The OBR is on the defensive this morning after fresh attacks on their repeatedly inaccurate modelling. They are saying that they will be introducing more “dynamic” modelling into their forecasts for the Autumn Statement and beyond, so behavioural changes and incentives will be considered in response to fiscal policy. Its long-time inability to do so means it always concludes tax cuts are doomed to fail…
The Truss-era Growth Commission, along with other free market think tanks, has dynamic modelling as its keystone in pushing for tax cuts. At the launch of its alternative budget, co-chairman Doug McWilliams said “the jury’s out” on whether the OBR will actually fix its forecasting, though he was “impressed with the result“. He said without continued pressure on them to address their “failure properly to look at the impact of policy changes on behaviour, it would have been surprising if they’d made an announcement today“. Guido has certainly been making that case…
Rishi’s warnings about human extinction this morning were spooky – Westminster’s think tanks are cautious on his Bletchley Park safety festival and the government’s AI policy. It’ll be a strange event… Kamala Harris is attending and Ursula von der Leyen’s apparently on the fence about turning up…
Matthew Lesh at the IEA says Rishi is “right to highlight the immense opportunities“, although “fear mongering risks setting fire to a nascent industry that has the potential to help solve some of our most intractable issues“. Don’t set up the guillotine too early…
Matthew Feeney of the CPS says Sunak “tried to give some reassurance that the government won’t rush to regulate AI which is welcome… However, businesses and entrepreneurs will need some certainty if they are to fully unlock the benefits of AI“.
The ASI’s Mimi Yates says the “announcement of more investment in British computer power will help the UK on its way to becoming the most agile place for researchers and start-ups to develop their businesses, as long as we also create favourable market conditions”. The invisible hand will do its work…
Allan Nixon from Onward, which has a report out today calling for tax breaks for AI startups, says the government “is right to put the UK at the forefront of global AI safety” with the caveat; “we must remember that AI is also a fantastic force for good if we harness it right“. Even the wets are playing the same tune…
For 30 years in the 19th century newly-invented motor cars were limited to 2mph and had to have a minimum of two operators plus a man waving a red flag 20ft in front to warn other road users. The wonks are telling Rishi not to make the same mistake…
Tom Clougherty has been appointed the new Executive Director of the Institute of Economic Affairs. He will succeed IEA veteran Mark Littlewood in December, having beaten a strong final shortlist of four other candidates to the role earlier this week. Littlewood will become Senior Economics Fellow. Clougherty is currently Research Director & Head of Tax at the Centre for Policy Studies (CPS). The CPS say they’re sorry to lose him:
‘The IEA could not have made a better choice. During his time at the CPS, Tom has been a hugely valued colleague, friend and leader. On the policy front, his work on tax and investment has set the agenda both inside and outside government. We are very sorry to lose him, but wish him every possible success.”
Clougherty was previously the executive director of the Adam Smith Institute, and then editorial director in the Cato Institute’s Centre for Monetary and Financial Alternatives. He will have no doubt impressed the board with his work on pro-growth tax policy. Guido congratulates Tom on taking what is undoubtedly one of the biggest jobs in Westminster Wonk World…
Read Clougherty’s full statement below:
Guido understands that the shortlist for IEA Director General, one of the biggest jobs in Westminster wonk-land, is down to five. In no particular order:
Matt Sinclair dropped out to take a senior position at the Computer & Communications Industry Association. A strong field to succeed Mark Littlewood…
The free market wonks aren’t happy with Sunak’s New-Zealand style smoking ban. Prohibition generally doesn’t work in practice…
The IEA’s Chris Snowden says the policy is “hideously illiberal and unconservative, it is full of holes. It will create a two tier society in which adults buy cigarettes informally from slightly older adults and will inflate the black market in general. It may well breach equalities legislation”.
Maxwell Marlow at the ASI calls it a “Black Market’s Charter – criminals, as they do already, will ramp up their penetration into a legal and regulated tobacco market”.
Simon Clark, director of smoker-rights group Forest said “it won’t stop young people smoking because prohibition doesn’t work. Anyone who wants to smoke will buy tobacco abroad or from illicit sources. This is the opposite of levelling up, it’s dumbing down”.
18% of cigarettes are already sold illegally. Out-of-the-car-boot salesmen will be jumping with joy…
As the dust settles on Rishi’s Net Zero rollback, the prevailing sentiment among the majority of Tory MPs, think tanks, and industry leaders alike is mostly positive – apart from a few squawky outliers. While the likes of Zac Goldsmith and Chris Skidmore aren’t happy, Guido hears most Tory MPs see it as a pragmatic move. One told Guido “it’s been relatively well received so far [and] they’ve got the tone right”. As always, Guido brings you the low down on the reactions over in Wonk World:
The Taxpayers’ Alliance Chief John O’Connell reacted as expected, saying the TPA is pleased that Brits won’t have to dig deeper into their pockets: “Brits will be relieved by these sensible moves to take the heat off household budgets. Families and businesses want solutions to the real problem of climate change that go beyond asking them to dig ever deeper into shrinking pockets. The prime minister is right to approach this issue with hard-pressed households in mind.”
The Institute of Economic Affairs’ Andy Mayer welcomed the changes, whilst hinting that he’d like to see more, saying they’re “a welcome step but could go further“.
The Adam Smith Institute’s Imogen Yates points out that “arbitrary top-down targets” are a poor strategy: “We should focus on a carrot rather than a stick approach – instead of having stringent regulations and outright bans, we should harness the power of the free-market to encourage innovation in cleaner technology and limit negative externalities. The government must also now concentrate on building the infrastructure such as EV charging points, and ensuring that our national grid will be able to cope.” Where there’s a will there’s a free market way…
Inevitably the GMB Union weren’t overwhelmingly supportive, attacking the government for not having a “credible plan to tackle climate change“. They did note that their calls to scrap the ban on gas boilers were heeded…
The Countryside Alliance were more sympathetic, saying “The PM is right to provide significantly more time for people to transition to heat pumps, understanding that in some circumstances it just won’t work.”
Toyota also came out in favour of the move, calling the “welcome” changes “pragmatic“. Jaguar Land Rover also agreed. This is despite Ford’s furious comments that the roll back would undermine the government’s “ambition, commitment and consistency”. As Kemi Badenoch rightly pointed out, the auto industry “certainly does not always speak with one voice…”
Driving the agenda…
