Free-market think-tanks that provided the inspiration for Kwasi Kwarteng’s fiscal statement have welcomed the radical range of policies – but admitted they will be on the hook if things go wrong.
In particular the Institute of Economic Affairs (IEA), which provided multiple members of its team to Liz Truss’s Government, is now seen in Westminster as a major influence on economic policy.
Tim Montgomerie, a former adviser to Boris Johnson, who endorsed a more centrist approach to the economy, said: “They’ve been advocating these policies for years. They incubated Truss and Kwarteng during their early years as MPs. Britain is now their laboratory.”
Responding to the fiscal statement, IEA director Mark Littlewood said: “It’s refreshing to hear a Chancellor talk passionately about the importance of economic growth and supply-side reforms, rather than rattling off a string of state spending pledges and higher taxes. Only by bearing down on the amount of tax the state collects across the income spectrum, and reducing the regulatory burden, can we create better conditions for growth.”
Asked by i whether he was worried that the IEA and other free-marketeers would be blamed in the event of a recession or debt crisis, he replied: “It would be a bit odd for a think-tank to resent or regret that an administration was adopting its policies.
“If it turns out that these don’t work, then the IEA has got a lot of hard thinking to do, but I presume think-tanks of any color or complexion would want their ideas not just to be listened to but enacted.”
Economist Andrew Lilico, a fellow of the IEA, said: “I don’t think that every single thing is going to work” but added: “I think it’s past time we had a go.” And colleague Julian Jessop blamed other economists for “an enormous amount of negative commentary” which is “just mentioning the risks and not mentioning at all the potential upsides”.