The cost to SMEs of IT failures

IT failures in a networked worldThe pressure to do everything online is inexorable but what is the cost to businesses of IT failures?

Perhaps one of the most frequent and difficult issues facing SMEs is the seemingly frequent meltdowns of both banking systems and government websites.

This is without considering the issues of cyber-attacks on companies where the FSB has recently calculated UK small firms are subject to nearly 10,000 cyber-attacks a day, with over a million small firms hit by phishing, malware attacks and payment scams.

Obviously it is in businesses’ own interests to have robust IT systems in place including cyber security, but the frustrations of IT failures are a different issue and often not of their own making since the counter parties also need to have adequate IT systems and security at their end.

Since 2018 the FCA (Financial Conduct Authority) has required banks to publish information about the number of major operational and security incidents they have experienced.

Last month a BBC investigation revealed that bank customers face an average of 10 digital banking shutdowns a month, based on the figures published so far.

The figures for the 12-month period until the end of July 2019 are not exactly comforting. The top five worst “offenders in the list (with the figures in brackets showing failures for the 3 months between 1 April and 30 June 2019) were:

Barclays 33 (4);

NatWest 25 (7);

Lloyds Bank 23 (2);

RBS 22 (7);

Santander 21 (4).

This is at a time when an estimated 6000 small bank branches have been closed, often in small town or rural locations, while, according to analysis by Close Brothers Finance, 51% of SMEs visit a bank branch at least once a week while three quarters use online banking at least once a week, with 41% using it every day.

This would suggest that the costs of IT failures to SMEs, not only in delays, frustration and cash flow issues are considerable.

But it is not only the banks that are a problem. We have lost count of the number of times businesses have reported difficulties with Government websites, from the application process for Business Rate Relief, to authorising and accessing various HMRC websites, and the online court service where last January the entire civil and criminal court IT infrastructure collapsed for several days!

Where does the problem lie for IT failures?

Is the problem with the expectations of those commissioning IT systems, who perhaps do not understand the IT capabilities and limitations? In their understandable desire to win business are the software providers and developers, themselves often SMEs, failing to tell their potential clients honestly what the limits are to the systems they want to commission? Or more pertinently what you can have for the budget.

Or is it simply that the IT skills of the Fintech and other IT provider industries are just not good enough?

We know there is a skills shortage in the IT sector generally but Fintech is supposed to be one of the UK’s most successful sectors.

UK Fintech companies received £740m from venture capital in the second quarter of 2019, almost double the amount invested during the same period last year according to the CBI (Confederation of British Industry), with Challenger Banks like Monzo among the most successful cohorts in Fintech.

Data released by Tech Nation and Dealroom for the government’s Digital Economy Council showed that British tech companies attracted more foreign investment in the past seven months than in the whole of 2018. Another endorsement.

If SMEs are to rely more and more on IT and the tech services of banks and other institutions with which they have to interact, it is perhaps time to look more closely at the services being provided and to make a concerted effort to do something to prevent so many IT failures.

Chaos and Confusion or Order and Clarity? Where are SMEs now with Brexit Planning?

Brexit planning - which way?Brexit planning will continue to dominate the thinking and expenditure of the UK’s SMEs as Parliament is suspended for five weeks and the Government’s plans for leaving the EU on October 31 seem to be in tatters.

Parliament has forced the Prime Minister and cabinet to release its documents, called Operation Yellowhammer, on planning for a No Deal Brexit and has also blocked the possibility of the latter. Both are now, in theory, legal requirements as Acts of Parliament.  However, disagreement prevails.

It is questionable whether the government will obey the law, especially if they can find a way out. Furthermore, there is now no Parliament, or Parliamentary Committees, sitting to scrutinise the Government although the press and Courts are fully engaged.

Notwithstanding the political gymnastics, businesses are deluged with upbeat exhortations and alleged offers of help of which the following is a selection from the last six weeks or so.

