PR agencies rocked by Government's public sector spending crackdown

Consultancies feel the effects as cuts to Government comms spending kick in.

At risk: public health campaigns
At risk: public health campaigns

The Government's crackdown on public sector spending is taking its toll on the PR industry with agencies reeling from profit warnings and redundancies.

Freshwater, the AIM-listed comms consultancy, issued a profit warning to the stock market on Tuesday morning, blaming a drop in fee income from the NHS.

The firm has seen revenue from the NHS collapse from £225,000 a quarter to just £25,000.

Heavy cuts in public sector income have also caused Fishburn Hedges to make ten redundancies in recent weeks. All those affected worked on public sector accounts, including associate directors.

The cuts in government comms spending, although widely trailed, have caused anger owing to their unprecedented severity.

Freshwater chief executive Steven Howell argued the comms industry was suffering a 'disproportionate attack'.

He told PRWeek: 'PR is being stigmatised by the way in which these cuts are being made. The Government seems to equate PR with waste.

The word "consultancy" is almost a form of abuse in some people's vocabulary.'

Fishburn Hedges MD Fiona Thorne commented: 'There's a sense that we now know how bad public sector cuts are going to be. It's been every bit as tough as everyone thought it was going to be.'

The Cabinet Office revealed earlier this month that Government spend on advertising and marketing was down an estimated 52 per cent in June compared with the same period in 2009, resulting in the COI slashing its headcount by 40 per cent.

Numerous comms staff in bodies such The Audit Commission and the UK Film Council are also expected to lose their jobs following Tory plans to scrap a host of quangos.

The toll on jobs

3 August: The freeze on non-essential advertising and marketing spend results in the COI making 287 redundancies

22 July: Forster announces it is entering into a period of consultation as it anticipates redundancies owing to public sector budget cuts

16 July: Kindred plans to make redundancies that could see a third of its 80-plus staff leave

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