Revealed: Charity watchdog probes pro-Brexit anti-NHS think tank

The Institute of Economic Affairs has been a fixture of political and media debates on Brexit and more. Now, the Charity Commission is examining whether the IEA breached rules on political independence

Peter Geoghegan
Peter Geoghegan
11 July 2018
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The Institute for Economic Affairs. Image, Youtube, fair use.

The Charity Commission is examining whether the Institute of Economic Affairs has breached charity regulations on political independence, openDemocracy can reveal. The watchdog is looking at the free market think tank after concerns were brought to the commission’s attention.

The IEA is one of the UK’s most influential think tanks. IEA representatives regularly appear on the media, advocating everything from privatising the NHS to a hard Brexit, and it has strong links with a number of Conservative ministers, including new Brexit secretary Dominic Raab and health minister Matt Hancock.

The IEA – which does not disclose its funders – is registered as an educational charity. The Charity Commission does not register charities that exist for a political purpose.

The charity watchdog says that it will look at information provided about whether the IEA breached rules on political independence before deciding whether to take action against the think tank.

Concerns about the IEA’s charitable status have been raised previously. Last year, the Charity Commission found that a hypothetical Conservative manifesto jointly written by the IEA and the Tax Payer’s Alliance calling for tax cuts and more privatisation breached charity guidance on political activity.  

Andrew Purkis, a former Charity Commission board member, called on the regulator to act against the IEA.

“(The IEA) are basically a political organisation. I have never really accepted that they are principally there for education and research. They are there to promote an agenda. They obviously feel that they are on a roll, that they are looked to that particular brand of right wing, free market Brexiteers,” Purkis told openDemocracy.

“If they were not a charity they would simply be categorised as a right wing think tank that promotes particular ideological views.”

The IEA said “we are confident that the IEA is acting in accordance with Charity Commission regulations.”

The IEA has taken an increasingly pro-Brexit stance in public, tweeting earlier this week that a ‘no deal’ Brexit would allow the UK to "crack on with its own trade deals".

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Earlier this year, the IEA hired former Legatum Institute trade chief Shanker Singham to head up a new trade unit. Singham, who has has also had dozens of meetings with British government ministers, is said to enjoy "unparalleled access" to senior Brexit officials.

Last month, the Charity Commission ruled that Legatum had “crossed the line” and failed to meet its charitable objectives in its pro-Brexit coverage. The regulator ordered the think tank to take a paper co-authored by Singham entitled the Brexit Inflection Point off its website.

The IEA has strong links with pro-Brexit Conservatives. The new minister in charge of the Department for Exiting the European Union, Dominic Raab, is a strong supporter of the think tank, appearing at IEA events and crediting the IEA with supporting a book he co-authored with Tory MPs, Britannia Unchained, that described British workers as “among the worst idlers”.

New health minister Matt Hancock has been criticised this week after it was revealed that he received donations worth £32,000 from an IEA chairman. Last week, on the 70th birthday of the NHS, the IEA described the service as an “international laggard”, adding that “it is time to look to the social health insurance systems in Europe”.

The IEA refuses to reveal its sources of funding, regularly receiving the lowest rating for transparency from campaign group Who Funds You? But it has received funding from tobacco firms as the industry sought to avoid regulation.

The IEA also accepts funding from the USA through the American Friends of the IEA, which was set up to allow US-based corporations and individuals to donate to the IEA. The American Friends of the IEA has donated more than $500,000 since 2010 according to documents filed in the US. The IEA has also received more than half a million dollars from the US-based Templeton Foundation to conduct research in recent years.

Liberal Democrat MP Tom Brake said: “It is essential that all charities, particularly those (whose) activities relate to highly political issues like Brexit, should be scrupulous in observing their charitable status. The Charity Commission must be equally scrupulous in enforcing that status.”

QC and tax expert Jolyon Maugham said: “The front page of the IEA's website – today – is dominated by the headline "David Davis is right to fear the consequences of the PM's Chequers deal." Of course the IEA has the same right as anyone else to argue for political outcomes. But what it doesn't have is the right to do so at public expense”.

A Charity Commission spokesperson: “Our job is to hold charities to account against the charity law framework. Concerns about the political independence of the Institute of Economic Affairs have been brought to the Commission’s attention, and we are currently assessing this information. We assess all concerns brought to us in line with our risk framework in order to determine if there are regulatory issues that require engagement.”

Stephanie Lis, director of communications at the IEA, said: “We are confident that the IEA is acting in accordance with Charity Commission regulations. The IEA’s mission is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems.

“We accept donations from individuals, foundations and companies both domestic and foreign in order to pursue our charitable objectives. We do not – unlike many of the organisations Who Funds You? rate highly – accept funding from the UK (or any other) government, and all our donations are capped to protect our independence.

“We do not accept any earmarked money for commissioned research work from any company, whilst the vast majority of our research is blind peer-reviewed by leading academics. We are totally confident that our output is rigorously independent and free from any conflicts of interest.”

The IEA, which was founded in 1955, has been described as the UK’s original neoliberal think tank. Its board includes the economist Patrick Minford, who is often quoted approving by Jacob Rees Mogg and Brexit donor and hedge fund manager Michael Hintze.  

Vote Leave's treasurer Jon Moynihan was recently appointed to the IEA’s board. The think tank also hired Darren Grimes as its digital manager. Grimes, who had worked for Brexit Central, is subject of an Electoral Commission investigation in relation to a £675,000 donation from Vote Leave during the Brexit referendum. Media reports suggest that the watchdog will find that electoral laws were broken.

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