Britain is becoming an increasingly anti-libertarian society
WELCOME to Britain, a land where rules, regulation and taxes are one of the few growth industries. In recent days, the government has decided that companies will no longer be allowed to decide freely at which price they can sell alcohol – there will be a minimum price, hurting those who enjoy two-for-one deals.
Our rulers have also decided that there will be a maximum rate of interest on some loans; a drastic reduction in the number of tariffs energy companies can offer (what next? Fewer mobile phone tariffs, or limits on choice in supermarkets?); and we will find out today whether newspapers will be regulated by statute.
There may be public support for all of these anti-libertarian rules. But they will be rife with unintended consequences, with social costs greater than social benefits.
Many people drink too much. The chaos caused by excessive consumption is disgusting, and the health effect on many binge drinkers can be heart-breaking. But this kind of state paternalism is not the answer. It is a myth that alcohol consumption keeps soaring: it has actually dropped 12 per cent between 2004 and 2011, with the per capita consumption of pure alcohol falling from 9.5 litres to 8.3 litres, according to HMRC. The proportion of 16-24 years olds drinking at least once a week collapsed between 1998 and 2010: from 71 per cent to 48 per cent for men; from 62 per cent to 46 per cent for women, according to the NHS. Binge drinking has also slumped, even if it doesn’t feel that way on a Friday night. The proportion of adults who drank in the last week is down substantially over the past decade. So why suddenly slap this deeply illiberal minimum price on alcohol? As the Institute for Fiscal Studies points out, poorest households will fare worst.
“Reforms” to the energy market will also hit the worse-off hardest. As the brilliant Stephen Littlechild argues in a devastating analysis on p24, the lowest tariffs will be withdrawn, everybody will face the higher tariffs, competition will be crippled and profits will rise, triggering another row. It’s a shameful policy, the most retrograde step in 30 years for the industry.
Taxes are also wreaking havoc. As Morning Wire revealed last week, higher taxes have coincided with a collapse in the number of high earners: in 2009-10, 16,000 people earned £1m or more; in 2010-11 6,000; in 2011-12 10,000 and in 2012-13 a mere 8,000. There are fewer higher earners around, and therefore less tax receipts. Ditto high end property: transactions in the £2m-£5m bracket have collapsed by over half since the Chancellor introduced a 7 per cent stamp duty rate and consulted on an “annual charge” (or Mansion Tax-lite) for anyone buying such properties through companies. This is hitting everybody, rich and poor: estate agents, the construction industry and various service staff, as well as wealthy buyers. Osborne won’t backtrack completely – but he ought to announce that the annual charge will not be levied, or applied only to those using a company to buy a home they do not rent or hold for investment. The stamp duty rates should be fixed for the remainder of this Parliament, and not hiked again or applied to cheaper houses. The £2m value should be indexed annually. The inheritance tax implications for foreigners need to be looked at carefully.
This government, like its predecessor, has been astonishingly illiberal in all sorts of areas, restricting individuals’ freedom to choose or to keep their own money. Let us hope at least that it preserves the freedom of the press, and gives short shrift to those calling for its statutory regulation.