Liz Truss, the then International Trade Secretary, described Brexit as a “golden opportunity” for UK businesses and Lord Wolfson, CEO of Next was reported in the Mail on Sunday as being no longer fearful of a no-deal Brexit now that Boris Johnson is Prime Minister. One wonders whether he is now preparing to eat his words.

Last week Alex Brazier, the executive director for financial stability, strategy and risk at the Bank of England, claimed the UK’s financial system will remain stable after Brexit.  Indeed, the BoE now claim a hard Brexit won’t be as disastrous as they previously claimed.

There have also been announcements of several offers of help to businesses with Brexit Planning.

The Business Secretary Andrea Leadsom has launched a £10m grant scheme for business organisations and trade associations to support businesses in preparing for Brexit ahead of October 31. The fund is open to business organisations and trade associations.

Barclays is to host a series of “Brexit clinics” in October and November, with the sessions designed to help its SME customers after Britain’s departure from the EU.

The Government also launched its own £100 million “Get Ready for Brexit” campaign designed, according to Michael Gove, to “give everyone from small business owners to hauliers and EU citizens, “the facts they need” to prepare for the UK’s departure from the EU on October 31st.”

Also, as I reported in July, the BCC (British Chambers of Commerce) launched its own Brexit planning  guidance.

Is all this Brexit planning help and guidance just “smoke and mirrors”?

There is some evidence from SMEs on the ground that their businesses are already feeling the effects of the long-running Brexit saga and that they still feel there is little clarity to help them with Brexit planning.

Last month a QCA (Quoted Companies Alliance) survey of UK small and mid-cap companies found that 59% said it had distracted them from running their business, 16% have invested less in the UK, 43% say that preparing for Brexit has had a negative impact on their company’s growth while just 24% felt the Government had provided adequate information although more than half had taken steps to prepare for the no-deal scenario as best they could.

The real effects on the ground are already being felt.

The value of central EU public procurement contracts secured by UK businesses fell by 30%, to €108m (£99m) in 2018, from €155m (£142m) in 2017, research by UHY Hacker Young.

The British Ports Association (BPA) has dismissed a £10m Brexit fund for English ports as “a tiny amount of money”.

The UK Food and Drink Industry has highlighted its worries about regulatory clearance required for selling animal products to the European Union, warning that there is a serious possibility that, come October, listed status will not be granted.

Towards the end of last month the Guardian described the impact it has already had on one UK company, a Bristol-based manufacturer of industrial safety valves. It reported that at one time its exports were growing fast, with 130 employees and eight apprentices training to high standards, but since the referendum things have quickly changed. According to the owner: “Some EU customers instantly decided it was too much trouble and switched to EU manufacturers – we lost 10% of the business.”

He reported that to continue to trade in the EU post Brexit he needs to obey rules of origin, recording every raw material, tracking every component, requiring “horrendous” new IT systems, his various valves containing 30,000 different configurations and “tripling our admin workload”.

Order and Clarity for Brexit planning? Not quite yet it seems.

So, my advice to SMEs who have to contend with this ongoing Chaos and Confusion remains as it was in July:

For the time being the sensible strategy may be to hold off on any major investment, to focus rigorously on management accounts and cashflow, and to ensure strategy and business plans are as flexible as possible to cover a range of eventualities. It might even be worth contacting a restructuring adviser as part of your contingency planning.

Ongoing carnage in consumer services sector as consumers reduce spending in restaurants and bars

consumer services struggle to surviveAs I outlined in my June sector blog, it is not only well-known shops in the consumer services sector that have been struggling.

The restaurant sector has also seen a plethora of big name closures, including Gourmet Burger Kitchen, Carluccios, Prezzo/Chimichanga, Byron, Cafe Rouge, Jamie Oliver’s restaurant group and most recently the Restaurant Group which has announced that it plans to close up to 100 of its Frankie & Benny’s and Chiquito branches.

A recent CBI poll has revealed that the whole of the consumer services sector, which includes hotels, bars, restaurants and leisure firms, has suffered its fourth consecutive fall in business activity with both profits and confidence plummeting.

