International Policy Digest: Regulatory Sandboxes: How a British Invention is Fueling Tech Innovation Globally

Published by the International Policy Digest

By its nature, government is always playing catch-up. First, a bold innovator pioneers some new technology. Then, some time later, the state appears, chasing after it with a huge butterfly net called ‘regulation.’

The movement of government is slow and haphazard. It often restricts or disincentivizes the development of new products and services which could enhance our quality of life in various ways, for fear of the hand of the state emerging to crack down on pioneering technologies because of often exaggerated fears about safety, or health risks, or monopolies, or any number of other things.

Enter regulatory sandboxes. First developed by the UK’s ICO (Information Commissioner’s Office) for use in the world of British fintech, a regulatory sandbox is a cordoned-off space in which eligible companies are allowed to do business free from red tape. Certain key rules like consumer protection stay in place but other than that, entrepreneurs and business leaders are given a safe, controlled environment in which to indulge in uninterrupted innovation and growth.

The idea may have germinated in the niche, technical regulation of the British financial services industry, but it quickly caught on. Around the world – and in the U.S. in particular – lawmakers at both the state and federal level have spent so many decades cushioning every industry within reach in endless red tape that now, rather than tinkering with the law and trying to reform regulation, often the best way to unleash the free market is to sidestep regulations altogether by using regulatory sandboxes.

Across the U.S., the regulatory sandbox movement is in full swing. Since 2018, around a dozen states have implemented some kind of regulatory sandbox for a wide range of industries including tech, finance, transport, and energy. More are on the way, such as this one in Pennsylvania. The idea is gaining traction around the world, too, with lawmakers in countries including RwandaCzechiaZimbabwe, and Serbia throwing their weight behind various forms of regulatory sandbox.

It’s a matter of if, not when, the remainder of America’s politicians cotton on to the limitless potential of regulatory sandboxes to transform our lives. It may have been a British invention to begin with, but it could yet make an enormous difference to American politics and industry by giving innovators breathing space to try out their potentially world-changing ideas and making clear to entrepreneurs and investors from across the globe that the U.S. is the right place for them to focus their attention.

Regulatory sandboxes are one of the most important fronts in the ongoing battle for innovation and the free market. In a world of nanny statism, excessive regulation, mission creep, and government overreach, regulatory sandboxes represent a glint of light, a hint of hope that the future might yet include a fresh embracing of the wonders innovation can bring.

Have you ever tried to read a large quantity of the law? Most new policies or regulatory developments are so complicated you have to set aside several hours to break down the dozens, if not hundreds, of pages of inscrutable writings, and even then, without extensive specialist education and experience, it will be very difficult to understand, especially when it comes to complicated areas of regulation like those developing industries – tech, finance, and so on.

Regulatory sandboxes flip the market-state dynamic completely on its head. No more does the government need to hurriedly and haphazardly respond to innovations after they happen and end up slapping them down retrospectively with overregulation. Instead, thanks to regulatory sandboxes, government actors can rest assured in the knowledge that consumers are protected, but no one is missing out on cheaper or better products or services because of them.

Lawmakers across the U.S. have nothing to lose by working towards more regulatory sandboxes. They can achieve astounding results with relatively little cost by creating these hubs for innovation, investment, and progress, allowing companies to sign up as the UK did back in 2014 and simply sitting back and letting the free market do the rest of the work. What are we waiting for?

TalkTV Drivetime Panel with Kevin O’Sullivan: Boris Johnson Will Still Be Prime Minister At The Next Election – And He Will Win

I joined Kevin O’Sullivan (in for Jeremy Kyle) alongside Peter Edwards on the TalkTV drivetime political panel.

TheArticle: Windfall taxes? This Tory government has been blown off course

The windfall tax U-turn won’t solve the cost of living crisis. There is a distinct lack of creative policy thinking in government.

Published on TheArticle

Rishi Sunak’s windfall tax U-turn is already costing me money. A couple of weeks ago, I made a bet with a friend that this Government would not resort to raiding energy companies’ profits to boost Treasury revenue. I was clinging onto the hope that there was still an ounce of truth in ministers’ claims that they believe in low-tax, free-market economics. Apparently, I was wrong.

In times of crisis, of course, some rules need to be thrown out of the window. The Covid spending package two years ago, for instance, would have been unthinkable from a Tory government in any other context – but as I wrote at the time, in the wake of the first viral pandemic in a century, it was proportionate.

