There were two big political news stories that kept the UK media busy this week. The first was the return of former UK Prime Minister Liz Truss, who wrote in The Times and interviewed with The Spectator about her time in office. Our Director General made some salient points on some of the issues raised by the ex-Prime Minister in his Times article on Monday (read further down) and there will be more on the analysis of the Truss Administration in due course.

The other big news story of the week was incumbent UK Prime Minister Rishi Sunak announcing a reshuffle and restructuring of several government departments. The 'machinery of government' changes include combining business and trade into a single department and creating separate departments focused on technology and science, and energy security and Net Zero. 

Many have criticised the announcements as a largely meaningless 'rearranging of the deck chairs'. After all, restructuring the government machine will not intrinsically solve any specific policy problem. And it will serve as a distraction, with civil servants spending many hours redeveloping organisational charts, shuffling their desks around Whitehall buildings and printing new stationery. 

Nonetheless, there are some sensible changes. It never made much sense to combine the department for artificial intelligence with funding for the opera and football. It is also good to see the department for 'industrial strategy' consigned to the dustbin of history.

There is also now a separate department razor-focused on energy security – even if there is little willingness to address the risks and trade-offs posed by Net Zero. As our Energy Analyst Andy Mayer said in City AM this week, a departmental reshuffle alone does "nothing to address the UK’s hostile environment for energy investment”.

Without further details, there are other changes that also raise questions. In particular, the merging of trade and business risks producer interests dominating future trade negotiations – with self-serving industry advocates for protectionist barriers like tariffs given a more prominent voice. The policy paper associated with the restructuring discusses mercantilist ideas like "boosting export volumes" and the need to "protect businesses," but does not mention consumer benefits from trade like lower prices and greater variety.

Ultimately, this reorganisation is not particularly inspiring. The focus is on infrastructure, skills and science. But this is extremely conventional. It’s difficult to imagine that the strategy of state interventions and picking winners, which has failed over recent decades, will suddenly work this time. 

The state does have a role in delivering prosperity – as Adam Smith said ‘peace, easy taxes, and a tolerable administration of justice’ – but it seems we are still far off from those lofty minimalist goals. Thankfully, despite the best intentions of politicians, we can still place faith in entrepreneurs and innovators to raise our standard of living.

Matthew Lesh
Head of Public Policy, Institute of Economic Affairs

CARBON CONUNDRUM



As Matthew referenced, IEA Chief Operating Officer and Energy Analyst Andy Mayer commented on this week's departmental reshuffle in City AM.

Andy said:

"[The new department will] do nothing to address the UK’s hostile environment for energy investment.

"Whether fossil fuels or low carbon the message today is to expect high and random taxes. Meanwhile, nothing has been done to reform the planning, permitting, and environmental regulations that turn two-year projects into ten-year slogs through bureaucracy and the courts."

You can read the full article here.



For evidence of state intervention getting in the way of UK businesses delivering prosperity, look no further than the conversation around energy. This week, BP revealed that it has made record profits in 2022, which gave rise to calls for yet more windfall taxes and environmental regulations.

Andy appeared on GB News to discuss the state of the UK's oil and gas sector.

Countering calls for more taxes and regulations in response to BP's record profits, Andy argued that government intervention already threatened to undermine the sector's long-term future in the UK:

“[Energy companies] are trying to deliver on the future without oil and gas; but in the interim, some of the projects that are far more up their street are the major oil and gas investments, but not in the UK and not in large parts of Europe, where hostile regulation and windfall taxes have essentially undermined the case for new investment.”

You can watch Andy's full appearance here (1:47:42).

Andy also discussed this week's energy profits controversy on talkTV, saying:

“The question is, does the UK want companies like BP, Shell, and all the rest – many of whom are now large players in the UK – to continue investing? If the answer to that question is yes, we should celebrate the fact that when these companies do well, we all benefit and when they do poorly, it’s their shareholders are the ones taking the hit.”

You can watch Andy's full appearance here (40:00)

IEA DIGITAL

The IEA has a vast array of digital content including: interviews with leading politicians and thinkers, education videos explaining the basics of economics and much much more. This section provides an update on the week's digital output and recomends some of our past content that might pique your interest.



Will China Win the Wireless Wars?... On this week's podcast, IEA Head of Public Policy Matthew Lesh was joined by telecoms industry expert John Pelson to discuss China's transformation into a tech giant. They discussed China's attempts to become a world leader in the technological space and their role in building the world's 5G network.

You can view the podcast here.



Markets, Not Capitalism?... In this video, IEA Communications Officer Harrison Griffiths interviews Professor Gary Chartier, author of the book Markets Not Capitalism: Individualist Anarchism Against Bosses, Inequality, Corporate Power, and Structural Poverty, about the potential for state influence to hamper market forces. Professor Chartier argues that the Left should support free markets rather than state intervention as the best way of achieving its goals.

You can watch here.



In case you missed it... last month, IEA Head of Cultural Affairs Marc Glendening spoke to musician, philosopher and author, Gary Lachman. They discussed the path to self-actualisation, mysticism, and the importance of philosophy to classical liberalism!

Watch here.

iN THE MEDIA



In her return to frontline politics this week, former UK Prime Minister Liz Truss highlighted the role of institutions like the Office for Budget Responsibility (OBR) and Bank of England in blocking her government's attempt to implement a pro-growth agenda.

Director General Mark Littlewood wrote in The Times this week further highlighting the importance of institutional reform in implementing free-market economic reforms.

Mark wrote:

"Truss is right that we have constructed an institutional framework that can’t easily be geared to tackling underlying economic problems. Growth and productivity across the West, not merely in Britain, have been woeful for a decade and a half.

