PRP tax changes could prove costly to design

The design industry’s digestion of last week’s Budget has left a bad taste in the mouth.

In particular, senior industry figures have been quick to express their disappointment at Chancellor Kenneth Clarke’s announcement that profit-related pay schemes are to gradually lose their tax-free advantages by the millennium.

Mandy Merron, partner at accountant Willott Kingston Smith, which has a number of design clients, predicts that implications of the change will include rising design salaries. “It was a staff incentive for a lot of employees,” she adds.

According to Merron, a number of workers have accepted lower basic salaries on the understanding that final take-home pay would be higher following a tax- free bonus. “A lot of our clients, and other designers, have put PRP in. It will affect them, but at least not yet,” says Merron. Designers who have recently started PRP schemes expressed fears that the start-up costs of the schemes will have been wasted.

“A number of design groups will be disappointed,” says Ian Rowland-Hill, chief executive of the Design Business Association. Jonathan Sands, chairman of the DBA, confirmed that for his consultancy, Elmwood, the changes to PRP would prove “a real pain”.

Funding cuts or freezes are also expected to have implications for a number of museum and exhibition designers. Spending on museums and galleries is to fall by 13m to 213m. “The exhibition sector has woken up after being in the doldrums. It had been starting to show that well-designed museums and exhibitions do bring in crowds,” says Rowland-Hill.

Barbara Woroncow, president of the Museums Association, says that museums are currently at a “cash standstill”. But she does offer hope to designers: “Museums are being pushed down the road of greater income-generation. They have to keep investing in front-of-house to attract visitors,” she says.

Public transport was another area to suffer cutbacks. Jeremy Rewse-Davies, design director of London Transport, confirms that Government-set external funding limits for the body have been reduced. “It means that we’re restricted in what we can do next year,” he says.

But there were positive points for designers in the Budget. Extension of Vocational Training Relief is popular with the DBA, which offers courses. It will be investigating ways in which extension to the relief can benefit members.