2008 represented something of a milestone for Britain’s charity sector as it was the year in which it received more money from government than from individuals. This was emblematic of the relationship between the state and the third sector which had been getting cosier for years and has long been controversial. With 27,000 charities dependent on statutory funding for three-quarters or more of their income, it has been argued that the government is bribing the sector into silent submission. Others have suggested that a reliance of government grants erodes independence and stifles innovation.
Today the IEA releases a paper – Sock-Puppets: How the government lobbies itself and why – which shows that the situation may be more serious than critics have realised. It argues that state-funding of charities and pressure groups constitutes a form of modern patronage, with groups whose ideology supports that of the political elite being given public money and a seat at the table while the rest of civil society is left out in the cold. In the past fifteen years, government - from the European Commission down to local councils - has given financial support to overtly political lobby groups who campaign for bigger government, new legislation, tougher regulation and higher taxes.
In so doing, the government amplifies the voices of like-minded groups and creates a distorted version of civil society. It is notable that many of the causes these groups support are viewed with apathy or hostility by much of the electorate. For example, while the European Commission funds the Young European Federalists, there is little public support for a federal Europe. Publicly funded groups who campaign for road pricing, increased foreign aid, a bigger welfare state, temperance, anti-smoking, sin taxes, bin taxes and radical feminism do not reflect the general public’s priorities. If they did, they would be able to prosper on private donations.
Sock-puppets seeks to explain the phenomenon of 'state-funded activism' using insights from public choice theory. It argues that politicians have an incentive to promote unpopular policies via third parties, especially if the third party is seen as independent, objective and wears the halo of charity. This might bean effective way of turning policy into law, but it remains objectionable for three reasons: it is a questionable use of scarce public funds, it subverts the democratic process, and it marginalises the real civil society. Moreover, it is an inherently unstable system because a new government with new priorities is faced with the choice between starving this ‘shadow state’ of its funding or sponsoring its ideological opponents.
We conclude instead that it would be better to restore the independence of the voluntary sector, safeguard taxpayers’ money and rebalance civil society in favour of grass-roots activism.
Click here to download a copy of Sock-Puppets: How the government lobbies itself and why.