Robert Chote: your questions

The Director of the Institute for Fiscal Studies answers your questions, such as 'What really caused the recession?' and 'What's a safe level of borrowing?'
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How did your organisation become the most important think-tank in the country?

Roger Barnett Haslemere

The IFS was created more than 40 years ago by four financial professionals who despaired of the way in which capital gains tax was introduced in the UK. They thought that we needed independent scrutiny of the tax system from outside government and the political establishment. To begin with, they each put in a little money and wrote some pamphlets and articles on tax reform. Since then we have grown enormously in size and scope and now employ about 50 people. The secret of the IFS's success (established long before I arrived) has been to combine the analytical rigour and best-practice use of empirical evidence that marks out the best academic work, with a focus on real-world policy challenges and a commitment to communicating our findings as effectively as we can.



Wasn't the biggest single cause of the recession loose monetary policy, motivated by egalitarianism, which inflated the property bubble?

Colin Winstanton Fife

The proximate causes of the recession were the problems in the banks and financial system, but some people certainly see loose monetary policy as an important precondition. I am not sure that egalitarianism had much to do with it. To some extent policymakers were victims of their own apparent success. During the "great stability" from the mid-1990s onwards, growth and retail price inflation (which is what we were targeting) were far better behaved that almost anyone would have expected beforehand, helped by downward pressure on inflation worldwide. This probably lulled both the public and private sectors into a false sense of security and encouraged them to borrow and lend too much. With hindsight something should have been done sooner, but to prescribe medicine before the symptoms became painful would not have been straightforward politically.



Has the Tories' performance during the last two years surprised you in its failure to grasp basic economics?

Geraldine Sommer Cardiff

No party has the monopoly of wisdom or folly!



Would you agree that the economic crisis poses a greater challenge to the right than to the left, given it was government interventions that averted a depression?

Victoria Blissamore Crewe

The crisis poses big challenges to the left, right and centre in determining the appropriate roles of markets and government intervention looking forward. But decisive government action has certainly helped us to avoid something much worse – both the interventions in the banking system and the aggressive loosening of monetary and fiscal policy. Of course, there is always a danger that action of this sort can sow the seeds of future crises unless it is unwound in a sensible way and accompanied by reforms that make the system more stable. That is much easier said than done.



What is a safe level of government borrowing?

Felippe Margue London

There is no magic number. The Treasury thinks the deficit last year was £167bn or almost 12 per cent of national income. That is the largest shortfall between tax revenue and spending since the Second World War, but it makes perfect sense for the Government to borrow heavily while private spending is so weak. The key challenge is to convince people that government borrowing will be reduced back to a sustainable level as quickly (but no quicker) than is safe to do so. The Treasury thinks that the crisis has created an additional structural hole in our public finances of about £70bn and whichever party wins the election will probably need to fill that hole over the coming parliament. None of them is going to come clean about exactly how until after the election.



What first attracted you to the idea of a career digesting deflationary spirals and fiscal deficits?

Hanish Mehta London

I have found economics fascinating since school – getting it right matters hugely to people's wellbeing and it provides a rigorous way of thinking about the choices that individuals and society confront. I started writing about economics here at The Independent almost 20 years ago, which was great fun, before moving on to the Financial Times and the International Monetary Fund. As a hack I was always an enthusiastic user of the IFS's outputs, which is why it is such an honour to be there now. I have very smart and hard-working colleagues whose efforts I shamelessly exploit.



Who funds the IFS?

Katherine Roche Preston

The election analysis we are producing at the moment is being funded by the Nuffield Foundation, a charity set up by the founder of Morris Motors back in the 1940s to "advance social well-being". They fund some of our other work too, along with other charities like the Joseph Rowntree Foundation. Our biggest funder though is the Economic and Social Research Council, which also supports social science research in universities – they support our core research and our ability to respond to policy changes and proposals as they happen. We do some work for government departments and international institutions, but only if we think it will advance our knowledge and understanding more widely. We only undertake research when we can publish our results whether the funder likes them or not – we do not do private consultancy. Organisations and individuals can also support our work by becoming members – and you would be very welcome to join them!



Are you uneasy with the fact that your organisation's research is used to settle so many political scores in Britain?

Paul Kenton Birmingham

The political parties inevitably seize on those of our findings that support their arguments (or which undermine those of their opponents), while keeping rather quieter about any that are less helpful. That's life. As I said in response to Geraldine's question, no party has the monopoly of wisdom or folly, so we tend to annoy them all pretty regularly. But the key thing for us is to set out how we have reached our conclusions as fully and clearly as we can, so people can judge what we say on its merits.

When you took up your present post did you think you'd be on television as much as you have?

Timandra Harvey Wrexham

My predecessor Andrew Dilnot, now the principal of St Hugh's College, Oxford, was and is a great broadcaster and had already given the IFS a big public profile. So I knew that being a talking head was part of the job description. But I certainly didn't expect to have a huge economic and fiscal crisis erupt on my watch. Over the last couple of years that has certainly meant more requests to help explain what has been going on and what the parties are planning to do about it.

Many of the policy challenges that the Government and opposition parties have had to confront have been core to our research agenda for many years, so it has been particularly gratifying that we have been able to have the impact we have – both directly through policy advice and indirectly by informing public debate.



As an expert on tax, can you advise me how best to avoid it? I'm not sure I qualify for non-domicile status.

Winnie de Jonghe Blackburn

I am afraid you will have to wrestle with the taxman and your conscience on your own.



Do you agree that you should tax bad things (property speculation, carbon) and cut tax on good things (income for the poor, profits). If so, are you a Lib Dem?

Ian Orpingham Hexham



Taxing "bads" rather than "goods" is a nice slogan, but alas things are not quite that straightforward. Even taxing bads can create costly economic distortions that people often forget. That is not to say that taxing bads cannot be a sensible way to achieve environmental goals, for example. But you need to think carefully.

For example, there is a very strong case for introducing road pricing to reduce the costs of congestion, but if you did that you might well want to cut fuel duty at the same time. As for how I might vote in the general election, that is between me and the polling booth.



Are you the unlikeliest media celebrity in Britain?

Oliver Mallon Ilfracombe

I think "celebrity" would be overegging it. I have being doing this job for seven years and have only been stopped on the street a couple of times. ("You're that bloke who does the statistics, right?") Hello! magazine never ring and I don't expect to be doing the bush-tucker trial any time soon ...

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