It’s not just the political parties that have had to change policy gear for the recession. The think tanks are also under pressure to refocus. The Conservative leadership, in particular, has been demanding more help from them as it seeks to develop its own response to the deepest economic challenges for decades. Pasted below are the responses of London’s five most influential centre right think tanks to questions I posed about their readiness for the recession-struck world we now inhabit.
Jill Kirby submitted this response on behalf of the Centre for Policy Studies:
"The CPS/Telegraph seminar on 4 Feb with two of the best financial minds on Tory benches and two key commentators. The panel will reconvene and we are running a series of lunches on the future of capitalism.
We were quick off the blocks last autumn to commission series of publications on causes of crisis and exploring ways out – this will include recommendations on new structure of responsibility for Bank/FSA/Treasury, and of course on ways to reduce expenditure and adjust to new environment – we started with The Price of Irresponsibility (Brooks Newmark) and From Boom to Bust (Howard Flight); I can’t yet reveal the names of next two – all I can say is one of the cleverest younger economists and one of the wisest old (City) hands. (Both are new authors to CPS – watch this space).
Our Freedom for Public Services (end 2008) set out radical structural reform to cut bureaucracy and regulation for a ‘post-bureaucratic age’ and make savings of some £16bn a year. We are working on quango-culling next. We are also examining ways to return control of personal data to individuals and cut massive waste in govt IT spending at the same time. All part of our vision for a complete rebalancing of the relationship between citizen and state, currently tipped too far in favour of the latter.
We have recruited an additional member of staff, a bright young economics researcher, and plan continued expansion; we are growing our study groups (including an energy forum to crunch realistic, cost-effective answers to energy gap).
CPS has a natural advantage in this climate – ‘we know why we’re here’. We were founded 35 years ago in a bleak economic climate to engineer a revolution in British politics under Margaret Thatcher. As then – and as Fraser Nelson said at our meeting – the public is getting ready for a radical reshaping of the scope of government – and the economic climate leaves the politicians with no choice but to catch up. The right approach is to be realistic but positive about the changes that will mean (see Frank Field quote!) – take the initiative and lead opinion rather than be swept along by events."
Philippa Stroud submitted this on behalf of the Centre for Social Justice:
We have three welfare reform papers due out over the next three months which will develop the arguments needed for welfare reform. Britain can’t afford the current welfare system and certainly won’t be able to afford one with increased demands on it. We can’t just withdraw support from vulnerable people – we have to use every tool possible to mend Britain through the welfare system encouraging work and stable relationships.
We are preparing all the implementation work on Breakthrough Britain for an incoming government. To do this we have established a fabulous steering group, brought on Gavin Poole, and as our researchers become available
are transitioning them to this work.
One of the key predictions is that a by product of the recession will be increased criminality. We have brought out our gangs paper and have three more criminal justice reform papers due out between now and the end of March.
Another key impact is the pressure on families. We have a family law review due to report at the end of April beginning of May.
Re the work we have published since September:
- Early Years intervention
- Children in care
If people really understood what is driving the rise in government expenditure they would know that until you mend the above and the British people become a healthy, stable workforce, government expenditure will just keep rising!"
Neil O’Brien submitted this response on behalf of Policy Exchange:
"Three main things now underway
1) Financial Reform: a series of seminars and research notes on the financial crisis, headed by Helen Thomas, a new recruit fresh from the City. We are looking at: monetary policy, bank regulation, incentives
etc. The most recent event was with Hector Sants and James Sassoon, and the one before was Letwin on regulation. Last week we had Larry Lindsey, economic advisor to three US presidents, and the next two events are:
- 2 March "Rebuilding the savings rate": Larry Elliot / Mark Hoban / etc
- 10 March "The Future landscape of financial services": Michael Spencer/ David Harding / Simon Walker from BVCA
2) Infrastructure: We have underway a big project with Dieter Helm at Oxford and someone from Goldman Sachs on (a) the cost of poor infrastructure (b) why we pay so much and (c) how to replace the broken
PFI model of funding and reduce the cost of capital. The answers to (c) will probably involve reducing regulatory risk and planning risk; implementing some sort of split cap arrangement for splitting the risk; and funding projects by securitising the income they will generate.
