Skip to content
Welcome, thoughtbot's Giant Robots listeners!Start here
Institute of Economic Affairs
AI-generated illustration
OrganisationGB

Institute of Economic Affairs

A free-market think tank campaigning for lower public spending.

The Institute of Economic Affairs argued on 28 September 2026 that alcohol, tobacco and landfill duties raised £5.2bn less than the OBR projected, blaming forecasts that assume people do not change behaviour when a tax rises.

Last refreshed: 7 October 2026 · Appears in 1 active topic

Key Question

Why does a free-market think tank keep showing up in coverage of public finances?

Timeline for Institute of Economic Affairs

#5 19 Oct

Proposed suspending the triple lock and freezing welfare in cash terms

Is Britain Actually Broke?: IEA plan would suspend triple lock
#4 22 Sept

Argued that three duties raised £5.2bn less than the OBR projected

Is Britain Actually Broke?: ONS puts borrowing £8.1bn over OBR path
#1 22 Feb
View full timeline →

Background

The Institute of Economic Affairs is a British free-market think tank that campaigns for lower public spending and taxation. In the debate over the state of the public finances it argues consistently that the problem sits on the spending side, and that tax rises yield less than official forecasts claim.

Its positions in 2026 follow that line. On pensions it treats the State pension triple lock, which the OBR now costs at £15.5bn a year by 2029-30 against an original £5.2bn projection, as a predictable result of guaranteeing the highest of inflation, earnings growth or 2.5%, and it calls for the mechanism to be replaced with a simpler earnings link. On councils it reads the growing number of authorities on Exceptional Financial Support as a sign of weak spending discipline rather than underfunding, and says discretionary programmes should be cut before councils borrow to cover day-to-day costs.

The Institute of Economic Affairs argues as an advocacy body and declares its policy positions openly. Its value in coverage is as the clearest statement of the case for spending restraint, set against think tanks that argue for higher revenue or for protecting household incomes.

Key Issues
Tax forecasting

It blames static behaviour assumptions

On 28 September 2026 the Institute of Economic Affairs argued that alcohol, tobacco and landfill duties had raised £5.2bn less than the Office for Budget Responsibility projected. Its explanation was one of method: the forecaster's model assumes people do not change their behaviour when a tax rises, so higher duty rates are costed as if consumption holds steady.

The note landed six days after the Office for National Statistics put borrowing £8.1bn over the OBR's profile in the five months to August. The two figures measure different things, since the institute's comparison covers duty receipts against projection and not this year's overshoot. The argument still serves its wider case: that Britain's fiscal gap is better closed by restraining spending than by raising taxes whose yield the official forecasts overstate.

Common Questions
What is the Institute of Economic Affairs?
A free-market think tank that campaigns for lower public spending and taxation.
What does the Institute of Economic Affairs say about the triple lock?
It has featured in coverage criticising the triple lock's rising cost, now put at £15.5bn a year by 2029-30 against an original £5.2bn projection.Source: Lowdown reporting
When was the Institute of Economic Affairs founded?
The IEA was founded in 1955 and is one of the oldest free-market think tanks in Britain.Source: public record
Is the Institute of Economic Affairs a neutral research body?
No. It is a free-market, campaigning think tank that argues for lower public spending and taxation, not a neutral or Independent research institute.Source: background

Written with AI from Lowdown's published reporting. Not individually reviewed by an editor. Updated 7 October 2026. Editorial standards.