capital inputs, outputs, accumulation, and tax treatment to generate its estimates. Remittance basis users were selected as they have most publicly available data attributed to them.

 For our analysis of UK exits, we used the mid-point of the Danish non-dom exodus, and input the amount of investment and economic growth the country would forego if 5,800 non-doms left. We also used a static tax model to estimate the tax impact, using HMRC data, as well as the effects on the country’s potential lost jobs and lost investments.

To arrive at the potential tax take from an Italian style system, we multiplied the proposed £150,000 elective tax by the total number of non-doms registered with HMRC (83,000). This gave us our £12.45bn figure, and should be understood indicatively.

Notes to editors:  

Maxwell Marlow is Director of Research at the Adam Smith Institute.

The Adam Smith Institute (ASI) has recently released its Millionaire Tracker, which calculates the proportion of the population who are millionaires and forecasts how this will change over time. It projects that the share of the population who are total millionaires will decline from 4.55% to 3.62% before the end of this parliament, representing a 20% decrease.

For further comments or to arrange an interview, contact press@adamsmith.org | 0758 477 8207

The Adam Smith Institute is one of the world’s leading think tanks. It is ranked first in the world among independent think tanks and as the best domestic and international economic policy think tank in the UK by the University of Pennsylvania. Independent, non-profit and non-partisan, the Institute is at the forefront of making the case for free markets and a free society, through education, research, publishing, and media outreach.

UK Set to Be Worst in the World for Millionaire Exits as a Share of Population Within This Parliament

The UK is set to lose greatest proportion of millionaires in the world over the course of this parliament;

• According to new analysis by the Adam Smith Institute, a leading economics think tank, the share of the population who are millionaires will fall by 20% by 2028;

• Today, 4.55% of British residents are millionaires, but the ASI has forecast that this will fall to 3.62% by 2028;

• The fact that the UK is losing proportionately more millionaires than China or Russia is a worrying indicator of our economic health and growth prospects;

• Many millionaires are wealth creators who set up businesses and employ people across the UK;

• They also pay a significant share of taxation, funding Britain’s public services;

• Millionaires are leaving the UK for a number of reasons, including high levels of current taxation, threats of further increases, a hostile culture towards wealth-creators and , the abolition of the non-dom regime, and a culture which is hostile to wealth-creators; 

• Former Chancellor of the Exchequer, Nadhim Zahawi, urges the Government to rule out measures in the Budget targeted at  high net worth individuals. Instead, the Chancellor  ought to  cut or abolish anti-prosperity taxes.

The Millionaire Tracker is a new initiative from the Adam Smith Institute (ASI) which calculated the proportion of the population who are millionaires, and how this is forecast to change over time.

According to their new analysis, the share of the population who are total millionaires, which means they have at least 1 million US Dollars across all asset classes, including shares, property, pension funds and cash, will fall from 4.55% to 3.62% before the end of this parliament. That is a decrease of 20%.

As the leading think tank highlights, this could be seriously damaging to the UK economy. Millionaires pay a significantly greater share of tax, especially income tax, which is the Exchequer’s largest source of tax revenue. The top 1% of earners pay 29.1% of income tax. 

Millionaires are leaving the country for a number of reasons, including the changes to, and the proposed abolition of, the non-dom tax status, high levels of general taxation, and a hostile culture for wealth creators.

To reverse this trend, the Adam Smith Institute calls on the Government to make the tax environment more welcoming to wealth creators. In particular, it suggests the abolition of inheritance tax, cuts to Capital Gains Tax and an international competitiveness assessment on the UK’s tax and regulatory treatment of non-doms and High Net Worth Individuals (HNWIs).

The Rt Hon Nadhim Zahawi, former Chancellor of the Exchequer, said:

“The rate at which millionaires are leaving the UK is a vote of no confidence in both our current tax and regulatory regime, and anti-business and anti-prosperity measures that could be coming down the line. 

These individuals are often entrepreneurs and business owners. Their exit won’t just reduce necessary funds for public services- it will decrease investment in the wider economy too.