Rain Newton-Smith, chief economist of the CBI, said: “The idea of a no-deal Brexit is clearly weighing down the economy and is affecting businesses both big and small.”

But, of course, there is much more to all this than Brexit uncertainty weighing on businesses and consumers, although the last week of febrile activity in Parliament on this seemingly now all-consuming issue will not help.

Is this a long-term change in consumer behaviour?

Clearly, worries about future job security after Brexit are playing into the declining numbers of people visiting restaurants, bars and hotels which will have contributed to the ongoing decline in the number of pubs and bars, down 2.4% to 116,880 over the past year.

Aside from the increasing numbers of people choosing to eat in, with ordering home-delivered food becoming more common as reported in my June blog, it seems that dining preferences and tastes are all factors.

A recent analysis in the Guardian newspaper revealed that restaurant numbers had fallen by 3.4% in the year to June. It also suggested that our tastes are changing, so that consumers are moving away from Indian, Italian and Chinese establishments in favour of Middle Eastern, Caribbean and specialist vegetarian rivals.

Perhaps, though, among the most significant long-term trends is the shift in demand towards vegan and vegetarian food, as highlighted by the Verdict analysis of restaurants in their 2019 food trends report.  It said: “The country is ever more aware of the amount of food that is wasted and the effect food and packaging has on the planet”.

The other big issue, plastic use and waste, has also grabbed consumers attention as reported in research by RG Group that highlights this as a significant influence on consumers going forward.

Sustainability, transparency and trust are likely to become ever more important in the choices that consumers make, says RG Group: “Consumers today expect brands to be much more accountable when it comes to whether or not they remain loyal. And frequently, perceived accountability comes in the form of commitment to transparency and more socially responsible values and processes.”

Clearly, it is not enough for the High Street and the consumer services sector as a whole to focus solely on providing a “destination experience” as many have promoted in their quest for relevance.

Businesses in this sector, but also in many others, are likely to have to pay a great deal of attention to consumers’ socially responsible values if they want to retain customer loyalty, to survive and grow.

The change to HMRC preferential creditor status v emphasising insolvent business restructure

HMRC preferential creditor status at the head of the queueThe Government’s proposal to restore HMRC preferential creditor status when a business becomes insolvent is, in my view, at odds with its desire to shift the balance in the insolvency regime towards helping more businesses to survive.

In September 2018 I welcomed the Government’s newly-published proposed changes to the insolvency regime, whereby there would be a moratorium, initially 28 days, from filing papers with the courts to give still viable businesses more time to restructure or seek new investment to rescue their business free from creditor action. Consultation on this and other changes to the insolvency regime was begun in 2016.

This year, in the April 2019 budget statement, the then Chancellor Philip Hammond included a proposal to restore HMRC preferential creditor status, something that had been removed as part of the Enterprise Act in 2002.The new preferential status will apply to VAT, PAYE income tax, employee National Insurance contributions, student loan deductions and construction industry scheme deductions and will rank ahead of both the floating charge and unsecured creditors.

Draft legislation has now been published and subject to Parliamentary approval of the Autumn Budget is due to come into effect in April 2020. Although it will only apply to businesses becoming insolvent after that date, it will apply without limit to the relevant historic tax debts, without time limit or cap.

According to the ICAEW (Institute of Chartered Accountants in England and Wales) after a relatively short consultation period between 26 February 2019 to 27 May 2019 the draft legislation appears to take little account of the representations made: “This proposal ….can be expected to deter lending and have other adverse consequences that have not been sufficiently considered…”

Given the current political uncertainty and obsessive focus on Brexit it remains to be seen when and if the new legislation appears in the eventual Finance Bill and when approval would be expected.

Nevertheless, the implications of the restoration of HMRC as a preferential creditor have been widely criticised for the effect it is likely to have on lending, given that it moves the floating charge of secured lenders down the pecking order in terms of getting their money back.

