"[T]here are […] significant economic costs associated with the planning system. It has significantly increased land and housing prices […] and […] led to the British standard of living being lower than it otherwise would be. […] The aggregate reduction is […] probably of the order of 10 per cent or more of national income."

This passage could easily be from a recent think tank publication. It is, in fact, from an IEA book published in 1988. In those quaint old days, house prices in the UK stood at around five times average annual earnings. That ratio has since increased to more than eight.

For me, the most frustrating aspect of the housing crisis is the fact that the correct diagnosis of the problem, and the right solutions, have been known for such a long time – or at least, known to anyone who cared to know. Some socioeconomic problems are genuinely difficult to solve, even with the best political will in the world. This one is not. We know what to do. We just need to – you know – actually do it.

As I show on this week’s IEA blog, for two decades, housing and planning ministers of all political stripes have repeatedly started with all the right rhetoric and all the right ambitions, only to U-turn and cave in to NIMBY opposition a few months later.

But while previous governments have failed to solve the problem, they have at least not made it actively worse. The Sunak government is now doing precisely that. Under pressure from around 60 "rebel" MPs representing NIMBY interests, they have decided to scrap mandatory housebuilding targets.

As a free-marketeer, I am obviously not a huge fan of government targets. As I type the word, I involuntarily start humming the Soviet national anthem. And yet, in the current system, those targets are one of the few available tools to keep the worst excesses of NIMBY obstructionism in check.

Getting rid of them without changing the overall incentive system just hands over even more power to the anti-housing brigade. Britain is now officially a NIMBYocracy.

Kristian Niemietz
IEA Head of Political Economy

EXPANDING THE WEB

This week the IEA published 'Expanding the Web: The case against net neutrality', authored by our Head of Public Policy Matthew Lesh. Commenting on the paper, former Secretary of State for Business, Energy and Industrial Strategy the Rt Hon Jacob Rees-Mogg MP, said:

"This is a thoughtful and persuasive report from the Institute of Economic Affairs… The EU’s internet regulations were misguided and unnecessary… Removing these regulations, or allowing them to sunset under the Retained EU Law Bill, will allow us to restore our more flexible regulatory environment which we enjoyed until 2015."



In the paper Matthew argues that net neutrality, the principle that internet service providers (ISPs) should treat all web traffic equally, is stifling the UK's capacity for online innovation. The UK's net neutrality rules derive from the EU's Open Internet Access Regulation 2015, which came into force in 2016 and has been retained in UK law post-Brexit.

By diverging from EU rules, a move supported by major ISPs including Three and BT, the UK can enable them to operate in a truly competitive environment. 



IEA Communications Officer Harrison Griffiths wrote about the research in CapX, saying:

"Britain’s regulators should prioritise openness over neutrality. They should allow ISPs to manage network traffic however they see fit and tailor their packages to consumers’ preferences. This would allow ISPs to run their networks more efficiently, attract much needed capital investment from the tech sector, and foster innovation by forcing ISPs to experiment with different packages in order to deliver the best services for consumers."

Matthew's video explainer of the report can be watched on our YouTube channel here.

ECONOMIC FREEDOM OF THE WORLD CONFERENCE

Vietnam has taken greater steps towards trade liberalisation over the last decade than most other nations. To discuss this progress and the economic challenges that the world faces, IEA Head of International Outreach Adam Bartha provided his views from a European perspective at the Economic Freedom of the World Conference in Hanoi.



The Fraser Institute and Friedrich Naumann Foundation conference provided a platform for market-oriented policymakers and experts to identify further avenues of collaboration between South-East Asia and Europe which could successfully combat the rising sentiments of protectionism and government interventionism. 

iN THE MEDIA



Overseas opportunities... Last Sunday, IEA Economics Fellow Julian Jessop appeared on BBC Politics London to discuss Qatari investment in the UK. "The economic reality," he said, "is that the UK runs a huge trade deficit with the rest of the world and we have to pay for that deficit somehow. One of the ways we do it is by encouraging foreigners to invest their money here."



Quantitative complacency... Julian was also quoted in the Daily Express explaining how the Bank of England's strategy of quantitative easing contributed to the UK's high inflation. He said:

"Printing huge amounts of money when the economy was locked down was a recipe for runaway inflation."



Edinburgh excitement... Julian also commented on Chancellor Jeremy Hunt's relaxing of financial services regulations. Julian said:

"The ‘Edinburgh Reforms’ are a sensible package of measures which should improve the competitiveness of the UK financial sector and boost growth across the whole economy." 



