Failing to recognise the equal value of women to the economy is short-sighted

equal value of women CEOsIt is dispiriting in the 21st Century that investors and businesses are still not recognising the equal value of women and their contribution to achieving success.

Two recent reports have – yet again – highlighted this discrepancy.

Not only did many businesses fail to meet the Government’s recent deadline for reporting on their gender pay gap but, according to BBC research, fewer than half of the UK’s biggest employers have succeeded in narrowing their gender pay gap. In fact, in 45% of firms the discrepancy had increased.

The Fawcett Society, which campaigns for gender equality, described the figures as “disappointing, but not surprising”.

More alarmingly, various reports have revealed that women entrepreneurs face an uphill struggle in getting investment finance.

Government analysis has found that less than 1% of venture capital investment in the UK goes to female-led start-ups. Its research was carried out by the British Business Bank, Diversity VC and the British Private Equity and Venture Capital Association.

Recently, the Daily Telegraph reported an example where a women posed as a man in order to apply for funding from investors:

After receiving patronising responses to her requests for financial backing for her technology consultancy business from male investors, entrepreneur Brittney Bean, the Telegraph reports: “She wrote to investors under the persona of “Nigel” – her male head of finance. “I’d reply as a man, saying, ‘I’m now taking this company’s finances over, is it possible that we can extend the credit line?’ And the reply was like, ‘It’s great to start working with you. Of course, we can help with that,”.

SMEs and investors miss out by Ignoring the equal value of women to the economy

Of course, if the culture is to change then schools, colleges, apprenticeship schemes and employers all need to play their part.

Research by a team under Robert M. Sauer, chair of economics at Royal Holloway University, has found that having a bank loan increases average business value by €96,500 for men and €174,545 for women.

While Samantha Smith, chief executive of FinnCap Group, suggests that improving female entrepreneurs’ access to venture capital funds could help boost UK GDP.

Yet the bias towards investing in male-dominated ventures persists. Where is the evidence that men, rather than women are likely to develop the “next big thing”?

And when there are skills shortages in many sectors, why narrow the recruitment pool to such an extent? Surely the most crucial thing for a business is to find the best available talent regardless of gender – or ethnicity.

It is time these chauvinistic attitudes were consigned to history, where they belong.


What kinds of jobs will be taken over by automation?

automation of unskilled jobsIn late March, the ONS (Office for National Statistics) published its latest findings on the effects of automation on the jobs market.

It found that some 1.5 million jobs were at high risk from automation, but, tellingly, 70% of these roles were currently held by women. The next most at risk groups were part timers and young people.

The ONS calculates that around 710,000 jobs in the City may be taken over by automated technology, with around 39% of jobs in the accounting, legal and financial services sectors most likely to be automated and that 34% of roles in tax advice could be affected..

Waiters and waitresses, shelf fillers and elementary sales occupations, are most likely to go, all roles defined as low-skilled or routine. Increasing numbers of factory workers are also at risk of being replaced by machines.

Least endangered are medical practitioners, higher education teaching professionals, and senior professionals in education although many of their support functions such as data capture and preliminary assessments are already being done by computers.

Deeper analysis suggests that automation has already dispensed with some lower-skilled work because although the overall number of available jobs has increased, according to the ONS, these are in low or medium risk occupations.

According to Maja Korica, associate professor of organisation at Warwick Business School, 20% of the Amazon workforce, for example, may already be made up of robots.

Are the economy, employers and businesses prepared for the risk from automation?

While it seems that manufacturing is already moving ahead with automation, the question is whether there will be enough higher-skilled people available for the future.

The take-up of apprenticeships by business has repeatedly failed to hit targets set by the Government.

While the future for the economy is still so uncertain, many employers will continue to delay investment in the long term productivity benefits that automation offers.

In the short term, therefore, there continues to be a need for lower-skilled workers with demographic groups being overlooked by employers, according to Pawel Adrjan, a former Goldman Sachs economist who now works at the jobs group, Indeed.

He argues that employers will need to search across underemployed demographic groups (young people, single parents, ethnic minorities, people with disabilities) at least in the short term as more and more EU workers either leave the UK or decide not to come and work here.