Purbeck Insurance Services, for example, has warned small businesses that the risks of Personally Guaranteed finance facilities are likely to increase and as a consequence more Guarantors will have to pay out.

In addition to the impact on loans, HMRC jumping up the queue for payments will mean less money is left for trade suppliers as unsecured creditors in future insolvencies, no doubt resulting in more insolvencies.

As a turnaround adviser and investor, I agree entirely with the ICAEW: “This proposal is at odds with government efforts to foster an enterprise culture in recent years.”

Key Indicator – a snapshot of the current state of commodity prices

minerals among the commodity prices going downOngoing fears of a global economic recession, not to mention the escalating trade war between the USA and China, are having an impact on commodity prices.

August has been a particularly torrid month, according to analysts, with iron ore prices in particular suffering a sharp drop – up to 30% according to a report in the Financial Times, although other sources also back this up.

The ongoing uncertainty has also had its effect on oil prices, with OPEC cutting production while the USA has increased theirs. This has had its impact on the futures price of oil, with Brent Crude for October falling 31 cents, or 0.5%, to $60.18 a barrel.

According to the latest analysis from Marketwatch.com, published on August 30, “Commodities will end August with a second straight monthly loss”.

It says that the S & P GSCI index, which tracks 24 commodities across five sectors was down by more than 4% at the end of August, following a fall of 7% in July.

Gold and Silver prices, on the other hand have been steadily rising, with Silver reaching a 1-year peak last week, breaking $17 per ounce and Gold prices rising by almost 7% in August.

In the grain sector, Marketwatch reports the biggest decline in corn, of more than 0.9% over the year. Corn futures prices for August were also down, by 9%.

Bloomberg publishes a useful summary of commodity prices covering three sectors, energy, precious and industrial metals and Agriculture here.

Stability is not yet in sight with the ongoing uncertainties over global trade, fears that Germany will soon fall into recession, the outcome of Brexit still unknown and the latest set of USA-imposed tariffs on Chinese goods kicking in from September 1. As a consequence, predicting what will happen to commodity prices is going to be increasingly difficult for the foreseeable future.

This is not likely to be something businesses will be happy to hear as it makes planning more risky.

 

SMEs, start-ups and ethical fundraising

ethical fundraising to save the planetFund raising can be a challenge for SMEs and start-ups but there are signs that many are turning to ethical fundraising for their money.

This growing trend is particularly pronounced among younger business founders and entrepreneurs, many of whom are reportedly shunning the venture capital routes that focus primarily on forcing them to grow as fast as possible to generate returns.

With the issues of global warming, climate change and damage to the environment being a major factor among young people it is no surprise that ideas of sustainable growth and ethical sources of finance should be so appealing.

But are they narrowing their options by focusing on ethical fundraising and risking their prospects for growth and possibly their business survival?

It would seem not, according to analysts, as there is also a growing movement among investors, particularly retail investors, to search for investment opportunities specifically with ethical funds.

Lisa Ashford, chief executive of Ethex, says: “Venture capital funding can often be about financial performance and short term returns and exit strategies, sometimes to the detriment of the other impact aspirations of an organisation. That’s not what our investors are about.”

Ethex was started about ten years ago and works to match ethical businesses with investors that shared their values. It only works with businesses that have a clear social mission and those that conform to very high standards of governance and accountability.

The Guardian last year reported on the growing attraction of ethical investing, which its article argued was becoming more attractive to mainstream investment funds.

Nearly 80% of investors across 30 countries told last year’s Schroders’ Global Investor Study that sustainability had become more important to them over the last five years, increasingly seeing sustainability and profits as intertwined.

According to the website hi.co.uk the term ethical “is often used as a catch-all to describe funds managed with social, environmental, or other responsible criteria in mind”.

It says the main approaches of ethical funds are that they usually avoid companies that do harm to society and instead invest in those that have a positive social impact. But it warns investors to do their research diligently to ensure a fund is consistent with their own views.

