With Hunt shredding almost the entire mini-Budget, the free marketeer wonks have released horrified statements as the Chancellor bins almost all the tax cuts Liz promised for the last four months. The only silver lining is that the energy support will now be means-tested. Other than that, it’s brutal…

The TaxPayers’ Alliance didn’t mince its words. Chief Executive John O’Connell put out a withering putdown:

“The light at the end of the economic tunnel has now been extinguished by this chancellor. Millions of hard-hit households who were desperate for an income tax cut are now facing many more months of financial misery. To get a grip on this crisis, the government needs to lay out a serious plan for necessary spending reductions, including means-testing energy support measures.”

The Institute of Economic Affairs is also critical of the scale of the U-turn, although the tweaks to the energy package were welcomed. Director-General Mark Littlewood said:

“The Energy Price Guarantee was always an unnecessarily expensive programme, representing the single biggest welfare scheme in British history. As many of us said at the time, it is absurd to subsidise wealthy households to keep heating their swimming pools. A more targeted approach from next year is warmly welcome and will save significant money… The risk of higher taxes is that they put Britain back on the path towards a high tax, low-growth economy. As Goldman Sachs warned yesterday, higher corporate tax rates could deepen any forthcoming recession and ultimately damage the government’s fiscal position.”

Likewise, the Adam Smith Institute encouraged No.11 to at least stay focused on supply-side reforms. Head of Communications Emily Fielder added:

“The Chancellor has said that there will be difficult decisions on tax and spend in the coming years as we move towards a more secure financial footing. But there is plenty this Government can do which doesn’t involve changing tax thresholds or spending pledges ––moving forward with supply-side regulatory reforms would boost economic growth and activity at a time when it is desperately needed. The decision to properly target the energy price guarantee from April is welcome…”

Hopefully Prime Minister Jeremy Hunt is listening…

There’s been plenty of media squawking in the last couple of weeks over the lack of an Office for Budget Responsibility (OBR) forecast in the mini-Budget. Never mind the fact the OBR didn’t even exist until 2010, without its explicit blessing, how can any fiscal policy ever be trusted?

Even a cursory look at the OBR’s personnel gives you an idea of which school of thought its leaders belong: both the chair of its Budget Responsibility Committee and its Deputy Chief of Staff are former colleagues or protégés of Torsten Bell, chief executive of the left-of-centre* Resolution Foundation (RF). Torsten Bell will be a familiar face to co-conspirators. Before he spent his days pushing for ever-higher welfare payments at the RF, Bell was Labour’s Director of Policy under Ed Miliband. For years it seemed carving Labour’s manifesto into stone would be his crowning achievement. It turns out seeing his friends land top jobs overseeing government fiscal policy has won out…

Richard Hughes, now the chair of the OBR’s Budget Responsibility Committee, spent a year alongside Bell at the Resolution Foundation as its research associate, where he:

• Co-authored new fiscal rule proposals which were “urgent” because the Government was promising “a flurry of spending commitments and promises to cut taxes” in 2019.
• Warned of the “economic disruption associated with a no deal Brexit“, and claimed it would lead to “a smaller and slower-growing economy in the long run.”
• Claimed the impact of Brexit on the economy would be “worse than Covid” which was responsible for over 100,000 deaths.

Laura Gardiner, OBR Deputy Chief of Staff responsible for policy costings, expenditure, receipts and “fiscal risks“, worked for Bell for six years. In that time she:

• Claimed it “makes sense” to bribe 25-year olds with £10,000 handouts – an £8 billion-a-year policy which was soon swept under the rug, presumably once everyone realised how bonkers it was.
• Attacked the government for “the era of austerity“, and proposed reforming Universal Credit. Learned plenty from her days alongside Bell, obviously.
• Served as a “Lambeth Equality Commissioner“.

