Matthew Hancock, the Minister for the Cabinet Office, accepted a £4,000 donation from the chair of the Institute of Economic Affairs three months before announcing a policy forbidding charities from using grant funding from public sources to lobby government.
The Cabinet Office referred to the IEA’s research on "sock puppets" in the first line of the statement it made on 6 February announcing the new policy, which will insert a clause from 1 May into all new and renewed grant agreements preventing charities from using such funds to lobby government.
Public records indicate that on 16 November Hancock accepted £4,000 from Neil Record, who became chair of the charitable think tank last March, and he has received £22,000 from him since 2010.
Record has made donations of more than £330,000 to the Conservative Party since 2005, according to the Tory donations website SearchtheMoney.com.
The Cabinet Office statement on the new anti-lobbying clause began with the line: "The Institute of Economic Affairs has undertaken extensive research on so-called ‘sock puppets’, exposing the practice of taxpayers’ money given to pressure groups being diverted to fund lobbying rather than the good causes or public services."
The research to which it referred took the form of three annual reports published by the IEA between 2012 and 2014. The first report, published in June 2012, said that state funding for voluntary organisations created a "sock-puppet version of civil society" that "subverts democracy and debases the concept of charity".
Andrew Purkis, a former board member of the Charity Commission who recently wrote in a blog that the evidence base for the new policy was a "muddled Tea Party-type polemic", told Third Sector it was unwise of the IEA’s chair to put his charity in the position of being perceived as currying favour from ministers through his donations and unwise of Hancock to accept a donation from someone who was chair of a charity that lobbied government so frequently.
Asheem Singh, director of public policy at the charity chief executives body Acevo, said there was no suggestion anything was improper about the donations, but they did show the danger of the new clause.
"Do we really want a democracy where rich party donors have an ever increasing monopoly on the ear of government, while charities and grass-roots advocacy groups are shut out from the debate by any or all means at the government’s disposal?" he said. "The anti-advocacy clause is not only a matter of social justice, but also an incursion on our hard-won freedom of speech, and this is why we strongly oppose it."
A spokesman for the Cabinet Office said in a statement: "The decision to end the farce of government lobbying government was taken based entirely on the advice of civil service officials.
"Reasonable people will know that taxpayers' money should be spent on improving people's lives."
A spokeswoman for the IEA said that Record’s support for Hancock pre-dated both his appointment as IEA chair and Hancock’s promotion to any government post.
"For the avoidance of doubt, he has never had any commercial or any other lobbying-type relationship with Matt in any of his ministerial posts, nor has he ever discussed his responsibilities in any context that relates to him personally, or his chairmanship of the IEA," she said. "Neil made the donation in a personal capacity, and it was in no way related to any work or activity of the IEA, which is entirely independent from any political party."
She said no IEA staff member or trustee had met Hancock to discuss the "sock puppets" research and that all financial-based lobbying carried out by the think tank was done "without a penny of taxpayers’ money".
The IEA hosted a fringe event called Sock Puppets: Should the State be Funding Pressure Groups? at the Conservative Party conference in Manchester in September, where comments from the audience and panellists included "I avoid giving to charities that have public funding because I feel like I've already given through the tax office" and "if we had less state-funded quangos, there would be more room at Tory conference because they wouldn't be there, taking up all the space".