To be published as HC 574 v

House of COMMONS



Public Administration Select Committee

Regulation of the Charitable Sector and the Charities Act 2006

Tuesday 27 November 2012

Paul Hackett and Christopher Snowdon

Evidence heard in Public Questions 379 - 472



This is a corrected transcript of evidence taken in public and reported to the House. The transcript has been placed on the internet on the authority of the Committee, and copies have been made available by the Vote Office for the use of Members and others.


The transcript is approved formal record of these proceedings.

Oral Evidence

Taken before the Public Administration Select Committee

on Tuesday 27 November 2012

Members present:

Mr Bernard Jenkin (Chair)

Alun Cairns

Charlie Elphicke

Paul Flynn

Robert Halfon

Kelvin Hopkins

Greg Mulholland

Lindsay Roy


Examination of Witnesses

Witnesses: Christopher Snowdon, Research Fellow, Institute of Economic Affairs, and Paul Hackett, Director, Smith Institute, gave evidence.

Q379 Chair: Can I welcome our two witnesses to this evidence session about charities, the role of the Charity Commission and the Charities Act? This is primarily about the role of charities in relation to politics and political campaigning, and we are interested in the perspectives that you each have. Could you both introduce yourselves for the record, please?

Paul Hackett: I am Paul Hackett. I am the Director at the Smith Institute, a notforprofit think tank.

Christopher Snowdon: I am Christopher Snowdon. I am a Research Fellow at the Institute of Economic Affairs, which is an educational charity and think tank.

Q380 Chair: Mr Hackett, perhaps you could start for us. There was an inquiry into the Smith Institute after concerns were raised in the media, and you took over as Director shortly after the Commission reported, and the Smith Institute resiled its charitable status and became a notforprofit organisation. Does that mean you accepted the Charity Commission’s report into the Institute?

Paul Hackett: I took over and set it up as a notforprofit organisation in January 2010, so you have to take my comments on the Commission’s inquiry prior to that as those of an observer. I was not Director of the Smith Institute during the period in which the Charity Commission conducted its inquiry. Perhaps it would be most useful if I explain what my thinking was in converting it from a charity to a notforprofit.

The Charity Commission report was influential in that decision, but I must say it did not necessarily say that the Smith Institute had committed a series of misdemeanours. In fact, I would not accept that. I took the report’s recommendations as a fairly clean bill of health for the Smith Institute, but that is perhaps something we can discuss. The important point for me was that I found there were a number of reasons why it was better for us to reconstitute as a notforprofit organisation. There were two main ones. I found that, as a small think tank, the compliance requirements and some of the Charity Commission’s procedures around governance were quite cumbersome for a very small organisation, so we found we were more fleet of foot and more flexible as a notforprofit. Certainly the experience that I witnessed, doing some work as a research fellow at the time for the Smith Institute, was that maintaining compliance with the Charity Commission took up an inordinate amount of time and money over an inquiry that lasted three years. I was quite fretful of spending my time as Director engaging with the Charity Commission. I preferred to be doing the work of a think tank for the Smith Institute. That was the first thing: bureaucracy and compliance.

Secondly, financially I find it more attractive to be a notforprofit than a charity, and that is primarily because the Smith Institute became, and certainly is now, much more distinct from other think tanks in the charitable sector, in that the business model I am using is projectbased, so all our activities will wash their face financially, project by project. I did not take donations; I was not seeking donations. Therefore, Gift Aid was not very significant to me; VAT was significant to me. As the Committee knows, charities cannot claim the VAT, so, at 20%, that is quite significant. Also, the corporation tax was not that great. We are a notforprofit, so we were not making large profits or surpluses, so that was not a matter that concerned me. On the cost side, I found that the business model that I was putting together-and can I say that the Smith Institute financially was not in a brilliant position when I took it over, partly because of the work that it had to do to comply with the Charity Commission-ensured that we maintained a healthy financial position. I thought it would be more suitable as a notforprofit.

The other thing to add, Chairman, was that I had some anxiety that we would lose the halo effect if we moved from a charity to a notforprofit, but that never happened. In my thinktank world, no one seemed to be that bothered that we were not a charity. I think they liked the fact that we were a notforprofit, but losing charitable status did not really affect our reputation.

Q381 Chair: You do not think you are any more political than you were before.

Paul Hackett: In hindsight, one of the advantages of being a notforprofit is it has enabled us to be a lot more flexible. Whatever purposes you put on the tin as a charity, you roughly have to stick to, particularly in terms of educational purposes, which is what the Smith Institute was doing before. I have since taken it further and extended the remit from the original Smith Institute, which was primarily around economic policy. I do a lot more work in social policy now. I am doing some work on constitutional issues. I have done some work with China, for instance, that originally would have been outside the remit, so I have been given greater flexibility as a notforprofit.

Q382 Kelvin Hopkins: You have given a broad description of the change, but can you be very much more precise about the kinds of things you did as a charity and you do now as a notforprofit organisation? You have more flexibility now, you say, but give us some specific projects-name them.

Paul Hackett: Certainly, it would be my pleasure. As a charity, we were doing a lot more events. Obviously this was a different time. The Smith Institute set up in 1997 and, up until the period I took over, in 2010, it was engaged a lot more with events, discussions and forums for debate. There were quite a lot of events, as people are aware, at Number 11 Downing Street but also elsewhere. It was much more of a talking tank at the time than maybe a thinking tank.

Since then, I have reduced the number of events and I am doing a lot more research. To give a specific example, I have just completed a ninemonth piece of work as secretariat to a commission that looked into the future of council housing in Southwark. After this meeting, I am going to give evidence to the Fairness Commission in Tower Hamlets, which we are helping. This type of activity never happened under the previous Institute. To give you another specific example, it was much more focussed on what were called "monographs", perspectives of new thinking and policy ideas, which of course enabled the Institute to give a more balanced and politically broader view on issues. Those monographs still exist; we still do monographs, perspectives from across the political and professional spectrum, but I am also now much more engaged in detailed research reports on specific issues. For instance, just last week I published a report on local authority pension fund investment, which is a specific piece of work trying to discuss the advantages of enticing public sector pension investment in local communities.

Q383 Kelvin Hopkins: You can be more political now, in a sense. You can come up with recommendations politically that have a left or right flavour.

Paul Hackett: I think it is true to say that we can be more political. Whether we choose to be more political is another matter, but there is certainly a lot more opportunity to be more partisan, if you wish to be, and I certainly do not feel as restricted by the charity law as you would be as a think tank in the charity sector.

Q384 Charlie Elphicke: You talked about doing projectbased work. Do you do projectbased work for the Government and have you done any work recently for the Government?

Paul Hackett: No, I have not done any work for the Government, although obviously as an organisation I could compete under the procurement process for potential work. Our work is funded in a range of ways: by corporates; by the notforprofit sector itself, other organisations; by foundations, sometimes charitable foundations; by trade unions; and a whole range of interested parties. I would quite like to have projects funded by the Government, but I do not have any at the moment.

Q385 Robert Halfon: What I did not understand is why the Charity Commission removed your charitable status, because there are other organisations, like Shelter for example, that campaign purely politically and do not do work in the field, and yet the Charity Commission singled you out to say, "Well, actually, your activities were deemed too political." What is the difference?

Paul Hackett: As a matter of record, can I just clarify that we were not deregistered as a charity?

Chair: The Charity Commission did not remove the charitable status.

Paul Hackett: We chose to; we left. It was a party we left.

