How are the centre right think tanks gearing up for the recession?

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.

Tim Montgomerie

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:

1. Early Years intervention
2. Children in care
3. Housing
4. Asylum
5. Gangs

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).

PUBLICATION PLANS

• 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?

PERSONNEL CHANGES

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:

http://conservativehome.blogs.com/centreright/2008/12/re-some-observa.html
http://www.guardian.co.uk/commentisfree/2008/dec/09/davidcameron-debt-tax
http://www.guardian.co.uk/commentisfree/2008/oct/08/marketturmoil.creditcrunch
http://www.guardian.co.uk/commentisfree/2009/jan/06/david-cameron-public-spending-cut

Beyond that, recent papers on BERR and RDAs are very much targeted at identifying savings that will help deal with the crisis in the public finances created by 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."

Comments

[Westminster Wolf]

Reform's programme is heads and shoulders the most impressive.

The TA show themselves up as headline chasers.

[Ross Warren]

"The total failure of regulation on banking does not necessitate an increase in regulation across the economy."

Such a good point, although I suspect that tight regulation of the banks is inevitable now. Even that is undesirable in a market economy. Those bits of the banking system that are essential should be ring fenced and separated from the risk taking. Otherwise once we are in recovery it should be business as usual as far as is possible. This is such a useful list and article that I am going to take the unusual step of printing it out to read at my pleasure. Many thanks to the author.

[Edward Huxley]

The TPA merely presents the facts. The press decides independently to give it the headlines.

[DCMX]

Am I right to think Policy Exchange is falling behind the curve now that crunchier issues matter again unlike positioning issues?

[Jim Lyme]

Reform stands out as having developed a strong and credible presence over the last year or so - which has shown itself to be relevant with clear substance. Its research is given extra credibility by the business credentials of its people.

You can't fault the TPA for the scale of its industrious output. Its heart is in the right place, but you can't help feeling that their hostility to the public sector is sometimes written by inexperienced people who have never worked outside the political village.

Policy Exchange doesn't seem to have recovered from its ridiculous report last year to close down northern cities. There doesn't seem to be any momentum there.

The CPS has a low profile and a dated image. The CSJ has a distinctive identity, but it comes across as being more emotive rather than intellectual in its output.

[Edward Huxley]

I support the TPA. It is not anti the public sector or anybody. Just against the waste of our money. Too bad if some people don`t like being rumbled.

[RichardJ]

What's the IEA doing?

[Alice Rainger]

ASI?

[paul]

The TPA wouldn't know a fact if it bit them in the face. Most of us in the know have seen the awful assumptions and lack of basic financial/accouting principles that are the leitmotifs of their work. They are a joke - thank goodness the Party tends to agree.

I would like to hear more about the various programmes on offer. I found the fact that a couple were obviously email blackberry responses a little distracting.

[paul]

I also think that the CPS, though deeply unfashionable and out of date will always attract good thinkers on reputation alone. Eg Darwell on welfare and Qvortrup on democracy. Good people.

[Peter W Watson]

Centre right. Now there is an oxymoron.
I would like to see a right think tank which dares to deal with THE EUROPEAN UNION ELEPHANT IN THE ROOM and immigration.

[paul]

What's there to think about immigration, and why do you need a tank of people to do it?

I'd wager, Peter, you've made your mind up already, and so the exeercise becomes otiose.

And that's why.

[ct]

These responses show that there is a lot of interesting and important work going on. But of course what matters is not the level of activity but the actual policies that result. That's hard, if not impossible, to measure, but needs to be the focus.

It seems as though there are several groups looking at how the Government, or the Tories, can save money, which will be essential to getting the public finances back on track after the recession is over. Might it not be a good idea to pool resources on this one as it's such an essential, and difficult, question - how to do a fiscal crunch without massively raising taxes.

I do think the centre-right would do better if the different think tanks adopted less of a silo mentality and cooperated more fully on finding answers to the crucial strategic questions facing Britain.

[Letters From A Tory]

"Am I right to think Policy Exchange is falling behind the curve now that crunchier issues matter again unlike positioning issues?"

Errr, excuse me? From what I've seen, Policy Exchange have been running the show as far as centre-right think tanks go for months if not years, including coming up with policies that CCHQ regularly lap up.

This economic crisis will come and go (eventually) and the last thing CCHQ needs is think tanks that just look at the recession and sod all else.

[paul]

DCMX is right. Policy Exchange is in decline, especially now that Browne has gone and Boles is just a memory. There are no heavyweights left on their team and this is reflected in their relatively poor media showing of late.

The ones to watch now are the Centre for Social Justice and the resurgent CPS. I would go so far as to say that IDS' tank is the new CPS, with a mission driven from the inside that chimes with times and the core mission of the party during these times.

[The Wilted Rose]

I take it that those of you commenters on this thread who have attacked the TPA are Councillors or even Cabinet Members? By any chance has your Council been exposed for its spending policies?

[Ron Bickerstaffe]

Phillipa Stroud at the Centre for Social Justice makes the most important and striking opinion IMO.

Until we fix the mounting social problems in the UK the call on the public purse wil just grow and grow and grow.

Lets focus on the cause of the problem as well as the symptom.

[anon]

Whether it's the Inheritance Tax cut pledge, the retreat from green taxes or the recent paper on localism that used TPA studies on council pay and RDAs repeatedly - to name just a few examples, the TPA has plenty of influence.

And it's interesting that people attacking the reliability of their research never actually provide any examples of them getting things wrong.

[Dave B]

@The Wilted Rose

TPA do seem to be shaking things up.

[Paul Marks]

On regulation:

Contrary to the propaganda line of the left, the Bush years were years of a great INCREASE in regulation and a big increases in the budget and staff levels of regulators.

And they could not even stop Mr M. - in spite of his taking in 50 billion Dollars and not making one real trade in 13 years. Or Sir Alan S. - in spite of endless warnings.

In what other walk of life is failure rewarded by being given wider powers?

All that regulation does is give people a false sense of security - so they are trusting of promises of "high returns" and other such.

In any case fraud was NOT the cause of the present economic crises anyway.

What caused the present economic crises was the expansion of the credit/money supply by governments and then this increase being (quite legally) magnified by the fractional reserve practices of the banks and other enterprises.

Proposed policies do nothing to deal with this - in fact they are all about "getting lending going again" (a failure to understand the basic nature of the problems).

Depressingly even many Conservative party politicians parrot the "get lending going again" line.

Markets must be allowed to clear and malinvestments must be liquidated.

Efforts to reinflate the burst balloon are going to make everything worse.

In fact they already have made things worse.

[James]

I think the TPA are doing great work - they've shaken things up and are a lot more energetic than some of the more veteran groups. MPs' expenses, Osborne ditching the Labour spending plan commitment, last week's local government policy announcement from Spelman - the TpA's having a big impact. Surely in the recession a group campaigning effectively for more efficient local spending is crucial?

[Philip]

I particularly agreed with Philippa Stroud: 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.