Policy Exchange

Policy Exchange's offices at Clutha House, 10 Storey's Gate

Policy Exchange is a neoconservative orientated think-tank with close ties to Conservative leader David Cameron. It was launched in April 2002 by Francis Maude and Archie Norman with Nicholas Boles as its founding director. It is part of the Stockholm Network a working group of European market-oriented think-tanks.

In a March 2009 presentation Tim Montgomerie and Matthew Elliott described Policy Exchange as part of the infrastructure of the conservative movement in Britain.

Origins and launch

Policy Exchange was established by a group of Conservative MPs who had backed Michael Portillo’s campaign in the 2001 Conservative leadership contest. Portillo, who had recently admitted having had homosexual experiences, advocated a shift towards more liberal social attitudes, whilst maintaining a commitment to right-wing economic policy. Dubbed ‘Portillistas’ by Westminster commentators, Portillo’s backers saw themselves as modernisers of an out of touch party which had put off potential voters through its negativity, xenophobia and social conservatism.

Portillo withdrew from the Conservative leadership race on the evening of 17 July 2001 and subsequently announced that he would leave politics. According to the Independent the eleven Shadow Cabinet colleagues who had backed him were subsequently dubbed ‘the living dead’ in Westminster.

Only days later, one of the ‘living dead’, Archie Norman, told the Daily Telegraph’s Rachel Sylvester that he and other Portillo supporters were planning to set up a think-tank saying: ‘I came into public life to help transform the Conservative Party so it can win again, and that's what I'm still about.’ On 21 July the Daily Telegraph ran a front page headline, ‘Portillo supporters to fight on’. Archie Norman was quoted as saying:

We've got hundreds of thousands of people who don't want to lose what we were creating, we've got financial support from people who wanted to invest in this as the future of the party and we would like to find a way of channelling that and harnessing it.

That August the Daily Telegraph published a letter from the ‘Portillistas’ in which they said they planned to establish ‘a new forum, firmly rooted within the party, devoted to developing the ideas that will form the basis of a genuinely modern Conservative Party.’ The letter was signed by Francis Maude, Archie Norman, Tim Yeo, Andrew Mackay, Peter Ainsworth, Theresa May, Edward Garnier, Peter Lilley, Damian Green, Nicholas Soames, Julie Kirkbride, Stephen Dorrell and Nicholas Gibb.

In early October, a week before the Tory Party Conference, the party’s new leader Iain Duncan Smith reportedly met for private talks with Francis Maude, and the latter agreed to delay the launch of the think-tank until after the party conference. The truce was cemented with an offer from the ‘Portillistas’ that Iain Duncan Smith would be appointed Honorary President of the think-tank – an offer which apparently came to nothing.

The logos for 'XChance', as Policy Exchange was originally branded in 2001, and the affiliated group Conservatives for Change or 'CChange'. The two were presumably kept separate to allow Policy Exchange to apply for charitable status as a non-partisan organisation.

Archie Norman, Francis Maude, and their allies decided to set up two seperate think-tanks as part of their modernisation project. One, XChange Ideas or simply XChange, would be rebranded as Policy Exchange a few months later. A company limited by guarantee, formed in October 2001, became XChange Ideas on 9 November 2001. A seperate company Conservatives for Change was also was set up that October, and was branded CChange. The two were presumably kept seperate to allow Policy Exchange to apply for charitable status as a non-partisan organisation. Conservatives for Change supplied the initial funding for Policy Exchange, with a loan of £75,000.

In December the group set up the websites cchange.org.uk and xchange.org.uk for people to register their interest in the projects prior to the launch of XChange or Policy Exchange's full website.

The full website <http://www.policyexchange.org.uk> was registered on 28 January 2002 and went live a few months later. Policy Exchange was officially launched at the Tate Gallery in Central London on the evening of 29 April 2002.

