Christopher Snowdon // 1 March 2019

In an IEA report published in 2013, I showed that large sums of taxpayers’ money are given to political pressure groups by the European Commission. In some instances, statutory funding makes up 100 per cent of their income. EU bodies have attempted to justify this spending on the grounds that they want to encourage engagement with civil society or, in the case of environmental NGOs, counter the lobbying from industry.

The EU is not alone in using taxpayers’ money to finance political campaigning. In the UK, central and local government have been funding special interest groups for years. This raises several questions. Is it ethical to force taxpayers to fund political campaigns with which they may strongly disagree? Is an NGO really ‘non-governmental’ when it relies on the state for most or all of its funding? And to what extent is civil society crowded out of the political conversation by this legion of quangos and state-funded pressure groups?

Insights from Public Choice Theory suggest that there is an ‘iron triangle’ of policy-making consisting politicians, bureaucrats and pressure groups. Using taxpayers’ money to create and fund pressure groups can be seen as a way of politicians and bureaucrats taking control of the third corner of the triangle. It amplifies the voices of those the government wants to hear from and makes ‘civil society’ less unruly (from its perspective).

I have revisited the topic in research published this week (Still Hand in Glove?) to see how the landscape has changed. In summary, it seems that there has been a decline in government spending on NGOs by central government in the UK, with the exception of foreign aid charities which have benefited from the government’s commitment to spend 0.7 per cent of GDP on international development. However, the Scottish and Welsh governments have continued to fund political advocacy organisations and, despite bearing the brunt of budget cuts in recent years, many local councils have managed to find money to fund pressure groups to lobby for such trivial causes as a clamp-down on fizzy drinks.

At the EU level, statutory funding for third sector organisations remains endemic. Most of the organisations mentioned in my Euro Puppets report have seen their grant funding increase since 2011, and many of them continue to rely on the European Commission for most of their income. Between 2014 and 2017, the EU allocated over €11 billion to NGOs. Environmental lobby groups – the ‘green blob’ – have done particularly well.

There are two plausible reasons why ‘sock puppet’ funding from government has declined somewhat in the UK. Firstly, there have been budget cuts in many areas of UK government spending from which the third sector has not been immune. Secondly, central government contracts have, since December 2016, contained a clause which specifically bans the use of grant money for campaigning, advocacy and lobbying.

It seems no more than common sense that grant recipients should not be allowed to use taxpayers’ money to finance their own political campaigns, but there is no such clause in EU grant contracts. Much of EU funding for ‘civil society’ is unrestricted despite many of the organisations involved being overtly political.

The European Commission’s largesse has not solved the EU’s democratic deficit, rather it has created a distorted version of civil society that is dependent on taxpayers’ money and therefore less independent of the state. With the EU budget likely to shrink over the next few years, it is time for an audit to see if taxpayers are getting value for money. At the very least, a ‘no campaigning’ clause should be inserted into EU contracts with third party organisations.