The Resolution Foundation is suddenly in high demand. In the row about George Osborne’s proposed tax credit cuts, its experts have supplied the scheme’s critics with high-quality ammunition. The Treasury has been noticeably unforthcoming on the question of how many low-paid people will lose how much money, which is not one that can be got up in an afternoon.
At any given moment, there tends to be a think tank which finds itself, or has taken the trouble to place itself, at the centre of the debate. Fraser Nelson has drawn attention to the excellent work done by Policy in Practice on the exact consequences for the low-paid.
But the Resolution Foundation has led the way in trying to warn of the malign effects of the policy. As David Willetts, executive chairman of the foundation, wrote in the Times on 3 October:
‘The national living wage helped to take some of the sting out of the cuts in tax credits and other benefits announced in the budget. But when the reductions in tax credits start hitting purses and wallets next April there is a real risk that it could turn sour as some of those hard-working families that politicians love realise they are heavy losers. Too many people will see their work incentives fall. If the goal is a genuine blue-collar conservatism, it must be a priority for the Autumn Statement and Spending Review to ease a policy that could other wise do the same kind of damage as Labour’s abolition of the ten per cent tax band.’
The Resolution Foundation was set up a decade ago and is funded by Clive Cowdery, who started out in life as the child of a single mother dependent on welfare, made a fortune in insurance, and is worried that our economic model no longer provides rising living standards for those on low to middle incomes.
Similar worries were expressed by ConHome in our manifesto at the last general election:
‘The foundations on which mass middle class prosperity was built are crumbling. The proportion of Britons owning their homes has been falling for over a decade. Wage rates for ordinary people are stagnant and undermined by inflation. Household debt is at record levels. The historical trends that transformed our society have gone into reverse.’
As Osborne’s current difficulties show, these are deep and intractable problems, about which it is hard to take decisive action without provoking an outcry. In many ways, it is easier for a think tank, untrammelled by election pledges or the need to seek re-election, to analyse what is going on. And to lead the Resolution Foundation’s team of researchers, two people with an exceptional gift for that kind of analysis have just been recruited: Willetts, whom I interviewed last week for ConHome, and Torsten Bell, who until recently worked for Ed Miliband as Labour’s director of policy.
Willetts and Bell both began their careers as Treasury officials. They have the ability to absorb and render lucid enormous amounts of often dry and technical information. And both of them have sometimes been accused of lacking political judgement: of being unable to see how their pronouncements would be received by the wider public.
As a young man in the 1980s, Willetts worked for Nigel Lawson, for Margaret Thatcher in her policy unit, and as director of the Centre for Policy Studies, before in 1992 becoming an MP. A generation later, Bell has worked as a young man for Alistair Darling and for Miliband.
Bell was accused by his colleagues of being responsible for the Edstone, engraved with Labour’s election pledges, which was going to be erected in the Downing Street garden. Damian McBride said of him: “He’s one of those arrogant oafs with brains to spare but no common sense.” Bell used to be known as Torsten Henricson-Bell, which led Labour Uncut to suggest he “sounds a bit like a Scandinavian washing machine designer”.
Willetts has likewise attracted a certain amount of mockery. In 2005, he backed David Davis for the Tory leadership, but at once fell silent, making none of the authoritative comments that might have been expected in support of Davis’s policies, and instead went to Japan and was said to have mislaid his mobile phone. Two years later, he made an unexpectedly controversial speech about grammar schools, which caused David Cameron a good deal of embarrassment.
As Universities minister from 2010 to 2014, Willetts saw through significant reforms. But he did not attain the full Cabinet rank to which his intellectual gifts and mastery of policy might have been expected to lead.
When I saw him last week, I had the impression of a man liberated from the constraints of office, and free to say exactly what he thinks of any given policy, including subjects he has been thinking about for over 30 years. As he said of tax credits:
‘…one of the reasons why this does matter for me personally, is that I was involved in persuading Margaret Thatcher of the case for the Family Credit back in the 1980s, and the Family Credit was the kind of precursor of a lot of this. The principle was that you should boost the incomes of people in low-paid work…’
So although Willetts put his criticism of the tax credits cuts in measured terms, he has in a sense moved in to opposition, or at least into the position of an uncomfortably candid friend, doing what he can to save Osborne from error.
If Labour had won the general election, Bell would now be playing a key role at Miliband’s side in Downing Street. On Tuesday, he instead found himself giving evidence about tax credits, alongside Paul Johnson of the Institute for Fiscal Studies, to the Work and Pensions select committee.
Bell was magisterial: “The answer to tax credits is tax credits.”
So he, too, is a clear opponent of Osborne’s policy. And since “evidence-based” is a term which might have been invented to describe both Willetts and Bell, they are not the kind of critics it is easy to brush aside. Bell went on to point out that what Osborne wanted to do would have a very bad effect on Universal Credit, being introduced by Iain Duncan Smith.
The Resolution Foundation intends to think not only about fairness now, but about living standards for future generations, which takes it into the question of how to make the British economy more productive and thus more prosperous. It will have the freedom to range very widely over Government policy, and to comment much more authoritatively, and at times much more damagingly, than Jeremy Corbyn and John McDonnell seem likely to do.