Charitable Status

Policy Exchange applied for charitable status and was registered with the Charity Commission on 3 March 2003. Registering as a charity can provide numerous tax breaks for think-tanks. Charities do not normally have to pay corporation tax, capital gains tax, or stamp duty, and gifts to charities are free of inheritance tax. They can also pay significantly reduced business rates (e.g. council tax) on the buildings they occupy.

Policy Exchange’s application to the Charity Commission was based on the application made by the New Labour orientated think-tank IPPR. Former Policy Exchange director Anthony Browne told the Guardian: ‘We basically borrowed the IPPR's claim for charitable status and changed the words “centre-left” to “centre-right”’. Similarly Browne’s predecessor, Nicolas Boles has said: “Before we set up Policy Exchange I went and chatted with Matthew Taylor [then director of IPPR], a friend, and when we approached the Charity Commission we put in an almost identical proposal to them. The joke, which is not quite true, is that the only difference was substituting 'centre-right' for 'centre-left'.”

Policy Exchange was investigated by the Charity Commission after an MP complained in February 2007 that it was close to the Conservative Party. The Charity Commission report found no evidence of party political bias but identified a number of issues:

events hosted by the Charity – For an event to be educational under charity law it needs to be clearly linked to and advance a programme of research which should be identified prior to the event. We identified that the charity had hosted a series of one-off events to stimulate ideas or to promote the charity’s brand which often included attendance by MP’s;

dissemination of information – Research papers produced by the Charity are easily accessible on their website, however, very little information was given on other events hosted by the Charity. All charities must demonstrate that they operate for the public benefit. In this case, Policy Exchange could demonstrate public benefit through the dissemination of transcripts and papers arising out of each event;

and transparency – The original source of concern was that the Charity was supporting a political party and carrying out political activities. Whilst the Commission determined that there was no evidence of party political bias we determined that there is a need for greater transparency, particularly on Policy Exchange’s website. Information contained on the website following events in 2007 failed to sufficiently highlight or identify the cross-party speakers at events hosted by the Charity.

Policy Exchange agreed to conduct a 12-month review of the areas identified by the Commission.

Research focus

Piechart showing the relative prominence of Policy Exchange’s Research Areas between 2003 and 2009.

Policy Exchange states that it is ‘particularly interested in free market and localist solutions to public policy questions’. Like other right-wing think-tanks much of its research advocates the expansion of private power through the promotion of 'free market' policies. In the case of Policy Exchange however, these measures tend to be presented as progressive solutions to social problems, something it describes as 'Using centre-right means to progressive ends'. It divides its research into nine categories: Arts & Culture, Crime & Justice, Economics, Education, Environment & Energy, Foreign Policy & Security, Government & Philosophy, Health and Social Policy.

As gauged by listed publications and events, its largest single research area is Economics, followed by Foreign Policy & Security, Environment & Energy and then Education. The other areas constitute a relatively small proportion of the think-tank’s output, together comprising less than 25%, although Social Policy became a greater focus from 2008 onwards.

The pie chart on the right displays the total number of events and publications listed in each policy area up to 31 December 2009. The same data is displayed in the table below, which shows the growth in the total number of events and publications as well as the relative prominence of each research area year on year.

Chart showing the relative prominence of Policy Exchange’s Research Areas year on year between 2003 and 2009.

Foreign Policy & Security

As the data displayed in the graphs above shows, the policy area described by Policy Exchange as ‘Foreign Policy & Security’ has been the think-tank’s greatest area of activity after economics. The main concern of the Foreign Policy & Security Unit, at least in terms of publications, has been domestic counterterrorism and ‘extremism’, with the focus being on British Muslims. The ‘About’ section of the Foreign Policy & Security webpage states that Policy Exchange stands for ‘Preventing extremism’ and ‘Backing progressives against reactionaries’. It criticises the Labour Government for allegedly ‘deal[ing] with relatively extreme groups at the expense of moderates,’ and calls for the Government to ‘confront those who do not accept the foundations of a liberal society’.