"She may have had a spectacularly unsuccessful tenure as prime minister, but perhaps her experience has shown that if you want significant economic reform, significant institutional reform needs to precede it. Today’s orthodoxy, of engaging in inaccurate beancounting, doesn’t merely fail to forecast the scale of our woes, it also contributes to them."

You can read Mark's full piece here.



Mark also discussed AstraZeneca's decision to choose the low-tax Republic of Ireland over the UK as the location of their new £320m factory, arguing that the UK's high taxes may have played a role: 

"Colour me unsurprised! if you retain tax at these extraordinarily high levels: on most of these estimates the highest total tax burden since Attlee's post-war socialist government. Well actions have consequences!"

"High taxes are bad but uncertain taxes are bad for investment too!"

Watch the full conversation here (1:07:37)

Mark also discussed this week's news that the UK economy narrowly avoided recession in 2022 on GB News. 

"I think we get too over obsessed over are we technically in a recession or technically not a recession. The truth is that if these statistics are accurate we've avoid a recession by 0.01% of GDP. Hardly anything to be particularly pleased about!"

Watch the full conversation here (10:00)


IEA Economics Fellow Julian Jessop also discussed the somewhat positive economic news.

Writing in The Express, Julian said:

"The news that the UK appears to have dodged a recession at the end of last year is better than the alternative and another reminder not to pay too much attention to official forecasts. But it is still little to cheer.

"Unlike almost all our peers, the UK economy is still smaller than it was before the pandemic struck.

"More worryingly, this UK underperformance comes on top of a decade of stagnant productivity and weak economic growth in the wake of the Global Financial Crisis."

The full article can be read here.



IEA Policy Advisor to the Director General, Matthew Bowles was quoted in The Daily Express arguing that reforming the NHS along the lines of the Dutch healthcare system could help to boost healthcare workers’ pay.

Matthew said:

“A change of healthcare system, to a Dutch-style social health insurance one for example, would most probably see their wages increase. A recent OECD report found that, taking into account the cost of living, UK nurses earn on average €16,000 less than their Dutch counterparts.”

The full article can be read here.



IEA Technology & Projects Manager, Jamie Legg wrote on how ‘Britcoin’ could lead to significant infringements of our civil liberties for The Telegraph.

Jamie commented:

"Although recent consultations on [Central Bank Digital Currency] have nodded at respecting civil liberties, it is reasonable to fear that this may end up being empty rhetoric."

"If Britain does adopt its own official digital currency, it is vital that it is done with a clear appreciation of its inherent dangers and that the rules are drafted with the rights to privacy and due process in mind. Although recent consultations on the issue have nodded at respecting civil liberties, it is reasonable to fear that this may end up being empty rhetoric."

The full article can be read here.



IEA Head of Lifestyle Economics, Christopher Snowdon was quoted by The Scottish Daily Express on SNP Government's funding for anti-alcohol lobby groups.

"It is undemocratic and frankly corrupt for the Scottish Government to use taxpayers' money to fund pressure groups who then promote the policies of the SNP. Alcohol Focus Scotland and SHAAP are almost entirely funded by the Scottish Government.

"This suggests they have little public support and yet they have a direct line to Scottish politicians and are constantly on the airwaves pushing their puritanical agenda."

The full article can be read here. 



IEA Director of Communications, Annabel Denham wrote in CapX to discuss proposals in the Protection from Redundancy (Pregnancy and Family Leave) Bill, which would extend employment protections for pregnant women. 

Annabel said:

"But we should care about the Protection from Redundancy (Pregnancy and Family Leave) Bill. It provides yet another troubling case study in how influential, self-righteous pressure groups can peddle their agendas based on flimsy data, and encounter little resistance.

"The downsides – in terms of fewer opportunities for women in their twenties to forties, or lower wages as employers pass on any additional costs – are largely hidden."

The full article can be read here.



IEA Director of Strategy, Alex Morton considered what Rishi Sunak can learn from Mrs Thatcher about taming inflation.

"The argument goes that Sunak is copying Thatcher’s approach by refusing to cut taxes, because to do so would slow the planned reduction in the deficit and allow higher inflation. Is that really the case though?"

The full article can be read here.

INITIATIVE FOR AFRICAN TRADE AND PROSPERITY

The Initiative For African Trade and Prosperity (IATP) continues to take 2023 by storm!

The IATP, which is a project of the Institute of Economic Affairs and the Vinson Centre at the University of Buckingham, partners with think tanks, universities, and scholars across Africa to help make voices explaining the benefits of free trade louder and more effective.

Thanks to an educational grant from the Network for a Free Society, the IATP was delighted to support a student event hosted by Liberty Sparks in Tanzania at Ardhi University, located slightly north of Dar es Salaam. The students learned about and discussed trade, globalisation, and the African Continental Free Trade Area. All attendees received a copy of Eamonn Butler’s ‘An Introduction to Trade and Globalisation’ in Swahili.

This week, IATP Director and IEA Free Trade Fellow, Alexander Hammond also made the case for trade rather than aid to students in the UK.

STUDENTS AND TEACHERS



Join the IEA's internship programme!... We are now welcoming applicants. From editorial work to aiding our operations team, there are a variety of opportunities on offer for sixth form and university students. Want to work for the UK's original free-market think tank? Click here to find out more and submit your application.

Our current cohort of talented interns put together a video providing an insight into what you can expect, which you can watch here.



And a reminder that applications for our Future Thought Leader Programmes for sixth-formers and undergraduates are now open. There will be two weeks for sixth formers in April, and one in July. The undergraduate programmes will take place in July and August.

You can find out more information on the programmes and how to apply here.