IT is alleged that Policy Exchange, whose latest policy document calls for local agreements on public sector pay, is David Cameron's favourite think-tank (" Fury at call for freeze on public sector pay", The Herald, September 4).

I imagine it is.

Constituted as a charity, Policy Exchange avoids almost all taxation on the handsome donations it attracts from the City of London. Any quid from that source is sure to be bonded to a pro quo , and no utterance of Policy Exchange's roster of pundits is likely to be inimical to the interests of its Square Mile sponsors. The problem for both the bankers and their political protectors is that the ideology it has championed for more than 30 years has ended in disaster.

Since 1979, successive British governments have promoted three main tenets of neo-liberalism: the nationalisation of public services and utilities; regressive taxation, and deregulation. The consequences are exemplified by the condition of the railways (even commuting stockbrokers reportedly dream of re-nationalisation); the siphoning up of wealth by a tax-ducking plutocratic elite, rather than its promised "trickling down" to society at large; and most notoriously the two-decades-long rampage of a finance sector released from restrictions wisely imposed after the Crash of 1929.

It is not just the citizens booing George Osborne at the Paralympics who have noticed and been scunnered by all this. There is a backlash in the academic and even business worlds. The economist Joseph Stiglitz examines the economic inefficiencies consequent on gross inequality and business analysts note that co-operatives, shunning high executive remuneration and spurious incentive schemes for workers, weather recession markedly better than conventionally-structured companies.

In such trying times, the Government badly needs the comfort and aid of non-aligned theorists and intellectuals whose opinions just happen to endorse the instincts of Mr Osborne and his colleagues. That's where Policy Exchange and its like come in. They aren't part of the Government, and they're charities, so they must be disinterested arbiters, rather like ratings agencies, for instance, or the sort of Big Four accountancy firms who were happily endorsing banking practice up until the eve of the meltdown.

The details of Policy Exchange's petition to Government to grind down public sector pay in order to make the world safer for entrepreneurs who think that low pay and further deregulation are just the ticket to incentivise them into parting with some of their considerable holdings of capital, are irrelevant. The true significance of their piping up is to advance the unlikely case that, far from having had too much neo-liberalism what the nation needs is more of the same.

Lindsay F G McCullough,

27 Buckstone Shaw,

Edinburgh.

THERE'S a depressing predictability about the Policy Exchange's call for cuts in public sector pay and conditions as the solution to all our economic problems. The irony is that, having squeezed private sector wages and conditions over the last 30 years by exporting jobs to low-paid economies and claiming that reasonable wages and pensions are therefore "unaffordable", the denizens of well-paid Tory think tanks now want to use the suppressed private sector conditions thus created to drive down standards in the public sector. No doubt in 10 years' time the same think tank geniuses will point to the "bloated" private sector as evidence of the need to further reduce conditions in that sector. If ever there was a definition of a vicious circle this is it.

Whoever caused the current economic crisis, it wasn't the workers in council housing, social work or cleansing departments. It would be unjust if they were to pay the price for the failures of the banking sector whose upper echelons appear to have taken no responsibility whatever for the problems they caused.

There is a wealth of evidence to show that public service wages are spent locally and help local economies. It is likely that the existing public sector wage freeze, while helping to balance council budgets, has been harmful to local businesses in reducing local spend. Further cuts to public sector wages would arguably cause more problems to the recovery than they would solve.

If Policy Exchange were to cease operating tomorrow it would have no discernible effect on anything practical. Compare and contrast a few days without cleansing services or home helps. I would be more sympathetic to the prescriptions of the Policy Exchange if it were to recommend swingeing cuts to the wages and conditions of the burgeoning right-wing think tank sector, but somehow I don't think that's going to happen.

Alex Gallagher,

12 Phillips Avenue, Largs.