Sector bodies have welcomed substantial changes announced today by the Cabinet Office to the government’s planned "anti-lobbying clause", hailing them as a "victory for free speech".
New government-wide standards for grant-making will replace the proposed clause, which was first announced in February but was put on hold in April after being criticised by the National Council for Voluntary Organisations, Acevo and Social Enterprise UK, all of which feared it would prevent charities from having normal dialogue with MPs and civil servants.
Included in the new set of grant standards is the creation of a Grants Advice Panel to consider "high-risk, new and contentious" expenditure as well as any significant increase in funding to existing grant schemes.
All government departments will also be required to have robust approval processes for grants of more than £100,000 and to review all grants at least once a year.
The Cabinet Office said in a statement that the standards would put an end to grant money "being wasted" on activities not specified in the grant agreement, such as political lobbying. Its guidance notes on the new standards say that "paid-for lobbying – unless a requirement of the grant – and attempting to exert undue influence using taxpayer funding, will always be prevented".
But the notes also say that departments can decide to allow their grants to be used for activities such as raising issues with ministers and civil servants, responding to consultations and contributing to the general policy debate.
In a joint statement released today, the NCVO, Acevo and SEUK said: "The new grant standards take a substantially more sophisticated approach than the original clause, and explicitly safeguard the important role of charities and others in presenting evidence to government and parliamentarians."
They said the standards should prevent another Kids Company situation in which an unusually large grant was handed out without proper oversight or a competitive process.
Asheem Singh, interim chief executive of Acevo, said: "This is a victory for common sense and for free speech. That the government has moved from implementing an aggressive, regressive and unfair anti-advocacy clause to explicitly recognising and facilitating the role of charities to speak out on behalf of their beneficiaries is constructive and welcome."
But he added that questions remained about the practical application of the grant standards and there was the potential for confusion about the kinds of activity that were eligible for funding.
Sir Stuart Etherington, chief executive of the NCVO, said the new guidance showed the government had recognised the "fundamental flaw" in the anti-lobbying clause. Peter Holbrook, chief executive of SEUK, said the guidance was good news for social enterprises.
Rob Wilson, the Minister for Civil Society, said in a statement: "The new grant standards announced today will not only increase the opportunity for charities to work with government through improved grant making practices, but will also better protect the role of charities to speak out on behalf of their beneficiaries while ensuring taxpayers' money is used as intended."
The government launched a review of its grants programme in February after the Public Administration and Constitutional Affairs Committee recommended in a report on its inquiry into Kids Company that the government should carry out "a fundamental review of how it makes direct and non-competitive grants to the voluntary sector".