Institute of Economic Affairs

Institute of Economic Affairs

Abbreviation	IEA
Formation	1955 (1955)
Type	Free market think tank
Headquarters	London, United Kingdom
Executive Director	Tom Clougherty
Funding	partially disclosed, including Jersey Finance and the John Templeton Foundation, some minor funding from fossil fuel industry, gambling industry, and tobacco industry
Website	iea.org.uk

The Institute of Economic Affairs (IEA) is a right-wing, free market think tank registered as a UK charity. Associated with the New Right, the IEA describes itself as an "educational research institute" and says that it seeks to "further the dissemination of free-market thinking" by "analysing and expounding the role of markets in solving economic and social problems". The IEA is the oldest free market think-tank in the UK and was established to promote free-market responses to economic challenges by targeting influential academics and journalists, as well as students, in order to propagate these ideas widely. Adopting as its credo FA Hayek's view that "yesterday's dissent becomes today's consensus," the IEA says that it prioritises producing work with a focus on economic insights over partisan politics.

The IEA subscribes to a neoliberal world view and advocates positions based on this ideology. It published its first pamphlet in 1955 making the case for the free convertibility of the pound. It published climate change denial material between 1994 and 2007, and has advocated for more patient-centric universal healthcare through privatisation of elements of, and abolition of complete government control of, the National Health Service (NHS), in favour of a healthcare system with market mechanisms. It has also published research on alleviating the housing crisis. It has received more than £70,000 from the tobacco industry (although it does not reveal its funders), and a former IEA officer was recorded offering a prospective supporter introductions to policy makers. The IEA is headquartered in Westminster, London, England.

Founded by businessman and battery farming pioneer Antony Fisher in 1955, the IEA was one of the first modern think tanks, and promoted Thatcherite right-wing ideology, and free market and monetarist economic policies. The IEA has been criticised for operating in a manner closer to that of a lobbying operation than as a genuine think tank. The IEA publishes a journal (Economic Affairs), a student magazine (EA), books and discussion papers, and holds regular lectures.

History

In 1945, Antony Fisher read an article in Reader's Digest that was a summary of The Road to Serfdom by Friedrich Hayek. Later that year, Fisher visited Hayek at the London School of Economics. Hayek dissuaded Fisher from embarking on a political and parliamentary career to try to prevent the spread of socialism and central planning. Instead, Hayek suggested the establishment of a body which could engage in research and reach the intellectuals with reasoned argument. The IEA's first location was a cramped, £3-a-week room with one table and chair at Oliver Smedley's General Management Services, which housed various free-trade organisations at 4 Austin Friars, a few dozen yards from the Stock Exchange in the heart of the City of London.

In June 1955, The Free Convertibility of Sterling by George Winder was published, with Fisher signing the foreword as Director of the IEA. In November 1955, the IEA's Original Trust Deed was signed by Fisher, John Harding and Oliver Smedley. Ralph Harris (later Lord Harris) began work as part-time General Director in January 1957. He was joined in 1958 by Arthur Seldon who was initially appointed Editorial Advisor and became the editorial director in 1959. Smedley wrote to Fisher that it was

"imperative that we should give no indication in our literature that we are working to educate the public along certain lines which might be interpreted as having a political bias. ... That is why the first draft [of the IEA's aims] is written in rather cagey terms".

The Social Affairs Unit was established in December 1980 as an offshoot of the Institute of Economic Affairs to carry the IEA's economic ideas onto the battleground of sociology. "Within a few years the Social Affairs Unit became independent from the IEA, acquiring its own premises." In 1986, the IEA created a Health and Welfare Unit to focus on these aspects of social policy. Discussing the IEA's increasing influence under the Conservative government in the 1980s in relation to the "advent of Thatcherism" and the privatisation of public services, Dieter Plehwe, a Research Fellow at the WZB Berlin Social Science Center, has written that

The arguably most influential think tank in British history... benefited from the close alignment of IEA's neoliberal agenda with corporate interests and the priorities of the Thatcher government.