Clearly, the economy and various sectors are still in a state of transition, so it may be that relatively low-skilled work will be around for a while yet. But when automation ramps up there will be a need for more skilled workers as operators. Despite the loss of some jobs, automation offers scope for everyone involved to benefit.

First two companies named and shamed over late payment

late payment penalty?In March the first company to be named and shamed by the Small Business Commissioner Paul Uppal over late payment to a SME was announced.

The Office of the Small Business Commissioner launched an official investigation into the payment practices of the Jordans & Ryvita Company.

Using his new powers for naming offenders the Commissioner investigated Jordans & Ryvita on behalf of small business Magellan Design Ltd, which was owed approximately £5,000. As a result, the money was paid together with a further £1,400 in late payment interest.

This week the results of a second investigation, this time into health food retailer Holland & Barrett, were revealed. It was launched after a complaint from an IT company, which had asked not to be named, over an unpaid invoice of £15,000. The invoice took 67 days to be paid, well outside the company’s contractual agreement of 30 days.

Mr Uppal found that Holland & Barrett had “a purposeful culture of poor payment practices”, in which 60% of invoices were not paid within agreed terms and payment took an average of 68 days. He also condemned the retailer for not cooperating with his investigation, saying: “Holland & Barrett’s refusal to co-operate with my investigation, as well as their published poor payment practices says to me that this is a company that doesn’t care about its suppliers or take prompt payment seriously”.

Since the inception of the Prompt Payment Code and Mr Uppal’s appointment in December 2017 his office has released £3.5 million in late payments for small businesses and attracted 50,000 visitors to its website.

The effects of late payment to SMEs by large businesses can be catastrophic

The FSB (Federation of Small Businesses) has estimated that 50,000 SMEs each year close because of late payments and in July last year published research showing that 17 per cent of smaller suppliers were paid more than 60 days after providing an invoice, while close to one in five smaller suppliers are paid late more than half the time by the public sector.

While the latest results are a welcome development I would argue that until Mr Uppal is given powers to fine offenders they are unlikely to take this initiative seriously despite his efforts, for which some credit is due.

The Government’s Business, Energy and Industrial Strategy Committee has also repeated its call for Small Business Commissioner to be given the power to fine companies that pay late and for there to be a legal requirement to force them to pay invoices within 30 days.

I urge all SMEs to report late payment by large clients and especially well-known names so that more are named and shamed as a way of humiliating them into paying on time.


April 2019 sector focus on the UK road haulage industry

road haulage industry Indian styleAs negotiations for the UK to leave the EU hopefully draw nearer to some kind of resolution it seems an opportune moment to focus our monthly sector blog on the UK road haulage industry.

First, some facts, published by the RHA (Road Haulage Association).

The sector is the UK’s fifth largest employer, employing 2.54 million people in haulage and logistics, with road haulage being one of several UK sectors facing a skills shortage.

It is an industry worth £124bn GVA to UK economy, with 600,000 Goods Vehicle driving licence holders and 493,600 commercial vehicles over 3.5 tonnes registered in the UK.

89% of all goods transported by land in Great Britain are moved directly by road (the balance not moved by road often needing road haulage to complete journeys to/from ports, airports or rail terminals). This includes 98% of all food and agricultural products, and 98% of all consumer products and machinery transported by road freight.

However, it is a tightly-regulated industry with very narrow margins and many of its customers depend on prompt delivery of consignments based on just-in-time supply chains for both food and manufacturing.

The road haulage industry will face massive changes after Brexit

The key questions facing the industry are what additional paperwork will be needed for drivers, vehicles and goods in transit, whether they are simply picking up containers from ports or needing to travel across borders. What border controls will there be and what regulatory requirements?

For example, currently AEO (also referred to as “trusted trader”) status permits a haulier whose credentials have been officially checked and verified to transport goods across frontiers without physical customs checks of consignments, where they are trusted to simply provide the documentation. What will happen to these after Brexit?

So far, the RHA has provided at least seven checklist updates for UK drivers and haulage companies in just a few months, but the situation is still fluid and the only thing it has been able to say with any certainty is that “ECMT permits will be the only certain access to and from the EU for UK operators after Brexit. These are quota limited permits issued under an old system never designed to deal with the sort of volume of haulage movements that exist between the UK and the EU. For UK operators only about 10% of the market demand can be met by ECMT permits.” Wow, only 10%!

