‘Government by Think Tank’: The Return of Policy Exchange

‘Government by Think Tank’The Return of Policy Exchange

Tom Griffin explores how an ideological reliance on lobbying groups appears to be undermining another Conservative leader

The dramatic rise and fall of Liz Truss last autumn showed the dangers of a government dependent on partisan think tanks. Her successor has not heeded the warning.

Truss’ brief ascendancy was shared by a suite of libertarian think tanks based in Westminster’s Tufton Street, which inspired her policies and were quickly discredited by her fall.

But rather than ending this approach to government, Rishi Sunak has presided over the resurgence of Policy Exchange, the largest right-leaning think tank, for which he himself once worked.

This is an under-rated factor in the malaise of his premiership. ‘Government by think tank’ means private donors are able to influence policy without the scrutiny that comes from funding a political party. While this has obvious dangers for the public, there are also risks for the Conservatives in becoming increasingly beholden to a layer of wealthy activists remote from electoral pressures.

---

Policy Exchange at No.10

Rishi Sunak worked at Policy Exchange in 2014-15, in a role unusually light on policy. The BME research unit, which he headed, produced one substantive piece of work: a useful, but largely descriptive, report on Britain’s ethnic minority communities, with little in the way of recommendations.

Most of the publicity around the report focused on winning over BME voters for the Conservative Party – a set of priorities which must have been congenial to Sunak as a parliamentary candidate but surely stretched Policy Exchange’s charitable remit.

The BME unit does not seem to have long outlasted Sunak’s election as MP for Richmond in Yorkshire in 2015, although the following year Policy Exchange would return to ethnic relations issues in the more combative guise of David Goodhart’s Integration Hub.

While Sunak’s time with Policy Exchange was brief, the donations to his leadership campaign suggest a more substantive relationship. Several supporters were also Policy Exchange funders either individually or through family foundations. Eleanor Shawcross, who gave £20,000, is married to Policy Exchange trustee Lord Simon Wolfson.

Shawcross was a central figure in Sunak’s campaign team and is now his policy chief in Downing Street. A former advisor to George Osborne, her family connections came under scrutiny in 2021, when her father – William Shawcross – became Commissioner for Public Appointments. He told MPs “I will not be doing deals around the dinner table”, but added that “I cannot say that the things I do will never be discussed”.

Sunak’s chief of staff, Liam Booth-Smith, was himself due to become head of policy at Policy Exchange in May 2018, but was appointed as a special advisor to the late Cabinet minister James Brokenshire instead. Other Policy Exchange alumni in No. 10 include John Bew, who has retained his foreign policy brief throughout recent gyrations and whose father heads the House of Lords Appointments Commission.

Policy Exchange’s renewed influence in Downing Street has been matched across government. In a number of areas, ministers with close connections to the think tank are implementing policies first canvassed in its publications.

---

Policy Exchange and the Security State

Although founded in 2002 by Conservative modernisers, Policy Exchange has long been defined by the hardline security policies which shaped David Cameron’s 2010 Munich speech and the subsequent review of the Prevent counter-extremism programme.

The think tank’s director, Dean Godson, has said that the “preference of much of the permanent bureaucracy has been to partner up with a range of ‘credible’ non-violent extremists”, even castigating MI5 for its timidity “in dealing with what used to be called ‘subversion’”.

For much of the Conservatives’ term in office, Policy Exchange’s founding chairman, Michael Gove, has been a key voice in government promoting this concept of non-violent extremism against a narrower Home Office focus on counter-terrorism.

On Islam, he has retained the hardline views of ‘Celsius 7/7’ – the polemic which he launched at Policy Exchange in 2006. Among his first decisions as Sunak’s Communities Secretary was to abandon work on an official definition of Islamophobia. The Government was already resisting the definition put forward by the All-Party Parliamentary Group on Islamophobia, citing strong opposition from “a wide range of organisations”, although three of the four groups named by – “Civitas, Policy Exchange, the Barnabas Fund and the Henry Jackson Society” are right-leaning think tanks.

The Sunak Government’s approach to the Muslim community may instead be set by the independent review of Prevent, carried out by the same William Shawcross whose daughter is a donor and advisor to the Prime Minister. 

Gove was reported last month to be lobbying against Home Office attempts to redact the names of Muslim individuals and organisations from the report, which accuses some Prevent-funded groups of promoting extremism.

The published report cites eight different Policy Exchange reports. Although it relies on the concept of non-violent extremism pioneered by the think tank, it is ambivalent about its application in practice, arguing that while Prevent products “related to Islamist terrorism focus on the most serious material relating to violent Islamist ideology, mostly Islamic State and al-Qa’ida, much of the material covering Extreme Right-Wing falls well below the threshold for even non-violent extremism”. 

