Friday, 25 March 2016

The State of Gaza #2: Welfare

Few peoples of the modern day have been subjected to the type of oppression faced by the Gazan community. In this second part of our series 'The State of Gaza', we reveal the welfare troubles faced by the local community.

"The goal of this operation is to send Gaza back to the Middle Ages."

Yes, this really is really is a genuine quote- one made not by some lone political voice, but 
by the actual (now former) Interior Minister of Israel himself, Eli Yishai (pictured), in 2012. Yishai was talking about the Operation 'Pillar of Defence', a military operation that, contrary to its name, saw Israel going on the attack. These 8 days of Israeli air strikes killed 174 Palestinians and injured 'hundreds more', according to the UN. It sounds pretty bad, but in reality, this is barely the starter to the main course of violence- with many, many more brutal operations killing thousands more Palestinian civilians.

Israel's  (now former)
 Interior Minister Eli Yishai,
who has expressed his wish
to "send Gaza back to the
Middle Ages".
Eli Yishai, emphasised that it is imperative that Israel should "destroy and damage infrastructure, public buildings and government buildings" (which would, and do, constitute international war crimes), in order to perform this wonderous act of time travel. 4 years on, it would be fair to say that he, and the Israeli government as a whole, has certainly kept to his promise. Accounts of the Israeli Defence Forces (IDF) bombing hospitals are far from rare. Operation Protective Edge in Summer 2014 didn't only kill 2,310 people, but it destroyed or damaged as many as 67 hospitals and health centres in Gaza, killed 32 medics and injured 102 more.

No wonder then, having to face such military action, that Gaza's healthcare system is not coping well. According to the World Bank, Europe has 5.4 beds per 1,000 people, and Israel has 3.3. Gaza has just 1.3, with 30 hospitals and clinics serving almost 2 million citizens.

One positive sign is that this January, the first new hospital in 10 years opened in Gaza, with two more expected to open by the end of the year. However, if the current situation is anything to go by, these will struggle like the current hospitals, primarily due to a desperate shortage of key medical resources caused by the lack of prosperity in Gaza. Following Operation Protective Edge, a World Health Organisation (WHO) report claimed that "nearly 50% of Gaza's medical equipment is outdated, and the average wait for spare parts is about 6 months"- something attributable not just to the blockade of goods entering Gaza, but the shortage of financial resources and wealth largely caused by it.

IDF operations have also severely disrupted emergency health services in Gaza. Between October and December 2015, the WHO reported that 146 paramedic personnel were injured by Israeli strikes, which also damaged 91 ambulances and 'significantly delayed' 91 others in emergency situations.

Such poor accessibility to healthcare matters when you have a people in such a bad condition as the Gazans. A UNWRA report estimated that Operation Protective Edge alone destroyed over 100,000 Palestinian homes, affecting 600,000 civilians- a third or so of the entire Gazan population. The result of the decades of Israeli bombing has been mass homelessness, and the blockade has prevented civilians from gaining access to basic building materials they need to rebuild their homes and lives.
Hundreds of thousands of Palestinians have lost their homes
to IDF air strikes- but few have the access to resources
required to rebuild them.

As well as housing and shelter, food is a key matter. The conflict and lack of a fluid economy (which we'll discuss in #3) in Gaza has pushed people deeper into poverty, which according to the WHO has resulted in 57% of the population being exposed to food insecurity. Consequently, a massive dependency has grown of the Gazan people on foreign aid, particularly food aid.

There is a very dark side to the food situation in Gaza, as revealed in 2012 when Israel was forced to release secret documents that showed the government was rationing food to Palestinians, tactically at a level calculated to be just above starvation between 2007 and 2010. Israel argues that it was attempting to pressurise the elected Hamas government of Gaza, but many condemned this as an unnecessary form of collective punishment.

Let alone housing or food, even water in Gaza is at a severe premium*. UN estimates suggest that over 90% of the water in Gaza is not fit for human consumption, and the only freshwater source of water available to the region is downstream from Israel- who many believe have used this as a tactic of war. The lack of clean water has not only taken away from many the basic nutritional value of the liquid, but it has lowered drastically the hygiene and sanitation conditions, causing stomach infections and other illnesses to locals of all ages.

The UN estimates that by 2020, virtually no clean water will be
available to civilians of Gaza.
The welfare of the Gazan people is a crucial issue that is unacceptable in the modern day. We hear almost nothing about it in the media, unless there is a military operation being carried out- and even then, we hear very few details. To have a state where the majority of citizens are food insecure, where so many lack even basic access to clean water, where most of the medical equipment is outdated, is unacceptable- particularly when there is a state government behind all of these crises. Unlike many other impoverished regions in the world, Palestine and Gaza have the potential to thrive- they are simply being deprived of the tools they need to do so.