Q386 Robert Halfon: The Charity Commission did say that you had been too political. Why did they say you are too political, and yet other organisations that are classed as charities and do nothing but political campaigning are not deemed as political?

Paul Hackett: I have two things to say. First of all, the Charity Commission reacted to the claims by The Daily Telegraph and Bloomberg News that we were too political. The inquiry was instigated on the basis, as far as I understand it-it was never made perfectly clear-that certainly those two organisations complained that the Smith Institute, at the time, was being too political. As a result of that, the Charity Commission launched their investigation, and the investigation was based on the fact they claimed that the Smith Institute was too party political, as opposed to being too political.

Q387 Chair: Can we just be specific? The Charity Commission felt it was wrong for you to have Labour MPs always doing forewords to your pamphlets. It was wrong for your occasions to be used as a platform for senior Labour figures to make political attacks on other parties. They thought it was odd that 11 Downing Street was constantly being used as a venue, with the permission of the then Chancellor of the Exchequer, Gordon Brown. There were a number of other telltale things that suggested it was a Gordon Brown think tank.

Paul Hackett: That was the basis of the investigation but, if you read the report, there are a few examples whereby those claims were substantiated, but there were many others where they were not.

Q388 Robert Halfon: What I am asking is why you think you were singled out. Forget about The Daily Telegraph or whatever it may be. Why is it that you were singled out when other charities have political figures speak to them, have receptions in Downing Street or whatever it may be? What I am trying to understand is why the Charity Commission says you are too political, whereas an organisation like Shelter, which purely does political campaigning, has links with political figures and takes a view of regularly examining and analysing Government policy on homelessness, is perfectly acceptable.

Paul Hackett: That is a very good question. It is a question I put to the Charity Commission. I thought that their response was disproportionate. My personal view-I was not Director at the time-is that I think the Charity Commission panicked and set themselves on a path that led them to a full investigation.

Q389 Robert Halfon: Do you not think it strange that the Charity Commission allows the IPPR to be a charity and not yourselves? The IPPR are, to me, a very similar organisation in terms of their links to the Labour Party.

Paul Hackett: I am saying that I think it was disproportionate and that they panicked. Just for the Committee’s interest, the process led to some very bizarre and Kafkaesque outcomes. At one point I remember being asked to collate lots of publications, letters, correspondence and transcripts of meetings, and send them to an organisation in Cardiff, which I think was part of Cardiff Business School, to be investigated line by line for political bias. A huge report came back from the Charity Commission saying, "This comment here looks like it is party biased; this comment here is not." It became a very strange and surreal situation, where it was almost impossible to identify what was political bias and what was not.

Q390 Robert Halfon: Do you think one way to solve this problem, because of the inconsistency that you set out very well, is to say that the bulk of the charity’s work must be practical activities, not political activities?

Chair: You are going on to somebody else’s question or are in danger of it.

Robert Halfon: It does not have to be all of it, but the bulk of it, and then the Charity Commission would know which charities were being political or not.

Paul Hackett: This is very difficult to draw the line on. I am aware of the law and how it defines charities. I am aware of the compliance for the Charity Commission. I find it very difficult, even myself, to define when something is political and when it is not political. It is easier to define something as party political perhaps, but even then it is quite difficult. You could find yourself trying to maintain, on the party political side, some sense of party political balance. Does that mean that I have to invite the BNP to speak on a platform? Where do I draw the line as to the extent of trying to get a balance? That is very difficult.

Secondly, where does the process of enforcement kick in and how proportionate should it be? Do not forget that the Smith Institute, at the time it was being investigated, still only had five staff. Some of the recommendations in this report required it to set up an audit committee, an advisory committee to trustees, for the trustees to meet on a more regular basis, etc. Just complying with that bureaucracy alone would have meant no other work was done. Somehow or other we have to try to get the balance, although I must say, having read the evidence that has been given to the Committee-I had a look at it last night-most organisations seem to be fairly relaxed about the situation regarding political activity and campaigning. My point to them would be they have not been investigated. It is more the enforcement and compliance element to it that I found disturbing, rather than the principle.

Q391 Charlie Elphicke: Do you not think that it is fundamentally unfair that you guys had the book thrown at you, were given all this hard time, this massive investigation, this ridiculous report from the Cardiff Business School and all the rest of it, when the IPPR just gets off scotfree and continues to have charitable status? There is not really much difference between you and the IPPR.

Paul Hackett: I accept that. What I did not understand was that they also did a very cursory investigation of Policy Exchange and I think another think tank, but I cannot remember which one it was, which were very short inquiries that led nowhere, with very grand statements that they had not committed any political activity, which I found rather strange. It was very inconsistent. If you are going to do it, do it consistently, and if you are going to do it, do it proportionately. I felt that we were singled out. You would have to ask the former Director of the Institute, Lord Stevenson, who is in this place, if you wanted a definitive view, but my view is, as I said, I think they panicked and found themselves in a place that they perhaps did not even want to be in themselves.

Q392 Charlie Elphicke: Do you think the fair thing would have been to investigate the IPPR at the same level as you guys were? Would that be fair?

Paul Hackett: Maybe they should have set up some sort of broader inquiry or maybe thought about looking at think tanks in the round, getting a general position and then moving in on some of the specifics.

Q393 Lindsay Roy: Before I move on to question 3, you have just clarified that the Smith Institute removed itself from charitable status. Have you any notion that the Charity Commission would have removed you?

Paul Hackett: No, I don’t think so. I don’t have the correspondence with me. I know it is in the office, because I checked it. They were happy with our compliance. I had personal meetings with the Charity Commission to explain that I wanted to move on and that the relationship perhaps had reached its point of termination, but they were happy to keep us as a charity if we wanted to remain as one.

Q394 Lindsay Roy: That is helpful. It leads on nicely to the next question. Should think tanks be entitled to charitable status? Can I ask both of you that question?

Paul Hackett: My answer to that would be, in a liberal democracy, I like a bit of choice. I do not think there is anything wrong in having a choice. The Charity Commission could do more to be a little bit definitive about the way in which it goes about ensuring enforcement of charity law and its own regulations on the matter of political activity and campaigning. I think it is a good position to be in. My colleague on my left can be a charity and I can choose to be a notforprofit. As I said, in some organisations that do not require or rely on donations, so therefore the taxpayers’ element is not relevant, what is in it for me? The halo effect, as I mentioned earlier on, is probably more relevant to a charity involving donkey sanctuaries than think tanks. In that sense, I am quite comfortable where I am as a notforprofit.

Christopher Snowdon: I basically agree. So long as education is considered to be a public benefit, then the think tanks that are providing education should be charities. If you did not have think tanks as charities, so long as they are providing education and are not party political, you would have to get rid of an awful lot of charities, because so many of them do have their primary purpose to be educating the public about whatever issue it may be.

Q395 Chair: Before we move on, Mr Snowdon, can I just be clear? You are not really here to speak on behalf of IEA. You are speaking on behalf of your publication and yourself, or are you representing the IEA?

Christopher Snowdon: I will do my best to represent the IEA where I can, but I am only fairly new to the IEA.

Q396 Chair: You are actually employed by the IEA, and therefore you can speak on behalf of the IEA.

Christopher Snowdon: I will try to speak on their behalf.

Q397 Lindsay Roy: Mr Hackett, we may be covering a bit of ground that has already been covered, but I just want to ask you this again. How does influencing the shaping of public policy differ from lobbying, and is it appropriate work for a charity?