Given its relative overall prominence Policy Exchange has published relatively few reports in this area, listing only eight publications up to 31 December 2009. The first of these reports, called ‘Regime Change - It's Been Done Before’, was published on 15 May 2003, shortly after Britain and the United States invaded Iraq. It was sponsored by Conrad Black, who had employed the Foreign Policy & Security Unit’s current director Dean Godson as a special assistant and leader writer at the Telegraph Group. (Black was subsequently convicted of fraud in the US and sentenced to six and a half years in prison.)

The Regime Change report was edited by Roger Gough and grew out of a Policy Exchange round-table held in early March 2003. The report included a foreword by the former Foreign Secretary Douglas Hurd (considered a ‘realist’ on foreign policy ), and essays from a number of contributors who considered previous examples of ‘regime change’ in West Germany, Japan, Cambodia, South Africa, Haiti, East Timor, The West Balkans and Afghanistan.

The Foreign Policy & Security Unit was originally called the International Programme and was headed by Anna Reid, a former journalist with The Economist. A separate programme on ‘Terrorism and Security’ emerged in 2006 which was eventually merged with its International Programme to form the Foreign Policy & Security Unit, as it is now known.

The Terrorism and Security programme – originally part of the International Programme and then separate for a period – emerged under the leadership of the right-wing journalist Dean Godson. Godson joined Policy Exchange from the Telegraph, following a purge of the paper’s most explicitly Atlanticist commentators after a change of ownership. In 2004 Telegraph editor Martin Newland told the Guardian:

I soon came to recognise we were speaking a language on geopolitical events and even domestic events that was dictated too much from across the Atlantic. It's OK to be pro-Israel, but not to be unbelievably pro-Likud Israel, it's OK to be pro-American but not look as if you're taking instructions from Washington. Dean Godson and Barbara Amiel were key departures.

Research Director, Foreign Policy & Security, Dean Godson on BBC Newsnight in December 2007.

Policy Exchange listed Godson as leading the think-tank’s work on ‘Terrorism and Security’ from June 2006, and by August he was listed as Research Director of the think-tank’s International Programme (which then included Terrorism and Security) with its former head Anna Reid listed as an Associate Fellow. That July, Policy Exchange published a pamplet called ‘When Progressives Treat with Reactionaries’ written by the then New Statesman journalist Martin Bright. In the acknowledgments for the report Bright wrote, ‘In particular I wish to thank Dean Godson, whose driving energy and immense professionalism kept the project on the rails.’

The pamphlet was a collection of a series of stories by Martin Bright on the British Governments relations with Muslim groups. Much of the material came from Foreign Office offical Derek Pasquill, who was strongly critical of Foreign Office adviser Mockbul Ali and the Government's relationship with the Muslim Council of Britain. Pasquill was charged under the Official Secrets Act, but the case was dropped in January 2008. According to a Guardian report on the hearing, the prosecution ‘indicated that internal FCO papers revealed that senior officials privately admitted that, far from harming British interests, Pasquill's leaking of the documents had actually helped to provoke a constructive debate.’

Funding and Finances

Graph from the Charity Commission showing Policy Exchange's financial history.

In its early years Policy Exchange was a medium sized think-tank, operating on an annual income of around half a million pounds. However after David Cameron was elected leader of the Conservative Party its income increased substantially.

In its latest financial statements, made up to 30 September 2008, the think-tank reported receiving over £2.6 million. This figure put Policy Exchange ahead of the New Labour affiliated think-tank Demos, which saw its income decline over the same period, but still behind the Institute for Public Policy Research, which has enjoyed an income of over £3 million for several years.

Policy Exchange's main source of income has been through donations, but it also receives significant funding through the sponsorship of research and its 'Business Forum', which is part of the think-tank's 'Corporate Engagement'. In early 2006 PR Week reported that companies were paying £5,000 to £10,000 to be part of the forum, and that members included BP, SAB Miller, BSkyB and Bupa. Policy Exchange states that corporations cannot commission research, but that they can 'contribute ideas and give advice to Policy Exchange’s research programme[s]'. In its 2008 accounts, Policy Exchange reported that:

The activities of the Business Forum group made a particularly strong contribution to fundraising during the period, with the number of members more than doubling to 27. The Policy Exchange Business Forum exists to engage corporates in the research work of the charity, by hosting regular round table events where members can come together to listen to influential policy makers and discuss the issues raised. Many members went on to work directly with our research teams by giving financial and/or research support.