And no, this is not something whose main consequences are in the long run, affecting only distant future generations. The crisis is now; the Israeli government really is achieving its goal of sending Gaza "back to the Middle Ages". Action needs to be taken now to end the blockade, to allow the Gazans to rebuild, recover and redevelop their lives.

Perhaps the most disturbing comment in any report on the Gaza crisis comes from a 2012 UNWRA report, which concluded that without any urgent action, by 2020 "there will be virtually no reliable access to sources of safe drinking water, standards of healthcare and education will have continued to decline... to ensure that Gaza in 2020 will be a 'liveable place', on-going herculean efforts... need to be accelerated and intensified in the face of all difficulties."

Join us for next week's final instalment of The State of Gaza series when we analyse the Gazan economy. 

This RT report provides an interesting on the ground insight into the water issues being faced by Gazan civilians.

"We do injustice to Gaza if we glorify it, because being enchanted by it will take us to the edge of waiting and Gaza does not come to us. 
Gaza does not liberate us.
Gaza has no horses, airplanes, magic wands, or offices in capital cities... 
Gaza liberates itself from our attributes and liberates our language from its Gazas at the same time.
When we meet it - in a dream- perhaps it won't recognise us, because Gaza was born out of fire, while we were born out of waiting and crying over abandoned homes."
Mahmoud Darwish, extract from 'Silence for Gaza'.
Mohammad M Lone Editor

Tuesday, 22 March 2016

The Cost of Chelsea's Failure

The past 10 months have been miserable for the blue part of South West London. From the very first day, Chelsea Football Club's season has been embroiled with controversy, instability and most importantly, failure. 

In any season of the Abramovich era, the scale of Chelsea failure would have been shocking- but coming after a season of winning the Premier League/Capital One Cup double with such comfort, no one saw this coming.

It's no difficult task to quantify Chelsea's overall lacklustre performance. Last season, with 30 games played, Chelsea were cruising in 1st place, with 70 points and a game in hand over second placed Arsenal, who were 7 points behind. The Capital One Cup was in the bag. This season, after 30 PL games, Chelsea are 10th in the league. On 41 points, and for the first time in a very long time, having drawn more matches than won. Elsewhere, the Blues were disposed of with relative ease from the Champions League and FA Cup by PSG and Everton respectively, and, well, it'd be better not to mention the Capital One Cup.

Now, much is made of the excesses of money in football- something that, no doubt, Chelsea have profited from massively over the past decade or so. But while this excess has rewarded success generously, it has equally put failure at a massive cost. Especially for a club like Chelsea, who have performed so consistently in recent years.

Premier League Prize Money 2014-15
Chelsea's Premier League struggles will cost them. Last season, the club won the largest ever Premier League prize bounty of £99m. Now, of course, any estimates of this year's prize money are totally dependent upon how we predict Chelsea will finish this year. If we assume merit payments (the portion of prize money dependent upon final position in the table) will stay the same as last year (in reality it will most likely increase, a little), Chelsea will lose out on £11m.

This won't be the greatest cost of failure this season, for Chelsea, however. Had Chelsea not lost to PSG and gone on to the final of the UEFA Champions League, they could have netted an extra £30m over the £18.7m they earned this year*. If they had won it, they could have earned up to £42m more.

But to be honest, while Chelsea were expected to go far in the UCL at the start of the year, few expected the Blues to win the competition- so perhaps these aren't the costs we should be thinking about. What we should be remembering is that, thanks to a terrible Premier League season, remaining in and winning the Champions League was Chelsea's last, thin hope of playing the Champions League next year. Knocked out of that by Paris Saint Germain, and now being very unfeasible that Hiddink's men will rise up the table to fourth from 11 points behind, Champions League football will not be visiting Stamford Bridge until at least August 2017. This has serious financial consequences.

It means that as substantial an amount of money won, even from such a disappointing campaign as this year's, will not reach the club accounts until at least the 2017/18 season. Even if they qualify for the Europa League next year, the prize money amounts for the two competitions are night and day. Tens of millions will be lost from Chelsea's failure to qualify for next year's Champions League, and this will most likely be the biggest financial consequence of the team's failures this season.

