Tax and Fiscal Policy

The anti-sockpuppet clause

Having written several reports about state-funded activism for the Institute of Economic Affairs, it’s pleasing to see the government acting on one of our recommendations. Two weeks ago, Matthew Hancock, the business minister, announced that government grants to external organisations, including charities, will henceforth include a clause prohibiting the funds from being used for campaigning, lobbying and advocacy. Many people will have been surprised to hear that such a basic stipulation was not already in the standard terms and conditions of government contracts, and yet parts of the third sector reacted as if this modest requirement was an existential threat.

Rob Wilson has provided a calm riposte to some of the more hysterical overreactions from state-funded charities and quangos, but a number of myths have begun to take root. A letter to David Cameron drafted by the Association of Chief Executives of Voluntary Organisations asserted that the new clause will ‘prohibit organisations in receipt of grant funding from influencing government or parliament’. This is simply not true. Charities will be as free as they have ever been to lobby and campaign with the money they raise from voluntary donations. It is only the money they receive from taxpayers via grants and contracts that will be restricted.

It is telling that the third sector’s trade associations have chosen to attack a straw man version of the government’s proposals rather than defend state-funded activism directly. Perhaps they are worried that the general public agrees with Matthew Hancock about ‘the farce of government lobbying government’. It doubt the average taxpayer thinks it is Orwellian to expect terms and conditions to be attached when their money is handed to private organisations. If we have learned anything from the Kids Company fiasco, it is that the government cannot carry on dishing out money to charities in the vague hope that it will be spent prudently. Money should be granted for specific services and those services should not include campaigning for pet political projects.

When government gives money to charities it is to commission specific services that the state would otherwise provide itself. It is not unreasonable to expect this money to be spent on those services, rather than on the pet political projects of the charity’s trustees. If a charity wants to run campaigns, start petitions, put up billboards or protest outside parliament, it should do what you or I would have to do and pay for it themselves.

We have drifted into surreal territory when the refusal to subsidise a special interest group is portrayed as being tantamount to censorship. This is a sector that receives £13 billion from the state every year. If, as critics allege, the government is trying to punish or silence charities, it would simply withdraw funding from those it sees as ideological enemies. A more ruthless administration would surely have done so. Instead, it is setting a basic requirement that taxpayers’ money be spent on the public services taxpayers need, rather than on the public policies charity bosses want.

The notion that the new clause will ‘gag’ charities has already been disproven by Department for Communities and Local Government, which has had a virtually identical clause in its contracts for the last twelve months. Among the charities that have received grants under this revised contract is the homeless charity Shelter which, despite its millions of pounds of state funding, has continued to run prominent political campaigns such as its ‘Power to the Renters’ initiative.

Only in the extreme scenario of a charity that is entirely funded by the government would there be any meaningful restriction on political advocacy. In such instances, lobbying would inevitably be state-funded and would therefore be prohibited, but we might reasonably ask why such an organisation is registered as a charity if it is unable to attract any private donations at all. Such an organisation is, in practice, a government agency and should be viewed as such. In any case, charities of this kind are so rare as to be almost hypothetical. The vast majority of state-funded charities have private donations upon which to draw if they wish to campaign for a political cause.

Some of the arguments made by the big charities in the last fortnight week have been quite incoherent. On the one hand they insist that it is almost unheard of for charities to use public money for advocacy. On the other hand they claim that the new clause will be an unprecedented attack on free speech. Which is it? Each of these propositions cannot both be true. Either state-funded activism is rife, in which case it is about time the government put a stop to it, or it is extremely rare, in which case there is no reason to be concerned about an unwritten rule becoming a written rule. The ferocity of opposition coming from some quarters since the government made its announcement suggests that state-funded campaigning might be rather more common than anyone suspected.

Head of Lifestyle Economics, IEA

Christopher Snowdon is the Head of Lifestyle Economics at the IEA. He is the author of The Art of Suppression, The Spirit Level Delusion and Velvet Glove; Iron Fist. His work focuses on pleasure, prohibition and dodgy statistics. He has authored a number of papers, including "Sock Puppets", "Euro Puppets", "The Proof of the Pudding", "The Crack Cocaine of Gambling" and "Free Market Solutions in Health".

3 thoughts on “The anti-sockpuppet clause”

  1. Posted 19/02/2016 at 11:48 | Permalink

    “In any case, charities of this kind are so rare as to be almost hypothetical.”

    Except, perhaps, ASH. 99.4% of their income is from the wallet of the taxpayer.

    Donations and legacies received: £5,116
    Total income: £767,446

    0.666% (yes – less than one percent) of the total were voluntary donations. The rest was from the tax-payer via grants, or government contracts.

  2. Posted 20/02/2016 at 10:38 | Permalink

    If a “charity” receives money from the taxpayer – who is not of course given any choice as to whether he contributes or not – then it is hardly a charity in any meaningful sense of the word. The latest move to restrict lobbying is welcome, but it would be even better if all state (ie taxpayer!) funding were brought to an end.

  3. Posted 23/02/2016 at 16:38 | Permalink

    But will this clause apply to businesses who are in receipt of taxpayer funding to deliver services (eg G4S, ATOS etc). If not, why not?

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