This conclusion was strongly criticised by former head of counter-terrorism policing, Neil Basu, who has said that is “driven by a right-wing viewpoint that [Extreme Right-Wing Terrorism] is either unimportant or doesn’t really exist”.

The report’s list of recent terrorist attacks ignores the extreme-right fire-bombing of a Dover immigration centre last November (although this may have occurred after its completion). Policy Exchange’s Dr Paul Stott has argued that the Dover attack is illustrative of a tendency for far-right extremists to be older and more isolated than their Islamist counterparts. Whether that makes the threat any less urgent is open to question.

Home Secretary Suella Braverman, who has accepted William Shawcross’ recommendations, is unlikely to provide the counterweight to Gove that some of her predecessors did.

Last August, she gave a speech to Policy Exchange’s Judicial Power Project, attacking what she called “the judicially-expanded European Convention on Human Rights and the Human Rights Act”. She argued that “the Strasbourg Court has operated to thwart aspects of our domestic policy-making in relation to illegal migration. This conclusion that is aptly demonstrated by the authoritative study for Policy Exchange by John Finnis QC and Simon Murray, and strongly endorsed by Lord Hoffmann”.

According to the Observer, when she became Home Secretary the following month, Braverman asked her officials to look at implementing a Policy Exchange report calling for the resettlement of individuals with accepted asylum claims outside the UK, in defiance of the 1951 Refugee Convention. The Home Office denied the claims, but a member of the team behind the report, Lord Simon Murray, was made a minister in the department under Liz Truss, and remains there under Sunak.

When the Archbishop of Canterbury challenged the policy of deporting asylum seekers to Rwanda in a Lords debate, Lord Murray cited a Policy Exchange paper which defended the theological credentials of the policy against the objections of the major church leaders in the UK. This prompted the Archbishop to respond that “Policy Exchange has a valuable function in provoking ideas, but not always quite as a valuable a function in solving problems”.

Policy Exchange, Downing Street and the Conservative Party did not respond to requests for comment.

Although seen as a counterweight to Braverman, Home Office Minister Tom Tugendhat has also worked with Policy Exchange, co-authoring a pamphlet calling for an updated law of treason. It was reported in January that the Home Office wanted to implement his proposals in the current National Security Bill but was overruled by the Ministry of Justice.

In December, a peer close to Policy Exchange, Lord James Bethell, sponsored an amendment to insert the treason law into the bill, citing Tugendhat’s paper as his inspiration. He failed to win support from his fellow peers, who feared treason prosecutions would give terrorists a propaganda boost without filling a real gap in the law.

During the 2022 Conservative leadership campaign, Sunak himself flirted with one of Policy Exchange’s most far-reaching proposals: withdrawal from the European Court of Human Rights. His government has instead opted for Justice Secretary Dominic Raab’s plan for a British Bill of Rights to constrain the domestic application of international human rights law.

Other attempts to legislate based on Policy Exchange’s claims of judicial over-reach, partly fuelled by post-Brexit litigation, have not gone well. A review of judicial review largely vindicated the existing system, and the resulting Judicial Review and Courts Act was less radical than might have been expected.

The Judicial Power Project has presented itself as defending parliamentary democracy against an American-style constitutional model. Yet it has itself received US funding – an earmarked contribution of $45,000 in 2015 from the New York-based Rosenkranz Foundation.

---

Policy Exchange Abroad

In recent years, Policy Exchange has been a strong supporter of the ‘Indo-Pacific tilt’ in British foreign policy – an approach which reconciles a hawkish approach to geopolitics with post-Brexit disdain for Europe.

The think tank has presented this as the alternative to a paradigm “represented by Chatham House, focused on Europe and advising against a more expansive global role and cautioning against closer ties with India”.

In 2020, a Policy Exchange commission chaired by former Australian Prime Minister Stephen Harper produced a report advocating the shift, with a foreword by Japanese Prime Minister Shinzo Abe. 

It declared victory the following year, in the wake of the Government’s integrated review of foreign and defence policy, led by the Downing Street advisor and Policy Exchange alumnus, John Bew.

Governments in the region have been an important constituency for this policy. A number of those supporting the Policy Exchange vision have links to the Japanese state.

The Japan Foundation is a major funder of the King’s College London Japan Programme, the director of which – Alessio Patalano – has written a number of Policy Exchange reports on the Indo-Pacific Tilt. Dr Patalano told Byline Times: “The Japan Foundation funding is related to the development of Japan studies in other disciplines, with no correlation to UK policy.”