3) Industry and innovation – we are working on a big project on this with John Wilman, who has just retired as the FT’s industry correspondent. It will pull together work on skills; universities; regulation; design and specific industrial policy stuff on RDAs and the R&D tax credit.
Plus 4) We are about to start an economics blog.
We are currently recruiting a new Chief Economist (ad here) following the departure of Oliver Hartwich.
Andrew Haldenby submitted this response on behalf of Reform:
"BIG WORKS ALREADY DONE
We’ve just held a major conference, at the London Stock Exchange on 2 February, on exactly this subject. I think by any standards it was a major event – politicians of all parties (Kenneth Clarke, George Osborne, Vince Cable, John McFall, Tony McNulty speaking), 200 acceptances, coverage in the FT. I attach the conference booklet, the transcript of the event and the attendees.
Basically the upshot of the day was that the short term ideas of demand stimulus, devaluation, monetary easing and so on are a big mistake. Instead policy makers should follow a supply-side agenda – taxation, regulation, education. The total failure of regulation on banking does not necessitate an increase in regulation across the economy.
We published a serious paper before the Pre-Budget Report – The hole we are in and how to get out of it – analysing the scale of the problem and presenting the evidence against the stimulus. You were kind enough to accept an article on it. Philip Hammond launched it at PWC.
We also published a short essay by Nick Boys Smith on the causes of the financial crisis.
(In a way all of our publications cover the economy! See A mobile economy (November 2008) on skills; the future of financial services (October 2008); even NHS funding reform (September 2008). But I guess the question is really about the recession).
- We will publish a major paper on rescuing the fiscal position and securing economic growth before the Budget.
- We will publish a major paper on Whitehall reform on 4 March, launched by David Blunkett, at KPMG. Civil service reform matters because unless officials are responsible for value for money, little will change.
- We will follow that with other papers, before the summer, on the infrastructure that the economy needs in future, and – the big question – how should pay for what in the new welfare state?
We are beefing up the economic team. On 2 March we will take on another economist, Dr Patrick Nolan – a 35 year-old Kiwi who has worked in the New Zealand Treasury and consultancies over there.
That means that we will have a team comprising:
- Andrew Haldenby – just finishing MSc economics at Birkbeck
- Elizabeth Truss – PPE at Oxford and business career including Shell and Cable & Wireless
- Patrick Nolan – PhD economics
- Lucy Parsons – qualified accountant (joined from Deloitte)
- Professor Nick Bosanquet – MSc economics, senior health economist.
Our board also includes the economists Derek Scott and Rupert Darwall.
I am saying to people that Reform basically has two priorities this year – public sector productivity, and moving from recession to recovery."
Matt Sinclair submitted the following response on behalf of The TaxPayers’ Alliance:
"We’ve done quite a lot of work explicitly about the recession/financial crisis. A special poll:Voters blame overspending for recession, and see tax cuts as best way to recover
Research responses addressing policy proposals for the recession/financial crisis:
Brown’s borrowing will be double the debt needed to win World War One
Response to Conservative tax plans
Taxpayers and the financial crisis
We’ve written a lengthy paper, extremely heavily researched, setting out how government regulations and policy choices drove the financial crisis:
How inept regulation and poor policy choices drove the recession
Those papers directly addressing the financial crisis and recession were part of a wider media campaign. I’ve been doing frequent television and radio interviews on the subject. We’ve written numerous articles for the newspapers on the recession:
Even the EU campaign, with its focus on policies that create costs for ordinary taxpayers, is focussed on the concerns of a public with increasingly tight budgets – “credit crunch Euro-scepticism”, as Iain Martin described it. The same could be said of our ongoing campaigns on council spending.
We have further papers of this kind coming up soon: one on the relationship between the tax system and entrepreneurship/employment. We’re in the process of commissioning work by the CEBR on how the recession might unfold. Then further papers on waste in quangos and NHS trusts and other targets for cuts.
To the extent the TPA is doing what it has always done, that is the result of the fact that our focus on value for money is becoming more salient with the crisis, not less. Now that the public finances are in crisis and people’s incomes are falling there is a political and public demand for policies that will save money. Politics has moved onto our turf."