Good morning, and sorry about the alliteration above. “What a day!” Kwasi Kwarteng told Conservative members yesterday, to which we might add: what a month, pal! When Kwarteng was appointed as chancellor, he wanted to fundamentally reshape the British economy in a matter of weeks. Well, job done.
Somehow, though, Kwarteng’s acknowledgment of “a little turbulence” in his speech did not receive the ritual acclamation he might once have imagined, largely because that reshaping has turned out to mean: currency fluctuations, mortgage deals withdrawn, £65bn of emergency first aid for the bond market and the prospect of deep spending cuts. Even at Tory conference, no one signed up for that.
Or almost no one. While the rest of the Conservative universe gulped at Kwarteng’s high-stakes experiment in neo-Thatcherism, one group was proclaiming its triumph: a cluster of obscurely funded free-market thinktanks that count Kwarteng and Liz Truss among their closest political allies.
Now Truss’s poll numbers are tanking; even the Daily Mail is telling her to ‘get a grip’. Kwarteng’s excruciating U-turn on the 45p tax rate, anatomised superbly here by Pippa Crerar, looks set to be followed by another on the timing of a new fiscal statement. Backbenchers are threatening to rebel over benefit cuts. And the thinktanks – which have for years proclaimed their ideas as a panacea for Britain’s sclerotic economy – are facing a reckoning.
Today’s newsletter, with Guardian columnist Aditya Chakrabortty, is a look at those thinktanks: who they are, how they operate, and what their influence means for Britain’s future. Here are the headlines.
Five big stories
Climate crisis | The Egyptian government, host of the next UN climate summit, has warned the UK against “backtracking from the global climate agenda”, in a significant intervention prompted by fears over Liz Truss’s commitment to net zero.
Russia | Russia no longer has full control of any of the four provinces of Ukraine it claimed to have annexed last week after Ukrainian troops advanced dozens of kilometres in Kherson province in the south of the country and made additional gains in the east.
Justice | The home secretary, Suella Braverman, will examine the possibility of giving anonymity to suspected criminals after concern over the identification and treatment of high-profile people wrongly accused of sexual abuse.
Iran | Iranian students have stepped up their protests in defiance of a new crackdown. The escalation comes after security forces allegedly cornered and shot a number of students at a prestigious university in Tehran on Sunday night.
Eamonn McCabe | The celebrated Guardian and Observer photographer Eamonn McCabe has died unexpectedly aged 74 at his home in Suffolk. His wife, Rebecca Smithers, said McCabe was kind, modest and encouraging: “He was very generous to younger photographers coming up through the system.” View a selection of his work.
In depth: The groups using Britain as ‘a laboratory’
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How do thinktanks work?
In ordinary times, the thinktank ecosystem is of roughly as much interest to the average member of the public as the mysterious § symbol on your keyboard: it exists, you ignore it, everything is fine. But when thinktanks appear to be setting a whole new political agenda, the question of exactly where this set of ideas has come from is rather more pressing.
A technical definition of a thinktank is as an independent, non-profit organisation that exists to conduct research and promote a set of political ideas – and there’s nothing inherently dubious about it. But that description misses almost everything about why some of them matter so much.
One might imagine that a political party tasks its own staff with generating policy ideas. “But actually,” Aditya said, “they don’t necessarily have the money or the expertise. But they might know a thinktank that has worked on a policy area for a long time, so they turn to them.”
One issue with this process, Aditya noted, is “who actually works in these thinktanks. They’re mostly young, they mostly have names like Sebastian, they’re mostly one colour. They’re people who don’t really represent London, even though they live there, much less the rest of the country.”
Another problem, described by former Conservative minister Nicky Morgan in a recent Radio 4 documentary, is an opaque practice where thinktanks act as useful outriders: “If you’re going to advance a difficult or a controversial idea, it’s no surprise that before you announce such a thing what you try to aim for is that phrase ‘rolling the pitch’,” she said. “You’ve got people outside saying, ‘This is what we need,’ so when you announce it, one hopes it is going to be well received.”
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Which ones are most influential?
