Kenny Ferguson is a former Head of Financial Services Communications at the Treasury, and served as a special adviser to Steve Barclay when the latter was Brexit Secretary.
Last week, Heathrow accused Rishi Sunak of shutting the door on “home-grown” growth with his so-called Tourist Tax. This prompted a moment of déjà vu, followed by a quick Google: hadn’t I, earlier in my career as a consultant, penned an open letter to George Obsorne, on behalf of the British Hospitality Association, urging him to axe this very tax?
Sure enough, I had (though I can only find reference to it online rather than the full text).
That campaign was for a cut in VAT on hotel rooms, tourist attractions, and restaurant meals; it promised to create 78,000 jobs and boost GDP by £2.6 billion over ten years. Heathrow’s campaign promises that scrapping VAT on retail sales for international visitors will likewise add 78,000 jobs, and deliver £10 billion in GDP each year to boot.
Now that we’re in a technical recession, surely the Treasury will be seriously considering this latest proposal ahead of next month’s Budget? Fat chance. This campaign has as much likelihood of succeeding as the one I contributed to in 2012.
If we were to actually see the purported economic benefit of every corporate ask of government I have personally worked on, as a nation we’d be booming; bank the GDP gains promised by every sectors’ lobbying efforts and our economy would probably be bigger than China’s.
The truth is that the economic analysis underpinning these types of claims underplays the displacement effect of stimulating an individual sector. Take job creation an example: if simply cutting taxes for every sector could create tens of thousands simultaneously in each, we’d soon be constrained by the availability of job seekers in the country.
From my time as press secretary to David Gauke and Jane Ellison, when they served as Treasury ministers, I know the short shrift these reports get in government. The institution is a bunker at the best of times, but especially so in the run-up to a Budget; political polls and OBR forecasts are the only real external influences.
Yet there is a whole industry (from which I have benefitted handsomely) devoted to influencing the Treasury. Not just the lobbyists and communications consultants, but also the economic research outfits, whose independent analysis curiously always supports the interests of their sponsors.
What then is the point of Heathrow’s salvo? Not much. Undoubtedly the CEO and Head of Comms will be pleased with the media coverage, and I do believe that the perennial public lobbying ahead of every fiscal event contributes to healthy debate about our national priorities. But that’s as far as it goes.
While I was covering tax policy at the Treasury, there were two instances where overt external pressure affected change. One, during Phillip Hammond’s chancellorship, was the reversal in rise in Class 4 National Insurance contributions in 2017.
I remember the morning after the Budget where it was announced vividly. I arrived at my desk on the fourth floor of One Horse Guards Road and was immediately greeted by a hurried call from the Downing Street press office demanding lines for that morning’s lobby on why the tax change did not breach pledges in the 2015 manifesto to not raise Income Tax, National Insurance, or VAT.
These proved to be insufficient. Pressure from the back benches and the Sun, which decried the perceived attack on self-starting entrepreneurs, saw a u-turn a week after the Budget.
(Looking back now, the moment was highlighted the fragility of relationships between government and the parliamentary party, and Nos 10 and 11, that were to prove tricky as the Brexit process wore on.)
The other was relating to a technical oversight during the 2016/17 Business Rates revaluation.
After the details of the imminent revaluation were published, I was inundated by calls from the Daily Mail, Daily Express and Daily Telegraph with examples of butchers, bakers, and candlestick makers around the country that were about to go out of business; Katie Morley, now consumer champion at the Telegraph, was especially tenacious and a great sparring partner.
For weeks, we stuck to our lines, certain that the small business reliefs should protect the types of businesses being highlighted. We were wrong. An unnoticed glitch in the multiplier to calculate rates meant a significant uplift in liabilities for small firms on the wrong side of the cliff edge.
In both instances, it was the power of emotive individual stories – of plucky entrepreneurs being crushed by the overweening state – that drove the media coverage and MP letters.
After my return to corporate lobbying, I was often perplexed and frustrated when clients would not accept that dry economic analyses were unlikely to motivate policymakers to change course, when human stories and powerful case studies might. Decision-making is driven as much by emotion as by rationale; big numbers might have a certain appeal, but their effect is compounded by examples of how real people are affected.
A third example demonstrates the underappreciated lack of homogeneity between and within departments. The Soft Drinks Industry Levy, or Sugar Tax, announced in George Osborne’s 2016 Budget was under severe pressure by the time it was due to be legislated for in the subsequent Finance Bill.
The sector was winning the public argument that the tax was regressive; May-era advisors focussed on Just About Managings (remember them?) were opposed to the policy and Hammond’s team were not so invested in it.
Working with Treasury policy officials and Jane Ellison we assembled a range of health charities to highlight in the media how poor kids were disproportionately harmed by too much sugar, and used the weight of coverage to persuade bosses to stay the course. Again, tugging on heartstrings helps.
In the final stretch before a budget (at least when I was there) press office leads and spads robustly run challenge sessions with officials to test for any unforeseen effects of policies on groups and constituencies with salience in the media or Parliament.
Rather than (or at least in addition to) splashing the cash on dry economic analysis to provide big numbers, corporates and others looking to affect government policy can more powerfully demonstrate the tangible positive impact they will have on real people.
The most consequential example of how big numbers can fall flat actually comes from the Treasury itself. Its 2016 analysis that each household would be £4300 worse off each year due to Brexit – a sum utterly meaningless to the huge number of people in the country who have never seen that amount of money at one time – totally fell flat.
To outsmart an opponent, it pays to study them.