With chances of Champions League football next
season pretty much gone for Chelsea, we won't be
seeing similar celebrations any time soon.
To put these losses into perspective, remember that Chelsea Football Club, despite the footballing success and achieving its second highest ever turnover of £314m, lost £23.1m last season, with no particular massive expenditures to justify the loss. It's worrying to think that what the next two years have in store for Chelsea's finance when you consider such a loss, during one of the club's successful years.

UEFA'S Financial Fair Play Regulations are tightening for the next 3 years, allowing only a loss of €30m (£23m) to be incurred in each season. Now, I'm pretty sure the club would have some sort of way to avoid substantial consequences, even if they did break this rule. But if Chelsea were to fall foul of the FFP regulations next season and be punished, it would not just be a huge embarrassment for the club, but it could restrict their re-entrance into the Champions League, worsening the financial issues.

The Blues' finances will be made worse by the fact that this failure will necessitate the club to spend more, particularly on the acquisition of players. With a new manager coming in, the squad looking weak in a number of areas, and a number of key players set to leave in the search of UCL football next season, Chelsea will have to spend big this summer to rebuild the squad. It will be interesting to see how the club manages to balance finances- after all, investment is required to open up future successes, but in the short term will only worsen the financial situation.

Chelsea have some big investments to make in the near
future- not least the £500m renovation of Stamford Bridge.
Not only is Chelsea due to invest in players, but it is also working on a drastic renovation of its stadium, Stamford Bridge, a project expected to cost over £500m. Failure to get back on to track financially over the next few years will jeopardise this grand project.

This is, you could say, a pessimistic look at Chelsea's financial prospects for the next year or two. But, it is indeed a situation that the club must be aware of, and one that teaches us the perils of failure in football as well as the gifts of success. The bigger you are, the harder you fall- and while it is unlikely (hopefully!) that Chelsea will collapse as a result of this season's failures alone, the financial effect will no doubt be felt hard.

What's your opinion on this matter? Will failure this season leave Chelsea in the lurch for the future or do you think will they bounce back quickly? Leave a comment below! 

*Estimates made from statistics from Total Sportek.
Mohammad M Lone Editor

Wednesday, 16 March 2016

The State of Gaza #1: An Introduction

Few peoples of the modern day have been subjected to the type of oppression faced by the Gazan community. In this three part series, we will take a look at the dire economic and social welfare conditions the people of Gaza are living under. 

Gaza, Palestine is one of the most troubled areas not just in the Middle East (which, today, really is saying something), but in the world. In the first part of our 'State of Gaza' series, we will be introducing some of the points of context key to understanding the economic and welfare situation in Gaza.

The Gaza Strip is part of Palestine, but it is separated geographically from the larger part of the nation, known as the West Bank. Now the West Bank has its own issues, but Gaza, being a region isolated from its mother country and surrounded instead by unfriendly Egyptian and Israeli neighbours, faces a number of unique problems.

If we're talking about context, it's key to understand that Gaza is small. Really small. If you heard that it had a landmass of 141 square miles (about the size of Bath and North East Somerset in the UK, or Detroit in the USA), you may not think it was too small. But, fill those 141 square miles with over 1.8 million people (1.2m of whom are refugees), and you have the recipe for one of the most densely populated lands in the world. For comparison, Detroit has a population of less than 700,000, Bath and North East Somerset 182,000.

Israeli government policy has played, and continues to play, a key role in making Gaza even more cramped. For example, in 2014, Israeli Prime Minister Benjamin Netanyahu established a 'buffer zone of 3km from Gaza's border- effectively outlawing 44% of Gaza's habitable land, and forcing 250,000 Palestinians to move inland or face intense bombing that has sadly become all too familiar in the region.

What has been an even bigger barrier to any economic or social welfare progress has been the blockade enforced by Israel since 2007. Made in response to Hamas' election victory in 2006, the blockade prevents key materials and aid needed for development from  Gaza, whether from land, air or sea. Israel has been desperate to prevent Gazans from benefiting from any sort of supplies- even going as far as to infamously intercept and board a Turkish aid ship en route to Gaza, killing 9 aid workers and detaining 600.

The severe blockade has been repeatedly condemned by various global authorities, including the United Nations and the World Bank, but little tangible action has been taken to actually push for the policy to be withdrawn.

Israel's oppression of Gaza has gone further than restricting resources from entering, however, to actually destroying the place. The buffer zones mentioned earlier are far from the only areas feeling the force of Israeli weaponry. Periods of concentrated violence have become far too common, such as in 2014 when a 50 day assault by Israel's air force on Gaza killed 2,100 Palestinians.