It baffles Guido that Richard Hughes was recruited to head the OBR from an organisation, the Resolution Foundation, which has been unremittingly critical of every Tory chancellor since George Osborne. Is it any wonder that Kwasi didn’t fancy having his plans benchmarked by known ideological opponents who favoured staying in the EU and egalitarian redistribution on a gargantuan scale. It doesn’t take a great insight to guess what the OBR will say when a budget that doesn’t align with their values and objectives lands on their desks…

*David Willets, the foundation’s president, is used as a token Tory shield against accusations it is a left-wing campaigning organisation. Guido would not go as far as to say Two Brains is a useful idiot, he is however an ideological fig-leaf…

Today’s quasi-budget was a dream come true for most of Westminster’s free market think tanks. Some can barely contain themselves at the “new era” announced in the Commons this morning. Inevitably there are others who are shocked to see a Conservative government doing conservative things. As always, Guido brings you the low down on the reactions:

Unsurprisingly, the TaxPayers’ Alliance calls the plan “the most taxpayer-friendly budget in recent memory” – albeit with a warning on excessive spending.TPA chief executive John O’Connell writes:

“Taxpayers will be delighted with a budget that eases the burden on their bottom lines and promises a growth game-changer. With cuts to income tax and stamp duty, the cancellation of the corporation tax and national insurance rises, and the freeze to alcohol duties, households and businesses will welcome the most taxpayer-friendly budget in recent memory. But to end the cost of government crisis, the Treasury now needs to get serious on spending and ensure borrowing doesn’t weigh down generations to come.”

The Adam Smith Institute is similarly impressed, saying the budget is “the first step to getting the British economy back on track.” ASI Head of Research Daniel Pryor adds:

“The planned corporation tax rise would have hammered businesses, choked off investment and reduced workers’ wages—scrapping it was a sensible move. It’s also encouraging to see that the Chancellor understands the importance of generous capital allowances, as well as headline rates. Making the £1 million Annual Investment Allowance permanent means businesses across the country have greater capacity and certainty to boost the economy at a time we need it most.”

The Institute of Economic Affairs also lavished Kwasi with praise, particularly over the income tax cuts. IEA Director General Mark Littlewood says: 

“This isn’t a trickle-down budget, it’s a boost-up budget. The government has announced a radical set of policies to increase Britain’s prosperity – from cancelling the corporation tax rise, to cutting stamp duty and extending investment allowances. 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.”

The Centre for Policy Studies might as well get the champagne out. CPS Director Robert Colvile took to Twitter to share his excitement:

“Not to blow trumpet, but: Cancelling CT rise ✅ Unapologetically pro-business agenda ✅ Stamp duty ✅ Opportunity Zones ✅ Reversing NI rise ✅ Childcare reform ✅ Action on energy ✅ All they need is capital allowances and it’ll be a [CPS] full house…”

Of course, not everyone is happy: the Resolution Foundation is predictably queasy. Chief Executive Torsten Bell is calling the announcements “full throated trickle down” economics:

“[The] Chancellor has announced biggest tax cuts since the 1970s, at price of public finances being set on an unsustainable footing. Gambles on growth, which is in Putin’s hands rather than ours in the short term… It’s hard not to be awed by the scale of what has been announced today: huge tax cuts… totally rejecting not just Treasury orthodoxy but Boris Johnson too… not just full throated trickle down, not just throwing fiscal sustainability out window, but also leaving little wriggle room on public spending to make problems go away pre-election.”

Likewise, the Institute of Fiscal Studies‘ Director Paul Johnson admits he’s “worried” by the gilt markets, although he does at least welcome the cuts to stamp duty. He writes:

“£45 billion of tax cuts. This is biggest tax cutting event since 1972. Barber’s “dash for growth” then ended in disaster. That Budget is now known as the worst of modern times. Genuinely, I hope this one works very much better… Increase in stamp duty threshold is welcome. But this is a relatively modest change compared with some of other things we’ve heard. Needs more reform than that.”

The Tory wets at Bright Blue claim

“This strategy is not particularly conservative; last decade, the Tories were all about fiscal discipline. But, with no qualms about tax cuts that will disproportionately benefit high earners and large companies, this Government is not especially socially democratic either. Most of the tax cuts could have been better targeted, as they were – admittedly – for today’s Stamp Duty cuts. There is real risk in all this radicalism… After twelve years of running the country, the Tories desperately need to establish a record of delivery quickly if they want to cling on to power. Knowing this, the Prime Minister and Chancellor are going for broke.”

