Undermining encryption will make us less safe and do nothing to stop ISIS

Following The Sun’s report that ministers are planning to force tech companies like Facebook and Apple to introduce backdoors for encrypted messaging services, Sam Dumitriu, Research Economist of the Adam Smith Institute, said:

"The encryption backdoor that intelligence services are proposing is exactly what led to the NHS WannaCry attack two weeks ago, and would put everyone who uses WhatsApp at risk.

"Criminals and terrorists will always have access to encryption whether or not it’s banned for apps that you and I use. If you outlaw encryption, only outlaws will have encryption, and that will make us all less safe.

"Terrorists like Salman Abedi will simply switch to lesser known, even more secure apps like Telegram, which protect journalists and activists from government survelliance and censorship in China and Iran.

"Hackers already dedicate substantial effort to seeking out and exploiting every vulnerability out there. Just two weeks ago we saw the harm and chaos they can cause when they shutdown IT systems at forty NHS trusts. The WannaCry exploit they used was based off a leaked NSA vulnerability in Windows. If WhatsApp, Facebook, and Google were forced to create vulnerabilities in their encryption, it'd risk giving cyber criminals a blank cheque to cause chaos and extort billions - and do nothing to stop terrorism."

For further comment or to arrange an interview please get in touch with samd@adamsmith.org or call 020 7222 4995

Unionising Deliveroo riders will hurt them and the wider economy

In response to the International Workers Union of Great Britain's attempt to force Deliveroo to accept it as a union for its riders, Sam Bowman, Executive Director of the Adam Smith Institute, said:

“Deliveroo riders do the job because it gives them so much flexibility, and ruling against that would hurt them. Just like Uber drivers and other ‘gig economy’ workers, being able to work when they want allows riders to work around other commitments – essential for students or people with irregular social lives. Deliveroo is hardly a monopolistic employer either – riders can choose between UberEats, Deliveroo or even similar services like Amazon Flex, choosing between whichever is offering the best deal at the time for them. That’s just one freedom that would be limited if riders had to be classified as ‘workers’.

“It’s misleading doublespeak to say that the court will be giving these riders more “rights”. Only 19% of Deliveroo’s riders in Camden supports the union's motion. The whole reason these jobs exist is because they are less tightly constrained by the type of job restrictions and barriers to entry that many full-time workers face. If you want to see what full-throttle “protections” for workers do, go to Italy or France, where unemployment rates are double Britain’s. 

“Our flexible labour market is what’s allowed us to create two million new private sector jobs since 2010, while the rest of Europe has stagnated. It allows firms like Deliveroo to innovate with new employment models and gives workers more choices and more opportunities. Ruling against the gig economy would be bad for Deliveroo riders, bad for innovation, and bad for Britain’s workers as a whole."

For further comment or to arrange an interview please get in touch via sam@adamsmith.org or 02072224995.

Theresa May is trying to turn us into Italy

In response to Theresa May's pledge of a raft of new European-style workers regulations, as well as a crackdown on the gig economy, the ASI's head of research damned them as risky.

Ben Southwood, Head of Research at the Adam Smith Institute, said:

Theresa May’s decision to copy Ed Miliband’s continental-style labour laws risks continental style unemployment and stagnation.

One of the British economy’s greatest strengths is its flexible labour market: it is easy to hire and fire workers, and when you do, the terms are simple and lightweight. It is this flexible labour market that has allowed us to get unemployment down to 4.7%, and employment up to a record high, despite a historically slow recovery around the world.

And it is this flexible labour market that has allowed “gig economy” employers like Uber, Deliveroo and Airbnb to flourish here, completely changing markets with new innovative products. Clamping down on this kind of work will make it harder for British firms to experiment with new business models in the future and act as a drag on innovation at a time when we need all the entrepreneurship we can get.

Look over the channel where countries ban new entrants like Uber, and cynically regulate away their business models, and you find 10, 20, 30% youth unemployment in rigid labour markets that cannot deal with shocks. We don’t want to emulate that here.

