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
Why does a free-market think tank keep showing up in coverage of public finances?
Timeline for Institute of Economic Affairs
Proposed suspending the triple lock and freezing welfare in cash terms
Is Britain Actually Broke?: IEA plan would suspend triple lockArgued that three duties raised £5.2bn less than the OBR projected
Is Britain Actually Broke?: ONS puts borrowing £8.1bn over OBR pathMentioned in: MHCLG backs 36 councils with £1.74bn
Is Britain Actually Broke?Mentioned in: Triple lock now costs triple the forecast
Is Britain Actually Broke?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.
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.
What is the Institute of Economic Affairs?
What does the Institute of Economic Affairs say about the triple lock?
When was the Institute of Economic Affairs founded?
Is the Institute of Economic Affairs a neutral research body?
Written with AI from Lowdown's published reporting. Not individually reviewed by an editor. Updated 7 October 2026. Editorial standards.