Charity Commission urged to review IEA’s charitable status

Here is my letter of 29 April to Paula Sussex of the Charity Commission challenging the charitable status of the Institute of Economic Affairs (IEA).

I have separately asked the Commission to investigate whether IEA’s joint publication with the non-charitable Taxpayers’ Alliance of Proposals for a Conservative Manifesto is in breach of their guidance to charities’  political activity during the General Election Campaign.

 

Dear Paula,

The Institute of Economic Affairs and the Advancement of Education (IEA)

I should like to reinforce my concern that the charitable advancement of education is not the exclusive purpose of the IEA, and to request that the charitable status of the IEA should be re-considered urgently. (My last letter to you in response to yours of 19 October 2016 was sent on 31 October 2016.)

To recap, I quoted the Commission’s previous guidance on the advancement of education for the public benefit (my italics throughout):

Promoting a specific point of view may be a way of furthering another charitable aim, but it would not be education”. And again:

“If the purpose of providing information or education is to persuade people to form specific conclusions, then this is not education.”

“[Charitable education involves] researching and presenting information in a neutral and balanced way that encourages awareness of different points of view where appropriate”.

Since our exchange of letters last October, you have summarised lessons to the wider sector from one of your case reviews as being that advancement of education by a charity must not be promoting a predetermined and controversial position.

Your letter to me (19 October 2016) stated that the IEA’s work overall must present an educational, and not propagandist, perspective. It could properly pursue “a legitimate and recognised (that is non-controversial) branch or aspect of the learning of economic or political science”. But this must be “a legitimate aspect of learning” and “within the rigours required of an educational charity”.

I assume that the formulations in your letter are not intended to change and override the other guidance quoted above, but rather to interpret and apply the same charity law in this particular case. If that assumption is correct, pursuing a legitimate aspect of learning with a particular academic orientation (as in a particular school of economics) must still be aiming exclusively at education and learning. It still must not be promoting a specific point of view, persuading people to form specific conclusions, or promoting a predetermined and controversial position. And it must still observe your guidance about researching and presenting information in a neutral and balanced way that encourages awareness of different points of view where appropriate. I assume that these are part of what you call “the rigours required of an educational charity”.

The Commission often emphasises that a charity must be and remain established for exclusively charitable purposes, and your guidance CC9 makes clear that political activity is allowed in pursuance of such an objective but may not itself be a purpose. So in saying that a charity’s work “overall” must present an educational perspective, you cannot mean that some of the work can be for a non-charitable purpose such as promoting a predetermined political conclusion. The crucial question is not whether part of the IEA’s purpose is charitable, but whether it all is.

I also note that the Commission and the courts do not take at face value the wording of the charitable objects and Trustee statements, but also (as in the McGovern case) dig deeper to determine whether the way the words are interpreted and applied in practice is in fact charitable.

The rest of my letter rests on these assumptions. I am relying on my past experience and learning as a Board Member of the Commission, but I have no formal legal training, so please tell me if the assumptions are incorrect, and if so in what respect.

Believing them to be correct, I now apply them to the work of the IEA.

On its website, the IEA states that “It is more vital than ever that we promote the intellectual case for a free economy, low taxes, freedom in education, health and welfare, and lower levels of regulation.” All those involved in promoting IEA’s vision, we are told, “believe that society’s problems and challenges are best dealt with by individuals, companies and voluntary associations inter-acting with each other freely without interference from politicians and the state. This means that Government action, whether through taxes, regulation or the legal system, should be kept to a minimum. Our authors and speakers are therefore always on the look-out for ways of reducing the government’s role in our lives”. These statements imply that part of the purpose of the IEA’s work is to promote a specific set of policy outcomes and ways of ordering society. That part is not an educational purpose about learning, ideas or ways of understanding. That part of the purpose is political as the Commission has defined it. The purpose of shrinking the state does not become any less political simply because it derives from a particular way of thinking and learning about economics and politics.