For further comment or to arrange an interview please get in touch via ben@adamsmith.org or 02072224995

Theresa May's energy price cap will backfire

In response to Theresa May's call for an energy price cap, ASI Head of Projects Sam Dumitriu, commented:

"When Ed Miliband called for 70s style price controls on energy prices in 2013 the Tories were right to oppose it. The facts haven’t changed since then, only the politics. We said back then that proposing a cap would force energy companies to keep prices high even as wholesale prices fell as a precaution – and, with the price cap on the table since then, that’s exactly what’s happened. Since Theresa May floated resurrecting Red Ed's price cap, energy companies have hiked prices by as much as 40% in anticipation of a cap.

"The real solution to high energy prices is more competition – something that the Competition and Markets Authority and five previous Ofgem regulations have said is the real problem with the British energy market. Britain used to have an incredibly competitive energy market with the highest rates of active customer switching in Europe, but since 2009 over-regulation has lead to a nearly 50% fall in switching rates. Theresa May’s proposed cap on Standard Variable Tariffs would destroy the incentive for customers to shop around for cheaper tariffs making the market even less competitive.

"Ultimately expensive bills are caused by high wholesale prices and bad regulation, not profiteering – energy firms are no more profitable than similarly sized companies in other sectors. If the Prime Minister really wants to cut energy bills, she should go for competition and make switching easier and more attractive for billpayers."

For further comment or to arrange an interview please get in touch at samd@adamsmith.org, 

Adam Smith Institute Annual Review 2016/17 now available

The ASI's incredibly beautiful Annual Review 2016/17 is now available to view here. Dive in and take a look at what we've been up to for the past twelve months.

Corbyn reckless in wage promise - Adam Smith Institute comment

In response to Corbyn's promise to raise the minimum wage to £10 by 2020 Executive Director of the Adam Smith Institute, Sam Bowman, commented:

"Labour’s commitment to raise the minimum wage to £10/hour is reckless and ignores the potential costs of such a move. We know that increases to the minimum wage have to come from one of three places – either through lower wages or employment for other workers, lowered company profits, or higher prices. The evidence is pretty strong that higher minimum wages kill jobs, whether through direct layoffs or by slowing down new job creation, and this effect seems to get stronger the higher the minimum wage level is.

"Higher prices may be even worse for the poor, because they are regressive – poor households disproportionately consume goods produced with minimum wage labour. 

"As well as being bad policy, this is also evidence that we were right when we warned that Osborne’s politicised “National Living Wage” would poison policymaking in this area. Instead of being set by the technocratic Low Pay Commission, with an explicit mandate not to risk unemployment, the National Living Wage is now subject to a political bidding war, with neither the Conservatives nor Labour having any real incentive to keep the level at a level that minimises harm to Britain’s poorer workers."

For further comment or to arrange an interview please get in touch flora@adamsmith.org.

ASI offers rational voice in encryption row

Sam Dumitriu's comments on Whatsapp's end-to-end encryption have been featured in a host of national newspapers including The i and Independent, Mail Online, The Mirror, The Herald, The National, This is Money and The Daily Record, as well as 100+ regional titles. 

Rudd deeply misguided in encryption row warns Sam Dumitriu

Following calls from Amber Rudd to abolish Whatsapp's end-to-end encryption, Sam Dumitriu warns against this deeply misguided move from the Home Secretary. 

Sam Dumitriu, Head of Projects at the Adam Smith Institute, said:

"Amber Rudd's call on Whatsapp to give the government backdoor access to your private communications is deeply misguided.

"It is mathematically impossible to build a backdoor for just the good guys. It means building a backdoor to your private messages for Putin's favourite hacker Guccifer. It means opening up your private photos to perverts like the iCloud hacker. End-to-end encryption keeps us safe.