Down tools... More strikes were announced this week, including planned action by the RMT over the festive period. In the Daily Express, IEA Editorial and Research Fellow Professor Len Shackleton warned that the RMT's Christmas chaos could have long-term effects on the industry. Len said: 

"The disputes are not just inflicting short-term misery on rail users, but are surely damaging the industry’s long-term prospects – which means job cuts further down the line. Sooner or later union members are going to get worried about this."



On TalkTV, Len told Julia Hartley-Brewer that NHS strikes are, in the short run, "about money but it's difficult to see that we can easily accommodate some of the claims which are being put forward".



Not working... Len also wrote for CapX following the news that government plans to introduce a right to request flexible working from the first day in a new job. He warned:

"Where flexibility gives rise to extra costs, this will likely have an impact on pay. Employment mandates of all kinds – other examples include pension obligations and holiday entitlements – reduce employer profits. In competitive markets the extra costs are gradually passed on to employees in terms of lower pay. Moreover, reduced pay is not confined to those taking advantage of flexible working, but the cost falls on all employees."



Regressive taxation... In Spiked!, IEA Energy Analyst Andy Mayer argued against the expansion of London's Ultra-Low Emission Zones, describing the move as a "tax on the poor". Andy wrote:

"In truth, the ULEZ is less about saving Londoners' lungs than it is about raising revenue for Transport for London."



Up in smoke... Also writing for Spiked!, IEA Head of Lifestyle Economics Christopher Snowdon discussed the widespread dismissal of data correlating smoking with reduced harms from Covid-19. Christopher said:

"After a brief burst of incredulous coverage in the spring of 2020, the media soon lost interest in the hypothesis that smokers are less likely to get Covid-19, but dozens of studies have been quietly published in the past two-and-a-half years which confirm it."



Online censorship bill... In a letter to The Times, IEA Head of Cultural Affairs Marc Glendening urged the government to abandon the controversial Online Safety Bill. Marc wrote:

"A Conservative government is now doing its best to introduce a law that the illiberal left has long campaigned for".

IEA DIGITAL



IEA Podcast... In this week's IEA Podcast, IEA Head of Public Policy Matthew Lesh talks to Bryan Cheang, Assistant Director of the Centre for the Study of Governance and Society, to discuss whether Hong Kong and Singapore are truly free market utopias.

Watch here.

YOU'RE INVITED!

Tomorrow, Monday 12 December, the IEA Book Club will be hosting journalists Harry Cole and James Heale to discuss their new book, "Out of the Blue: The inside story of the unexpected rise and rapid fall of Liz Truss". The event will take place at the IEA's offices in Westminster between 12.30-2.30pm, and will be chaired by IEA Head of Public Policy Matthew Lesh.

Liz Truss slowly but determinedly achieved her goal of taking over 10 Downing Street – only to instantly plunge her administration into chaos and announce her resignation after a record-breaking 44 days. How did she do it? And what exactly went so wrong?

Tracking Truss’s transformation from geeky teenage Lib Dem to Tory PM, Out of the Blue offers a behind-the-scenes account of Britain’s shortest-serving Prime Minister.

This event is exclusive to IEA Book Club members. For more information on the Book Club, please contact [email protected] or follow the link here.

CALLING ALL STUDENTS!



Global Internship... The Initiative for African Trade and Prosperity partners with think tanks across Africa and works with them to make their push for greater free trade more effective and louder. If you are interested in African trade and development, want to work with cutting-edge think tanks across the continent, and develop your knowledge on the biggest issues facing Africa, then this internship is for you!

The IATP is a project of the Institute of Economic Affairs and the Vinson Centre at the University of Buckingham. We are housed at the Vinson Centre at the University of Buckingham, where we work under the same roof as dozens of world renowned academics and popular think tanks.

Click here for more details on how to apply for this exciting opportunity.



Future thought leaders... Applications for our Future Thought Leader Programmes for sixth-formers and undergraduates are now open. There will be two weeks for sixth formers in April, and one in July. The undergraduate programmes will be in July and August.

You can find out more information on the programmes, and how to apply here.



Monetary policy essay prize... Applications remain open for the monetary policy essay prize, organised by the IEA, the Institute of International Monetary Policy Research and the Vinson Centre at the University of Buckingham.

This year's question is: Are the central banks to blame for the current inflation episode?

To be in with a chance of winning up to £500, you must submit your answer by 6 January 2023. Further details on how to enter can be found here.