However, we now seem to be leaping from one crisis to the next. First there was Brexit, then Covid, now war in Europe and inflation, not to mention the environmental “emergency”. There must come a point where a party which has always stood for low taxes, economic growth and individual autonomy puts its foot down and says: no more.

The current round of crises would have been the perfect opportunity for this Government to do that. The Conservatives could have drawn a clear line between them and Labour, refusing to introduce any more taxes, providing short-term cash support to relieve the financial pain for those most in need, but sticking to growth and sensible economics as the longer-term route out of the crisis.

Instead, we are on track for the highest tax burden since the Second World War, with new or increased now taxes now apparently the Treasury’s go-to tool for addressing any problem. As Kate Andrews writes in the Spectator, Rishi Sunak will find it hard to shake his newfound reputation as a tax hiker.

Where the money comes from was never the issue in the first place. We are already in unimaginable debt, with one year of national debt interest now costing taxpayers, present and future, £83 billion. The much stickier issue is how and where to spend money to alleviate the cost-of-living crisis. Sunak has finally conceded that a small loan on energy bills won’t do and has unveiled a package of measures, including a non-repayable £200 discount on energy bills for everyone.

This is a straightforward approach. “Energy bills are too high, so let’s give everyone a flat-rate discount.” There is a distinct lack of creative policy thinking in our Government. Other countries in Europe have implemented VAT cuts on energy bills in Spain, tax credits for energy-intensive companies in Italy, and even a low energy price cap, with the government paying the difference, in Norway. Meanwhile, the best Britain can come up with is to throw a few medium-sized cash payments at the problem and hope it goes away, with no thought for the recession to come.

When a party has been in government for as long as the Conservatives have, a degree of stagnation is inevitable. That’s why, when new leaders come in, it is imperative they put their own ideological stamp on the party and shake it up with fresh thinking and new ideas. Boris Johnson tried to do that by appointing Dominic Cummings as his tsar, which turned out to be a rather more explosive decision than he first thought.

He then over-corrected his mistake by replacing Cummings with Dan Rosenfield, a man who made headlines for his furniture preferences more often than any boldness of leadership or interesting policy ideas.

Now that Rosenfield, too, has departed, it is a new official, David Canzini, to whom many point as the brains of the Government. Reportedly, he is the voice of common sense in Number 10, always asking advisers: “What’s Conservative about this?” Canzini could re-ground the Government, reminding them of what their party stands for — but only if ministers pay attention to what he says.

Wherever it comes from, this Government is in dire need of a refresher course in Conservatism. The phase in which they were able to retain support because “at least they’re not Labour” is over. Jeremy Corbyn is long gone, and the Tories have embraced too many Labouresque policies. The cost-of-living crisis has turned the next election on its head. Boris Johnson and his ministers need a convincing solution to this problem, and a few hundred pounds in pay-outs here and there just won’t cut it.

1828: Tobacco harm reduction is an under-appreciated benefit of Brexit

When Britain left the EU, we liberated ourselves from countless thousands of pages of pointless or downright harmful legislation, not least in the field of public health.

Published on 1828

When Britain left the EU, we liberated ourselves from countless thousands of pages of pointless or downright harmful legislation, not least in the field of public health.

The pre-Brexit TRPR (‘Tobacco and Related Products Regulations’ 2016) is currently under review by the government. As a result, there is huge unexploited scope within the post-Brexit regulatory framework for a greater embrace of tobacco harm reduction. Free from Brussels, there is no limit to how liberally we can approach the taxation and regulation of smoking and vaping.

Meanwhile, the European Union continues down the road of ceding more ground to the World Health Organisation (WHO) growing the state, hurting markets and consumers. The European Commission announced recently that it will publish its revised ‘tobacco excise directive’ later this year. It seems to already be laying the groundwork for increased tobacco taxes, noting that it has not bolstered the taxes it slaps on smokers since 2010:

“The Commission highlighted that tobacco taxation is outdated as it has not been revised since 2010, and does not capture the developments in the tobacco market or the inflation rates of the last decade.”

It’s early days, but the omens are not good. It looks very much like the European Commission is gearing up for a new war on smokers and vapers. Endless evidence shows that hiking taxes does not achieve what policymakers want it to achieve and causes plenty of collateral damage besides. But perhaps even more worryingly, the Commission is already talking about the importance of “the harmonisation of new tobacco products such as e-cigarettes, heated tobacco products and nicotine pouches”.