Paul Hackett: My view, not the Smith Institute’s view, is that I do not think lobbying is appropriate for a charity, but then what is the distinction sometimes between being lobbied and being campaigned? Again, we are into a definitional area that is a quagmire and a nightmare to pin down. I think you can pin it down on the lobbying side, because it is probably easier to draw a line in the sand. Certainly as a think tank I do not do lobbying, but I could as a notforprofit have an activity that is around public relations and lobbying if I wanted to; whereas for as a charity, again it would be moving away from what is on the tin. One of the things about being a charity is that it does pin you down, and as a notforprofit there would not be anything wrong with me lobbying, if I wanted to, although I do not want to, because it is not my purpose; it is not what I am in the think-tank world for.

Again, it is back to the same point: somehow in this part of the forest, for the Charity Commission, they are going to have to be a bit more definitive, because it is inconsistent at the moment. As far as I am concerned, I can see how a charity campaigning and engaging in political activities related to its other purposes makes sense-in Shelter’s case, it is lobbying and campaigning for its greater purposes-but in other cases I can see where it is open to abuse. Maybe it is an area that needs some greater clarification, which is why this inquiry is a very good idea.

Q398 Lindsay Roy: The message is loud and clear: greater clarity is required.

Paul Hackett: I think so, yes.

Q399 Lindsay Roy: Mr Snowdon, what benefits does charitable status bring to the Institute of Economic Affairs?

Christopher Snowdon: It is basically confined to the tax benefits of being a charity. We do not use the charitable halo. When we go on the radio or television, we do not get introduced as "the charity the Institute of Economic Affairs". We could if we wanted change our name to something cuddlier, go on there and make various policy proposals as a charity, but I think that would be rather disingenuous. It is purely because people are giving us money out of their own pocket without getting anything in return, and to me that is what a charity is about. We are a nonprofit, but the benefit is purely the tax breaks.

Q400 Lindsay Roy: What does that mean in terms of financial gain?

Christopher Snowdon: I am not too sure, I am afraid. I do not know the financial position of the IEA.

Q401 Lindsay Roy: Could you let the Committee know what it means in terms of financial dividend?

Christopher Snowdon: In the future?

Lindsay Roy: Not just now, in writing.

Christopher Snowdon: Yes. I will make a note of that.

Q402 Kelvin Hopkins: Just very briefly, I make a distinction in my own mind between commercial corporate interests lobbying for profit-"We want to get your contract to make money"-and a philosophical ethical view. For example, I am a member of CND. I campaign against nuclear weapons not because of corporate interest; it is about a moral view. There is an overlap; it is difficult, but can you not make those distinctions, both of you?

Paul Hackett: I certainly make those distinctions. I have purposes, aims and objectives at the Smith Institute that I try to fulfil. The difference would be, as a charity, I would have trustees in position to make sure that I do fulfil them. It is a slightly different position from a notforprofit. Your reputation is all, of course. If you try to honour that, then people see you in that light. Members of Parliament are aware of caveat emptor. When you are approached, you have a responsibility too to distinguish whether you are being approached by someone who is actively lobbying you or actively campaigning you. It is very important to make sure that they are aware of what is on your Tshirt, in that sense. As I said earlier on, they do not often ask, "Are you a charity?" You put your case and you make your argument. Kelvin, I am sure you are very astute at it; you soon realise whether they are actually lobbying for a vested interest or for a cause that you might have some empathy with. To that extent, we live and die by what we do.

Q403 Lindsay Roy: Mr Snowdon, do you find that having registered charity status curtails activities that you may wish to pursue?

Christopher Snowdon: I cannot really speak on behalf of the IEA there. It is something that does not make any difference to me as a writer. I had better not answer that question. I do not think so, but I do not know exactly.

Chair: In my experience, it allows you to be diplomatic. You can send back texts to troublesome MPs and say, "I am sorry, we cannot publish this, because we are a charity."

Paul Hackett: That would not be charitable.

Q404 Robert Halfon: Do you think the way to solve this problem of the difference between charities, think tanks and pressure groups is for the Charity Commission to make two definitions, one of a charity and one of a notforprofit enterprise? There would be different benefits for each.

Paul Hackett: The thing they need to look at, and perhaps you need to look at, is the way in which Gift Aid operates. Gift Aid is, in some cases, depending on the charity, a significant financial incentive to be a charity. One of the things you need to be aware of that I remember from my time working as a research fellow at the Smith Institute, and you will have to check this, is you cannot take Gift Aid for specific projects, which is now what I do. You have to take it for general purposes, which then can be applied to specific projects-i.e. I could not take Gift Aid for Project X in relation to donations and endowments. I would have to take it in regard to a donation to the Smith Institute.

Q405 Chair: How would anybody know what conversation you had had with the donor?

Paul Hackett: Exactly. One of the issues that came up with the compliance was to prove that that was the case, and that did require considerable paperwork, including details of correspondence, etc., regarding how that Gift Aid was being used. If it is taxpayers’ money, there is every right to know how that is being applied, as opposed to looking at further classifications. In a way, you could find yourself in a labyrinthine world with a huge range of classifications for pressure groups, campaign groups, political organisations, etc.

Q406 Lindsay Roy: Finally, Mr Snowdon, how does the IEA actively ensure it remains independent of political parties?

Christopher Snowdon: I am not sure if we have a written guideline as such, but we open our door to anybody who is interested in the purpose we have, which is to educate people about the benefits of free markets and free society, so we very much have an opendoor policy. We have MPs of all political colours come into the IEA for the various events that we have. We absolutely do not have any political preference at all. Our Director General, Mark Littlewood, used to work for the Liberal Democrats. He had to resign from the Lib Dems.

Q407 Paul Flynn: Why was that? Why did he have to resign from the Lib Dems? What do you have to do to resign from the Lib Dems?

Christopher Snowdon: No, the Lib Dems did not make him resign. The IEA will not allow their Directors General to be affiliated with a political party, so it was a condition of him becoming Director General that he had to resign from the party.

Q408 Lindsay Roy: Have there been any allegations of political bias with the IEA?

Christopher Snowdon: Not that I am aware of, but we have been around a long time. So possibly, but not that I am aware of.

Q409 Paul Flynn: You say there have been no examples of political bias from the IEA. I have just read this remarkable document and I would suggest it is not a balanced document, but we will come back to that. The Atlantic Bridge: what lessons do you draw from the fact that the Atlantic Bridge was advised by the Charity Commission to end their activities?

Christopher Snowdon: I don’t know enough about the case, I am afraid.

Q410 Paul Flynn: Would you describe the Atlantic Bridge as having a "militant agenda"?

Christopher Snowdon: I don’t know anything about them.

Q411 Paul Flynn: I can fill you in on it. The Atlantic Bridge was an organisation dominated by prominent members of the Conservative Party and prominent members of the Tea Party tendency in America. They existed to promote things like the Iraq war, the Afghan war and other American agendas in Britain. They also imported brainwashed young people as researchers in this place, who were distributed to Conservative MPs and bored us all stiff on the Terrace with their extreme views. You are not aware of it.

Christopher Snowdon: Not really, no. Sorry.

Q412 Paul Flynn: Just on the question of "militant": you describe certain organisations as having a "militant agenda" in the nonpolitical view of the IEA, and the militant groups are the Child Poverty Action Group, War on Want and Pesticide Action Network. Can you enlarge on why these people are militants?

Christopher Snowdon: Militant? Both War on Want and the Child Poverty Action Group are on the far left politically.

