FEATURE 

When you have right on your side

Last year, the publishing industry won its long running campaign to get VAT on its digital output zero rated. It was the result, says James Evelegh, of a hugely effective lobbying effort.

By James Evelegh

When you have right on your side

“Politics is the art of the possible,” said the nineteenth century German chancellor, Otto von Bismarck. He might just as well have been talking about lobbying.

Attempts by vested interests to affect government policy are more likely to prove successful if they are a) possible b) in line with government policy and c) the “right thing to do”.

The sustained lobbying effort from the publishing sector, backed by the Professional Publishers Association (magazines), News Media Association (newspapers) and Publishers Association (books), ticked all those boxes in their successful campaign to get the VAT charged on digital publications zero rated, in line with print publications.

Publishers still bear the scars from the many years having to add VAT to one part of their output but not the other, and the administrative summersaults they had to perform to account for it properly.

Owen Meredith: It was an “unfair and illogical” tax.

This disparity in VAT regulations meant that “a huge swathe of complexity and bureaucracy built up within publishing businesses and that was also taking away investment from journalism as well as pushing up prices for consumers,” said Owen Meredith, CEO of the PPA.

It is indeed sobering to consider just how many non-productive hours were ultimately wasted in adapting subs management and accounting systems, to say nothing of the lost revenues.

You will recall the huge sigh of relief when Chancellor Rishi Sunak announced in last year’s budget that digital publications would be zero rated from December and the equally big sigh when that date was brought forward to 1 May, in response to Covid.

As a rule, chancellors don’t give up tax revenue lightly; indeed, I recall a guest speaker at the PPA Festival as recently as 2019, saying that, in his opinion, it just would never happen. Period.

Well, it did, and hats off to the phenomenal lobbying work done by the PPA and the other industry associations.

A huge swathe of complexity and bureaucracy built up within publishing businesses.

How they did it

So, why did their lobbying work ultimately prove successful?

According to Owen, effective lobbying campaigns have certain characteristics:

  • They are persistent and play the long game. Government policy does not change overnight. Owen joined the PPA as a junior lobbyist in 2014 and VAT was at the top of his to-do list back then.
  • They are led by people who know their way around the corridors of power. In a previous life, Owen worked as a senior parliamentary advisor for four years. Just prior to Sunak becoming chancellor, he met with him face to face to make his case. You’ve got to know which buttons to press.
  • They choose the right fight. The VAT fight was winnable. Owen saw it as an “unfair and illogical” tax. “Our tax system has failed to keep up with technology and recognise changing consumers habits in accessing news and information.” Changing the law, therefore, was simply a “technical correction”.
  • They have a clear message and a unified voice. The PPA, NMA and PA worked closely together to make sure everyone was singing from the same hymn sheet and couldn’t be played off against each other. “If you've got different parts of the industry presenting slightly conflicting messages, it’s easy for politicians to say, ‘you guys don’t know what you’re after, so why don’t you think about it first and come back to us’.”
  • They play it smart. If you can couch your policy aims in the language of the government’s own agenda (“abolish the reading tax to help with levelling up” etc etc), you’re more likely to get a hearing.

Successful lobbying is not a question of flashy pyrotechnics and shouting the loudest – it’s about doing the serious groundwork, getting your ducks all in a row and sticking at it.

This successful approach bodes well for the tough but hopefully winnable lobbying efforts ahead for the publishing industry, over big tech’s stranglehold on digital advertising and use of publisher content.

It was recently announced that Owen was leaving the PPA, although he’s staying in the publishing sector – just swapping trade associations. In June, he takes over from David Newell as CEO of the News Media Association, so, indirectly, magazine publishers will continue to benefit from his lobbying skills as the industry as a whole limbers up for future legislative battles.

Just as publishers had right on their side in the VAT fight, so too do they have it when it comes to big tech.

The big tech companies display monopolistic tendences, do not pay their fair share of tax, and are not subject to the same onerous regulation that publishers are.

“There isn't a level playing field and there is too much power in the hands of a few large tech platforms,” said Owen.

Of course, the tech platforms won’t be short of cash to throw at lobbying efforts of their own, but the publishing sector last year proved what an effective campaigning force it can be. Game on!

Our tax system has failed to keep up with technology and recognise changing consumers habits.

You can hear Owen Meredith being interviewed by Ciar Byrne on a recent episode of The InPublishing Podcast, which was sponsored by AdvantageCS, a leading global provider of subscription and membership management software.

This article was first published in InPublishing magazine. If you would like to be added to the free mailing list, please register here.