SPECIAL REPORT - In age of austerity, lobbyists prosper

A damaged sign hangs over a closed shopping centre in Birmingham, central England May 13, 2009.

LONDON (Reuters) - Until recently, clients came to London-based political consultant Chris Whitehouse for help in winning government grants and contracts. Now they want advice on how to survive.

There are the charities which face an end to government funding and worry they may cease to exist. There are the big companies whose government contracts are under threat. And there are the smaller businesses dependent on contracts with public bodies such as local councils who have told him nervously that they might face bankruptcy.

You can hear similar concerns in corporate offices and lobbyist meeting rooms across Europe this year. In the face of the worst economic downturn in 70 years, Berlin says it will cut 80 billion euros between 2011 and 2014. Athens has frozen public sector pay, slashed holiday bonuses, frozen pensions and raised the retirement age as it tries to narrow its budget gap to 2.6 percent from 13.6 percent of GDP in 2009 to 2.6 percent by 2014. In London, the coalition government which formed after an election in May says it wants to reduce government spending by 25 percent over the next five years.

As ministers and civil servants pore over budget books and decide what goes and what stays, an army of lobbyists, consultants, companies and campaigners is fighting to hold the line. All face the same problem -- a cacophony of competing interests from admirals trying to protect planned aircraft carriers to health charities fighting for funding for their particular disease to outsourcing firms ready to grab more business.

"You can hear the shiver in their voices," says Whitehouse of his clients. "There are some who really didn't see this coming, who have only just realised they are dealing with a paradigm shift."

'REAL ALARM'

Whitehouse is a former MP's assistant whose first lobbying client was the British Olympic movement as it bid for the 2012 games. New clients make their way to Whitehouse's offices within walking distance of the Houses of Parliament and Whitehall government ministries, hoping he can win them access -- and salvation.

They sit in his conference room with its black and white picture of the Palace of Westminster and flip chart, and tell him their problems.

"No one's cried while I've been in the room," he says. "But there is real alarm."

Rival lobbyist Matt Bryant, director at public affairs firm Connect, agrees the world has changed. Several years ago, he represented a consortium of lighting companies pushing for new street lighting programs. "Now, I suspect it would be a matter of simply trying to keep the lights on," he says.

It's not just a case of a snip here and a snip there. The spending cuts are so large some countries have signaled whole areas of government may vanish.

Public servants and analysts talk about two methods of cutting: a series of "salami slices" -- where pain is shared equally across the state -- or a more fundamental rethinking of what services a government should provide.

Most countries are aiming for a mix. The coalition government in Britain says it is aiming firmly for the latter. "The government's reform agenda is very radical," says Bryant. "But there are also going to be some fantastic new opportunities out there for clients to take advantage of."

GET IN EARLY, MAKE IT SIMPLE

Those likely to survive the battle ahead have made their case early.

Through September, Whitehouse was still receiving frantic requests for advice from companies and other organisations which suddenly realised what was about to hit them. "You should have started two years ago -- and if you didn't, you need to start in the next 24 hours," he says.

What firms like Whitehouse's offer is expertise in the process of policy-making. Whitehouse and his staff -- former advisers to MPs and ministers as well as the occasional ex-civil servant -- will sketch out a "stakeholder map" of the key figures involved in each decision: ministers, senior civil servants, advisers, influential MPs on select committees. Then his team will go to work targeting each stage in the process. Experts in how an MP's office function will target parliamentarians, former civil servants will work on their one-time counterparts while their PR specialist will define the media strategy.

Political lobbyists usually deny that it is purely a matter of contacts, of working through their "mates". But there's no doubt that having the right e-mail addresses and phone numbers helps.

Delivering the message simply and quickly is crucial. The subject of an introductory e-mail should be clearly labelled "MEETING REQUEST", while three paragraphs of text under an organisation's letterhead should quickly convey the matter to be discussed. The most effective approach is to boil your argument down to one side of a piece of A4 paper. "Any longer than that and it will get lost in the noise," says Whitehouse, who estimates a special adviser makes a decision on whether to book a meeting or not in the first three seconds of a request.