Policy Exchange’s idea of an Indo-Pacific Charter modelled on the Atlantic Charter has also received support in the House of Lords from Viscount Hugh Trenchard, a consultant to the Japan Bank for International Co-operation.

While Policy Exchange has claimed that the war in Ukraine reinforces the need for the Indo-Pacific tilt, others have argued the policy undervalues the land-based capabilities relevant to European security. The Commons Foreign Affairs Committee has criticised the terminology adopted by the Integrated Review, arguing that “the term ’tilt’ implies a tilt away from something; in other words, away from Europe towards the Indo-Pacific. This is not the message the UK should be sending to the world”.

---

Policy Exchange At Home

In the early 2010s, Policy Exchange was one of a number of think tanks promoting the notion of “a public sector pay premium”, arguing that public servants received higher wages than private employees in the same sectors.

Trade unions argued that Policy Exchange did not compare specific roles, ignoring the generally higher levels of responsibility in the public sector. The ‘pay premium’ concept has nevertheless contributed to repeated public sector pay freezes over the past decade.

Policy Exchange’s health team was, until recently, headed by Robert Ede, who was appointed as a special advisor at the Department of Health and Social Care last November. The following month, Policy Exchange published a paper on vaccines policy which Ede co-authored.

The report praised the successes of the NHS Foundry platform during the pandemic and recommended an expansive version of the Federated Data Platform, for which the NHS is currently tendering. The findings on data were endorsed by Palantir, a US tech company which has sponsored Policy Exchange at several recent Conservative conferences.

Although Palantir’s US Chairman Peter Thiel has described British attachment to the NHS as “Stockholm syndrome”, the company has big ambitions in UK healthcare. Palantir provided the NHS Foundry platform and reportedly considers the Federated Data Platform a “must-win” contract. However, some NHS data workers have expressed concerns about being locked out of parts of the Foundry system and have questioned whether the FDP offers an advance over open-source tools. Privacy campaigners have also challenged Palantir’s access to NHS data.

Robert Ede is not the first Policy Exchange alumnus at the Department of Health and Social Care, where the think tank’s former communications director, Lord Bethell, was a minister in 2020-21 overseeing COVID contracts during the pandemic. 

While in office, Lord Bethell was reportedly lobbied by David Meller, a Conservative donor who was awarded a £65 million PPE contract. The Guardian noted that Meller was a former Policy Exchange trustee, but Lord Andrew Feldman, the former Conservative Party chairman who reportedly sat in on the phone call as an unpaid advisor to Lord Bethell, was also a sitting trustee.

In education, Policy Exchange has played a central role in promoting free schools, beginning with the 2005 report ‘More Good School Places’. One of the report’s authors, James O’Shaughnessy, would later implement the policy as a Conservative minister in the Lords, working with the Policy Exchange trustee Lord Theodore Agnew, who succeeded the Policy Exchange donor Lord John Nash as Schools Minister in 2017.

The 2015 Policy Exchange report ‘A Rising Tide’ provided the basis for David Cameron’s pre-election announcement that a Conservative government would open 500 more free schools. However, a key claim in the report – that free schools raise the performance of schools around them – was later shown to be statistically flawed.

Reports by Policy Exchange senior fellow Eric Kaufmann have been a defining influence on the current Higher Education (Freedom of Speech) Bill. Yet this work has also relied on questionable statistical evidence. A YouGov poll cited in the report ‘Academic Freedom in the UK’, found that 32% of academics who identify their political views as ‘right’ or ‘fairly right’ have “stopped openly airing opinions in teaching and research”. However, this effectively equates to a third of 10% of a sample of 820 academics, of which 40% were already retired.

On this basis, the government has introduced a bill which free speech groups – including Index on Censorship and English PEN – argue have a chilling effect on expression in universities, the opposite of its professed aim.

---

Policy Exchange in Parliament

Policy Exchange’s influence in Government over the past decade has been reinforced by a growing presence in Parliament. Rishi Sunak’s career demonstrates the think tank’s value as a stepping stone to the Commons. Its founding director, Nicholas Boles, also went on to become an MP in 2010, eventually serving as Skills Minister under David Cameron.

Yet, what is most striking, is the ease with which Policy Exchange donors have transitioned into the Lords – sometimes, as in education, as a prelude to ministerial office overseeing sectors where they retain active involvement.

Policy Exchange director Dean Godson himself entered the Lords in 2020, earning a Conservative political peerage while continuing to lead a think tank which is obliged to remain independent of any political party.

Despite the growing contingent of Policy Exchange peers, the Lords’ role as a revising chamber means the predominance of think tanks in legislation has often received more scrutiny there.

