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Tax Take

Today brings the very welcome news that the Government is to ban charities from spending public money on lobbying.

The Daily Telegraph reports that new clause to that effect will be inserted into all new and renewed grant agreements with the third sector, having been successfully trialled by the Department for Communities and Local Government. It reads:

“The following costs are not Eligible Expenditure: Payments that support activity intended to influence or attempt to influence Parliament, Government or political parties, or attempting to influence the awarding or renewal of contracts and grants, or attempting to influence legislative or regulatory action”.

Chris Snowdon, of the Institute for Economic Affairs, has written extensively on so-called ‘sock puppets’, and his research inspired this site called for such regulation in December, when we wrote:

“…the Government can’t regulate inconvenient political speech from the third sector (by means such as the Lobbying Act) whilst subsidising the convenient. There is a case to be made for partnering with charities to deliver practical services, but this is very different to subsidising advocates to stimulate – or even simulate – public support.”

So this announcement marks an important step forward in the Government’s efforts to rein what has been exposed as a woefully under-scrutinised area of public life.

However, Matt Hancock, the Cabinet Office minister making it, could perhaps expand on how he plans to measure the success of the measure.

As we set out in our above-linked piece, there are some so-called ‘advocacy’ charities whose raison d’être is lobbying the Government – usually with public money. Are such outfits about to disappear? Certainly the shrieks of outrage one might expect from a serious assault on their funding seems absent.

It would be completely counter-productive if this announcement led to complacency on the part of the state whilst the third sector, having shuffled its money around, simply carried on as before.

Thus Hancock could try, if such is possible, to set out two things.

First, the sort of changes in the structure and output of the third sector that the Government hopes to entail from this reform, over what time scale it could be expected to occur, and reports on whether or not it has occurred.

Second, how the Government will assess whether or not public money is indirectly subsidising lobbying by allowing charities to redirect private funds away from programmes deemed “eligible expenditure” for taxpayers’ money.

The latter is especially essential if the purpose of this law is to ensure that state funding contributes directly to front-line provision.

If a charity is found subverting this initiative by using state grants to displace its own funds and channel them into lobbying and advocacy, then the flow of Government cash ought to stop. Otherwise the new clause will amount to little more than a workout for the sector’s accountants.

Shifts in the donation patterns of the major, established charitable donors ought also to be monitored for similar effects.

This is a welcome and worthwhile initiative: the Government owes it to itself, and to taxpayers, to make sure it works.

71 comments for: Hancock needs a plan to enforce spirit of new charity rules

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