Q413 Paul Flynn: That is militant, is it?

Christopher Snowdon: I think that is a reasonable viewpoint.

Q414 Paul Flynn: You have a fixation about smoking and the smoking ban. You claim in your document, you pray in aid evidence, that taxes on alcohol are intrinsically unpopular with the population, and you would say the same about tobacco-that it was unpopular to ban tobacco. The evidence you offer is a report from the World Health Organisation in 2004. Are you happy that that is a rational basis on which to found an argument: the popularity of the smoking ban?

Christopher Snowdon: The World Health Organisation in that particular paper said that a tax on alcohol is intrinsically unpopular, as indeed taxes on most things tend to be unpopular with the people who purchase them. With the smoking issue, ASH themselves-Action on Smoking and Health-said in their financial accounts from some years back, which I quote in there, that it is very difficult to raise funds for the antismoking cause, because it does not seem to be particularly popular.

Q415 Paul Flynn: The theme running through this book is that popularity should determine causes. If it is a popular cause, is should be an Act, and if it is an unpopular cause, it should not be supported. Could I just say that, if you had got figures more up to date than 2004, you would find that there was 56% support for the smoking ban in 2003 and 81% support in 2011? I can give you each individual year. Clearly this has been an example of a ban being imposed-obviously smokers objected-that then became very popular and very successful, which is absent from your document.

Christopher Snowdon: That is not relevant to my point, which is that, at the time the campaign was ongoing for the smoking ban, most people were against it. This is the argument I am making.

Q416 Paul Flynn: Do you think Government should just do those things that are popular, not the things that are necessarily right?

Christopher Snowdon: No; I am suggesting that Government should not fund lobby groups to campaign for causes that may be dearer to their hearts than they are to the public’s.

Q417 Paul Flynn: Does not Government have a duty to do good things in their simplest form? There are already hugely well founded organisations like Forest and others that are in the pay of the tobacco industry and are encouraging young people into this addiction that will lead to their early deaths. Does the Government not have a responsibility to ensure that another point of view is put forward and that is funded as well?

Christopher Snowdon: No, I don’t think so. What you are making there is basically what the European Commission’s argument is for funding all these environmental groups and, indeed, think tanks: to act as a counterweight to all the industrial lobbying that they receive. I do not think it is the place of Government to deliberately create front groups.

Q418 Paul Flynn: Would you agree there should be a balance between those who are lobbying for their own greed, their own profit, and those who are advocating the public good with health? If you are a lobbyist with a bottomless pocket, you can pay £250,000 and have a dinner with the Prime Minister to lobby him personally. Is that reasonable? In those circumstances, should the causes that are lobbying for the public good have some assistance?

Christopher Snowdon: No, because it is dishonest.

Q419 Paul Flynn: Is it not dishonest to buy an MP, and for countries like Azerbaijan and Israel to invite lots of MPs to their country, butter them up, pay for their hotels, pay their expenses and then bring them back and expect them to deliver? Is that dishonest?

Christopher Snowdon: I don’t know if it is dishonest. It is an attempt at persuasion. Even if it were dishonest, two wrongs would not make a right. If the Department of Health wishes to bring in a smoking ban, plain packaging for cigarettes or a ban on display, which it clearly does, then it should just get on and do it, rather than go through this charade of creating numerous front groups, using public money to finance campaigns that, on the face of it, do not look like Governmentfunded campaigns. They look like civil society campaigns to try to persuade the public on a policy that has already been decided within the bureaucracy and has not been decided democratically or through reasoned debate. It has been decided on high, and then these policies are pushed to the people using what we would describe, if industry was involved, as front groups.

Q420 Chair: It is passing off organisations that purport to be independent but actually are agents of government.

Christopher Snowdon: Of the state, yes.

Q421 Paul Flynn: You make no apologies for the fact that the piece of research you quote is eight years old and you did not check the subsequent research.

Christopher Snowdon: No, because it is completely irrelevant that it is eight years old. The point being made there is that, at the time the Government was funding groups to campaign on their behalf, the policy was unpopular. My argument throughout this report is that many of the things that the Government did create groups to campaign for are unpopular. There would be no need to go through this charade if they were popular policies. If you have popular policies, you simply put them in your manifesto and then you bring them about.

Q422 Paul Flynn: In your ideal world, Mr Snowdon, because there was not a majority among smokers for a smoking ban, we should not have had a smoking ban. The great benefits that have resulted from that would not come about.

Christopher Snowdon: I personally hate the smoking ban and I wish it had never come in, so it does not have any great benefits for me. The fact that 80% of the people may approve of it still means that 20% of the people disapprove of it. Incidentally, 20% of the population are smokers, so we probably disagree on how beneficial the smoking ban has been.

Q423 Paul Flynn: Do we judge all Government policies on the effects they have on Mr Snowdon? Is this a rational argument?

Christopher Snowdon: No, we do not, but nor do we judge them on Mr Flynn. Whether the smoking ban is a good or bad thing is by the by. I am using it as an example to show a tendency that has been in government for the last 15 years.

Q424 Paul Flynn: You claimed quite erroneously in this book that people who advocate the smoking ban, and I would class myself amongst them-having had all my family die of lung cancer, I am a fanatical person for the ban-all intend to prohibit tobacco in the long run.

Christopher Snowdon: I do not say that.

Q425 Paul Flynn: I have never come across anyone anywhere else who wanted to prohibit the use of tobacco.

Christopher Snowdon: I don’t think I say anything about prohibition in this paper.

Paul Flynn: Yes, you do suggest it. You may have forgotten it, but could we just have a general view of prohibition? Prohibition of tobacco would set off the biggest crime wave this country has ever seen.

Chair: I am not sure this is relevant to the inquiry.

Paul Flynn: It is. It is relevant to whether Mr Snowdon is a competent witness. I think this is a really shoddy piece of work. The most remarkable thing about this document is that it was actually published.

Chair: By a charity.

Paul Flynn: By anyone.

Q426 Kelvin Hopkins: My earlier question was about the division between corporate interests and what can be seen to be possibly a moral view-an ethical view. Are you funded by the alcohol and the tobacco industries?

Christopher Snowdon: I have no idea who we are funded by. There is a clear wall between the fundraising side of the organisation and the writing side.

Q427 Kelvin Hopkins: Can I suggest that my impression of you is you are simply a front for corporate capitalism and have no interest in the health of the nation?

Christopher Snowdon: Thank you for your input.

Chair: Every Member of this Committee is entitled to his or her own views.

Robert Halfon: Can I just make a point of order?

Chair: No.

Robert Halfon: Just a quick one.

Chair: No, you cannot. Mr Mulholland.

Q428 Greg Mulholland: As perhaps a slight respite, can I ask you to comment on some other organisations? Just looking specifically at the guidance, which is what all organisations that are under the remit of the Charity Commission have to seek to adhere to, the guidance says that a charity "may choose to focus most, or all, of its resources on political activity for a period", the idea clearly being, looking at the rest of the guidance, that it does not become the "continuing and sole activity of the charity" or "the reason for [its] existence". Can I ask you both if you think that all campaigning charities act within the spirit of that guidance?