From the perspective of the SMEs and start-ups ethical funds may actually benefit them through an alignment of culture, environmental awareness, social consciousness and ethics despite pursuing a strategy for slower growth. There is no reason to suppose such businesses cannot be sustainable, not least because of the opportunities for positive marketing messages that speak to their clients’ or customers’ own ethical concerns.

Is gender parity in business a utopian dream?

gender parity in Soviet statusRarely a week goes by when some aspect of gender parity often defined as equality is not in the headlines.

Back in April, just ahead of a Government deadline for firms to report on the gender pay gap within their businesses, the BBC reported that nothing much had changed since the initiative was announced.

Its analysis revealed that fewer than half the UK’s biggest employers had succeeded in narrowing their gender pay gap. In fact, in 45% of firms the discrepancy in pay increased in favour of men and overall in 75% of businesses the gap was in men’s favour.

By July, the focus had shifted to the representation of women on the boards of FTSE100 and FTSE 350 companies. While representation of women on FTSE100 company boards had improved since 2011, from 12.5% to 32% according to the Hampton-Alexander review, many of the leading broadsheets were accusing businesses of adopting what they called a “one and done” policy and that any such “improvements” were a token gesture.

Furthermore, a study by Cranfield University, supported by the FRC (Financial Reporting Council) found women typically hold executive director positions for half as long as men and are more likely to hold an advisory non-executive position than a top managerial role.

When it came to women entrepreneurs and finance there was not a lot about which to be optimistic.

The Independent reported in August that a mere 13% of senior members of UK investment teams are female and only one in five firms was founded by a woman. Indeed, the Government’s Rose Review found that a lack of start-up funding is the number one barrier preventing women from starting a business, with women starting businesses doing so with 53% less capital on average than men.

The Review of Female Entrepreneurship was carried out by Alison Rose, who is currently CEO of commercial and private banking at NatWest and is in line to become the first female boss of a major UK bank if she secures the role of CEO at RBS.

Is there any chance of realising the utopian dream of gender parity in business?

Firstly, the gender parity issue relates mainly to the number of women in senior roles.  Too many of those opining on the issue only compare the pay data for each gender across businesses often claiming that men earn more than women without acknowledging that women are generally fulfilling the lower paid roles. Commentators all too rarely look at pay levels for the two genders doing the same job.

Indeed, there are plenty of men in business who support the ideal that women and men fulfilling identical roles should be paid the same.  In the same vein most men believe that more women are needed in senior roles.

However, the fact is that culture and work demands on those in senior roles remains deeply biased against women in most businesses.

For example, Andrew Hauser, executive director of markets at the Bank of England, said in a recent speech at an event intended to promote careers in forex to women, that a “bro-culture” encouraged financial crime in the foreign exchange markets in recent years.  He described it as a “toxic male environment” arguing that it made terrible business sense to not have more senior women in finance.

But the problem of encouraging more women to seek senior roles in business goes much deeper than that.

In an article in the Guardian on Sunday, Yvonne Roberts unpicked the assumptions that underpin the discipline of Economics, which she argued would remain “a man’s game” while women’s contribution to the economy continued to be undervalued when compared to men’s.

She quotes Mary-Ann Stephenson, director of WBG (Women’s Budget Group), an international independent think-tank that is now part of a global network of feminist economists: “Classical economics is based on the independent man who works full time and is in control,”. As such, calculations of a country’s GDP (Gross Domestic Product) largely ignores not only women’s direct economic contributions from work and business, but the often-unrecognised social contributions many make that support the smooth running of the economy.

This, the article argues, was recognised by New Zealand’s leader, Jacinda Ardern, whose government in May produced the first ever Wellbeing Budget which allocated millions to child poverty and narrowing the inequality gap.

Clearly utopia will only become a reality if some fundamental and deep-rooted assumptions are changed.

Post Brexit boom sectors – business opportunities

brexit boom for smaller ports?It is often said that there are winners and losers for every significant event, so which are the post Brexit boom sectors likely to be?