There are thinktanks on the left, too – Aditya is a trustee of one of them, Common Wealth. But since the Tories have been in government since 2010, those on the right are bound to be more relevant to immediate policy outcomes. Truss and Kwarteng are allied to a group infamously based around Tufton Street, a few minutes’ walk from parliament. The most enduring of these relationships has been that with the Institute of Economic Affairs (IEA).
The IEA used to exist on the fringes. Mark Littlewood, its director general (pictured above), recently recalled that in 2011, he worked “hand in glove” with Truss to set up the Free Enterprise Group, a faction of Tory MPs with the same commitment to radical supply-side reforms. Kwarteng was another early member. Her chief economic adviser, Matt Sinclair, is an IEA alumnus; several of her other aides also came from the IEA and other neoliberal thinktanks, as George Monbiot recently set out.
Littlewood, who calls Trussonomics “disruptive but exciting”, says she has spoken at more IEA events than any other politician since 2011. In a recent New Statesman interview, he sounded as if he could barely believe his success: “They’re being more radical than even we are requesting,” he said.
One measure of the IEA’s influence came in a tweet from the influential Conservative Tim Montgomerie, who called Kwarteng’s non-budget “a massive moment for [the IEA]. They’ve been advocating these policies for years. They incubated Truss and Kwarteng during their early years as MPs. Britain is now their laboratory.”
Nor is the IEA alone in feeling that it is suddenly in a position of stunning influence, as this tweet from Robert Colvile, the director of the Centre for Policy Studies, suggests:
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Where does their money come from?
“The problem with groups like the IEA is who’s paying for them,” Aditya said.
Not all thinktanks are so opaque: a league table compiled by the campaign group Who Funds You? in 2019 gave many of them its highest “A” rating. (“The ones on the left mostly look like Church of England vicars,” Aditya said.) But the IEA and the CPS have the lowest rating of E, because they do not routinely disclose the identity of their donors.
While much of this funding remains “dark money”, the IEA is known to have taken donations from tobacco, oil, alcohol and gambling companies or associations. The IEA argues that naming its donors would breach their right to privacy, and told the Guardian in 2018 that it does not “act in donors’ interests, except to the extent that they have an interest in pursuing free trade and free markets”.
Then there’s the problem of how they are billed when defending their cause in the media. Yesterday, Littlewood was introduced on the Today programme merely as a representative of “a free-market thinktank”, with no reference to his ties to Truss, or concerns over the IEA’s funding; a casual listener might have heard the reference to this “institute” and imagined a bloodless source of objective expertise.
Rather than explain the IEA’s relationship to Downing Street, Littlewood complained of a different kind of influence: that of elected MPs. The 45p tax U-turn, he said, “will raise the question that the next time Kwasi Kwarteng makes an announcement that Grant Shapps and Michael Gove don’t like, does that announcement stick?”.
“The BBC should never have thinktanks on that don’t declare their funding, or at least it should make sure listeners know that they’re not experts, they’re partisans,” Aditya said. “It’s a very modest proposal.”
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What happens now?
A role at a thinktank with reliable funding but little influence is, you assume, a pretty quiet life: you can stick to your guns, criticise the government, and never find out if you were right or wrong. Today, a little like the proponents of Brexit, the IEA find themselves in the curious position of the dog that caught the car. Suddenly they have had a transformative effect on the British economy – and decades of theoretical work has come crashing into cold, hard, reality.
“I suspect that what these thinktanks have done is assure that the Tory party will not be in power for much longer,” Aditya said. “They’ve got everything they wanted, and they’ve ruined it so badly that they’re going to be on the outside.”
Even if that does happen, some of the problems with incubating ideas in thinktanks do not disappear simply because they are of the left. “It needs to be a moment of reckoning,” Aditya added. “If the Labour party comes to power, decisions will still be shaped by a group of people all working in the same postcode, with no accountability.”
Littlewood, for his part, appears to be aware of some of the risks attached to the IEA’s new position. At a post-budget briefing, he told journalists: “If it turns out that these [policies] don’t work, I think the IEA has got a lot of hard thinking to do.”
In the meantime, the Tufton Street crowd are making the most of it. After we spoke, Aditya emailed from the “corridor of outriders” outside the convention centre in Birmingham where Tory conference is being held: “Policy Exchange facing the Think Tent, run by the Institute of Economic Affairs and the Taxpayers’ Alliance. Almost every hour of the networking day, these glorified gazebos hold events with frontbenchers, ambitious rookies and industry lobbyists talking about everything from the state of the rail network to cancel culture … and they are heaving.”
