UK: THE PRICE OF PERSUASION.

UK: THE PRICE OF PERSUASION. - In spite of the time and money spent on it, lobbying is still seen by many as an activity both shadowy and slightly disreputable.

by Tom O'Sullivan.
Last Updated: 31 Aug 2010

In spite of the time and money spent on it, lobbying is still seen by many as an activity both shadowy and slightly disreputable.

Sitting behind a curtain in a London restaurant the members of the British Producers and Brand Owners Group (BPBOG) looked like any other office party. It was a Tuesday evening in early July and the next day's train strike had dashed hopes of a full turnout. But the group, whose roll-call reads like a Who's Who of branded goods manufacturers, was not discussing summer holidays. The meeting was billed as a 'policy and strategy conference' and had been called to plot the next step in the group's faltering campaign to outlaw so-called 'copycat' brands.

The BPBOG was created in January, with a membership spanning Grand Metropolitan, Mars GB, Procter and Gamble and its bitter rival, Unilever. Its mission was to amend the Trade Marks Bill on its passage through Parliament to include a ban on the copycats which manufacturers claim deliberately imitate existing brands, leech on their marketing spend and steal their sales.

The meeting was, according to insiders, a rather hurried affair. The restaurant insisted that the group take its seats by eight o'clock, which left just two hours for discussion. Most of the time was swallowed up by an assessment of the group's legal position, leaving little opportunity to discuss where the campaign had gone wrong or what to do next.

Though brief, the troubled history of the BPBOG offers other lobbyists a salutary lesson - and illustrates just how badly some need to sharpen their political acts. It had been conceived as the vehicle for a short, sharp exercise in single issue campaigning. Instead, through two elementary errors in its first three months of life, it unwittingly created a lobbying fight that could last five years - and which, in some quarters, is already being dubbed the 'Sunday Trading' of the '90s.

The group's first mistake was in acting too late. Despite a three-year consultation period before the Bill was introduced to the House of Commons in November 1993, the manufacturers - either through apathy or inertia - failed to take any action. The second was in the BPBOG's attempt to compensate for its earlier neglect by mounting a campaign that was, if anything, too loud and too vigorous. It painted an apocalyptic picture of the future for brands and threatened that manufacturers would withdraw investment from the UK if there was no law to ban 'lookalikes'. Such a stand made it easy for the group's main opponents, the British Retail Consortium and the Consumers Association, to cast it as a collection of bullies seeking anti-competitive advantage to justify inflated prices. It also forced the Government into a position where it was impossible for it to arrive at a compromise without being accused of surrendering the consumer's interests to its 'friends' in big business. Hence, when it became politically damaging to side with the brand owners, the then DTI minister, Patrick McLoughlin, dismissed their case.

Ironically, Government insiders admit that if the group had formed just a year earlier it probably would have won. 'There is support for the case,' says one DTI source, 'but the group failed to educate the department about the problems until the eleventh hour. The brand owners have missed an opportunity and it may be a long time before they get another.' The BPBOG's failure is given added poignance by the fact that none of its members lacked lobbying experience. In the worst case, the revenues lost through its error could run into billions of pounds.

Whether it is BT arguing to be allowed to open up its information superhighways, the BBC winning its case for charter renewal or BA complaining bitterly about a £2.4 billion European subsidy to Air France, few areas of business are untouched by the mechanics of lobbying. For the most part, however, it is an activity that figures low on a company's list of priorities. Many tend to see lobbying as a 'distress purchase' rather than part of a long-term strategy. And, typically, if they do lobby or, as is more common, retain someone to lobby for them, they are often loathe to admit it. Instead, like some black art, it is concealed behind a whole canon of corporate codewords; 'dialogue with Government', 'strategic communications with opinion formers' or the catch-all 'public affairs'.

John Wybrew, Shell UK's public affairs and planning director, confirms such sensitivity. 'We don't lobby,' he insists. 'The word has pejorative connotations. We contribute to the development of policy and regulation either directly or through a trade association to MPs, ministers and officials. It is a vitally important activity and we do it directly, not covertly, through a lobbying company or tame MPs.' Wybrew, who spent three years on the receiving end as a member of the Downing Street Policy Unit, is well aware that the current era of Conservative government has seen lobbying come of age. Privatisations, deregulated markets and increasingly global competition have all offered companies greater opportunities to put their case and, in turn, have prompted many to develop keen political antennae. Despite its prevalence, however, the image of lobbying as a shadowy and slightly disreputable activity persists.