During the 1990's the IEA began to focus its research on the effects of regulation and began a student outreach programme. Free market publications, however, continued to be the core activity of the IEA.

In 2007, British journalist Andrew Marr called the IEA "undoubtedly the most influential think tank in modern British history". Damien Cahill, a professor of Political Economy at the University of Sydney, has characterised the IEA as, "Britain's oldest and leading neoliberal think tank". Sir Oliver Letwin once said: "...without the IEA and its clones, no Thatcher and quite possibly no Reagan; without Reagan, no Star Wars; without Star Wars, no economic collapse of the Soviet Union. Quite a chain of consequences for a chicken farmer!"

In October 2009, the IEA appointed Mark Littlewood as its Director General, with effect from 1 December 2009.

In September 2022, an associated think tank, the Free Market Forum was founded.

In December 2023, Mark Littlewood stood down as the IEA's Director General and was replaced by Tom Clougherty under the title of Executive Director.

Purpose and aims

In 2018 the IEA's then director Mark Littlewood said "We want to totally reframe the debate about the proper role of the state and civil society in our country ... Our true mission is to change the climate of opinion." While there is no corporate view, and while the IEA has a tradition of welcoming discussion, debate, and papers from those on the left, the IEA promotes the market and has two prominent themes in its publications: first, a belief in limited government and, second, "the technical (and moral) superiority of markets and competitive pricing in the allocation of scarce resources."

The IEA is described as a "university without students" because its primarily target is not politicians but "the gatekeepers of ideas", namely the intellectuals, academics, and journalists. The IEA believe that a change in the intellectual climate is a pre-condition for any ideological shift within political parties or government institutions.

The IEA has written policy papers arguing against government funding for pressure groups and charities involved in political campaigning. The IEA does not receive government funding. As a registered charity, the IEA must abide by Charity Commission rules, that state that "an organisation will not be charitable if its purposes are political". In July 2018 the Charity Commission announced that it was to investigate whether the IEA had broken its rules.

The investigation concluded that one of the IEA's reports on Brexit was too political. The regulator thus asked the IEA to remove the report from its website in early November 2018, and issued an official warning in February 2019. It required trustees to provide written assurances that the IEA would not engage in campaigning or political activity contravening legal or regulatory requirements. The IEA removed the report on 19 November and said it complied with the commission's other guidance by 23 November. IEA trustees were also required to set up a system whereby research reports and launch plans are signed off by trustees.

Following the IEA's compliance, the Charity Commission withdrew the official warning in June 2019. A compliance case into the IEA remained open, examining concerns about the trustees' management and oversight of the charity's activities.

According to George Monbiot, the IEA supports privatising the National Health Service (NHS); campaigns against controls on junk food; attacks trades unions; and defends zero-hour contracts, unpaid internships and tax havens. IEA staff are frequently invited by the BBC and other news media to appear on broadcasts.

The IEA published, between 1994 and 2007, "at least four books, as well as multiple articles and papers, ... suggesting manmade climate change may be uncertain or exaggerated [and that] climate change is either not significantly driven by human activity or will be positive", according to an October 2019 Guardian article. Specifically, in 2003, the IEA published the book Climate Alarmism Reconsidered which concluded that government intervention in the name of sustainability is the major threat to energy sustainability and the provision of affordable, reliable energy to growing economies worldwide. It further advocated that free-market structures and the wealth generated by markets help communities to best adapt to climate change.

Concerns about political independence; investigation

The Observer reported on 29 July 2018 that the director of the IEA was secretly recorded in May and June. He was recorded telling an undercover reporter that funders could get to know ministers on first-name terms and that his organisation was in "the Brexit influencing game". While seeking funding, Littlewood said that the IEA allowed donors to affect the "salience" of reports and to shape "substantial content". The recording was to be given to the Charity Commission on 30 July.

The Charity Commission, considering that the allegations raised by the recordings were "of a serious nature", on 20 July 2018 opened a regulatory compliance case into the IEA due to concerns about its political independence. Previously, it had become known that the IEA offered potential US donors access to ministers while raising funds for research to promote free-trade deals favoured by proponents of a "hard Brexit". The commission has powers to examine IEA financial records, legally compel it to provide information, and to disqualify trustees. The IEA denies it has breached charity law.