These desired policy outcomes form a predetermined position. That position is controversial, because many people believe that there is an important role for the state in, for example, environmental protection, ensuring minimum standards of welfare and opportunity for every citizen, preventing discrimination, defining and promoting the public interest in planning, health and other spheres, and softening the effects of inequality. Minimizing the state is therefore held by many to be a purpose that may often be against the public interest.

The IEA claims that it “holds no corporate position” and that each author or researcher puts forward a personal view that is not that of the Institute. However, the statements already quoted do resemble a corporate position so closely that it is difficult to tell the difference. So far as I can tell, no research output or statement from any author or staff member of the Institute ever contradicts this position or seriously entertains a contrary opinion. There is no neutrality or balance on these fundamentals.

Moreover, the claim that there is no corporate position does not survive the process of digging into actual practice. Recent “Policy Proposals for a Conservative Manifesto” have been published (jointly with the non-charitable Taxpayers’ Alliance) in the name of the IEA. The common understanding must be that this is the position of the charity. Similarly, it may say in the small print of a report on “A Rational Approach to Alcohol Taxation” by Christopher Snowdon (15 February 2017) that the IEA of which he is a staff member has no corporate view, but the IEA Press Release trumpets: “IEA calls for 9p flat rate of tax on alcohol to fix illogical system”. Other typical press releases use the corporate formulation “IEA reacts to…”, to introduce IEA’s view on sundry proposals by political parties that do not accord with IEA’s clear policy positions (eg Conservative plans to cap energy prices, or Labour’s plan to increase the minimum wage). These views are not attributed to an individual, even if an individual is quoted, but to the IEA. The IEA reacted to the Chancellor’s recent U turn on National Insurance contributions by announcing in a press release that “Hammond should scrap NI contributions altogether” – another controversial political proposal presented as a collective IEA position, (and again apparently reflecting a purpose beyond advancing education alone).

In my letter to you of 31 October 2016 I questioned whether the IEA reports, policy proposals and lobbying on Sock Puppets could plausibly be seen as an expression of educational purpose exclusively, using the criteria set out in Commission guidance as recapitulated above. I should now like to apply the same criteria to other recent reports from the IEA, in case any single IEA initiative might be seen as a one-off.

“Obesity and the Public Purse” by Mark Tovey (23 January 2017) suggests that “the annual savings that overweight and obese people bring UK taxpayers by dying prematurely” (sic) should be deducted from the actual costs of treating and caring for such people before they die, before we start talking about the costs of obesity. The death of some 39,000 people per year, each losing 12 years’ on average, (as acknowledged by Mr Tovey) can in this way be seen as a financial blessing, offsetting the gross costs. It may be that the methodology of working out how much these “savings” are constitutes a contribution to education and learning, but this is then used to advance IEA’s predetermined agenda, by attacking ‘the “burden on the taxpayer” narrative propagated by public health campaigners’. The charity’s press release explains that the report counters the narrative of the “obesity epidemic” that is used to justify policies disliked by the IEA, such as a sugar tax. The Government should therefore not be focusing on this matter of obesity, we are told, but rather on the demands of the elderly who survive and the wider problems of the NHS. The IEA’s predetermined position is that they dislike state intervention to promote public health in areas such as obesity via nanny state educational programmes or taxes: and Tovey’s research is integrated with this non-educational purpose.

In “A Rational Approach to Alcohol Taxation” by Christopher Snowdon, 15 February 2017, the IEA calls for a 9p flat rate of tax on alcohol to fix an illogical system. There are serious points made about the illogicality of the present system, in line (in my view) with an educational purpose to do with coherent thinking about the purposes and effects of public policy. It is another matter, however, to propose a specific 9 pence flat rate that would make almost all alcoholic drinks (other than still cider) cheaper than at present. No serious effort is in my view made to consider possible disadvantages, or to encourage awareness that there might be different, respectable points of view about the best basis on which to pitch the optimal tax rate in the public interest, (for example) by taking into account the damage to society at large as well as Government finances, or acknowledging that different experts compute the cost to Government finances differently. This lack of balance and neutrality reflects the predetermined position, going beyond educational and learning purposes, that we need to minimise state intervention in the form of taxes.