Perhaps the most obvious ones are likely to come from the increase in regulation and compliance requirements for businesses, particularly those in the export sectors.

It is in this area, according to IW Capital, there are opportunities for companies that can devise technology to reduce the amount of time businesses will have to spend on complying with the inevitably more complex requirements that will be imposed by other countries within the EU, but also more widely as businesses explore markets they have perhaps not previously considered.

The exchange rate is likely to have the greatest impact on winners and losers.  Therefore, firms that supply essential goods and services with UK supply chains whose costs are not affected by exchange rates and who do not rely on foreign labour ought to be huge beneficiaries, especially when their competitors rely on imports.

But there are other sectors where there will be lots of opportunities.  News.co.uk also identifies tech start-ups where there are potential post Brexit boom opportunities, but it also suggests that there will be greater opportunities for exporters to non-EU countries thanks to the declining value of £Sterling compared to other currencies.

Another sector it highlights is medical technology, where the UK is a leading contributor, particularly among SMEs, which make up 85% of the sector and had a turnover of £70 billion in 2017.

The Spectator in a piece last autumn predicted that there will be opportunities for the UK’s smaller ports as logistics companies seek out and prioritise alternative, less congested routes.

Another example is the growing interest in CBD (cannabidiol). The Adam Smith Institute in July predicted that this medicinal product derived from cannabis has potential for sustained development in the UK after the Medicines & Healthcare Products Regulatory Authority (MHRA) re-classified CBD in the UK as a medicinal ingredient. No doubt the export market beckons.

Like the somewhat frivolous example above, there are opportunities for nimble SMEs to develop a strategy that takes advantage of Brexit.

There has been so much “doom and gloom” about the post-Brexit economy and supply chains in the last three years, and admittedly there will be some immediate disruption until new systems are in place.

In due course and only once the dust settles we will find out if Brexit benefits the country as a whole but in the disruption lie opportunities for SMEs to seize and create a Brexit advantage.

UK productivity – is it time to move to a four-day working week?

productivity working hours and family timeThe UK’s comparatively low productivity and how to improve it has long been a source of debate and analysis.

The ONS (Office for National Statistics) has reported a reduction in UK productivity for three successive quarters and according to the Resolution Foundation productivity is now 28% below the average rate before the 2008 financial crisis.  Yet this is a time when employment levels in the UK are the highest they have ever been.

Business productivity has traditionally been calculated by dividing average output per period by the total costs incurred (capital, energy, material, personnel) consumed in that period and is used as a determinant of efficiency.

Productivity in both national economies and individual businesses is much scrutinised by governments, business commentators and business owners as an indication of performance, efficiency and economic health.

All of this is based on the assumption that perpetual growth and competition are the cornerstones of economic health.

There are good reasons why it may be time to question some productivity assumptions

Two considerations suggest that the element of the productivity calculation based on employee hours worked and improved performance is becoming less central to the assessment.

Firstly, the nature of many workplaces from manufacturing to offices, has been changed by the growth of AI (Artificial Intelligence) and automation. This can have a potentially dramatic impact on overheads, particularly in reducing staffing levels, but it also means that the skills required from employees in the future will change dramatically.

Secondly, there has been a growing awareness that employee health, both mental and physical, is crucial to business productivity and success. There has been mounting evidence that increasing workers’ hours can result in higher staff absence rates due to ill health, not to mention increasing the chances of mistakes being made through tiredness and exhaustion.

UK employees have the longest working week compared to other workers in the European Union. But, despite the long hours, there is growing evidence that reducing hours worked can have a beneficial effect on productivity.

The TUC (Trades Union Congress) has calculated that UK full time employees worked an average of 42 hours a week in the final quarter of 2018 – almost two hours more than the EU average – but that full-time staff in Denmark are 23.5% more productive per hour than UK workers, despite working four hours fewer per week.