"Khalid Masood wasn't even on MI5's 3000 strong list of suspected jihadis. Ending end-to-end encryption would not have stopped the Westminster attack, but it would mean a free-for-all for cybercriminals and Putin's hackers."

For further comment or to arrange an interview please get in touch flora@adamsmith.org, +44 20 7222 4995.

Appeal to Cabinet Office over government data leaks grabs headlines

Following an investigative piece in the Wall Street Journal by Mike Bird, ASI Executive Director Sam Bowman wrote to the Cabinet Office asking for a review of current procedures around pre-releases of ONS data to government ministers and civil servants. 

The letter, in full below, was a leading story for The Sun, and Sam's commentary ran across City AM , Guardian and The Daily Telegraph.

Dear Mr Gummer,

I am writing to you in your capacity as Minister for the Cabinet Office and Paymaster General. I wish to draw your attention to new evidence published in today’s Wall Street Journal showing dramatic moves in financial markets in the 24 hours prior to the publication of surprisingly strong or weak market-sensitive CPI and other market data. (https://www.wsj.com/articles/market-drift-suggests-some-investors-may-be-trading-on-u-k-economic-data-ahead-of-release-1489397403)

These moves, revealed by the WSJ’s Mike Bird and Prof Alexander Kurov, a professor of finance at West Virginia University, are large and suggest that official, confidential data may be being leaked to certain traders for the purpose of insider trading, before the data is made public. These leaks may be coming from inside the government and as such it is vital that they are investigated.

The UK is unusual in giving advance notice of this sort of sensitive data to a large number of people before it is revealed to the public – 118 different politicians and civil servants are given advance access to labour market data, for example, including ministers and their special advisors at the Treasury, Department for Work and Pensions, and other ministerial departments, and at least fourteen different government press officers. This creates a much greater risk of data leakages, enabling traders to profit illegally from secret information undermining trust in the markets.

In light of this new evidence, will the Cabinet Office review the people it gives pre-release access to, to determine whether these leaks are taking place and, if so, who is responsible? Furthermore, will the Cabinet Office re-investigate the rejected proposal from the UK Statistical Authority (made in 2010) that the maximum pre-release period ought to be cut to a maximum of three hours?

In the US official data is typically released less than 24 hours after it’s completed and physically delivered by courier to the White House, where only the President and the chairman of his Council of Economic Advisors have access to it. Prof Kurov found that evidence of pre-release drift was much less likely in the US. We ask that the Cabinet Office consider US-style security measures to prevent future leaks and ensure that leakers cannot enrich themselves or others through insider trading.

In the long run, the solution may be to move towards greater openness and transparency at the ONS so that leaks of this kind are not possible. There is little reason for the ONS not to make its data collection and generation open to the public throughout the process, so that we can see in real time what the statistics suggest about the health of our economy and ensure that no individuals can profit from corrupt leakages of government data.

Best,

Sam Bowman

Executive Director, 

Adam Smith Institute

The ONS needs urgent review - Sam Bowman comments

In response to a report in the Wall Street Journal this morning which revealed that current ONS procedure needs urgent review, Sam Bowman Executive Director of the ASI, made the following comment:

"Reports that markets are moving ahead of official ONS data releases in a way that is consistent with leaks and insider trading must be taken extremely seriously by the government and the ONS. 

"If flaws in ONS procedures are enabling market-moving leaks to take place, allowing some individuals to profit off secret information, then something has gone badly wrong. The Cabinet Office should review ONS procedures and consider substantial reforms in light of this new evidence.

"We could follow the lead of the United States, where these suspicious market movements are seldom seen, and data is released less than 24 hours after completion and statistical reports are physically delivered to the President. 

"An alternative option would be to make the process entirely open, so that the public (and the markets) can see ONS data in real-time as it is generated, and markets can price in new information immediately and openly. The ONS is already working on this, but today's findings should be an urgent call to action for them to speed up the process."

For further comment or to arrange and interview please contact flora@adamsmith.org.