Paul Hackett: To get technical, this is Guidance 9, which I have had a look at, which is the guidance on Campaigning and Political Activity. That is based on charity law, which is what has shaped the Charity Commission’s Guidance. You have to look at the legal version and the legal case law on this, which defines it as, as far as I understand it, political activity that is in support of charitable purposes where they are a means to an end. I think that is effectively what it is saying-that a charity cannot exist for a political purpose, especially one that has party political objectives, but can engage itself in the political process. If it could not engage itself in the political process, then in many cases they probably would not have a purpose, because a lot of decisions and, as we have just heard, a lot of decisions on big issues of public policy are conducted, quite rightly, within our democracy inside the political process.

The issue is more about where those boundaries are, in terms of trying to understand the political process as legitimate and the political process as illegitimate, in the sense that it would be clearer if we knew where, in the Charity Commission’s mind, the interpretation of charity law goes and where it is illegitimate. The law does not say when a political process is illegitimate; it just says "the political process". The Charity Commission is left to enforce that. Certainly at the Smith Institute, we found their definitions of where the political process begins and ends as quite difficult to understand, and almost at times impossible to comply with. In that sense, maybe they need to fatten it out a bit and give a little bit more detail.

You can take what you want from the fact that the written evidence to your inquiry, from almost everybody, seems to be quite satisfied with the system as it is. That means either they are fairly relaxed, or are finding it very convenient and there is nothing wrong with it, or that it suits everybody at the moment to continue in the way it is, even though there are problems with it in that, as I have said, defining it is very difficult.

Christopher Snowdon: As I see it, the problem with this clause about being able to campaign for a certain period is twofold. Firstly, I am not sure that it reflects case law, which has been the problem with a lot of the Charity Commission guidelines over the last five or six years; and secondly, certainly they have never defined what period it can be. Can it be 10 or 20 years? Can Shelter continue campaigning indefinitely? It seems that they can. It does not seem as if this has been tested.

My own view is that I do not have a problem with a charity campaigning permanently. I do not have a problem with lobbying. I am wary about reducing and restricting the free speech of charities. Many charities do say that their charitable purpose can only be pursued through political campaigning. I am sure that is true in some instances. You can say that the most appropriate thing to do there would be to join a political party and stand for office, but I am wary about restricting the free speech of charities. Either it should be liberalised significantly and charities should be able to be more political, and the restrictions, such as they are on charities, should be clearly laid out; or we need to go back, look at the case law for charities and have the guidelines reflecting what case law has said. As I understand it, case law has said, in fact, that charities cannot spend most of their time campaigning. Being a pressure group cannot be the dominant activity. It does seem to me we have two problems here. The current guidelines do not reflect reality. Whether that should all be changed, I do not know. Maybe it should not be down to case law, and we should just set up a whole new system and be much more relaxed about what charities do. I do not have a strong preference either way, but it does seem to be a problem.

Q429 Chair: The corollary of the view of War on Want and the National Council for Voluntary Organisations, which seem to share the view that all charities should be allowed to do as much political campaigning as they consider appropriate-and charities against slavery or child trafficking seem to be very good examples of campaigning charities-is that political parties ought to be charities as well, because are political parties not campaigning for the public good, or at least we all think we are, even if most of the public thinks political parties are pretty odious bodies. How do you distinguish?

Paul Hackett: It is a hell of a challenge to define political purposes and neutrality, let alone public political good.

Q430 Chair: That has been the current framework. The NCVO and War on Want’s view is that charities should not be politically neutral. They should be free to express their political views.

Paul Hackett: The key thing, going back to my earlier point, is: should the taxpayer fund that?

Q431 Chair: The taxpayer already does through various means. There is even a suggestion from the Committee on Standards in Public Life that donations should be replaced by taxpayer funding instead.

Paul Hackett: That is the crunch issue. Certainly, as far as I am concerned in running a notforprofit, that is a key issue: the degree to which one organisation, the organisation on my left, your organisation, can take taxpayers’ money to subsidise their activities, and my organisation does not. That does not necessarily by default mean that one of us is being more politically active than the other one.

Chair: I have a certain amount of sympathy for that view.

Christopher Snowdon: You have hit on my main point, which is taxpayer funding. I do not mind charities campaigning on the side, ad infinitum, so long as they do it with their own donors’ money and not with taxpayers’ money. That I see should be an absolute rule: that taxpayers’ money is not used.

Q432 Chair: If political campaigns are being run by charities, they are getting taxpayer funding because they are being excused VAT and given tax relief on donations, so the taxpayer is assisting those organisations.

Christopher Snowdon: Which I guess is why there needs to be an exception for political parties and for industrial lobbying, as it were. I have struggled with the same question as Paul and indeed the question you ask. Why can political parties not be charities? I suppose the answer is that you are then subsidising people getting into power. There is an element where people are benefiting.

Q433 Chair: Can you have democracy without political parties? I submit not, and therefore political parties are a public good.

Paul Hackett: I think it is really important that we bear in mind that the rich political process that we have is partly there because we have this growth of political parties, think tanks, lobbying groups and campaign organisations, which makes our democracy the envy of many countries in the world. I would not like to see that sacrificed on the altar of draconian views on funding, but it is important to establish where the line is between what is and is not legitimate funding.

Q434 Chair: In summary, each of you, what is your advice to the new Chairman of the Charity Commission: tighten up, loosen up or leave well alone?

Paul Hackett: I like that. Do you want me to go first? There are two things. One is that we should maintain a system where there is choice and diversity.

Chair: Very briefly, should there be tighter controls?

Paul Hackett: Briefly, tighten up on the rules.

Christopher Snowdon: On balance, loosen up on the rules. There is an issue of free speech. Charities should have a right to do as much campaigning as they want. All the rest of us can do so, so long as it is not party political and so long as it is not taxpayerfunded.

Q435 Robert Halfon: Do you think it should be a legal requirement for charities to clearly set out on accounts that are easily accessible how much money they spend on political campaigning and PR, as opposed to practical work in the field? At the moment, when you go to charity websites, they are very opaque.

Paul Hackett: I think that is a very sensible suggestion, although let us keep it fair and proportionate. One of the things that strikes me about charities is there does not seem to be sufficient insight into small, medium and large. You must make it proportionate, if that is the case, for a very small charity or any of the think tanks in that camp.

Q436 Robert Halfon: You would say, "We raised £100,000 this year. £60,000 was spent on political campaigning. £40,000 was spent in the field," or whatever it is, so people would know the total that you raised.

Christopher Snowdon: I think it is very difficult to make that distinction. I know that the charities would like us to believe that they ring-fence a certain amount of money for lobbying, campaigning or frontline services. In practice, I think it is unrealistic. "Lobbying" is perhaps the wrong word. I think "campaigning" is a better word. "Lobbying" implies that you are setting a certain amount of time to go and have a drink with an MP. "Campaigning" is much broader. It is all the campaigns on your website. It is informal meetings with people. It is bits of literature that may not be greatly political but support a particular campaign that you are running.

Q437 Robert Halfon: If I can use the Shelter example, people give money to Shelter because they think that they are going to help a homeless person literally in their street. That organisation does nothing to help homeless people in the street. What it does is purely political campaigning. One may argue whether that is right or wrong, but that is a different argument. If they knew that, the people who give that money, I am sure, would probably give money to their local homeless shelter rather than necessarily a national organisation that is in essence a pressure group and is no different from Greenpeace or whatever it may be. Surely the distinction needs to be made clear to the public, when they are giving the money, regarding how that money is being spent.

Christopher Snowdon: Yes, I would like people to be more aware of that. I do not know how many people realistically are going to look at their financial accounts. I do not see how much difference it would make. If they had made any delineation between their campaigning and whatever other work they say they do, I think it would be fairly arbitrary anyway. I really do not think you can ring-fence things in that way.