The National Institute of Economic and Social Research (NIESR):

“We now forecast that the energy support guarantee, together with the tax cuts announced today, will lead to positive GDP growth in the fourth quarter of this year, shortening the recession and raising annual GDP growth to around 2 per cent over 2023-24.”

Policy Exchange were happy to finally see a focus on growth. Head of Economics and Social Policy Connor MacDonald said:

“This is a sea-change in Government policy, and a welcome one. The UK’s trend-rate of growth is too low, and it has had significant negative impacts on public services and on living standards in the last decade. This is an unambiguously pro-growth budget, and the tax cuts outlined will spur growth, encourage investment and ensure that the UK can respond to weak global economic conditions. What will be key going forward is to match the fiscal ambition with supply-side reforms that can raise the trend rate and ensure that the fiscal expansion is ultimately sustainable.”

Momentum‘s take is easy to summarise

“The Tories have declared class war.”

If Kwasi’s upset by the scepticism, there is at least one person he can turn to for comfort:

Today was the best Conservative budget since 1986.

— Nigel Farage (@Nigel_Farage) September 23, 2022

It’s a budget that upends years of Treasury orthodoxy and Whitehall groupthink. Guido’s inclined to agree.

Zoe Williams has a column in the Guardian in which she complains that Liz Truss has brought a load of think tank wonks into government, and doesn’t understand what motivates people to work them: “What would propel a person, who is probably paid quite modestly by super-rich standards, to endlessly push the cause of their wealthy overlords?” Demonstrating a fundamental incomprehension.

It just does not occur to Zoe that believers in free markets and free enterprise think they are the best engines for raising living standards, spreading prosperity and providing a foundation for individual liberty. The young people toiling away in think tanks are, as she says, not doing it for the money, they would obviously make far more working in the City. They’re doing it because they’re idealists, and they believe in advancing the cause of freedom for the greater good.

Zoe does raise a question: which tanks have got the most wonks into Whitehall and Downing Street? Guido’s crunched the numbers:

• The Centre for Policy Studies has lost half-a-dozen wonks to Whitehall: Callum Price, Lauren Maher, James Heywood, Robyn Staveley, Caroline Elsom, Adam Memon all slaved in Tufton Street for the Thatcher-founded think tank before moving into government.
• Policy Exchange alumni include Jack Airey (DELUC), John Bew (No 10) Ruth Porter (No 10), Guy Miscampbell (No 10), Ross Kempsell (No 10/CCHQ) and Jan Zeber (PAd, DWP). Dean Godson points out that his predecessor as PX boss, Neil O’Brien MP, is a minister at Health. In addition other former PX staff members in parliament include Nus Ghani, minister at BEIS, Alex Burghart, minister at DWP, Jesse Norman is a minister at the Foreign Office plus Anthony Browne is on the Tory backbench. Guido is not counting the elected politicians, so is still giving PX a count of six wonks in Whitehall.
• Near neighbours the Taxpayers’ Alliance are a feeder school for Whitehall SpAds. Callum Price worked there too, as did Danielle Boxall, Matthew Sinclair, Alex Wild and James Price. Chloe Westley and Rob Oxley, meanwhile, have recently left government for the private sector.
• Three alumni of the Guido Fawkes newsroom are in Downing Street: Ross Kempsell, Hugh Bennett and Sophie Jarvis.
• Sophie is also the Adam Smith Institute’s sole alumna in government.
• Former staff members of the Institute for Economic Affairs now in government include Oliver Legard, Ruth Porter and Victoria Hewson. Callum Price also once interned there. He really did get about.
• The Henry Jackson Society counts Oliver Legard and John Bew as alumni.

Guido is pretty certain that the Centre for Social Justice, Onward and the Social Market Foundation must have people in government. Surely the Institute for Big Government has one alumnus in government – or do they only have influence with broadsheet columnists? Other think tanks feeling missed off should get in touch with amendments team@order-order.com.

