'It could make PR less dynamic' - agency bosses digest Autumn Statement

As the Government attempts to tackle vast economic difficulties faced across the UK, yesterday’s Autumn Budget announcement has put pressure on everyone, the PR industry included. So what can we expect from the following few months?

Chancellor of the Exchequer Jeremy Hunt announced the Autumn Statement in the House of Commons yesterday (Future Publishing/Contributor/Getty Images)

As a result of the Chancellor’s announcements, more people will pay the highest rate of tax, as the threshold is cut from £150,000 to £125,140. Meanwhile, income tax and national insurance thresholds have been frozen until April 2028, leading many to pay higher rates as their wages rise to meet cost-of-living requirements.

“Prolonged freezes in tax thresholds, selective current and deferred tax increases, plus substantial commitments to public sector spending will all have wide-ranging impacts,” summarises Heather Blundell, Ketchum’s UK head of corporate and EMEA chief growth officer.

“For those of us in the PR and comms industry, it makes no difference whether our clients operate in retail, infrastructure, finance, manufacturing or big tech – you name it, the announcement will have a significant impact on their businesses and their employees. As communications experts, we must be prepared to adapt swiftly to clients’ changing needs as we help them to navigate this challenging economic environment.

“Whether we are guiding them on the importance of more empathetic communications, helping them to overcome unforeseen crises, or providing strategic advice and counsel on how best to deliver essential change in their organisations, the role of our own industry will undoubtedly remain a crucial one.”

When it comes to ensuring PR’s longevity, it is key to “be careful that the strategic role of PR to deliver long-term brand building platforms is not diminished to short-term tactical product campaigns”, says Ondine Whittington, group managing director at Golin.

“While at present clients continue to spend and new business pipelines appear relatively healthy,” she explains, “we must give our clients the confidence to not completely abandon longer-term brand strategies that will ultimately define how they come out the other side of an economic downturn.”

Whittington acknowledges that PR agencies will face challenges not only with clients, but with their own employees too. On Wednesday, the Office for National Statistics announced that the UK's inflation rate rose to 11.1 per cent in October, a 41-year high.

“Unfortunately this budget will do little to bring comfort to our people, as wherever they fall in the tax bracket the cost-of-living crisis is having a very real and tangible effect, both in their pockets and their mental health,” she says. “We are trying to make a meaningful difference by increasing wellbeing allowances and offering mental and financial health advice, but it feels like the tip of a very big iceberg.”

Entrepreneurial

Luckily for comms, hard times often allow the industry to prove its worth, and now is no exception, says Liam Keogh, founder of Palm PR. “The PR industry is a very entrepreneurial one, and has always benefited because of that.”

In this instance, Marc Woolfson, partner and head of public affairs at WA Communications, says: “Where spending has been protected there is huge pressure to show value quickly - NHS, social care and education in particular. 

“This is a government that needs help,” he continues, spying an opportunity for public affairs.  “Ministers are scrabbling for good news from businesses with solutions that enhance productivity, competitiveness, innovation and economic growth. Those who can communicate an evidence-based, compelling case will have an opening to make their mark.”

Despite this glimmer of hope, Keogh warns of the logistical difficulties posed by the bigger picture, saying: “Changes in the tax structure have the potential to make the sector less dynamic. 

“By stripping the industry and entrepreneurs of incentives, we could see a reduction in the creation of new agencies and even a slowdown in the expansion of existing ones as individuals start wondering whether all that extra work is worth all that extra tax.

Though the comms industry will no doubt serve up its best efforts in spite of any setbacks, Keogh's message to the Government is ultimately that: "If you want to encourage people to produce more, employ more people and grow their businesses, then the tax system must be designed to incentivise this, not to deter it."


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