In an article for the Sunday Times, John Blundell argues we need to guard think tanks against undue influence

The day before Lady Thatcher fell and broke her arm recently, she came to the Institute of Economic Affairs (IEA) to receive the Legion of Liberty from a Mexican spin-off of the IEA, one of more than 100 around the world. My Mexican counterpart made a speech saying what an inspiration she was to young people in Latin America. Knowing that many of her most radical ideas – selling off public housing to tenants, the privatisation of inefficient state-run monoliths and curbing excessive trade union power – had originally come out of the IEA, I felt proud to be part of that legacy.

I was 16 when I read my first IEA monograph 40 years ago. I was considering taking A-level economics and picked up an IEA reprint of George Stigler’s The Intellectual and the Market Place. I was smitten, intrigued – yes, it’s a cliché but it changed my life.

When, after the LSE, seven years with the Federation of Small Businesses and 11 years with think tanks in America, I was headhunted to take over the IEA in 1993, I felt I had come home, in every sense.

The IEA had just gone through a deeply unhappy patch. But it was too important to fail and it was being cloned more and more around the world. It was the home church of free market capitalism, the place that preached personal freedom and responsibility under the rule of law.

The secret of success in the think tank world is independence. Being your own man is crucial, especially with think tanks playing an increasingly central role in policy making. On that front they have taken over from the universities.

Here are the rules I’ve tried to stick to:

* No corporate money tied to projects either explicitly or implicitly

* No taxpayer funds

* No FTSE 100 company to give more than 2% of budget

* No corporate sector (eg oil, banking, pharmaceuticals) to give more than 5%.

The interface between big corporate UK and the think tank world has become increasingly complex and troublesome.

On my watch, funding decisions have moved out of the office of a chairman, who might have donated £5,000 to advance market ideas, and over to the director of public affairs who has a “think tank budget” and wants results. “I’ll give you £2,000 if my CEO can sit next to George Osborne,” I was offered last week.

Principles and ideas are not always the first priority. A banker friend, who gives me £5,000 a year but is more generous with other think tanks, confided recently: “John, we give them more so we can sit on their boards and committees to ‘candlesnuff’ ideas that we do not like.”

Perhaps the most painful lesson in corporate influence came in March 2001, when we published a paper by Roger Scruton criticising the World Health Organisation’s Tobacco Free Initiative. Even though we had a policy of revealing interests, he failed to tell us that he was receiving a large consulting fee from a tobacco company. Now we ask authors to declare their interests rather than trusting them to volunteer the information.

All this is why IEA funding has moved to private companies, foundations and individuals. They take a long-term view and want change, not access.

Running a charity with tax-free status raises interesting issues. Donations to the IEA attract gift aid, so £10,000 becomes £12,820 for us and donors paying 40% tax can also reclaim the difference between the bottom rate and their rate. About once a year I get an approach like this: “John, my boy/girl is at XYZ University. It is costing me a lot and my foundation is also supporting you. Why don’t I give you an extra sum and you can award a scholarship to my offspring. We can split the tax advantage.” Sadly, no deal.

The IEA welcomes people from all political parties, but I’ve noticed how much more guarded politicians have become. When in government, the Tories used to leave their minders at the door and come in for a good, open, off-the-record discussion. I also recall Tony Blair taking off his jacket and charming everyone in sight and Gordon Brown cracking a half-joke about vicars.

When Labour came to power in 1997, the nightmare of ministers arriving late and leaving early, reading prepared scripts with five minders present and not engaging one little bit, led to us withdrawing our invitations.

It’s hard to beat the frisson of seeing ideas spiral into the public arena. Sir Humphrey’s Legacy, Neil Record’s brilliant 2007 analysis of the £1 trillion cost of public sector pensions liabilities – twice the official estimate – is a classic example of an academic think tank launching an idea that is seized on by the CBI, the opposition and downstream think tanks much closer to the action.

My other great joy has been developing talent. Many of the youngsters who came to the IEA as interns or joined our outreach programmes 17 years ago are now well into successful careers in all areas of life. They, like Thatcher’s young Mexican fans, are the future.

John Blundell steps down as head of the Institute of Economic Affairs later this year

Further reading:

Waging the War of Ideas by John Blundell.