Trailers weighing more than 750Kg will have to be registered for international commercial use, drivers will need an international green card from their insurers and they will also need an international driving permit (IDP).

Then there is the question of what will happen to those qualified non-UK HGV drivers working in the UK and employed by UK hauliers to fill the current skills gap.

The capacity of the ports and their ability to cope if they need to introduce customs and paperwork inspections is also under question. The UK has major import terminals at Dover, Southampton, Felixstowe, Tilbury and Hull, to name the main ones servicing trade with Europe, for which at the moment there is very little information from Government as to what additional facilities they will need to allow for.

Who can forget the fiasco of transport minister Christ Grayling’s failed effort to open up Ramsgate to provide more capacity, not to mention the now-cancelled £13.8m contract to the Seaborne Freight to run a service to Ostend, in Belgium, to alleviate any delays at Dover in case of a no-deal Brexit despite the company having never run a ferry service and having no suitable ships?

It is all very well for the Government to exhort businesses to be prepared for all Brexit eventualities, including a no-deal scenario, but, as the RHA chief executive Richard Burnett warned in early March, “The whole situation has turned into a farce …and, through no fault of its own the industry on which the economies on both sides of the Channel rely so heavily is being set up for a fall of catastrophic proportions.”

GDPR one year on – how well is it working?

GDPR and data securityIt is almost a year since the new EU-wide GDPR (General Data Protection Regulations) legislation was introduced and so far approaching 60,000 breaches by companies have been reported across Europe.

The UK, the Netherlands and Germany have reported the most, ranging from minor errors such as missent emails to major cyber hacks.

In the UK the ICO (Information Commissioner’s Office) oversees and takes action on GDPR breaches and has powers to impose massive fines for those found guilty.

In a speech in New Zealand the UK’s ICO commissioner Elizabeth Denham revealed that in the first six months of the new law her office was seeing “More complaints from the public – from 9,000 to 19,000 in a comparable six month period. Complaints about subject access, data portability and data security. All of our front line services have jumped by at least 100%. More breach reports – over 8,000 since the end of May when it became mandatory in some high risk circumstances”.

Where has GDPR had most impact?

GDPR has certainly made the job of marketers and advertisers more difficult, not only in how they go about promoting products and services on behalf of their clients but also in collecting and analysing the results.

Facebook and Google (the two largest digital ad platforms) changed their rules to make themselves GDPR-compliant. They ended support for third-party audience technology and prevented marketers from exporting data. LinkedIn on the other hand still allows data to be downloaded.

In fact, in January in France, Google was hit by a €50m fine by its regulator for “lack of transparency, inadequate information and lack of valid consent regarding ads personalisation”.

In the UK in March the ICO fined Vote Leave Limited £40,000 for sending out thousands of unsolicited text messages in the run up to the 2016 EU referendum. It also fined a Kent-based pensions advice company £40,000 for being responsible for sending nearly two million direct marketing emails without consent.

From personal experience, the volume of unsolicited marketing calls has diminished noticeably and it is rare nowadays to visit a website that does not immediately advise visitors in a pop up of its cookie policy on information gathering and offer the option to manage or opt out altogether.

Despite the reduction in marketing emails and texts the volume of unsolicited telephone calls seems to continue, but most seem to come from abroad while purporting to be via BT.

While all this clearly means that UK advertisers and marketers may have to come up with more innovative methods it is surely a welcome relief to be pestered less frequently.

April 2019 Key Indicator – the state of the EU economy

Car manufacture mainstay of EU economyLeaving aside its obvious concerns about its future relationship with the UK, the EU economy has more than enough troubles of its own to contend with.

With global growth slowing the EU economy can hardly expect to be immune, but there are some inbuilt issues that are likely to become more pressing and will need to be dealt with as a result.

Europe’s demography is against it with an ageing population and the number of people of working age falling by 0.5% a year despite which the EU unemployment rate has remained stubbornly high at 8% since the 2008 global financial crisis. This is unlike the USA which has a rising workforce, while the UK has a growing immigrant population, with both countries’ unemployment reducing significantly.