Today, fresh from his 45p rate reversal, Kwarteng will appear “in conversation” in the Think Tent. His hosts will be the IEA.
What else we’ve been reading
Almost £1bn a month is spent using buy now, pay later schemes and that number is set to grow as more people use these services to pay for bills and groceries, locking them in cycles of debt, Emine Saner writes. Is online credit spiralling out of control? Nimo
“In a quarter of a century of covering party conferences I can’t remember a car crash like this,” writes Gaby Hinsliff. Her assessment of the 45p tax U-turn makes bleak reading for Kwasi Kwarteng. Archie
Niloufar Haidari takes a closer look at social media influencer Emma Chamberlain’s sun-soaked LA home that has sent the internet into a frenzy. Nimo
If, like me, you have followed the recent chess cheating/vibrating anal beads scandal with amazement and glee, you’ll enjoy Sean Ingle’s investigation into whether chess is the new rock’n’roll. If not, you have a lot to catch up on. Archie
This piece by Anil Seth, asking whether we all experience the world in the same way, slightly broke my brain. Seth argues that our perceptual experiences are unique to us, meaning we could be looking at the same objective reality as someone else but seeing something different. Embracing this inner diversity could be transformational: “There isn’t just one beautiful world out there, there are many.” Nimo
Sport
Football | A police chief and nine elite officers have been removed from their posts and 18 other officers are being investigated after one of the world’s worst-ever sports stadium disasters, at Kanjuruhan stadium in Indonesia on Saturday, killed at least 125 people.
Football | James Maddison scored twice for Leicester in a 4-0 win over Nottingham Forest to secure his club their first win of the season and move off the bottom of the table.
Formula One | Christian Horner has reiterated he is confident Red Bull stayed within Formula One’s budget-cap rules last season as the FIA prepares to announce its conclusions after an investigation into whether the team exceeded the cap.
The front pages
We have a separate roundup of the papers today – a summary follows. This morning’s Guardian front page says “Tory plot to halt benefit cuts after U-turn over top tax rate”. The Telegraph has “PM takes on rebels in battle to rein in benefits”. Similar treatment in the i which says “Truss faces new Tory rebellion on benefits cuts”. The Financial Times splashes with “Kwarteng quickens debt cut plans after U-turn on tax”.
Others step back slightly to take in the sheer spectacle. “Calamity conference” – that’s the Mirror, which says “Damage is done” and despite U-turns “Budget chaos will still cost billions”. “What a day!” – the Metro’s headline reads like an understatement, but it’s what the man said. “Get a grip!” says the Mail, echoing Tory MPs after the “screeching late-night reversal” on the top tax rate. “Tories will live or die by economy, warns Patel” – the Times calls this a warning shot from the backbench. The Express provides today’s laughs: “PM: stick with us and we WILL reward your trust”.
Today in Focus
Truss and Kwarteng: counting the cost of chaos
After delivering a mini-budget that caused financial mayhem, the chancellor backtracked on his headline tax cut – but has the political and economic damage already been done? Heather Stewart reports
Cartoon of the day | Martin Rowson
The Upside
A bit of good news to remind you that the world’s not all bad
In 1977, when Martha Einerson was 19 and in her first year of college, she realised she was pregnant. She delayed telling her family but when she did, they were supportive. Her relationship with her boyfriend was coming to an end and Einerson decided to give up the child for adoption. Fastforward 45 years, and Einerson received an email that began: “Hello, I’m Martha Einerson’s birth son.” At 62, she says, she had become a mother. Einerson and her son, Jonathan Tallert, have since spoken on the phone and via video call and last year, he visited her in Minnesota. While Einerson had been completely content with her decision to put Tallert up for adoption, this reunion was a welcome addition to her life. This is a change for the better, she says: “I feel more grounded, more at peace … A lot of joy.”
Sign up here for a weekly roundup of The Upside, sent to you every Sunday
Bored at work?
And finally, the Guardian’s crosswords to keep you entertained throughout the day – with plenty more on the Guardian’s Puzzles app for iOS and Android. Until tomorrow.