Noam Chomsky, an outspoken critic of Israeli's policies regarding Palestine, claims such violence is cyclical in nature, part of what Israel itself has called "mowing the lawn": "The regular pattern is for Israel, to disregard whatever agreement is in place, while Hamas observes it," he states in a 2014 article for "Until a sharp increase in Israeli violence elicits a Hamas response, followed by even fiercer brutality."
Israeli air strikes have caused huge devastation in Gaza.

Considering the tiny, packed nature of Gaza, and it is inevitable to anyone, let alone the Israeli military, that civilian deaths are inevitable in the case of air strikes. No matter how 'targeted' you claim your strikes can be, in such a densely populated area, it's almost impossible to avoid any civilian casualties. Yet the aerial onslaught has continued and is ongoing. Israel has even bombed UN relief areas, such as schools and hospitals- but again, while this has been vocally condemned by world powers, little has been done to resolve the issue itself.

Of course the most significant damage of this bombing has been the loss of life- but it has also disrupted the limited educations of the youth of Gaza, the healthcare system, and the economy as a whole, as we will go on to see.

The blockade, the bombing, and the sheer population density of Gaza's landmass has earned the region the tragic reputation of being known to many as "the world's largest open air prison". As a result, looking at the everyday lives and welfare of the Gazan people makes for interesting, though depressing, as we shall find out over the next week.

Join us for next week's article, in which we will be discussing welfare in Gaza.
Mohammad M Lone Editor

Tuesday, 8 March 2016

'Brexit': Liberation or Suicide?

On Thursday the 23rd of June, a referendum will be held on whether Britain should remain a part of the European Union. This referendum will not only be one of the most significant events in British history, but also in Europe - James Rosanwo examines the key knock on effects of a potential vote in favour of Britain's exit.

The result of this impending vote could shape the future of the United Kingdom, as Scotland and Northern Ireland are heavily invested in Britain’s membership of the EU and will no doubt bring their own membership of the UK into question. The departure of a heavyweight member would certainly have negative effects on it’s the European Union’s dwindling economic stability.

The referendum was called after Mr Cameron completed his supposed renegotiation of Britain’s stance in the EU at the European Summit in Brussels, where he claims he has won concessions on behalf of Great Britain. However, many doubt it may do little to sway the result of the referendum in his favour. Soon after the announcement, many government ministers stated their intention to either back Mr Cameron’s campaign to remain in the EU or do the opposite, with high profile MPs, the likes of justice secretary Michael Gove and London mayor Boris Johnson, boldly reinforcing their discontent with remaining an EU member, pledging their allegiance to the “out” campaign.
The question of Britain's membership of the EU has created
a rift between key figures in the Conservative Party.

At the start of the year, the chances of “Brexit” seemed unlikely. However, recent events such as the European migration crisis and the incessant euro decline, seems to have many Britons favouring an exit. Whether, however, this is a good enough reason to opt for total economic uncertainty instead is debatable.

Mr Cameron has confirmed that if the British people decide to leave the EU, the UK would apply for withdrawal under Article 50 of the Lisbon treaty. Article 50 states that the EU countries’ would negotiate a new agreement with the withdrawing nation over a period of 2 years. It also specifies that the withdrawing state cannot participate in these discussions, so in essence the terms of the deal are established only By the EU. Hence it will be a process that will most likely not be quick or pleasant; neither will it yield results that would be favourable to Britain. One thing guaranteed is that the EU will be desperate to show that a decision to leave will not have a painless outcome.
Many opposed to remaining in the EU still maintain that Britain is being hindered by Europe, believing that  as a country free from the EU it would have an open Economy that would continue to trade with Europe and the rest of the world. Many have offered the Swiss and Norwegian models as  potential solutions:

The Swiss Model: Britain would emulate Switzerland and would negotiate trade treaties sector by sector.
The Norwegian Model: Britain leaves the EU but joins the European Economic Area, giving it access to the single market, with the exception of financial services but exempting it from EU rules on agriculture, fisheries and home affairs.

In practice, however, these models would be very difficult to implement. At the bare minimum, the EU would only allow access to the single market in return for obedience to rules Eurosceptics are so eager to escape, meaning they would still most likely demand free movement of people and big payments to its budget before permitting access to the market. Nonetheless, to these “Brexit” campaigners these hardships would be worth it, if it meant regaining independence from Europe and British sovereignty. 