In 2020, Labour peer Viscount Handsworth complained that the Civil Service had been sidelined, resulting in situations where “a neophyte, perhaps a recent Oxbridge graduate who is eager to impress his political masters, is put in charge of policy formulation. The result is liable to be a proposal with a strong political coloration that is devoid of practicality and careless of the plight of the people on whom it might impinge”.

In relation to the Higher Education (Freedom of Speech), Liberal Democrat peer Lord William Wallace observed that “the Policy Exchange publications rely heavily on US examples of university behaviour, including references to extreme right-wing US sources. This is cultural war, imported from the United States and, for all I know, partly financed from the United States, since Policy Exchange does not publish where its funding comes from”.

---

Policy Exchange Funding

While Policy Exchange funding is opaque, some is disclosed by donors and some is known to come from the United States.

Its income in the financial year ending 2021 was £3,396,554. The vast majority of this – £2.96 million – came from donations and legacies. 

The Policy Exchange Business Forum provides a vehicle for corporate donations. Ministers and special advisors have declared attendance at a number of Business Forum events in recent years, but these do not record the identities of any participating companies.

The think tank’s US funding arm – the American Friends of Policy Exchange – also does not declare its donors, although some US corporate and philanthropic funders have declared their contributions. US oil firm Exxonmobil donated $30,000 in 2017, funding which the Guardian linked to Policy Exchange’s support for the criminalisation of climate protestors.

Major UK philanthropic donors in recent years have included: the David and Claudia Harding Foundation which gave £450,000 in 2020; the Law Family Charitable Foundation which gave £175,000 in 2021; and the Charles Wolfson Charitable Trust which gave £100,000 in 2020, having previously given £385,454 in 2018. 

All of these are associated with trustees of the think tank. Andrew Law is a hedge fund financier, whose wife Zoë Law chaired the Conservative Party’s fundraising Black and White Ball in 2015. Simon Wolfson, chairman of Next and husband of Eleanor Shawcross-Wolfson, is also a major Conservative donor. As is David Harding, the founder of investment firm the Winton Group.

Throughout Policy Exchange’s history most Policy Exchange directors and trustees have been closely aligned with the Conservatives. Among donors, one recent exception has been John Armitage of Egerton Capital whose charitable trust gave £100,000 to Policy Exchange in 2016. Armitage donated £12,500 to Labour Leader Keir Starmer in 2022, having previously given £500,000 to the Conservatives during the 2017 General Election.

While Policy Exchange often engages with opposition politicians – an exercise which appears to burnish the non-partisan credentials of both sides – there is otherwise little sign of the think tank hedging its bets when it comes to real power within the organisation.

---

The Danger of Donor-Activists

The dramatic unravelling of the Truss-Kwarteng budget in autumn 2022 exposed the weaknesses of ‘government by think tank’. Yet while events forced a rapid turnover of policy and personnel, the systemic problem remains.

Think tanks provide wealthy donors with more direct influence over policy formation with less scrutiny than direct party donations. When think tank and party donations go together, as they often do, donors may able to promote the policies they helped formulate as non-executive members of departmental boards or even as ministers in the House of Lords.

While the conflicts of interest in such a situation are obvious, the risks for the Conservative Party itself are less often considered.

In the past, Conservative ministers, sitting at the apex of the Civil Service and party machinery, were in a strong position to determine when and how to satisfy their supporters. The increasing policy influence of think tanks moves some of this initiative to donors themselves – a shift which is particularly difficult to reverse when donors become directly involved in policy implementation. 

Such donor-activists may have sectional interests quite distinct from Conservative voters at large and are insulated from the direct electoral pressures that face MPs. This may explain the appetite of think tanks for picking battles with large swathes of civil society, and even of the state-machinery itself, engaging in open-ended ‘culture wars’ without an obvious electoral pay-off.

Some Conservative MPs have blamed the disconnect between the party’s election-winning ‘levelling-up’ rhetoric and its record in government on resistance from the Civil Service ‘blob’. In fact, the problem may be as much with a ‘blue blob’ of right-wing think tanks remote from ‘Red Wall’ voters.

The Conservatives now face a crossroads similar to the Lib Dems in 2010, when the party chose to abandon its urban voters won from Labour, in favour of an Orange Book philosophy that was more congenial to their heartland MPs and to a small tranche of wealthy donors. 

The question for Rishi Sunak is whether he can find a way to balance the interests of the Red Wall and the Blue Blob – or whether his ties to the latter will make the outcome a foregone conclusion.

Tom Griffin is a former political editor of the ‘Irish World’, and the author of ‘State Private-Networks and Intelligence Theory: From Cold War Liberalism to Neoconservatism’