Q438 Alun Cairns: Mr Snowdon, I want to come back to something you said earlier. You said you did not think there should be tax relief for political campaigning by charitable organisations.

Christopher Snowdon: Party political campaigning.

Q439 Alun Cairns: How would you differentiate? Does it not take us back to the situation Mr Hackett highlighted earlier, whereby you cannot take relief for specific projects? In reality, of course you are, because you cannot differentiate because the money has been drawn into the organisation. How would you differentiate between the two and is it practical?

Christopher Snowdon: No, it is not practical, but that is not actually what I am saying. We have two things here. One is the Government giving think tanks or charities money for various projects. The other thing is the fact that, as charities, they have tax relief, and so you may say that they are effectively taxpayerfunded. I actually do not agree with that distinction. Not paying tax does not mean that you are given money by the Government; you are just not paying as much tax as you otherwise would do. That is different. I am specifically talking about Government grants being given to organisations. If that money is being used for lobbying, then it should not be and the Government should not be giving the money in the first place.

Q440 Alun Cairns: Thank you. That has clarified that. Confidence in charities: the average person in the street who wants to donate to a charity needs to have confidence, and that is across the whole sector, rather than just in individual organisations. Just simply having this debate about campaigning and politics being involved in charities, do you think that undermines confidence in people donating and supporting charities in general?

Christopher Snowdon: Quite possibly, but I think that is fully justified. I sense people are getting a little bit frustrated with charities, when it seems that, every time there is some move to raise taxes or restrict our liberties, some enormous charity seems to be doing all of the legwork, in terms of the advertising, the media, parliamentary briefings and what have you. People are sick of being harassed in the streets by chuggers; this is something that really does need to be looked at. People are aware that there is this enormous disparity, with the richest 1% of charities getting two-thirds of the money of the entire sector. Anybody who has worked in a large charity or knows somebody who works in a large charity is aware that this money does seem to be rather frittered away.

Q441 Chair: What distinction do you make between a chugger and an old soldier wearing his medals, holding out a collecting tin and selling poppies?

Christopher Snowdon: One is more aggressive and also being paid. That is the thing. Chuggers are on commission. The old man rattling the tin is not even allowed to rattle the tin any more, I gather, because of a law made a few years ago. He has to just stand there and hope people give money, whereas these young people on commission just go up to people and hassle them.

Paul Hackett: I think it is important, in the time we are in, when charities are struggling and the political process seems under strain, that at the same time we try to promote the good things that charities do and the fact that they are part of our democracy. That is certainly how I feel, and think tanks are part of that good too. There is a separate debate to be had about certain charities. I would not want to go into my own political views on why the taxpayer is funding private education, for instance. I think there are aspects that the public is probably uncomfortable with but, in general, I think it is important that we all try to support as pluralistic a society as we can. Therefore, the reputation of charities is important to us all, in that sense. Therefore, raising this debate in terms of putting the spotlight on some of the enforcement and compliance is important, but I hope it does not distract people or bias people against the usefulness of charities in our society, because many of them do great things.

Q442 Alun Cairns: Of course they do. Going back to the point that the Chairman made a bit earlier, should the Chairman of the Charity Commission be tightening up, should he be loosening up or keeping it the same; if he tightened up, would that instil greater confidence in charities, which would encourage more people to give?

Paul Hackett: I think good charities have got nothing to hide and that the public would expect the Charity Commission to do its job and make sure that the charities are working within the rule of the law. The problem comes sometimes when it is disproportionate in terms of their enforcement, which was my experience.

Q443 Paul Flynn: You say in your book, Mr Snowdon, that the current rules on political campaigning have "led to a freeforall, with some charities seemingly able to engage in political lobbying on a permanent basis". Which charities are those?

Christopher Snowdon: Which charities are lobbying on a permanent basis? Somebody like Alcohol Concern or Friends of the Earth.

Q444 Paul Flynn: Are you serious? Alcohol Concern is lobbying politically on a permanent basis?

Christopher Snowdon: Yes. It does not provide services for alcoholics or anything like that. It is there entirely to be an advocacy group, pushing for fresh legislation.

Q445 Paul Flynn: Taking your thesis that it needs popular support before there should be the support of charity status, if you went out on the street rattling your tin asking for donations for Harrow and Eton, or even employed chuggers to collect money for Harrow and Eton, do you think you would collect a great deal of money?

Christopher Snowdon: No, I do not think you would. The case for the charitable status of Harrow and Eton is twofold. One is that education in itself is a public benefit and, secondly, by taking 7% of the schoolaged population out of the state system, you are saving the taxpayer money.

Q446 Paul Flynn: In this diatribe of bile and prejudice, there seems to be no mention of public schools and their status.

Christopher Snowdon: No, because it is not about public schools. It is about Governmentfunded lobby groups. As far as I know, Eton does not lobby and is not funded by the taxpayer.

Q447 Paul Flynn: You would be offended if it was suggested there was political prejudice in the writing of this document, would you?

Christopher Snowdon: Yes.

Q448 Paul Flynn: You would be. You would be entirely wrong anyway. Are your concerns restricted to charities? There was one that was mentioned by Mr Halfon, which was Greenpeace, which I believe takes no money from Government.

Robert Halfon: No, I was saying they were not classed as a charity, so what is the difference? The whole point is why some people are classed as pressure groups and some people, who do exactly the same thing, are classed as charities.

Paul Flynn: I understand. Are your concerns, Mr Snowdon, restricted to charities that receive income from the state or other ones, such as Greenpeace, which have no public money? Do you object to their campaigning?

Christopher Snowdon: Greenpeace’s? No, not at all. I do not object to any of the campaigning of the Green 10, being the very large environmental groups in Europe, nine of which are funded by the European Commission. I do not have a problem with any of them campaigning. They may well see that as the best way to pursue their charitable purpose. I just don’t think that the European Commission should be giving them up to 75% of their income from the taxpayer.

Q449 Paul Flynn: I don’t think you have fully answered the question that it is a matter of balance. It is not a question of winning government opinion, which might be settled, as you rightly say, but it is winning public opinion over. With the endemic cowardice of politicians of all parties, they won’t move forward unless they have a comfort blanket wrapped around them of public support. That process is necessary. On one side, you have commercial interests with bottomless purses; on the other side, you have charities wandering around rattling tins. It is entirely reasonable that a benign government and the European Union should give the charities a helping hand. Surely that is entirely right.

Christopher Snowdon: What they should do is invite the civil society groups in to have a chat about their concerns. There is no need for them to be giving them millions of pounds so they can go out and lobby the public, which is really what we are talking about: it is campaigning amongst the general public, going to the media, presenting themselves as grassroots groups, when they are in fact just reflecting the Government in power. You may agree with many of their causes; other people would not. I suspect that, if the Government suddenly decided it was going to set up an antiabortion charity, a progunowning charity or indeed a prosmoking charity, to provide some balance to the debate, you would not be so happy with it.

Q450 Paul Flynn: I think your view is a utopian, impractical and ill informed one. That is the best part of it. I think you should check on how much access groups like Greenpeace and Friends of the Earth had on, say, the London airport developments compared with the commercial organisations. It was a ratio of about one to 12.

Christopher Snowdon: I think we come from fundamentally different perspectives here. You seem to think that it is the Government’s role to fund antiindustry groups and various proenvironmental or propublichealth groups, because that creates balance. What I say is it fundamentally does not create balance. There are civil society groups out there campaigning for the kinds of things you would applaud. All I am saying here is that the great campaigning successes over the centuries, antislavery and votes for women, were pursued by genuine civil society based on voluntary donations. They did not come about because the Government decided they were going to rig the system using public money.