I urge the Government to rule out anything in the Autumn Budget on the 30th October that could drive them away even more. They should instead be focusing on attracting more millionaires from across the world to make a home and set up shop in Britain. Abandoning anti-non-dom policies and abolishing or cutting anti-wealth taxes would be a vital first step.”

Maxwell Marlow, Director of Research at the Adam Smith Institute, said:

“These findings should be a wake-up call to the Government. The more millionaires who leave the UK, the worse the impact on the economy will be. 

It’s important to understand that High Net Worth Individuals aren’t only leaving in response to the UK’s uncompetitive tax and regulatory regime, the proposed abolition of the non-dom status, and the threat of increased taxation. They are understandably also reacting to a culture that is increasingly hostile to wealth creators. As long as we continue along this path, we can hardly be surprised that so many millionaires want to leave. 

This trend is not set in stone. We need to take a comprehensive review of our tax and regulatory treatment of millionaires and reconfigure it to attract more of them to our shores, as well as creating more of them at home.”

--ENDS-

Methodology:

The Adam Smith Institute utilised data from New World Wealth and UBS/Credit Suisse wealth reports, as well as national data office population data and forecasts, for each respective nation. We calculated the number of millionaires within the country per capita, and utilising UBS/Credit Suisse forecasts for millionaires in 2028 against population forecasts provided by the ONS, and calculated the forecast exodus of millionaires. This was calculated as both a percentage of millionaires against the overall population, and against the population of millionaires today. We also utilise the Governmental census bodies of other applicable countries from other nations mentioned in the UBS/Credit Suisse and New World Wealth reports.

As our analysis is based on UBS/Credit Suisse’s data, where they investigated 36 separate countries, there will be gaps in the data we have utilised for our tracker. Likewise, New World Wealth’s data, comprising 24 countries was utilised for liquid millionaires and may reflect similar criticisms over proportionality and gaps for non-measured countries. Our report concentrates on the G7, OECD, and other global economic peers.

Notes to editors:  

The report is available on a private website link here. Please use password ASIMT24

For further comments or to arrange an interview, contact Emily Fielder, press@adamsmith.org | 0758 477 8207

The Adam Smith Institute is one of the world’s leading think tanks. It is ranked first in the world among independent think tanks and as the best domestic and international economic policy think tank in the UK by the University of Pennsylvania. Independent, non-profit and non-partisan, the Institute is at the forefront of making the case for free markets and a free society, through education, research, publishing, and media outreach.

ASI Responds to Observer Splash About Potential Delay to VAT on Private School Fees

Maxwell Marlow, Director of Research at the Adam Smith Institute, said:

“It is unsurprising that this tax raid is already running into trouble, and that experts are calling for it to be delayed past January. This tax would be incredibly complicated, more so than was initially promised.

As we have previously highlighted, levying VAT on school fees could lead to school closures, state schools becoming overwhelmed in certain areas, a reduction in opportunities for underprivileged children, and teacher redundancies. In a worse case scenario, it could even end up costing, rather than raising, money.

We urge the Government to take this opportunity to think again about applying VAT to school fees at all.”

ENDS

Notes to editors:

For further comments or to arrange an interview with Maxwell, contact press@adamsmith.org | 0758 477 8207

The Adam Smith Institute has previously released two reports on the potential impact of charging VAT on private school fees:

• In ‘Short-Term Thinking’ we highlighted the economic savings that the existence of private schools creates for the Treasury, and  warned that the policy could raise no money at all, overwhelm state schools, and reduce bursary and scholarship opportunities for talented youngsters;

• In ‘Tuition Tensions’ we explained why parents who take their children out of private schools could choose to work fewer hours, with negative knock-on effects on the rest of the economy.

The Adam Smith Institute’s submission to the technical consultation on charging VAT on private school fees can be found here.

The Adam Smith Institute is one of the world’s leading think tanks. It is ranked first in the world among independent think tanks and as the best domestic and international economic policy think tank in the UK by the University of Pennsylvania. Independent, non-profit and non-partisan, the Institute is at the forefront of making the case for free markets and a free society, through education, research, publishing, and media outreach.