Kenny Ferguson is a former Head of Financial Services Communications at the Treasury, and served as a special adviser to Steve Barclay when the latter was Brexit Secretary.
Last week, Heathrow accused Rishi Sunak of shutting the door on “home-grown” growth with his so-called Tourist Tax. This prompted a moment of déjà vu, followed by a quick Google: hadn’t I, earlier in my career as a consultant, penned an open letter to George Obsorne, on behalf of the British Hospitality Association, urging him to axe this very tax?
Sure enough, I had (though I can only find reference to it online rather than the full text).
That campaign was for a cut in VAT on hotel rooms, tourist attractions, and restaurant meals; it promised to create 78,000 jobs and boost GDP by £2.6 billion over ten years. Heathrow’s campaign promises that scrapping VAT on retail sales for international visitors will likewise add 78,000 jobs, and deliver £10 billion in GDP each year to boot.
Now that we’re in a technical recession, surely the Treasury will be seriously considering this latest proposal ahead of next month’s Budget? Fat chance. This campaign has as much likelihood of succeeding as the one I contributed to in 2012.
If we were to actually see the purported economic benefit of every corporate ask of government I have personally worked on, as a nation we’d be booming; bank the GDP gains promised by every sectors’ lobbying efforts and our economy would probably be bigger than China’s.
The truth is that the economic analysis underpinning these types of claims underplays the displacement effect of stimulating an individual sector. Take job creation an example: if simply cutting taxes for every sector could create tens of thousands simultaneously in each, we’d soon be constrained by the availability of job seekers in the country.
From my time as press secretary to David Gauke and Jane Ellison, when they served as Treasury ministers, I know the short shrift these reports get in government. The institution is a bunker at the best of times, but especially so in the run-up to a Budget; political polls and OBR forecasts are the only real external influences.
Yet there is a whole industry (from which I have benefitted handsomely) devoted to influencing the Treasury. Not just the lobbyists and communications consultants, but also the economic research outfits, whose independent analysis curiously always supports the interests of their sponsors.
What then is the point of Heathrow’s salvo? Not much. Undoubtedly the CEO and Head of Comms will be pleased with the media coverage, and I do believe that the perennial public lobbying ahead of every fiscal event contributes to healthy debate about our national priorities. But that’s as far as it goes.
While I was covering tax policy at the Treasury, there were two instances where overt external pressure affected change. One, during Phillip Hammond’s chancellorship, was the reversal in rise in Class 4 National Insurance contributions in 2017.
I remember the morning after the Budget where it was announced vividly. I arrived at my desk on the fourth floor of One Horse Guards Road and was immediately greeted by a hurried call from the Downing Street press office demanding lines for that morning’s lobby on why the tax change did not breach pledges in the 2015 manifesto to not raise Income Tax, National Insurance, or VAT.
These proved to be insufficient. Pressure from the back benches and the Sun, which decried the perceived attack on self-starting entrepreneurs, saw a u-turn a week after the Budget.
(Looking back now, the moment was highlighted the fragility of relationships between government and the parliamentary party, and Nos 10 and 11, that were to prove tricky as the Brexit process wore on.)
The other was relating to a technical oversight during the 2016/17 Business Rates revaluation.
After the details of the imminent revaluation were published, I was inundated by calls from the Daily Mail, Daily Express and Daily Telegraph with examples of butchers, bakers, and candlestick makers around the country that were about to go out of business; Katie Morley, now consumer champion at the Telegraph, was especially tenacious and a great sparring partner.
For weeks, we stuck to our lines, certain that the small business reliefs should protect the types of businesses being highlighted. We were wrong. An unnoticed glitch in the multiplier to calculate rates meant a significant uplift in liabilities for small firms on the wrong side of the cliff edge.
In both instances, it was the power of emotive individual stories – of plucky entrepreneurs being crushed by the overweening state – that drove the media coverage and MP letters.
After my return to corporate lobbying, I was often perplexed and frustrated when clients would not accept that dry economic analyses were unlikely to motivate policymakers to change course, when human stories and powerful case studies might. Decision-making is driven as much by emotion as by rationale; big numbers might have a certain appeal, but their effect is compounded by examples of how real people are affected.
A third example demonstrates the underappreciated lack of homogeneity between and within departments. The Soft Drinks Industry Levy, or Sugar Tax, announced in George Osborne’s 2016 Budget was under severe pressure by the time it was due to be legislated for in the subsequent Finance Bill.
The sector was winning the public argument that the tax was regressive; May-era advisors focussed on Just About Managings (remember them?) were opposed to the policy and Hammond’s team were not so invested in it.
Working with Treasury policy officials and Jane Ellison we assembled a range of health charities to highlight in the media how poor kids were disproportionately harmed by too much sugar, and used the weight of coverage to persuade bosses to stay the course. Again, tugging on heartstrings helps.
In the final stretch before a budget (at least when I was there) press office leads and spads robustly run challenge sessions with officials to test for any unforeseen effects of policies on groups and constituencies with salience in the media or Parliament.
Rather than (or at least in addition to) splashing the cash on dry economic analysis to provide big numbers, corporates and others looking to affect government policy can more powerfully demonstrate the tangible positive impact they will have on real people.
The most consequential example of how big numbers can fall flat actually comes from the Treasury itself. Its 2016 analysis that each household would be £4300 worse off each year due to Brexit – a sum utterly meaningless to the huge number of people in the country who have never seen that amount of money at one time – totally fell flat.
To outsmart an opponent, it pays to study them.