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1. About the charity
The Legatum Institute Foundation (registered charity number 1140719) (the ‘charity’) has been registered as a charity since 2011. Its charitable objects are ‘to advance the education of the public in national and international political, social and economic policy, including through the promotion of research in any of those areas and the publication of the useful results of such research’.
2. Why the Commission got involved
In late 2017 the Commission was made aware of some concerns reported in the media about the charity’s independence and received complaints that it was political and acting to promote the views of ‘pro-Brexiteers’.
The charity also at this time proactively reported what it regarded as false and misleading allegations made against it in press reports to us under the Commission’s Serious Incident reporting procedures.
Particular concern related to its research paper:
- ‘Brexit Inflection Point: The Pathway to Prosperity’ (‘the report’) which was published on 4 November 2017 by the charity’s research body, the ‘Special Trade Commission’
The Commission therefore sought to examine whether the work of the charity was conducted in accordance with its educational object and independently of political views.
The Commission also sought to establish whether the report itself was consistent with its stated purpose to advance education, whether the report might risk being perceived to promote a particular political view in respect of Brexit and whether it lacked the necessary balance and neutrality required of an educational charity.
3. The action we took
We requested and obtained detailed information from the charity and examined the structure of the charity, the process for undertaking its research and publication of reports and its connection to the non-charitable Legatum Foundation which had funded the report.
We considered the content of the report, sought an explanation of its aims and background and the trustees’ response to concerns that the paper promoted a particular political direction.
4. What we found
4.1 The charity and its operations
The charity operates through a board of trustees and senior management team supported by a body of research fellows. These include a number of individuals who are prominent in their fields and recognised experts. Although the charity has a relationship with the Legatum Group from which it receives funding, and some individuals connected to the Legatum Group serve on the charity’s board of trustees, it was substantially independent of the Group.
The charity engages with individuals from across the political spectrum both through its programme of events and its research and has sought to ensure a diverse range of views through its appointments.
The charity told us that it has a wide-ranging programme of work across a broad portfolio, which includes research on effective government, refugees and migration, cultural transformation and global trade. Its work on Brexit comprised only a part of its work and this has now been refocused to global trade more generally, following changes in personnel.
4.2 The Special Trade Commission
The Special Trade Commission (STC) (which produced the report on behalf of the charity) was established in 2016 by the charity after the EU referendum. It is a working group of the charity and the trustees describe its role as supporting the charity and educating the public about the nature of the relationship between trade, competition and regulatory policy in the context of the political choices facing the UK.
The trustees explained that the aim of establishing the STC was to enable the charity to have the benefit of experts and thereby have access to a range of perspectives on topical issues and to introduce the rigour of peer review for the most senior experienced and knowledgeable people on the subject of trade policy which the charity could find.
Each research project is subject to peer review processes at different stages in the research life cycle, from initial scoping and consultation, to expert engagement, feedback and final draft review. This includes internal debate and scrutiny within the charity and, where appropriate, external review. The internal review process is designed not only to ensure the quality of the technical detail but is also intended to ensure a balance of views.
4.3 The report
The trustees explained that the purpose of the report was:
to examine the interim conditions necessary for the UK to have an independent trade and regulatory policy and to review the barriers to the UK establishing its own trade agenda – its purpose was not to promote a particular point of view but rather to analyse and assess the implications of the different political choices available for the UK on its ability to independently negotiate trade deals
to enable the reader to come away with a much better and clearer understanding of how the policy choices which the UK faces in its negotiations with the EU will affect its trade and its future
to help readers understand these relationships and the relevant trade-offs and compromises more clearly
However, at one point the report explains the role of the STC specifically as follows:
‘At this critical historical juncture, the STC aims to present a road-map for the many trade negotiations which the UK will need to undertake now. It seeks to re-focus the public discussion on Brexit to a positive conversation on opportunities, rather than challenges, while presenting empirical evidence of the dangers of not following an expansive trade negotiating path.’
We therefore consider that the starting point for the STC’s research appears to be that of a free trade perspective. As outlined above, the STC seeks to present empirical evidence of the dangers of ‘not following an expansive trade negotiating path.’
The executive summary of the report highlights the ‘opportunity’ posed by Brexit for Britain to restore freedom to trade, and the benefits of trade liberalisation. It sets out specific terms of the interim arrangement and describes them as ‘vital’ for ‘Britain’s ability to resume its place as an independent trading nation’.
The executive summary concludes by calling on the UK government to act, including by moving to substantive negotiations as soon as possible; taking a lead in World Trade Organisation membership; and instructing UK customs agencies to talk to EU member state counterparts.
The Commission was satisfied that the charity operated independently of the Group and the trustees understood their responsibility to maintain a separation.
The Commission is also satisfied that the trustees were aware of the need to retain balance and neutrality in its research work and publications and had systems in place to this end.
We concluded that research into the framework of Brexit negotiations falls with its area of study in national and international political, social and economic policy and was an appropriate area in which to undertake research.
It would be acceptable for an educational charity’s research paper to examine an approach to Brexit negotiations from a particular perspective, such as a free trade perspective, and to discuss how those ends might be reached and the impact of different proposed options, and we understand that this is the approach taken by the charity with respect to the report.
However, to be consistent with the charity’s object to advance education, a report of this nature should make clear that a desired outcome of free trade is only one of a number of the potential political outcomes that might be sought. It should present balanced, neutral evidence and analysis explaining why it has chosen to adopt a free trade perspective over others.
We concluded that taken as a whole the report may be seen as promoting a political view directed towards securing a particular negotiating position for the aim of a particular final outcome, and recommending specific government action that reflects this.
We concluded that failing to make clear that there are multiple potential Brexit outcomes and that free trade is one of a number of political outcomes the report is not consistent with the requirements associated with the advancement of education for the public benefit.
Whilst we considered that the trustees do recognise the need for balance and neutrality, they crossed a clear line with this publication.
6. The impact of our involvement
We provided the charity and trustees on 10 May 2018 with formal regulatory advice under Section 15(2) of the Charities Act requiring:
the Foundation must be and be seen to be independent of party politics – it should be careful of promoting a political purpose and should always ensure its independence and political neutrality are protected in all that it does
the trustees must ensure that the charity better manages this type of risk in future by:
reviewing the charity’s procedures on managing risk, especially around the commissioning and publication of reports on controversial, highly political subjects
removing the report from the charity’s website
The Commission will continue to monitor the charity’s output closely.
7. Lessons for other trustees
Further information on the issues raised in this report can be found in our guidance on The Advancement of Education for the Public Benefit.
The Commission recognises that it is common for charities to have close connections with non-charities, for example trading subsidiaries or charities established by commercial businesses. However, in order to fulfil their legal duties and maintain public trust and confidence, trustees must manage these relationships properly by ensuring there is appropriate separation.
We launched a consultation in February 2018 around draft guidance on these matters.
Further information is available on GOV.UK.