Source of Income	2002	2003	2004	2005	2006	2007
Donations	£67,030	£359,794	£435,066	£473,296	£796,689	£1,143,266
Research sponsorship	-	£12,500	£57,310	£55,342	£41,000	£506,022
Business Forum membership	-	£2,348	£18,930	£3,639	£46,417	£90,875
Sale of Reports	-	£961	£963	£2,191	£2,294	£12,875
Localis Research	-	£10,297	£15,035	£30,000	£14,250	£20,000
Corporate Event Sponsorship	-	-	-	-	£78,133	-
Management charges	£7,909	£33,767	-	-	-	-
Premises charges	£7,500	£24,750	-	-	-	-
Interest received	-	£236	£2,651	£3,735	£3,775	£11,958
Miscellaneous income	-	-	-	-	£1,074	£1,829
Total Income	£82,439	£444,653	£529,955	£568,203	£983,632	£1,786,825

The table on the right consolidates information on the sources of Policy Exchange’s income from 2002 to 2007 as provided in its annual financial statements.

The financial statements are made up to 30 September in each reporting year, meaning for example that the figures for 2007 here represent not that calendar year but the period from 1 October 2006 to 30 September 2007.

Although available, information from the think-tank’s 2008 financial statements have not been included in this table as they no longer provide as detailed a breakdown of the various sources of income. From October 2007, income from donations and research sponsorship are given as one lump some (reported as ‘Voluntary Income’), and Business Forum membership, the sale of reports and other sources of income are given as another lump sum (reported as ‘Activities for generating funds’).

Financial Statements

Policy Exchange Financial Statements made up to 30 September 2002
Policy Exchange Financial Statements made up to 30 September 2003
Policy Exchange Financial Statements made up to 30 September 2004
Policy Exchange Financial Statements made up to 30 September 2005
Policy Exchange Financial Statements made up to 30 September 2006
Policy Exchange Financial Statements made up to 30 September 2007
Policy Exchange Financial Statements made up to 30 September 2008

On British Muslims

In August 2006 Policy Exchange hosted a seminar the title of which was 'Why Are Britain's Universities Incubating Islamist Extremism?'. It was attended by right-wing figures including Anthony Glees, the author of When Students Turn to Terror; the Scottish academic Tom Gallagher; and the right-wing Irish historian Ruth Dudley Edwards.

In an online article promoting the event and at the seminar itself, Tom Gallagher argued that a main cause of 'radicalisation' amongst young Muslims was not injustice, but that Muslim students are not intellectually capable of achieving in higher education.

Events

In the Dispatches programme ‘Politicians for Hire’, broadcast on 22 March 2010, Patricia Hewitt recommended Policy Exchange, along with Demos, as a think-tank which could be used by corporations seeking to influence government policy. Dispatches had set up a fictional US public affairs company and contacted Hewitt and several senior politicians asking them if they were interested in a position on the advisory board in their London office. Hewitt attended a bogus interview told the undercover reporter:

“Now the think tank and the seminar route I think is a very good one and will remain a good one and so identifying the right think-tank. Policy Exchange is a good one at the moment, Demos is another good one. And saying ok, does that think tank already have a relationship with Minister X? Can we invite Minister X to give a seminar on this subject? Your client would then sponsor the seminar and you do it via the think-tank. And that’s very useful, because what you get for your sponsorship is basically you sit next to the Minister.”

External Resources

Neocon Europe Policy Exchange
Internet Archive Wayback Machine, policyexchange.org.uk

Address

Clutha House
10 Storey's Gate
London SW1P 3AY
Telephone: 020 7340 2650
Fax: 020 7222 5859
Email: info@policyexchange.org.uk