Wonk world has reacted to Hunt’s Autumn Statement, the general consensus from the free market think tanks being that there’s a few positive announcements, though not enough to be excited about. Guido gives you the run down…
The Institute of Economic Affairs’ Mark Littlewood welcomes the NI cut and permanent full expensing, though cautions that there is far more work to be done to reduce the tax burden and decrease spending. He called the statement “a step in the right direction, not a leap”…
The Taxpayers’ Alliance called the statement a “mixed bag” of good and bad news. Chief executive John O’Connell said, “Cuts to taxes for businesses and workers will be warmly welcomed, but the fiscal drag of frozen thresholds means the UK is still on track for an even bigger tax burden by the end of this decade.” Not a huge cheer from the TPA…
The Growth Commission points out that “while the cut in National Insurance Contributions by 2 percentage points will add 0.6% to GDP per capita after 20 years, it needs to be borne in mind that the freezing of tax allowances had already cost 1.3% of GDP”. Co-chairman Douglas McWilliams says the measures “are falling short of getting us out of economic stagnation”.
The Centre for Policy Studies welcome the permanent full expensing, something they’ve been campaigning for for many years. However, they warn against the decision to maintain the triple lock which “prioritises older people at the expense of younger workers”. Robert Colvile, CPS Director, cautioned: “The economy, and our long-term growth prospects, are still far from where they need to be.” Still much work to be done…
The Adam Smith Institute‘s Maxwell Marlow says “there is much to be positive about this statement“, praising the announcement of “a number of pro-business measures”. Though he cautions that Hunt will still need to “plan for public spending restraint”. The invisible hand will do its work…
The campaigners over at Stop the Taxi Tax say that Hunt’s pledge to consult on the 20% non-Black cab taxi VAT is “good news, but there’s no time to waste to stop this damaging tax“.
Director of Onward, Sebastian Payne welcomed the measures, saying, “Today’s Autumn Statement showed the best of moderate conservatism – combining bold measures to boost growth and slash taxes, with support for struggling workers and families.” Optimistic tone from the wets…
Douglas McWilliams, Co-Chairman of the Growth Commission says
“… there was little acknowledgement of just how high the public spending bill now is – and the impact such a large state has on the prospects for economic growth. My overall sense of this statement is that the Chancellor has taken a loaf of bread from the taxpayer and given us back a couple of slices.”
Not a full return to tax-cutting Tories…
Onward’s shuttle bus to Tory Conference has quite literally crashed on the motorway up to Manchester. Luckily, everyone is absolutely fine.
The team are back on the road in a recovery van, having written off their original vehicle, with Deputy Director Adam Hawksbee telling Guido they were “laughing through the rain” while waiting on the side of the road. The wettest think tank in Westminster certainly lives up to its reputation. This is what happens when you put Seb Payne in the driving seat of a think tank*…
*Payne was not actually behind the wheel…
Contrary to the Twitterati narrative that a conspiracy of think tanks clustered in Tufton Street wields the most influence in wonk world, it’s actually the centre-left think tanks that have the most money and manpower. Guido’s crunched the numbers.
The Tony Blair Institute, Resolution Foundation, New Economics Foundation, Institute for Government and the Institute for Public Policy Research have a combined headcount of 497. This compares to Tufton Street’s more modest headcount of 116.
The top 5 centre-left think tanks had a combined turnover of £79,814,431 last year. In comparison, their top 5 right-of-centre rivals – the Centre for Policy Studies, Institute of Economic Affairs, Centre for Social Justice, Onward and Policy Exchange – had a combined turnover of a mere £9,032,646. The high media profile of the right-of-centre wonks is to their credit given by how much they are outnumbered and out-gunned in everything except the persuasiveness of their arguments. Nevertheless, the myth of the insidious influence of “Tufton Street” lives rent-free in the minds of conspiracy theorists.
It should be noted that the Tony Blair Institute for Global Change (TBI) alone has a whopping 337 staff, with an eye-watering turnover of £65,247,459. Arguably the TBI is a do-tank, and consulting for foreign governments is a big source of revenue which allows it to nurture the next generation of Labour SpAds and future Labour Party MPs. One senior New Labour source reckons that the TBI is about selling Larry Ellison’s Oracle databases to African developing countries – Ellison has given Blair’s institute over $80 million in recent years. Blair has known Ellison since his time in Downing Street, when Oracle became a significant supplier of software to the government.
Gets a few digs into Boris too:
“I’ve only been Prime Minister for six months, but I do believe we are making good progress. If you think about where were were then, and where we are now. Our economy is in much better shape. Our politics doesn’t feel like a box set drama anymore, and our friends and our allies know that we are back…”
Jeremy Hunt’s budget today received a mixed reaction from Westminster’s wonks. Unsurprisingly, it was most welcomed by centre-right voices with the free-marketeers and lefties alike less enthusiastic. As always, Guido has the lowdown on their reaction.
The Taxpayers’ Alliance was hardly full of praise to a budget “full of problems” . Despite criticising the government for rises to corporation tax and tobacco duty, they welcomed reforms to medicine approval and the abolition of the lifetime allowance for pensions. Chief Executive, John O’Connell said:
“Despite looking good on the surface, under the bonnet this Budget is full of problems for taxpayers. The chancellor has identified a number of structural weaknesses in the UK economy and has rightly focused on fixing them. But yet more spending increases in coming years will further frustrate households, whose rising tax bills are contributing to the biggest drop in living standards since records began. While forecasts are heading in the right direction, taxpayers still face funding the cost of government crisis for years to come.”