It was also revealed that, after the IEA published a report recommending more casinos, the casino industry donated £8,000 to the IEA.

Jon Trickett, the shadow Cabinet Office minister, welcoming the investigation into the IEA, said "on the road to Brexit, a small group of establishment figures, funded to the tune of millions, are covertly pursuing a political campaign in favour of extreme free trade, acting in effect as lobbyists for secretive corporate interests...there are serious questions that high-ranking Conservative ministers must now answer about their dealings with the IEA."

It was also revealed that Jersey Finance, representing financial interests in Jersey, paid for an IEA report saying that tax havens (such as Jersey) benefited the wider economy, and did not diminish tax revenues in other countries. The report recommended that their status be protected. The IEA did not disclose the funding from Jersey Finance. A similar IEA report about neighbouring Guernsey was funded by the financial services industry there. Following this, the IEA said that funding they received never influenced the conclusions of reports, and that their output was independent and free from conflict of interest.

Separately, the register of lobbyists concluded in 2019 that the IEA had not participated in consultant lobbying for E Foundation.

Freer launch

In March 2018 the IEA offshoot Freer was founded to promote a positive message of liberal, supply-side Conservative renewal. Freer held two meetings at the 2018 Conservative conference (with none in any other political parties' conferences), and remains entirely within the IEA's structural and organisational control.

Cabinet ministers and MPs (including Michael Gove and Liz Truss) spoke at the organisation's launch. Truss called for a neoliberal "Tory revolution" spearheaded by "Uber-riding, Airbnb-ing, Deliveroo-eating freedom-fighters", comments which were criticised by the Morning Star for failing to take into consideration the quality of employment within the companies mentioned. Conservative blogger Paul Staines said that the launch "piqued the interest of senior ministers including Michael Gove, Dom Raab and Brexit brain Shanker Singham". The organisation has 24 parliamentary supporters – including prominent figures such as Liz Truss, Chris Skidmore, Priti Patel, Ben Bradley and Kemi Badenoch – all of whom are Conservative MPs. Freer also holds events and publishes pamphlets for Conservative MPs, and has been referred to the Charity Commission by Private Eye for political bias.

Funding

The IEA is a registered educational and research charity. The organisation states that it is funded by "voluntary donations from individuals, companies and foundations who want to support its work, plus income from book sales and conferences", and says that it is "independent of any political party or group". The Charity Commission listed total income of £2.34 million and expenditure of £2.33 million for the financial year ending 31 March 2021.

The IEA policy is to allow donors to choose whether or not to disclose their funding. Some publish their grants to the IEA; others do not. It has been criticised by health charities and by George Monbiot in The Guardian for receiving minor funding (less than 5% of revenue) from major tobacco companies whilst campaigning on tobacco industry issues. British American Tobacco (BAT) confirmed it had donated £40,000 to the IEA in 2013, £20,000 in 2012 and £10,000 in 2011, and Philip Morris International and Japan Tobacco International also confirmed they provide financial support to the IEA. In 2002, a leaked letter revealed that a prominent IEA member, the right-wing writer Roger Scruton, had authored an IEA pamphlet attacking the World Health Organisation's campaign on tobacco, whilst failing to disclose that he was receiving £54,000 a year from Japan Tobacco International. In response, the IEA said it would introduce an author declaration policy. The IEA also says that it "accepts no tied funding".

An organisation called 'American Friends of the IEA' had received US$215,000 as of 2010 from the U.S.-based Donors Trust and Donors Capital Fund, donor-advised funds which support right-wing causes.

The think tank Transparify, which is funded by the Open Society Foundations, in 2015 ranked the IEA as one of the top three least transparent think tanks in the UK in relation to funding. The IEA responded by saying "it is a matter for individual donors whether they wish their donation to be public or private – we leave that entirely to their discretion", and that it has not "earmarked money for commissioned research work from any company".