A briefing on disability benefits of 27 December 2016 by Dr Kristian Niemitz explicitly reflects anxiety that the Ken Loach film “I, Daniel Blake” will influence opinion in favour of more generous disability benefits, and hence against the IEA’s pre-determined policies. Dr Niemitz’s survey suggests that the present system is too centralized and has grown unjustifiably over the years. The conclusion is that there should be a pluralist, diverse, localised and partly privatised system of benefits and measures to get disabled people back into work instead. So far from neutrality and balance, with a view to education rather than persuasion, no mention is made of the possible risks and downsides of such a radical upheaval, which might have encouraged readers to decide for themselves.

I have already drawn to your attention the “Policy Proposals for a Conservative Manifesto” just published jointly by IEA and The Taxpayers’ Alliance. These include greater co-payments and private sector competition in health care; capping and cutting taxes; eliminating Government borrowing by 2022, and ending political “interference” in wage setting. It is telling that the IEA has joined forces in this with a political and non-charitable organisation, reflecting the fact that this manifesto goes well beyond the borders of charitable education and learning, with its currency of ideas, into specific policy proposals to advance controversial, pre-determined political positions.

This and other evidence cited in this letter casts profound doubt on the Trustees’ assurances quoted in your letter of 19 October that the IEA has no agenda beyond research into market economics and the dissemination of “ideas”. A political proposal for a 9p flat rate on all alcohol, the recommendations of the Sock Puppets reports, and the recent Manifesto Proposals for Conservatives, are not just ideas or an aspect of advancing education and learning. They are political (as defined by the Commission) proposals designed to advance the predetermined “shrink the state” policy positions of the IEA.

You say in your letter of 19 October that a legitimate and recognised branch of learning can properly have a particular perspective that may border on a political perspective. The crucial question is how, then, a charity whose exclusive purpose is such legitimate learning can be distinguished from a charity which also has a non-charitable political purpose. After all, almost all political proposals of any sort – Marxist, socialist, liberal, statist or pro-market – can be derived from a combination of a political or economic philosophy, research and learning from experience. Yet this cannot give carte blanche to all those promoting a political agenda to claim their purpose is charitable just because their political proposals stem from such disciplines. That is why it is so important that those whose purpose is exclusively the charitable advancement of education must also pass the other tests set out in your guidance:

  1. Their positions must not be predetermined and controversial.
  2. They must not provide information or education with a purpose of persuading people to form specific conclusions or follow particular prescriptions, because that is not education as defined in charity law.
  3. They must research and present information in a neutral and balanced way that encourages awareness of different points of view where appropriate.

I have offered evidence in this letter that the IEA fails all three of these key tests. The IEA’s purpose, once one digs a la McGovern below the surface assurances, is not exclusively the charitable advancement of education. Part of the purpose of the IEA is political (as defined by the Commission), which of course is not allowed under charity law.

I request the Commission to act to correct this situation because:

  • I know the Commission wishes to uphold charity law consistently
  • It is potentially damaging to the reputation of charitable education, and unfair to all the educational charities that strive to adhere conscientiously to the charity law definition of advancing education, if another is allowed to advance a partly political purpose while claiming to be advancing education exclusively
  • It is unfair to the public and the taxpayer to be supporting, via charitable tax privileges, activities that are not exclusively charitable in nature
  • It is unfair to those think tanks whose purpose is partly political and who are therefore denied charitable status if another body with a partly political purpose retains it.

I am not dealing in this letter with the problem (raised in our previous correspondence) that the IEA is also unwilling to be transparent about the source of its donations. You have explained that you do not approve of this lack of transparency but can at present do nothing effective about it. This continuing problem does, however, interact with the issues raised in this letter to risk bringing charitable status into disrepute, since the political positions adopted by the IEA and documented here sometimes favour the interests of particular industries and individuals who, for all we know, may be paying the bills.

Thank you for considering my request for action. I am sending a copy of this letter to your colleagues Kenneth Dibble and Anthony Blake.

 

Yours sincerely,

 

Andrew Purkis.

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