Will the Tories really slash the UK COI’s £232m budget?

On the face of it it’s a done deal, the Tories and their putative allies the Liberal Democrats have vowed to cut the UK’s deficit – currently standing at an imposing £167bn – so shaving 20 per cent or so off the Central Office of Information’s generous budget for government ads is one of the many places to start.

The current COI budget is, after all, about 20 per cent more than the country’s next biggest advertiser, Procter & Gamble, spent last year.

The Tories even said, at one point in the election campaign, that they were minded to switch the remuneration of COI agencies to ‘payments by results.’ Which would be all fine and good except that the world’s most experienced advertisers have been trying to do this for years and ended up precisely nowhere.

Au fin de la jour it’s more trouble and expense to work out these deals than is justified by the savings you make. And the incoming UK government might have more pressing demands on its time.

Then there’s the whole issue of forthcoming government cuts and the strikes they are likely to face in the public sector. The obvious recourse for the Government is to deploy some COI budget to oppose the dissidents under the guise that the ad expenditure is ‘information’ for the public.

So, on balance, it’s still probably not as bad as it could be for UK agencies. But the COI can still turn nasty. Its decision to centralise all of its media expenditure into a cobbled-up WPP company recently meant the demise of respected digital media company i-level which lost the media account, its biggest by far.

I-level was disastrously over-borrowed of course after a private equity buyout of its founders. At the time of its demise it owed £39m in real money against £38m in ‘intangible assets.’ But the COI loss was still the killer.

And the COI will certainly spend the remainder of 2010 grinding down agency margins, although even your correspondent would be surprised if it decided to put all the creative work into one agency, maybe at a rate of £20 an hour?

But the talk is of bluff old Ken Clarke emerging as chancellor in a Tory government supported by the Liberal Democrats. Now this is not good news for the COI or its agencies.

Ken, who doesn’t need to court popularity although he likes it rather a lot, might decide on a few quick kills to make the point that the new administration is serious about cutting costs.

What juicier target could there be than the COI? Get rid of the damn thing, nobody would notice apart from a few squeaking agencies. And it’s £232m a year in the bag (although much of this would obviously be re-spent by government departments in the COI’s absence).

Just a thought to be going on with.

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About Stephen Foster

Stephen is a former editor of Marketing Week and London Evening Standard advertising columnist. He wrote City Republic for Brand Republic and is a partner in communications consultancy The Editorial Partnership.