Press release

Government announces new clause to be inserted into grant agreements

Organisations receiving government grants will be banned from using these taxpayer funds to lobby government and Parliament.

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.

A new clause to be inserted into all new and renewed grant agreements will make sure that taxpayer funds are spent on improving people’s lives and good causes, rather than lobbying for new regulation or using taxpayers’ money to lobby for more government funding.

It will not prevent organisations from using their own privately-raised funds to campaign as they see fit. This will ensure that freedom of speech is protected, whilst stopping taxpayers’ money being diverted away from good causes. The Department for Communities and Local Government (DCLG) have successfully piloted these new rules over the last year.

This builds on action in the last Parliament which stopped quangos, such as the Audit Commission and Ordnance Survey, hiring lobbying firms to lobby politicians and Whitehall departments. The government has also increased transparency on consultancy lobbyist firms.

Matthew Hancock, Minister for the Cabinet Office, said:

Taxpayers’ money must be spent on improving people’s lives and spreading opportunities, not wasted on the farce of government lobbying government. The public sector never lobbies for lower taxes and less state spending, and it’s a zero sum game if Peter is robbed to pay Paul.

These common sense rules will protect freedom of speech – but taxpayers won’t be made to foot the bill for political campaigning and political lobbying. This government is standing up for value for money, so we can keep taxes down and support better services that people can rely on.

Notes to editors

The exact phrase that will be inserted into all new and renewed grant agreements reads:

The following costs are not Eligible Expenditure: Payments that support activity intended to influence or attempt to influence Parliament, government or political parties, or attempting to influence the awarding or renewal of contracts and grants, or attempting to influence legislative or regulatory action.

The Cabinet Office is publishing guidance to implement the new rules, which will commence in May alongside the new financial year.

DCLG has piloted this scheme since February 2015. It is now being rolled out across government.

Organisations which have signed the new DCLG grant agreement include Shelter (to run a homelessness advice hotline); this has not prevented the organisation from using its own funds to lobby on housing legislation in this Parliament.