'There is still a big mystery,' claims Ian Birks, Gallaher Tobacco's general manager of corporate affairs. 'People like to think of lobbyists in dimly lit rooms littered with empty champagne bottles and cigar smoke - if only life were that interesting. I have no doubt that as we speak some lobbyist somewhere is overstepping the mark, just as other people in other walks of life are doing the same. But this idea that it is all about hidden persuaders is, 99% of the time, just lunatic.' Lunatic or otherwise, it is an image for which the clients themselves are partly to blame. 'Companies are still reticent to admit they indulge in lobbying,' confirms Gerry Wade, who spent 25 years representing IBM in the UK, Brussels and Washington and now, as a partner at Bruce Naughton Wade, advises companies on how to lobby effectively. 'They feel uncomfortable or guilty about it and aren't good at articulating why they lobby or at putting it into a business context.' They are also, he notes, 'attached to this belief that when something happens they must rush off and talk to loads of MPs'.

For most companies the options are invariably wider. They can either do their own lobbying, use an industry body, trade association or coalition (as in the woeful case of the BPBOG), hire a specialist agency to do it for them or retain an MP to gain Parliamentary access.

Alternatively, they can do nothing, cross their fingers and hope that any new law leaves their businesses unscathed.

The latter, unsurprisingly, has few advocates. 'A single piece of legislation can make or break a company,' warns Peter Luff, Tory MP for Worcester and former full-time lobbyist. 'Companies should always lobby, especially in an area of business clearly related to Government such as defence, aerospace or pharmaceuticals.' At the very least, he says, 'any reasonable-sized company should keep a watching brief'.

Luff, who still acts as a consultant to Sir Tim Bell's Lowe Bell Comunications, representing, among others, Securicor, Salomon Brothers and the Chamber of Shipping, is critical of the amount of what he terms 'bad lobbying'. 'There's still too much paper, too much entertainment and too much concentration on MPs rather than civil servants, officials and the departments.' Typically, the amount spent on entertainment draws the most attention; tales of wasted hospitality and meaningless briefings are legion. In 1989, for example, the newly-privatised PowerGen held a £30,000 champagne reception at the Labour Party conference at a time when the people's party still wanted the company strangled at birth. Twelve months later, again at the Labour Party conference, companies booked lavish receptions at Blackpool's Imperial Hotel without realising that its owners, Forte, were involved in an industrial dispute with staff and that no Labour politician would cross the threshold. This month's party political conference season will inevitably throw up more examples, with companies expected to spend more than £1 million during two weeks at the seaside on exhibitions, receptions, lunches and 'hospitality'.

The practice of retaining MPs as consultants - estimated to account for £6 million of the annual £80 million spent on lobbying in the UK - is no less contentious, particularly in the wake of the 'cash for questions' inquiry sparked by the Sunday Times last July. Aside from matters of ethics, however, many dispute their use on the simple grounds of effectiveness. Perhaps surprisingly, Peter Luff is among them. 'Some companies enjoy having access to a Parliamentarian,' he says, 'but quite often it is a waste of money. MPs give a feel for the way in which an issue may develop politically but have very little direct power.' Luff's argument is echoed by other MPs, including Sir Geoffrey Johnson-Smith, chairman of the House of Commons Select Committee on Members' Interests. 'It is naive and far too narrow to assume that MPs are the only route,' says Johnson-Smith, consultant to Eagle Star, Philips Communications Systems and holder of two non-executive directorships. 'But they can be a good source of information and provide a guide to the strength of feeling in the political corridors affecting an industry.' Yet if MPs are simply weather vanes of political opinion, their attentions are expensive - annual consultancy fees range from £3,000 to £25,000 - and their efforts, when too visible, often counterproductive. Once hired, MPs are also notoriously difficult to shake off. Ironically, a newly formed group of commercial lobbyists, the Association of Professional Political Consultants, refuses membership to agencies who retain MPs.

