Institute of Economic Affairs report on taxpayers funded politics

June 11, 2012 6:01 PM

New research from the Institute of Economic Affairs looks at how many charities are funded with grants at taxpayers' expense, and how many of them are increasingly using that money and the organisational clout that it buys to campaign for changes in Government policy. Ending undemocratic subsidies for political campaigns is a key campaigning priority for the TaxPayers'  Alliance and we've done a lot of research on the scale of the grants politicians are handing out, creating what the IEA research calls "sock puppets".

You pay twice. From the unions and their £113 million subsidy in 2010-11 to the environmentalist campaigns that received £10.1 million from the British Government and the European Union in 2009-10 (look out for an update on that research coming soon), your money is financing groups that fight for even higher taxes and spending and new draconian regulations that drives up prices.

Taxpayer funded politics is one of the dangers of the Government getting too involved in financing charities. Another is that it displaces private contributions. Politicians give taxpayers' money out to their favoured causes instead of letting people make up their own mind how to spend their own money.  Eamonn Butler, Director of the Adam Smith Institute, explains the problem in the video above and there is empirical evidence in Section 3.3.4 of the 2020 Tax Commission report. Once that happens, and as charities are less and less accountable to donors giving their own cash, the charities tend to get less and less efficient. Our research looking at efficiency in aid spending has found that some international development charities spend as much of a third of their budgets before it even reaches projects, and there will be additional administrative costs within the projects themselves.

The Government want to involve charities in delivering public services because they can be more efficient than departments or quangos. That is a laudable objective. They need to be very careful though, that they don't turn nimble little groups with a great record of helping people efficiently into more lumbering bureaucracies that squander our money campaigning for their pet causes.New research from the Institute of Economic Affairs looks at how many charities are funded with grants at taxpayers' expense, and how many of them are increasingly using that money and the organisational clout that it buys to campaign for changes in Government policy. Ending undemocratic subsidies for political campaigns is a key campaigning priority for the TaxPayers'  Alliance and we've done a lot of research on the scale of the grants politicians are handing out, creating what the IEA research calls "sock puppets".

You pay twice. From the unions and their £113 million subsidy in 2010-11 to the environmentalist campaigns that received £10.1 million from the British Government and the European Union in 2009-10 (look out for an update on that research coming soon), your money is financing groups that fight for even higher taxes and spending and new draconian regulations that drives up prices.

Taxpayer funded politics is one of the dangers of the Government getting too involved in financing charities. Another is that it displaces private contributions. Politicians give taxpayers' money out to their favoured causes instead of letting people make up their own mind how to spend their own money.  Eamonn Butler, Director of the Adam Smith Institute, explains the problem in the video above and there is empirical evidence in Section 3.3.4 of the 2020 Tax Commission report. Once that happens, and as charities are less and less accountable to donors giving their own cash, the charities tend to get less and less efficient. Our research looking at efficiency in aid spending has found that some international development charities spend as much of a third of their budgets before it even reaches projects, and there will be additional administrative costs within the projects themselves.

The Government want to involve charities in delivering public services because they can be more efficient than departments or quangos. That is a laudable objective. They need to be very careful though, that they don't turn nimble little groups with a great record of helping people efficiently into more lumbering bureaucracies that squander our money campaigning for their pet causes.

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