TUC general secretary Frances O’Grady explains: “Britain’s long hours culture is nothing to be proud of. It’s robbing workers of a decent home life and time with their loved ones. Overwork, stress and exhaustion have become the new normal.”

Based on this evidence, along with the TUC, the (NEF) New Economics Foundation has been campaigning for a reduction in weekly working time to 32 hours spread over four days without a reduction in pay.

‘Job and finish’ used to be more commonly used by firms although it has been largely replaced by hourly wages for productivity focused workers.  This has led to firms trying to get more out of workers without the incentives and sharing rewards with staff.  The productivity data would suggest this approach has failed.

There are however examples of companies that have shifted to a 4-day week including one Glasgow-based marketing company mentioned in a recent BBC article, that made the switch three years ago and reports that productivity has increased by about 30%, sickness leave is at an all-time low and there have been unexpected cost savings in that the company no longer needs to pay professional recruiters, as so many people want to work for them.

In July, new research by Henley Business School, as reported by the Independent, found that a four-day working week could save UK businesses an estimated £104bn a year and its survey of 250 companies “indicated that adopting a shorter working week could add to businesses’ bottom lines through increased staff productivity, as well as improved physical and mental health”. The Henley paper, Four Better or Four Worse, also found that nearly two thirds (64 per cent) of those who have already adopted the scheme reported improvements in staff productivity.

But crucially, the third, perhaps currently most important, reason why we should rethink our attitudes to productivity, is the effect on the environment.  The Henley research indicated that the four-day week would have a positive impact on the environment with employees estimating that they would drive 557.8 million fewer miles per week on average.

Work experience – between a rock and a hard place

work experience should be reintroducedEarlier this year the Federation of Small Businesses (FSB) called for compulsory work experience to be reintroduced for all children aged 14 to 16.

The Government ended schools’ obligation to provide compulsory work experience in 2012.

Since then, although many schools do still try to arrange some work experience, the responsibility for finding placements has rested largely on parents and pupils themselves.  In fact, according to the organisation Changing Education “Ofsted has identified that 75% of schools are failing to provide adequate work experience programmes”.

In 2015 the British Chambers of Commerce (BCC) questioned the wisdom of the 2012 decision, following a study of members that found that “most firms and education leaders believe secondary schools should offer work experience for under 16-year-olds”.

John Longworth, who was then the director general of the BCC, said: “Business and school leaders are clear – we won’t bridge the gap between the world of education and the world of work unless young people spend time in workplaces while still at school.

He may have been correct but the same BCC survey of 3,500 respondents found that just over a third did not offer any work experience.

In March 2017 the Government published its own research into the current state of work experience and among its findings were that “schools took a largely student-led approach, which placed responsibility on young people and their parents/ carers on finding a placement” with many relying on individual staff systems and contacts.

We are wearyingly familiar with the complaints from businesses about the lack of readiness for work among new recruits in their first jobs. They regularly cite specific concerns relating to the punctuality and attitude of such individuals.

In other research carried out in 2016 by the Confederation of British Industry (CBI) a quarter (27%) of employer respondents viewed involvement with schools and colleges as too onerous.

This may be why has not been easy for schools to find enough local employers willing to offer pupils work experience despite various initiatives tried over the years such as the now-defunct local county Exchanges which as NGOs sought to act as an interface between the two by taking care of the perceived bureaucracy involved.

Indeed, the Government’s Apprenticeship scheme launched in 2017 has hardly been a resounding success.

This is the background to the present situation we find ourselves in with employment levels higher than they have ever been and fewer Europeans willing to come to the UK for work as a result of the uncertainty over their status post Brexit, businesses are finding it even harder to recruit suitable employees let alone fill low-skilled jobs.

It seems young people are between a rock and a hard place when it comes to gaining work experience with schools overburdened by cash shortages, the demands of the National Curriculum and the demise of careers guidance while at the same time employers bemoan the lack of preparedness of new recruits while also seemingly unwilling to offer much practical help to improve the situation.

What is the answer?