Faced with the dubious value of a presence in Parliament, companies might seek better service from agencies offering similar early-warning systems or by initiating their own activities. Alternatively, they can use a third party agency to conduct a 'political audit' to determine their specific lobbying needs. Charles Clarke, a former aide to Neil Kinnock, offers such a service through his firm, Quality Public Affairs. He rarely recommends hiring specialist agencies, the bulk of which he holds in contempt. '(In Kinnock's office) I was amazed at how incompetent much of the lobbying was, even from international companies. We had a rule not to talk to lobbying firms and only dealt with the companies themselves. The firms pretend that it is only through them that you can get access.' It is, he says, 'an expensive nonsense'. Such mystique seems endemic at Westminster and Whitehall, serving the purposes of politicians as much as anybody else.

So how does a company judge if it is getting its money's worth? Chris Davies, BAA's head of Parliamentary affairs, offers a blunt rule of thumb. 'If a company is spending a lot of money on lobbying then it is probably wasting it,' he says. 'Lobbying per se should be very cheap because you're only targeting a small audience.' BAA's current audience, however, is formidably wide. In seeking to quell opposition to plans for a £1-billion fifth terminal at Heathrow its activities must extend beyond the Department of Transport and encompass the DTI, employment and environment. Davies refuses to disclose how much this costs but, with a full-time in-house unit, a specialist agency, a retained MP and the newly-hired services of former environmental campaigner Des Wilson, BAA appears well prepared.

Its efforts are unlikely to go unnoticed. Recent cross-party research by Access Opinions, part of Market Access International, shows that MPs believe 60% of lobbying to be 'effective' (a term that covers everything from an actual change in the law to a politician listening and finding the lobbyist's information useful). On a sector-by-sector basis it also found lobbying by the pharmaceutical, oil and chemical industries to be the most professional. Overall, however, its figures suggest that, of the estimated £80 million spent on lobbying every year, more than £35 million is wasted.

What does emerge is that lobbying campaigns typically fail when their objectives are imprecise. The key, it seems, is to get into the debate early with clear aims. In 1992, for example, the European Commission issued a directive that restricted the availability of certain pharmaceutical ingredients to 'prescription only'. The Proprietary Association of Great Britain, which represents makers of over-the-counter pharmaceuticals, acted swiftly and, through a carefully co-ordinated campaign, was able to amend the directive successfully. Its efforts saved the drug companies an annual £100 million.

It is a fact which the BPBOG, back at its by-now sober dinner table, might wish to forget. With the opportunity to secure fresh legislation anything up to five years away and its brands still under siege from copycats, it will have plenty of time to add up the bill.

THE EUROPEAN DIMENSION

As president of the EC, Jacques Delors turned Brussels into a lobbying mecca. In the last 10 years the lobbyist population of the Belgian capital has trebled in size to 10,000 as the Commission has grown in legislative importance. It is ironic, then, that Delors's departure and his replacement by Jacques Santer next January coincides with a dilution of Brussels'importance.

Before the Single European Act was formally adopted in 1993, it was possible to lobby a national government, in tandem with the European institutions, to oppose an unpopular directive or piece of legislation. That, in the vast majority of cases, is no longer effective. Now, to win a lobbying battle at the Commission or Parliament it is necessary to lobby across the national state parliaments as well.

As a result, companies and trade organisations must co-ordinate pan-European campaigns to influence the all-important Council of Ministers, the 12-member body which holds the final legislative say. Often these coalitions are built across not just geographic but also industry borders.

'It is essential to bring together opinions from across Europe because an individual company will not be listened to,' says Gallaher Tobacco's Ian Birks, who last year, along with representatives of the other tobacco firms, publishers and the advertising industry, successfully opposed a Europe-wide ban on tobacco advertising. The coalition strength was in uniting around the idea that the ban posed a huge threat to marketing freedoms and, more critically, to industry revenues. 'We might be killing each other in the market place,' says Birks, 'but if there is a common problem then we will act together. It is no longer just about Westminster, Whitehall or even Brussels - when you lobby you now have to take Bonn, Paris and all the other capitals into account.'

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