GET IN FRONT OF THE MINISTER

Getting the timing right is also key.

It may be too late to meet with some ministers -- and pestering them for their time could prove counter-productive. But for most clients, be they charities or private companies, a ministerial meeting remains the priority. Martin Green, the chief executive of the English Community Care Association (ECCA), says nothing else is the same. It allows groups to make powerful personal cases that speak to every politician's deepest wish -- the desire to be re-elected. "Getting in front of policymakers is absolutely essential," he says. "You can get points across to them in person in a way you can't from a 350 page document. You can give them case studies of the sort of people who might be their constituents."

Representing Britain's private care agencies -- heavily funded by national and local governments to look after disabled, elderly and other vulnerable adults -- Green's industry group has spent the past few months spelling out the dangers of cutting too hard. If too much money is sucked from the system, Green warns, the quality of care will suffer or business models and profitability will collapse.

But he also preaches the potential savings he says his industry can offer if it takes over more work from the state and national health service and local government providers.

Former cabinet minister Paul Boateng -- a former Chief Secretary to the Treasury under Labour Prime Minister Tony Blair's government -- says lobbying is key to informing that process.

"Lobbying is an entirely legitimate activity," he says. "If those three or four key people -- the Prime Minister, the Chancellor, the Chief Secretary and others -- are going to make the right decisions, it is absolutely essential they understand the reality on the ground."

GET WITH THE RHETORIC

If you're going to get anywhere, you have to speak the political language of the times.

Lobbyist Kevin Craig, managing director of PLMR -- which advises Green and his colleagues at the Community Care Association -- says part of the strategy should focus on publicly embracing the rhetoric and government narrative. The worst thing to do right now, he says, is to simply push against the cuts.

Trade unions, the opposition Labour Party and some analysts say the coalition government has proposed much tougher cuts than are genuinely necessary. The country is under less immediate bond market pressure than other troubled European nations such as Greece or Ireland, and some worry the austerity drive might push the economy back into recession.

But even for those who believe this, it may pay to look like part of the government's solution. "Rightly or wrongly, this coalition government has its analysis and that's what you need to be working with," Craig says. "They don't want to hear voices of doom. Being constructive, practical and nonpartisan is the key to success here."

Craig tells clients they need to be ready to show how they fit into the government's vision of a "Big Society" and the drive to "localism", which both emphasise self-reliance and push communities to solve their own problems. Critics say such concepts are nebulous and ill-defined -- threadbare covers for reducing state safety nets. "It's not the job of those I advise to oppose the cuts," says Craig.

The rhetoric can also define where you expend your effort. The push for "localism" means interested parties should lobby much harder at all levels of government, not just at the national level. As well as local councils, there are devolved assemblies in Scotland, Wales and Northern Ireland and numerous semi-independent governmental bodies -- although several of the latter look set to be axed themselves.

"If you're dealing with local authorities, you obviously have more people to talk to," says Whitehouse. "But the basic principle is still the same. You have to make the case as to how you solve their problems and how the local community will benefit."

There are some key differences, however. While ministers and their departments have little choice but to take a nationwide strategic view, local officials have more local pressures. While national government might want a nuclear plant or a major rail yard built for national strategic reasons, local councils may be under pressure to avoid it being built in their backyard. "If a decision on planning permission for projects such as power stations is devolved to local level, it will be difficult," says Connect's Bryant.

SHOW THEM THE SAVINGS

Perhaps the most effective arguments, lobbyists say, is to show how cutting now will prove a false economy in the long run.

Charities such as Leonard Cheshire Disability and the Royal Association for Disability and Rights (RADAR), for example, are arguing that pulling too much funding from support to disabled people will make it harder for them to work. That, they say, will boost unemployment and could ultimately increase the overall welfare bill -- the opposite of the government's stated aim of getting people off incapacity benefit.

Or take Whitehouse client the British Gurkha Welfare Society, which wants additional funding for Nepalese Gurkha soldiers. The Gurkhas have served in the British armed forces since the 19th century and now want equal pension rights to their British counterparts. The soldiers have a clear moral argument -- one they used successfully during the Labour government to win veterans the right to settle in Britain.