First off, e-cigarettes are not tobacco products. That’s the whole point. Vaping is a tool used successfully by millions of smokers around the world to quit cigarettes. Inhaling vapour rather than smoke is, according to Public Health England, around 95% healthier overall and approximately 200 times less likely to give you cancer.

The EU Commission looks set to join the WHO and the American FDA in clumsily labelling e-cigarettes ‘tobacco products’ and then treating them the same way in policymaking. That means they will be subject to the same harsh taxation and over-regulation of advertising as traditional cigarettes, despite the fact that they are by far the most effective method ever discovered for helping people quit smoking.

Britain has a chance to set itself apart and bring some much-needed common sense into the tobacco policy debate. Against the backdrop of the cost-of-living crisis, late 2022 would be an excellent time for our government to set itself apart from the EU by publicly embracing vaping. The government could no doubt win over many voters by slashing VAT on e-cigarettes, at once easing the cost-of-living squeeze and showing that in post-Brexit Britain, common sense wins out over virtue-signalling in public health policy.

If our continental neighbours hike taxes on e-cigarettes, making life more difficult for both vapers and smokers in economic and health terms, Britain’s forward-looking approach will shine by comparison. In public relations terms, it would be a repeat of the Covid vaccine triumph, in which Remoaners fretted that Brexit locking Britain out of the EU’s vaccine procurement scheme would spell disaster, only for the UK to acquire and roll out Covid vaccines much faster than any other European country.

As the government scrambles for ways to reduce the cost of living and fumbles its public health strategy, low-hanging fruit is abundant in the field of tobacco harm reduction. Smokers and vapers are too often ignored in politics or treated as an afterthought. Brexit is a golden opportunity to change that. As for the EU itself, if Euroscepticism continues rumbling throughout Europe, the project’s viability might soon depend on public opinion of Brussels, in which case treating these issues with compassion and common sense becomes all the more important. 

American Spectator: Menthol Cigarette Ban Plan Will Fuel Illicit Tobacco Trade

Published by the American Spectator

The FDA has taken it upon itself to liberate America’s youth from the blight of cigarette smoking. As has sadly become typical of its activities, the regulator has reached for the 20th-century policy playbook of taxes and bans. According to its recently published plans, the FDA intends to ban menthol cigarettes altogether.

The proposed menthol cigarette ban is a textbook case of nanny statism. When questioned on it, proponents of bans like these tend to quote alarming statistics about cancer cases and deaths among smokers and regale with tales of blackened lungs, heart failure, and other health disasters. But that response answers a question no one asked.

Americans already know that smoking is unhealthy. It is patronizing and infantilizing for a regulator to suggest otherwise. We no longer live in the 1950s, when doctors would routinely prescribe cigarettes as a remedy for the common cold. Still, while educating the public on matters of public health might well be a laudable course of action, that is not what the FDA is proposing.

The FDA’s bull-in-a-china-shop approach of slapping bans on things it does not like will only make the situation worse.

There is a disconnect between the issue the regulator has identified and its proposed solution. Sure, menthol cigarettes are harmful. No one is denying that. But will a ban actually achieve the desired goal of reducing consumption? On a generational level, Western society is weaning itself off cigarettes independently. In 2018, 61.7 percent of adult smokers quit.

A much better, more positive course of action — which would not criminalize millions of Americans in the process of trying to safeguard their health — would be to invest in and pave the way for innovation and investment in stop-smoking technologies such as electronic cigarettes. But the FDA view is too simplistic for that. It does not extend beyond thinking, “Menthol cigarettes cause harm; therefore, we should ban them.” Worryingly little thought is given to actually achieving the desired outcome of improving public health.

In fact, all the evidence suggests that bans of this kind simply do not work. Liquor prohibition came to an end almost a century ago for that reason. Banning the legal purchase of menthol cigarettes will only fuel illicit tobacco trade. It will be a boon for the black market, funneling money into the pockets of criminal gangs and leaving consumers vulnerable to the whims of unlicensed, unregulated, unaccountable vendors.

When cigarettes become inaccessible (or unaffordable, because of wildly inflated tobacco taxes), illegal trade grows. The research, such as a study conducted by Pepperdine University on this subject, consistently shows that banning consumer products only drives those consumers towards the illegal market.

A two-pronged approach is needed: stronger enforcement against the illegal tobacco trade alongside the creation of a safe, regulated environment for consumers to buy the products they want. The FDA’s bull-in-a-china-shop approach of slapping bans on things it does not like will only make the situation worse for all parties.