Funding to the IEA from the alcohol industry, food industry, and sugar industry has also been documented. IEA Research Fellow Christopher Snowdon disclosed alcohol industry funding in a response to a British Medical Journal article in 2014.

In October 2018, an investigation by Greenpeace found that the IEA was also receiving funding from the oil giant BP, which was "[using] this access to press ministers on issues ranging from environmental and safety standards to British tax rates." In May 2019, the British Medical Journal revealed that British American Tobacco was continuing to fund the IEA.

In November 2022, the funding transparency website Who Funds You? rated the institute as E, the lowest transparency rating (rating goes from A to E). This was updated to a D rating in December 2023.

Reception

In early 2019, on national radio station LBC, James O'Brien called the IEA a politically motivated lobbying organisation funded by "dark money", of "questionable provenance, with dubious ideas and validity", staffed by people who are not proper experts on their topic. The IEA complained to UK media regulator Ofcom that those remarks were inaccurate and unfair. In August 2021, Ofcom rejected the complaint.

Publications

Arthur Seldon proposed a series of Papers for economists to explore the neoliberal approach to the issues of the day. Eventually, these emerged as the Hobart Papers; 154 had been published by August 2006. In addition, 32 Hobart Paperbacks had been released along with 139 Occasional Papers, 61 Readings and 61 Research Monographs. They published The Denationalization of Money by F. A. Hayek in 1977.

Research

According to the IEA, although not an academic body, the institute's research activities are aided by an international Academic Advisory Council and a panel of Honorary Fellows. The IEA's work is generally more theoretical than political, and has a refereeing process for all its publications. They note that their papers are subjected to the same refereeing process used by academic journals, and that the views expressed in IEA papers are those of the authors and not of the IEA, its trustees, directors, or advisors.

The IEA has also published research in areas including business ethics, economic development, education, pensions, regulation, taxation, and transport.

Notable people

Honorary Fellows

• Armen Alchian
• Samuel Brittan
• James M. Buchanan
• Ronald Coase
• Terence W. Hutchison
• David Laidler
• Alan T. Peacock
• Anna Schwartz
• Vernon L. Smith
• Gordon Tullock
• Alan Walters
• Basil Yamey

Personnel and Fellows

As of 2024, the IEA had full and part time 26 employees, 9 trustees (unpaid volunteers) and 3 former chairmen who serve as life vice presidents; additionally, the IEA has an Academic Advisory Council with dozens of professors and other academics.

Directors-General

• Ralph Harris 1957–1988
• Graham Mather 1988–1993
• John Blundell 1993–2009
• Mark Littlewood 2009–2023
• Tom Clougherty 2023-

Chairmen of the Board of Trustees

• Antony Fisher 1955–1988
• Nigel Vinson 1988–1995
• Harold Rose (economist) 1995–1998
• Sir Peter Walters 1998–2001
• Professor D.R. Myddelton 2001–2015
• Neil Record 2015–2023
• Linda Edwards 2023–

Members of the Board of Trustees (current and former)

• Kevin Bell
• Christian Bjornskov
• Robert Boyd
• Tim Congdon
• Linda Edwards
• Robin Edwards
• Antony Fisher
• Mike Fisher
• Tom Harris
• Michael Hintze
• Malcolm McAlpine
• Patrick Minford
• David Myddelton
• Mark Pennington
• Bruno Prior
• Neil Record
• Sir Michael Richardson
• Martin Ricketts
• Harold Rose (economist)
• Len Shackelton
• Nigel Vinson
• Linda Whetstone
• Geoffrey Wood

See also

• List of think tanks in the United Kingdom
• Hayek Lecture
• Economists for Free Trade

Further reading

• Bosanquet, Nick (1983). Economics: After the New Right. Boston: Kluwer-Nijhoff. pp. 79–87. ISBN 0-89838-135-5.
• Cockett, Richard (1995). Thinking the unthinkable: think-tanks and the economic counter-revolution, 1931–1983. Fontana Press. ISBN 0-00-637586-3.

External links

• Institute of Economic Affairs
• IEA Blog