Yet again, this supposed liberation is not as advantageous as it seems. In essence, Britain would be trading a greater power for a lesser one; in exchange for their newfound independence it would be relinquishing its ability to have any real influence in global issues. What is even more alarming is the threat posed to the EU and the West as a whole. Both Britain and the European Union would be significantly weaker, and less of an ally as separate entities. The strength of the EU is crucial to the West’s duty of maintaining global stability, an ordeal which is becoming more and more challenging given the ever persistent issues involving Russia, Syria, and North Africa etc. There’s no surprise why Russia’s Prime Minister Vladimir Putin would have no objection to ‘Brexit’, whereas America’s president Barack Obama has already urged the British people to vote to remain in the European Union.  

Britain's exit from the EU could further empower the already
dominant Germany.
Germany’s dominance in the EU would also monumentally increase, making them even more of an influence not just in Europe but on a global scale. Britain, on the other hand, would be on the sidelines outside the EU, free from but still in fact constrained by many rules it would have no role in formulating. We would be an independent Britain, still dependent on Europe.

The immediate effect of a vote in favour of 'Brexit' could also be devastating in further ways. Prolonged uncertainty over the UK’s new relationship with the EU would discourage investment, particularly foreign direct investment given Britain’s status as the financial capital of the world and the effects of these fears are already being identified; for instance, the recent fall of the value of the pound.

Above all, one question remains: will Britons be enticed by the illusion of a sovereign and liberal Britain, or will they see reason in the idea that there will always be safety in numbers? One thing is certain however, If the UK separates from the European Union, the decline of the pound will be the least of their worries.
Mohammad M Lone Editor

Wednesday, 2 March 2016

Pros & Cons #5: Britain's Patent Box

In recent decades, Britain has quite significantly lagged behind other developed nations in its level of innovation and, partly as a consequence, productivity. An active 'Patent Box' has been one of the British government's headline measures taken to try to stimulate the country's level of Research and Development. 
So, what is the Patent Box, and what are its pros and cons?

This graph (left) tells you a lot about Britain's need for more research and development activities. Showing the proportion of national income spent on Research and Development projects, it highlights Britain's lack of investment in innovation compared to the rest of the developed world. Not only is the British average expenditure less than the OECD average, but it has also remained worryingly stagnant compared to almost every other country- in fact, it has decreased in the past decade.

The aim of the Patent box is to address this: "to provide an additional incentive for companies to retain and commercialise existing patents and to develop new innovative patented products", according to the Government itself. 

The Patent box does this by granting a lower level of corporation tax (10%, as opposed to the usual 20%) to profits earned as a result of patented innovations. 

PRO: Incentivising Innovation
This is the headline pro, the main aim of the whole project. Data presented on the right highlights the fact that very few patent applications emerge from the UK, and a major reason for this is the high cost of patenting, something that only hits smaller innovators hard. A properly drafted patent application in the UK can cost up to £6,000, with no guarantee that it will be accepted- it's common that multiple applications must be made before the patent is accepted. And even this does not ensure the international security of the intellectual property- there are even greater costs that come as a result of trying to win a patent abroad. 

In Japan, on the other hand, the cost of a patent applications (including attorney and translation fees) comes to around 210,000 yen, just over £1300. So it's very likely that patent costs are a major reason for the gap in application numbers between the UK and countries like Japan.

While the government wants to do little about patent costs, the proponents of the Patent box argue such smaller businesses will be helped out by the fact that their returns to innovation could be significantly increased by the new tax incentive. This higher profit possibility could give more encouragement to innovators to take greater risks with their inventions and commercialise them.

CON: Favours Larger Businesses?
However, there is an argument on the opposition side that the Patent box system is too 'complex' to be of great benefit to these small, independent innovators, and instead favours the larger firms with access to greater resources. While some financial barriers to entry may be lowered by the tax breaks granted by the box, it arguably also raises some more. 

In order to benefit from the Patent box, there are a number of compliance measures that have to be taken by businesses- most notably, they have to track and allocate R&D expenditures and subsequent patents through to their resulting income. This means that a company has to determine, document and prove how much of their profit is directly as a result of each of their patents. This is something that is far easier for massive businesses that will often have a whole department just for tax, than for small up and coming companies. The Institute for Fiscal Studies is a believer in this argument, arguing that "this [the Patent box] will lead to a significant increase in complexity and compliance burden... administratively burdensome and difficult in practice".

The iPhone 4 featured over 200 patents- the recipe for
a Patent box pickle indeed.
CON: Complexity
There is a further argument that while larger businesses may be in a better position to cope with the additional compliance costs brought by the Patent box, they will not be in an ideal position either. 