But morals carry less weight in such austere times, which is why the Gurkhas have decided to focus on showing how higher pensions could actually save Britain money. If their pensions were higher, the Society argues, more former soldiers would stay at home in Nepal where they would be less of a drain on the British taxpayer. "We think we can say it is ethically right, it won't cost that much and in fact you might actually make a cost-saving," says Whitehouse, who represents the group.

DIFFERENT GROUPS, DIFFERENT METHODS

But what works for one group might backfire for another. Coalition ministers have laid into several state-funded organisations such as the Audit Commission - which monitors local and national government spending -- and the National Film Council, accusing them of using public money to pay lobbyists to push their case with central government. Both organisations say the reality is more complex. If they have lobbied, it appears not to have worked: both are tipped to be abolished.

Whitehouse argues that for a major public sector body to hire lobbyists right now would be ill advised. That puts him at odds with some in his own industry, who have long-standing contracts with a string of public bodies, from police forces to councils -- and who say they are still getting calls.

"For every public-sector body that is concerned about being seen to be lobbying government, there is another that really wants to get their message across," says Connect's Bryant.

For some, there is the option of more direct action. In Ireland, thousands of elderly people marched through the centre of Dublin last year to protest proposed cuts to health and other benefits. The protests worked: the cuts were repealed.

"If, say, you're a disabled group pushing against the cuts, it's simple," says one former minister on condition of anonymity. "Direct action, red paint thrown at the gates of Downing Street. It's embarrassing and it gets results."

But while that might work for a small, defined group able to win public sympathy, it won't be right for everyone. Trade unionists privately acknowledge that they lack the popular support to bring the country to a standstill as they did in the 1970s. There is even less support for anything approaching violent action. The deaths of three people in a burning bank in Athens in May prompted widespread soul-searching even amongst the anarchist movement -- and a considerable fall in the number of people attending protests.

For most, there seems little alternative to working within the system. And that, the lobbyists say, usually means hiring them.

'THE GUYS WITH THE CONTACTS'

Or does it? One former Whitehall lobbyist -- she did not want to be identified talking publicly about the industry -- says it overstates its importance. Many clients, she says, would get the same results by making the approach themselves. "We make them believe they need a third party to make the introduction," she says. "In reality, if the pitch is reasonable and you are an important stakeholder you would almost certainly get the meeting anyway."

To the Gurkhas, though, the advice and backing they get is money well spent. "Obviously it isn't cheap," says Society chairman Tikendra Dal Dewan. "But they are the guys with the contacts. We have been campaigning on this years. You get MPs and ministers and they are very supportive but you never hear anything back. Whitehouse are helping us do better than that. They have done very well getting us in front of MPs and we are looking for a meeting with the Prime Minister."

Plenty of people agree. Despite the doom and gloom -- or perhaps because of it -- some lobbyists and political consultants are doing great business. The Whitehouse Consultancy says its earnings grew by 20 percent in 2009 as clients moved to position themselves ahead of the election. The spending review means there is no sign of interest dropping off -- although in the longer run some firms worry the cuts will filter through in terms of fewer public sector lobbying contracts.

In Whitehouse's London office, activity was unusually brisk even during the parliamentary summer recess. Dressed in casual clothes, staff talked on the phone to officials and clients. On the wall, a map showed the results of the May general election by constituency, a guide to Britain's new geography of power.

"August is normally quiet but this year it's been as busy as ever," said Whitehouse director David Hare, lead manager for much of the firm's public sector business, as he takes a quick break from writing e-mails.

For lobbyists, just as for their clients, it pays to play a long game. Dozens of major contractors have already been summoned to Downing Street and other government offices to be told that they will be paid less, even for contracts that have already been agreed. The trick is to look ahead, says PLMR lobbyist Craig.

"One gets the message that when rebuilding starts in years two and three, it will be those who provided a way forward, not those who simply buried their heads in the sand, that Her Majesty's Government will remember."

(Editing by Simon Robinson and Sara Ledwith)