Perhaps worst of all, bans of this kind simply do not succeed in preventing activities regulators want to forbid. Banning menthol cigarette sales will not necessarily stop people from smoking menthol cigarettes. In 2020, the South African government tried to ban alcohol, leading to supermarkets selling yeast, sugar, and pineapples as home-brewing kits. If people want to drink or smoke, they will find a way to do so, even when the government objects.

When smokers want to quit, they must have access to the education and resources they need in order to do so. But according to data from the CDC, more than three in 10 smokers have no interest in giving it up. The FDA’s obvious yearning for a smoke-free America is a fantasy for the foreseeable future. Mission creep is rampant — it is not the FDA’s job to lean into nanny statism and make lifestyle choices on behalf of the average American. Many people want to smoke, and we have no right to tell them not to.

In the post-COVID era, there is a real and imminent risk of politicians and regulators getting hooked on the high of centralizing control on people’s lives. Mask mandates, social distancing, and stay-at-home orders have led to a crop of lawmakers and busybodies who can’t give up the habit of nanny statism. The FDA’s proposed ban on menthol cigarettes, like most nanny-state policies, will do much more harm than good, and it must not go ahead, however attractive it might be to those who run America.

Jason Reed is the spokesperson at Young Voices and a policy analyst and political commentator for a wide range of outlets. Follow him on Twitter @JasonReed624.

Politics.co.uk: The Online Safety Bill’s age verification mandates won’t make the internet safer

Published on politics.co.uk

Regulating the internet is a behemoth challenge, and Nadine Dorries thinks she has the solution. The multi-faceted Online Safety Bill is set to mandate age verification checks for adult content online in order to protect children, among many other radical news measures. It’s a well-intentioned but woefully planned move which will do much more harm than good.

To begin with, the government is making itself the arbiter of which parts of the internet require age verification and which don’t. It says it will target “psychologically harmful content”, which suggests they are not planning to put a wall up around a handful of porn sites and leave it at that. Details on what “psychologically harmful content” actually is are not easy to come by. As things stand, the government looks to be giving itself the authority to block off access to the entire internet, bar CBeebies.

The Online Safety Bill’s new rules would require a vast number of websites to force visitors to declare their identity, resulting in a mass, diffuse, hard-to-regulate surveillance system which could easily be used to track your every move online and link your online activity to your identity. It would be tantamount to creating an online ID card for every adult in the UK.

With concerns about privacy online already on the rise, these measures would take modern society a long way further down the slippery slope towards levels of online surveillance which would have been unimaginable until very recently. Rolling back online privacy in the name of child safety is a tactic routinely deployed by authoritarian states like Russia and China to limit freedom of information and expression. Let’s not mirror that approach in Britain.

This isn’t the first time the government has flirted with the idea of age verification online, and many of the problems highlighted the last time around are still lurking. Back in 2019, the Adam Smith Institute drew attention to a whopping flaw in Theresa May’s so-called ‘porn laws’.  MindGeek, set to become the most prominent provider of the soon-to-be legally required age verification services, also happened to be the owner of some of the world’s most popular porn sites including RedTube and YouPorn. How many users of adult websites would be happy merrily sending their passport or driving licence off to that company?

Age verification mandates are not a solution. Frankly, the average ten-year-old is probably more technologically savvy than the average government minister. That’s not to say the government don’t know their IPs from their VPNs, but rather that kids know much more than we think they do. No matter how sophisticated a system we put in place, no matter how tall a wall we build around websites they ought not to be looking at, if anyone can find a way around it, it’s them.

It’s already possible – and easy – to trick online service providers into thinking you’re on the other side of the world, and the innovations in online anonymity will only keep on coming. Compared to the various creative ways both children and adults already use to hide their identities online, standard age verification mechanisms are Stone Age technology.

Add into the equation a state-mandated age verification hurdle to access much of the internet and the incentive will be even stronger to create, market and learn to use VPNs and other tricks, making them even more commonplace than they are now. That would mean Nadine Dorries’ crusade for everyone to verify their identity before going online will probably end up making the internet an even more anonymous place.

The last nail in the coffin of this idea is its raging unpopularity. More than three quarters of adults in Britain would be flat-out opposed to providing their ID online to access adult websites, according to a recent YouGov survey. We all want a safer internet, but not at any cost, and age verification is too littered with crippling flaws to be a catch-all solution. With a general election slowly moving into view on the horizon, the government should reconsider the Online Safety Bill before it’s too late.