Rishi Sunak defends think tank behind Liz Truss Budget disaster

Prime minister warned that ‘gullible’ politicians could fall for free market think tank claims again

Rishi Sunak has defended a think tank whose ideas influenced Liz Truss's disastrous mini-Budget, arguing that it contributes to a “vibrant debate of ideas”.

The prime minister was asked in parliament to review the charitable status of the Institute of Economic Affairs (IEA) – which promotes free-market policies.

SNP MP Deidre Brock said such think tanks exerted undue influence on “gullible” politicians like Ms Truss without disclosing how they’re funded – and added that they should stop getting tax breaks.

But Mr Sunak said he would “do absolutely nothing” to check the influence of think tanks, citing freedom of speech.

Ms Truss’s September mini-Budget – which included sharp tax cuts and plans for “supply-side reforms” – sent financial markets into meltdown, raising the cost of mortgages and destabilising pension funds.

The IEA was among the plan’s cheerleaders, with director Mark Littlewood welcoming it as a “radical set of policies to increase Britain’s prosperity” which “shared the IEA analysis of the problems with our economy”.

On the day of the mini-Budget, senior Conservative Tim Montgomerie described the announcements as a “massive moment” for the think tank.

Liz Truss put her faith in IEA thinking on the economy (PA)

“They’ve been advocating these policies for years. They incubated Truss and [former chancellor Kwasi] Kwarteng during their early years as MPs. Britain is now their laboratory,” he said on the day of the fiscal event.

Another right-wing think tank, the Centre for Policy Studies (CPS), also claimed to have inspired parts of the doomed mini-Budget

Think tanks regularly meet with MPs and try to influence their policy decisions or thinking.

Speaking at Prime Minister’s Questions on Wednesday, Ms Brock urged the prime minister to “condemn” the influence think tanks have on politics in the UK, and specifically the IEA.

“Will the prime minister join me in condemning opaquely funding for so-called think tanks, who exert so much influence on gullible politicians that their policies were able to almost crash the UK economy just weeks ago?" she said.

“OpenDemocracy reports a former member of the Charity Commission board has called for the Institute of Economic Affairs to be stripped of its charitable status, saying the very purpose of the IEA shrinking the state is political.

“Is it right this body receives charitable tax status? And will the PM meet with me to discuss the influence bodies such as the IEA exert on politicians, including what influence they still have with him?”

Mr Sunak replied: “Obviously charitable status is a matter for the Charity Commission, but more generally actually I do believe in free speech and vibrant debate of ideas.

“That is a good thing and we should do absolutely nothing to stamp it out, even when we disagree with it.”

Founded in 1955, The IEA has a long history of engaging with Tory politicians on matters of economic policy – generally recommending a cocktail of privatisation, deregulation, and tax cuts. It does not disclose its funding.

Commenting on Ms Truss’s Budget U-turn, Mr Littlewood said: “I’m pretty distraught about it. It did actually appear as if we had a new government that, in very broad terms, shared the IEA analysis of the problems with our economy, and it not being market-oriented enough.”

However, Kristian Niemietz, the IEA’s head of political economy, later wrote that the mini-Budget was not a “particularly good example” of the policies the think tank advocated and that it had been poorly implemented.

Andy Mayer, chief operating officer at the IEA, said the call for the prime minister to condemn the think tank was “a blatant effort to intimidate and silence opposing voices”.

“Rishi Sunak was correct to reject the question and highlight the importance of free speech and vibrant debate,” he said.

“Think tanks contribute ideas to public debate and those ideas are available for others to reject, improve or implement as they see fit. Ultimately, politicians develop their own agendas and policies.”

Mr Mayer added that there was an “ongoing smear campaign” against the IEA and said the questioning of its charitable status was the result of “a vexatious critic”.