Paul Flynn: It took decades to get that in because of the huge amount of pull that the slave owners had in this building, and they opposed it for years and years because they had the money. It would have been quite right for those who wanted to abolish slavery to be funded by Government. It is a wonderful example of slow progress, because of vested interest in the West Indies by lords and ladies in this House. I will leave it there.

Q451 Chair: We will move on, shall we? Mr Hackett, for clarification, when you say you want the rules tightened up, do you mean you want more restrictive rules or do you just want more precise and clearer rules?

Paul Hackett: Sorry if I misled you there. More precise if possible, and more proportionate.

Chair: More precise and more proportionate. I think that is very important, thank you.

Q452 Charlie Elphicke: First of all, just to return briefly to chugging, do you not think that chugging is one of the great infestations of our modern life, lashes out at people in the street as they are trying to do shopping, and is highly damaging, even toxic, to charity brands?

Christopher Snowdon: Yes.

Paul Hackett: We live in such an inyourface society, don’t we? It is just mirroring other marketing efforts that intrude into your privacy. Phone calls in the middle of the night from insurance companies are very similar. Yes, but I don’t think that is the worst thing that one could say about charities. Yes, it is a nuisance and it is annoying, but again I don’t think the concern that most people would have, if they thought about the role of charities in civil society, would be the fact that there are aggressive people trying to get money off you. It is not necessarily the most important thing, although I personally find it really annoying.

Q453 Charlie Elphicke: If Parliament acted to stamp out this abuse and invasion of our personal space that goes on, on our high streets, up and down this land, do you think that would be the right thing to do?

Paul Hackett: Providing it was sensibly discussed and enforced in a way that again did not lead to some charities or some organisations not becoming charities and being able to do it. You could become a notforprofit and therefore be in a situation where you are discriminated against.

Q454 Chair: Can I just be clear? Is this your view or is this the view of the Smith Institute?

Paul Hackett: This is my view. The Smith Institute has yet to study this matter, although perhaps we should. It is an interesting angle. My concern would be that I can see how it would become a populist issue and may distract from some of the more serious and important issues that we need to get to grips with in the charitable sector.

Q455 Charlie Elphicke: Turning to the issue of the guidelines on the boundary between appropriate and inappropriate levels of political activity, let me give you an example. A little old lady is a pensioner. She gives £5 a month to War on Want, thinking that her money is going to help a starving child in Africa to make their life better. We get rid of all these guidelines, and War on Want tells us they want to go campaigning all day long. She thinks she is putting her money to a good purpose, and yet all they spend their money doing is campaigning to get the Government to spend more taxpayers’ money on international development.

Paul Flynn: Very successfully too.

Charlie Elphicke: Possibly so, but nevertheless is it the right thing for a charity to be doing or would a charity be better off walking the walk rather than just talking the talk?

Paul Hackett: It was made clear, also by my colleague here, that transparency is important. Making things as transparent as possible must surely be one of the objectives, and then I am afraid caveat emptor comes into it yet again. If you want to give £5, you should think about whom you are giving it to and at least inform yourself a little bit. There is a responsibility on the donor; it is not just a oneway street. Maybe the Charity Commission could look at ways in which charities could make it clearer what their activities are, as opposed to what their purposes are. I am sure you have discussed this in terms of the law and how difficult that might be. It has to be twoway, and sometimes one wonders if there is too much pressure on the organisations to be transparent perhaps, without encouraging some onus of responsibility on the donor.

Christopher Snowdon: Yes, I think caveat emptor. Anybody who visits War on Want’s website cannot be under any illusion what their money is going to go towards. It has to be left to individuals to decide whom they give their money to, so long as it is fairly obvious where it is going to go. The Government should probably pull away from giving significant sums of money either to the far left or the far right. There are plenty of charities that will distribute foreign aid, and I don’t think we need to settle for giving money to people who are so dogmatic in their politics.

Q456 Chair: Would you say Oxfam is pretty dogmatic?

Christopher Snowdon: Increasingly so, yes.

Q457 Chair: Would you remove their charitable status?

Christopher Snowdon: No, I would not. It is not about removing the charitable status. It is really the responsibility of the Government to decide who they want to give this kind of money to and if there need to be any restrictions on how it is being used.

Q458 Charlie Elphicke: Hold there. Let us just take this transparency point and caveat emptor point. That is a powerful point. The question is: should it be regulated or should it be controlled so that misleading advertising can be dealt with? I will give you an example. On the London Underground currently, there is a Shelter advert that says, "Help people get housed for Christmas. Your donation can make the difference." That is the implication of the advert, but Shelter does not provide any housing or shelter whatsoever. They are an advisory service. Should that kind of advertising be stopped by some regulatory intervention or should we just say, "Caveat emptor; let anything go"?

Paul Hackett: No, there should be regulations. I am not sure how many homes are provided by housing charities either. One could go down a whole range of charities to see where there are inconsistencies. Let us be more transparent. Let us have some rules and regulations that make the system more explicit and more transparent. We live in that sort of society, where people do want to see more detail on the activities of organisations, charities or not, including Her Majesty’s Government, of course, and this place. I don’t think transparency is a bad thing, but you have to keep it proportionate, otherwise you could put such onus and pressure on an organisation to make its information so detailed that, in a sense, it drowns it.

Q459 Charlie Elphicke: Like your Cardiff Business School report. There is transparency, and transparency gone mad.

Paul Hackett: That is my proportionate point, yes.

Christopher Snowdon: I think this could be another instance where we already have the existing laws to deal with it. If the Shelter advert is misleading, then that is for the Advertising Standards Authority to look at. Similarly, it is high time somebody brought a case under existing common law for these charities that are, as far as I can see, going beyond what the 1948 vivisection case decided, which is that you cannot have political campaigns being your dominant activity. If somebody would bring a case, then we might have a bit of clarity in this matter.

Q460 Charlie Elphicke: Do you think the Charity Commission should revise their guidelines in line with that law, because they seem to have just created their own regulatory guidance case law thing?

Christopher Snowdon: They have, and under pressure from the previous Government, which wanted the guidance to be as relaxed as possible. In fact, the Charity Commission did not go quite as far as Tony Blair wanted them to go. He wanted, more or less, to make party political campaigning a perfectly legitimate charitable activity.

Q461 Charlie Elphicke: Do you think, given we have talked about transparency, charities should be required to publish how much they spend on political campaigning and how much they spend on public affairs, known as "lobbying", and things like that?

Paul Hackett: I don’t think there is anything wrong with that. I think we should also extend it to corporations, certainly the larger ones. We have talked about politics, but we have not talked about power, although it was mentioned briefly in regard to slavery, which somehow or other slipped in.

Q462 Chair: So corporations, as with political donations, should have to declare what they spend on lobbying.

Paul Hackett: Let us have a bit more transparency across the board. I do not think it would do us any harm. What have you got to hide?

Q463 Charlie Elphicke: Finally, I think I am right in saying that the British Pregnancy Advisory Service has charitable status. There are a lot of proabortion groups that have charitable status. Could either of you envisage a situation where an antiabortion group would get charitable status under the current Charity Commission?