The IEA’s director general, Mark Littlewood, tells Guido he has invited Zoe Williams to come and speak to them at an event. It will give her a chance to increase her understanding by finding out what makes wonks tick… 

Liz Truss’s planned review – a classic Whitehall euphemism for ‘we’ve already agreed on the direction of policy – of Boris’s nannying junk food policies is going down a treat among Tufton Street’s wonk residents. With the energy price freeze having seriously disappointed the Institute of Economic Affairs (IEA) last week, it looks like No.10 have managed to curry back favour this morning. IEA Head of Lifestyle Economics Christopher Snowden said:

“Scrapping policies that make food and drink more expensive during a cost of living crisis is a no-brainer. The sugar tax has achieved nothing and the ban on volume price discounts will hurt everybody. We are long overdue a Prime Minister who puts the interests of consumers over the interests of nanny state pressure groups. Let us hope Liz Truss is that Prime Minister.”

The TaxPayers’ Alliance’s chief executive John O’Connell is also glad to see nanny state politics are off the menu:

“Junking these nanny state policies is long overdue. Plans to end buy-one-get-one-free were only going to pile pressure on hard-hit households during a cost of living crisis. Government cannot expect taxpayers to further tighten their belts and Truss is right to row it back.”

Meanwhile the Adam Smith Institute’s Head of Research Daniel Pryor added that junking the “anti-obesity crusade” will beef up ordinary people’s wallets:

“The Government’s anti-obesity crusade was always light on evidence but it weighs heavily on the wallets of hard-pressed consumers. It’s encouraging that the new Government could reverse the trend of politicians meddling with our weekly shop. Ordinary people have seen prices go up and choice go down whilst businesses have been burdened by yet more red tape. Multiple impact assessments—often based on questionable science—have failed to demonstrate significant impacts on public health. This has left a bitter taste in the mouth of Brits struggling with the cost of living crisis.”

Scrapping the ban on buy-one-get-one-free promotions and deals on junk food is one thing. Binning Osborne’s sugar tax would be a big step further. Hopefully Liz still has that appetite for small-c conservative politics like she promised…

Sadly, the death of the Queen caused Guido to overlook this i  profile of Liz’s new chief economic adviser, Matthew Sinclair. Formerly of the Taxpayers’ Alliance, the former member of the Tufton Street mafia – can you ever leave? – was appointed to the No. 10 economic unit on Liz’s first day in office. The left apopleptic that the PM has hired someone who shares her free market views…

So what did the i manage to dig up on Sinclair? The answer is a lot of sound stuff that they, unsuccessfully, tried spinning as a sinister agenda:

“Back in 2012, while at the TPA, Mr Sinclair argued for the scrapping of national pay deals for civil servants.

In an article in the Guardian, he wrote: “Ending centralised pay bargaining would mean better value for taxpayers, better services for those who rely on them, and a fairer deal for public sector workers overall.

“There is no reason workers in some regions should get an arbitrary windfall, and others unnecessary hardship, simply because of the quirks of national pay bargaining.”

Anything else?

“He has long been an advocate of low taxes and is believed to be driving the Prime Minister’s plan to raise income tax thresholds, reverse Rishi Sunak’s 1.25% rise in national insurance and suspend the green levy on energy bills.

Indeed, he has never been a fan of much when it comes to spending on tackling climate change, and advocated the abolition of the government’s Green Investment Bank – which is now independent of government and called the Green Investment Group.

In 2016 he said: “I think we’ve pushed energy efficiency too far, too fast. Not really more ‘efficient’, just warmer.””

Lower taxes and scepticism about spending trillions on net zero, how terrifying…

“He will also endear himself to the likes of Jacob Rees-Mogg, the new Business Secretary. Like Mr Rees-Mogg, he is keen to see a smaller state, the slashing of departmental budgets, and fewer civil servants for the Business Secretary to tell to get back to their desks.”

“Mr Sinclair has never made any attempt to hide his views and enjoys putting them in book form. In 2010 he edited How to Cut Public Spending (And Still Win an Election). The following year he authored Let Them Eat Carbon: The Price of Failing Climate Change Policies, and How Governments and Big Business Profit From Them.”

Guido is in no doubt that to the lefties at the i, these proposals must signal the end of days; for any Tory voter, they heavily imply they might finally get a taste of low-spending, state-shrinking, free market economics. Sinclair’s “Let Them Eat Carbon” book is well worth a read…