Hunt’s policy of full capital expensing gave the Adam Smith Institute cause to celebrate a win in their campaign to abolish the factory tax. Beyond this, they were similarly lukewarm to the budget – giving it an overall score of 6.5/10. They summarised their reaction on twitter:
“The Chancellor seemingly has the right ideas about what is causing our economic ailments… but came to the Budget with the wrong conclusions about how to fix them.”
The Institute of Economic Affairs agreed with the ASI’s assessment that childcare reforms were still “too demand-inducing”. Their Editorial and Research Fellow, Len Shackleton said the policy would “primarily benefit middle class families” and was unlikely to be effective. On the budget more generally, Director Mark Littlewood was similarly critical:
“The budget lacks ambition but takes some welcome steps. Introducing full expensing for plants, machinery and equipment will encourage business investment and boost productivity. Abolishing the lifetime pension allowance will encourage more people to work. Recognising foreign medicine approvals could save lives by providing earlier access to treatments… For a government claiming to be laser-focused on reaping the rewards of Brexit and promoting economic growth, this is a profound misstep.”
In a break from the free-marketeers, centre-right wonks were more receptive, with the Centre for Social Justice leading the charge. Their Chief Executive, Andy Cook, heaped praise on the “back to work budget”:
“Universal Support – the long forgotten “sister” to Universal Credit – was specifically designed to help those in this group who want to work get back into the workforce. The CSJ has long campaigned for the roll out of Universal Support, and we are delighted that the Chancellor has now taken decisive action to begin that process. Delivered properly, Universal Support will help hundreds of thousands more people reap the financial, social and health benefits of work… With CSJ calls to boost childcare support in Universal Credit also adopted, the Chancellor’s ‘back to work Budget’ certainly packs a punch.”
Policy Exchange joined in offering a ringing endorsement for the “serious budget to tackle serious challenges”. Connor McDonald added:
The Chancellor was right to deal with two big problems facing the UK: economic inactivity and business investment. The budget measures on labour market participation represent one of the largest packages of its kind in recent history. The proposals to expand childcare and tackle supply-side reform in the sector are potentially revolutionary, and we are glad that Policy Exchange proposals, such as incentivising childminder agencies and bringing ratios in line with Scotland are being implemented… While more could be done on taxes – the tax burden is still too high and rising in April – this budget identifies long-term problems for the UK economy and delivers a comprehensive plan to address them. A serious budget to tackle serious challenges.”
Onward has similarly kind words for Hunt – and in particular his childcare policy. Seb Payne responded that:
“This was a Budget to bring back trust – reassuring and optimistic, providing support now and fostering growth in the future. It balanced fiscal security and creating better conditions for prosperity. A solid start, but there’s still an electoral and delivery mountain to climb…”
Unsurprisingly, the Resolution Foundation took the opposite view. Torsten Bell summarised his response as follows:
“So, in summary; bad, but not as bad as previously feared… policy announcements will be more successful at boosting employment (make a real difference to women) than investment (today will make no real difference). The back to work package is basically: The carrots: big spending/tax bungs to keep better off parents/doctors in work; The sticks: increase conditionality on poorer parents. Anyone saying this would be a boring Budget was very wrong – big policy changes, especially on childcare and disability benefits”.
The Resolution Foundation’s less establishment-friendly comrades at the New Economics Foundation weren’t happy – Guido doubts Jeremy Hunt will be losing sleep. They provided running commentary on Twitter:
“Increasing the pension lifetime allowance is a massive giveaway to the wealthiest people in society. It won’t encourage people back into work and it won’t help most of us struggling to get by…The expansion of 30 hours free childcare is a big step forward – but it’s not enough to fix our broken childcare system. It’s not enough for providers or parents. We need free, universal, high-quality childcare. The most notable thing about this budget is what was missing. There was room for tax breaks for the rich but no mention of a pay rise for hard working nurses, teachers and other public sector workers.”
Despite the 5p cut to fuel duty being maintained, the budget was also a non-starter for the Alliance of British Drivers. Chief Executive, Brian Gregory, said:
“The Chancellor could have helped ease the cost-of-living crisis by removing the outrageous burden of paying tax twice at the fuel pumps – in the form of VAT and fuel duty… Instead, the Government will continue to spend hardworking taxpayers’ money to support electric vehicle subsidies and grants for electric vehicle infrastructure which will benefit the wealthy… This was a disappointing Budget from a disappointing Government.”
Driving the agenda…
When Guido heard the rumour a fortnight ago that one Seb Payne was trying for a seat at the next election, the party of his choosing was not hard to guess. It therefore makes complete sense that this morning he announces his move from His Majesty’s Financial Times to wet-centrist Tory think tank Onward. Its former director has just made a move into No. 10 as Rishi’s deputy chief of staff…
The press announcement this morning saw Payne hail his new outfit as “Westminster’s finest think tank”:
“Onward’s values are my values and I can’t wait to take up the mantle from the outstanding work done by Will [Tanner] and Adam [Hawksbee].”
Danny Finkelstein, chairman of Onward’s advisory board, says, “It is testimony to the quality and influence of Onward’s work that we have been able to attract such a prominent and respected centre-right journalist to this job.” Guido has asked Northumberland-native Seb whether he’s hoping for Hexham or Berwick in 2024…