Paul Hackett: I cannot speak on behalf of the Smith Institute, but personally we are back to my earlier point about how far you go. Are we looking to give all political parties charitable status? Does that include the BNP? When you come to campaign groups, does that include those that are antiabortion? I would hope that we keep a sense of respect for the law here, where we would not be funding groups that are campaigning to break the law. That would be one of the lines in the sand that I would draw in this particular instance, and I am sure there are many other lines one could draw where we are funding an organisation that seems to contradict and directly oppose what is the law and government policy that has been enacted as public policy. I do not think that is correct. It is a very tricky area. As I say, if they are getting advantage from the taxpayer through Gift Aid, through no corporation tax and other advantages, I am not sure necessarily whether that is in the public interest.

Q464 Charlie Elphicke: Before we come to Mr Snowdon, let me give you a different example where the law is not affected. We have antismoking charities. Could you envisage a situation where you would have a prosmoking charity?

Paul Flynn: There is one: Forest.

Christopher Snowdon: They are not a charity.

Paul Hackett: They are not a charity, are they? Forest is not a charity. I don’t think the state should be funding activities that undermine the state.

Chair: It is like the RSPCA and the Countryside Alliance.

Christopher Snowdon: I am not sure what "undermine the state" means. Are you suggesting anybody who is campaigning for a change in the law is undermining the state? There is an antiabortion charity, is there not, the Society for the Protection of Unborn Children? Is that not a charity?

Charlie Elphicke: I don’t think so.

Christopher Snowdon: Isn’t it? I don’t see any reason why it should not be allowed to be a charity. It would seem to be an imbalance if you were allowed to campaign for all sorts of things but not for the repeal of the Abortion Act.

Q465 Charlie Elphicke: My point is it seems to me the Charity Commission was very ready to give charitable status to all manner of causeledtype organisations of a particular viewpoint and not to others that do not have that viewpoint. Do you think that that is a defect in our current Charity Commission and the way we do charity law in this country?

Paul Hackett: You are getting to the nub of the matter of how we define all this. It is very difficult. As I have said before, I can see where you can have rules and regulations over what is and is not legitimate, in terms of activities that are defined in regard to your purposes, but when you are starting to get into the idea of defining it by balance, you are getting into the sense of trying to define political neutrality here. The idea is if you support one organisation, you have to support the other, and therefore you have neutrality or balance; that is not necessarily always the case. My view is that we have to think long and hard about how the state, through tax breaks, funds organisations that are actually campaigning to change laws that the state has just passed.

Christopher Snowdon: There is a large abortion industry in this country, so presumably the Government is obliged to fund some antiabortion groups to provide balance, according to Mr Flynn’s argument.

Q466 Robert Halfon: What has come up today is clearly the issue of inconsistency, in my view. The Charity Commission picks some organisations out as being political and not others. What is your view on charities and the public benefit of religion, because the charity group has singled out-in a similar way, I would argue, to the way they singled you out-the Christian Brethren. I am not a Christian Brethren member; I am actually Jewish. They have been forced to justify themselves before a tribunal, and yet the Charity Commission allowed druids to become a charity. I have no problem with druids either, but do you agree that this whole argument shows just how inconsistent the Charity Commission is when it comes to charities? Actually, what we really need is a wholesale review.

Paul Flynn: It shows you how gullible you are, I am afraid, if you believe-

Chair: Order, Mr Flynn. Order.

Paul Hackett: I think this is a problem with maybe the way that the Charity Commission interprets its responsibilities for compliance and enforcement. They take this attitude of looking at certain cases, swooping in on certain cases and then exploring what is happening through the Brethren or through the Smith Institute, and then trying from there to extrapolate a wider set of rules and regulations, so it is a minimumrisk or proportionaterisk based approach to compliance, which I think does have its faults. I agree. If you run a system like that, where you swoop in on organisations willynilly almost, without any sort of clear rationale, you are going to get these inconsistencies. Members here have made the point. Why not IPPR? Why not Policy Exchange? Why not Reform? There is a whole list of them. Why not the IEA? Why the Smith Institute for three years, with huge amounts of money and effort? I do not know; you would have to ask the Charity Commission that. Sorry to repeat myself, but it is the proportionality of it. It did not seem proportionate in compliance terms, not necessarily in regulatory terms. It is the compliance component there.

Christopher Snowdon: Religion absolutely should have charitable status. I really think that the only exceptions from charitable status should be party politics and blatant industrial lobbying. On balance, the very fact that people are prepared to voluntarily give money to an organisation is almost by definition proof of its charitable purpose.

Q467 Robert Halfon: People voluntarily give money to political parties as well, so what is the difference?

Christopher Snowdon: They do indeed. It is because it could be misused to get somebody into power, in the same way that commercial lobbying can be used to gain a significant advantage.

Q468 Robert Halfon: Some people would argue that the bigger charities have huge influence on political power. They may not be elected members, but they have huge influence, so what is the difference?

Christopher Snowdon: It is very messy. There is no doubt about it. It is the way that charity law has always been. Party politics is an absolute nono, and I think that is justified because you do have issues of corruption and blatant selfinterest.

Q469 Chair: We must draw our session to a close, but can I just ask two points of clarification? Mr Snowdon, your reference to the National AntiVivisection Society case suggests you want to elevate that case and that you want the restrictions to be tightened up, but previously you said the restrictions on political campaigning should be relaxed. Can you just clarify what your view is?

Christopher Snowdon: I was providing two points of view, because I have not really made my mind up in this matter. On the one hand, I do feel that they should be relaxed and we should start from scratch, as it were, and have a system in which campaigning has clear limits but, in general, more liberal boundaries; but if we do not do that, then we should stick with the existing system that has been in place for many decades, and which the Charity Commission, over the last 10 to 15 years, has misrepresented. We should go back to case law, like the antivivisection case, in which case it should be tightened up and campaigning should not be the dominant activity. We have a choice here, but we need to know where we are because, at the moment, we do not.

Q470 Chair: You both expressed a concern that charities should be free to campaign but, on the other hand, you do not want taxpayers’ money used for political campaigning. Does that suggest you would both like to see a separation between charitable status and the tax relief that charitable status confers on organisations? Should these be two different things?

Paul Hackett: I did not say that we should not have any taxpayers’ money used for political campaigning. It was the party political bit. In some cases, some charities have more power and influence than others by just the sheer nature of what they are doing.

Q471 Chair: Charitable status and the tax relief that goes with charitable status should remain concomitant.

Paul Hackett: Yes. I just think that the rules need to be examined in a bit more detail, so we can be a bit clearer about where the line is.

Chair: I have got that bit.

Christopher Snowdon: I fundamentally disagree with the premise of the question. It comes from the idea that all money belongs to the state unless it is given back to the people. Having a tax break is not the same as being funded by the taxpayer. It just means you are not paying as much tax. You are not taking from anybody; the Government is just taking less from you.

Q472 Chair: I think we will leave it there, but thank you very much to our two witnesses and to colleagues. I should just suggest that, if any of the charities mentioned in this session felt that they wanted to write us a note to clarify anything that they feel has been said about their charity, we would welcome their evidence. For the record, it is worth just pointing out that the Society for the Protection of Unborn Children is not a charity, although they control a small educational research subcharity with an income of £230,000 a year. Forest is not a charity.

Greg Mulholland: However, to ensure that there is not a false impression created, LIFE, which is a prolife organisation, is a charity because it provides care as an alternative to abortion.

Chair: Thank you for that further clarification. It just shows that there be dragons in this swamp and we need to be very careful what we say.

Prepared 19th December 2012