Larger businesses are more often than not holders of multiple patents, and in many cases these are commercialised in clusters, put into a single product. Take the iPhone, for example- the iPhone 4 from 2011 was crammed with over 200 patents, ranging from patents on the touchscreen technology, to the battery, to the then-new retina display. Now, Apple aren't beneficiaries of the patent box because their R&D does not take place in the UK- but if they could, how would they apportion their massive profits from the iPhone to each patent to present to the taxman? It would be impossible to objectively say that, for example, 10% of sales were purely down to the new battery patent they won for the phone.

And this issue is not just with phones, but essentially any product that requires more than a single patent- whether it is a car, a factory machine, the issue of apportioning responsibility for profits objectively to individual patents is a massive issue that is generated by the Patent box.

PRO: Attracting R&D to Britain
The Patent box phenomenon started in 2000, when it was introduced in Ireland. France followed in introducing the scheme in the next year, and since then, Belgium, Hungary, Luxembourg, Netherlands and Spain all adopted this approach to stimulating innovation- making the UK a relative newcomer, with our patent box opening in 2013.

With so many European countries having such a tax incentive in place, it was very important that the UK compete effectively with its neighbours, so that it didn't lose out from R&D activities moving away or not coming to Britain at all because of preferential tax rates. Therefore the Patent box, even if it doesn't make Britain more competitive than the rest of Europe, prevents the UK from lagging behind.

However, it's important to note that this might not be such a strong pro as it seems, considering recent developments in the OECD, whose excitingly titled 'Base Erosion and Profit Sharing' (BEPS) scheme intends to tame the level of migration of businesses due to tax reasons. A consequence of BEPS has been that most European patent boxes have now introduced 'Nexus' clauses that require beneficiaries to have performed all of their R&D in the country whose box they are using. So, to benefit from Britain's patent box, a company will have to do all of its work developing a patent in Britain. This reduces the likelihood of companies moving in the middle of their research projects just to benefit from tax cuts, and ensures that the host country granting the tax cut benefits from all of the positive externalities (consequences) of the research.

Nevertheless, it is still important that the UK's Patent box remains competitive, especially when it is considered that some companies will take tax breaks into account when they are planning to set out on their research.

CON: Better alternatives?
The tax cuts granted by Britain's Patent box system loses the government an estimated £740 million in annual tax revenues, so it's incredibly important that this huge cost is allocated to the scheme that is most effective in increasing Britain's innovative competitiveness.

And many argue that there are far more efficient schemes, most notably the existing system of R&D credits. R&D credits reward businesses for research activity in general (as opposed to exclusively commercialised patents), by excluding as much as 150% of research costs from end of year profits. This may sound like a bad thing, but it just means that research expenditure (and a bit more) will be excluded from taxation- ultimately decreasing tax expenses and increasing profits of the company. According to the IFS, R&D credits are preferable to the Patent box as they are "given in proportion to the amount of investment activity undertaken", as opposed to the Patent box which rewards only the profits derived from the group of patented, commercialised research.

£740m is a massive amount of money to sacrifice every year, so there are further alternatives to the Patent box that could have real, long lasting and crucially sustainable effects on the UK's level of innovation. Investment in human capital is arguably the most important of these alternatives- investment in the people of Britain, through avenues such as education, healthcare and general infrastructure.

Investing in education would have massive effects on the level of innovation in Britain. A better educated population would increase the level of innovative activity going on, and the multiplying benefits of a well educated society would mean an initial short term investment could bring far reaching long term benefits. However, that is the issue for some politicians- human capital investment in general often incurs large short term costs, for mostly long term benefits.

One thing that is clear, in this debate over the UK's Patent box, is that this is not simply a case of weighing the number of pros against the number of cons. It's quite evident that the number of cons outweigh the number of pros- but what is most important to consider here is whether the positive impacts of the Patent box outweigh the negative ones.

From our perspective, the negatives outweigh the positives. The Patent box seems a good idea in principle, but in application its shortfalls are exposed. Notable is the burden its complexity places on both small and large businesses, and the scheme's targeting of commercialised patents rather than other forms of innovation (such as copyrights, trademarks, or non-commercial patents), but in our view its most significant downside is the opportunity cost. £740m is a massive sum of money, and it is highly likely that the British government could achieve its aims of increasing innovation in the country by distributing this cost between an improved R&D credits system and further focus on investing in human capital.
Mohammad M Lone Editor