The global pecking order in terms of the size of national economies is changing with EU countries falling down the global rankings according to the latest HSBC economic model as highlighted by Hamish McRae in yesterday’s Evening Standard. Germany falls from fourth behind the US, China and Japan, to fifth, France to seventh, Italy to ninth.  HSBC notes that Austria and Norway won’t make it to the top 30 by 2030 and Denmark will drop out of the top 40. The UK, however, is ageing marginally more slowly.

McRae calculates on this basis that the EU falls from about 22% of the world economy to about 17% and without the UK it falls to below 14%.

There are political tensions in several EU countries, as elsewhere, which have given rise to populist movements, such as in Italy and in the ongoing push for Catalonian independence in Spain. With EU Parliamentary elections due in May, this is likely to be a worry.

The ECB (European Central Bank) is regarded as notably conservative and this may, in part, explain why recovery since 2008 has been so slow.

It must also be remembered that the EU is a mix of widely disparate countries, some still using their own currencies, others having adopted the Euro and this, too, creates some tension.

The “powerhouse” countries in the EU have always been Germany, UK and France, with the French and German economies relying heavily on manufacturing and exports, but these have become the source of their current troubles.

Germany narrowly avoided recession in the fourth quarter of 2018 with its largely export-oriented industry suffering, particularly the automobile sector due to a decline in the sale of new cars not least down to tariffs on imports into US and a significant drop in sales to China.  Its banks, too, have been struggling, hence the proposed merger currently under way between its two biggest banks, Deutsche and Commerzbank, a merger aimed at survival based on weakness not strength.

France has fared a little better, but not by much, and it has brought political troubles in the shape of ongoing weekly protests by Les Gilets Jaunes.

Italy’s banks, too, are in dire shape and the Italian economy has been struggling for the past 20-plus years, not helped by its national debt relative to its GDP being second only to Japan’s and its population getting smaller.

After narrowly winning its argument with the EU, which refused at first to accept its latest budget, Italy has recently announced that it will be the first EU country to take part in China’s Belt and Road initiative – an attempt to link Asia, the Middle East, Africa and Europe with a series of ports, railways, bridges and other infrastructure projects. Clearly, Italy has become tired of waiting for the EU to put its monetary house in order, but what are the prospects for its economy?

It has been argued, not least by the Guardian’s Larry Elliott, and by the French leader Emmanuel Macron, that the EU needs closer political and economic integration and that there are design flaws in monetary union that are becoming more obvious and in more urgent need of a fix.

Another issue that, Elliott argues, is making countries in the EU less competitive when pitted against the likes of China is that EU industries are mostly mature, more than 25 years old, and there are no equivalents to Facebook, Google and the like, nor any significant businesses in the emerging technologies of the fourth Industrial Revolution, such as artificial intelligence.

Clearly, there is much to be done to improve the EU economy although it does seem to focus on old industry rather than stimulate business based on new technologies and in Hamish McRae’s view, whatever the current Brexit troubles, it is in the interests of both UK and EU to co-operate.


Is HMRC buckling under the strain of too hasty IT and insufficient staff?

HMRC needs a conductor to manage the orchestraDoes anyone love the taxman? HMRC is an easy target when it gets things wrong and equally when it seems to be altogether too prompt with reminders!

Earlier this year, for example, the website accountingweb reported an ongoing problem with HMRC charging for late tax return filings for trusts. It transpired that these are not as automated as personal returns and the information on the return has to be input or re-keyed by staff. As a result, even if the tax return is filed on time, any delay in inputting and the HMRC system will flag up a late return and send out a penalty notice.

But HMRC’s system has also been found to not have recorded payments on account on online personal accounts and on paper statements, allegedly a “widespread problem” according to the website.

Other examples have been staff ignorance of the NI (National Insurance) system as it relates to PAYE, of employment allowances, and even miscalculation of tax owed after statements have been submitted, again resulting in incorrect communications.

It is fair to say that HMRC is extremely diligent in following up on late filings, penalties and late payments and in passing cases to its debt recovery teams and in taking swift action to recover monies owed.

At the same time, the Government has been pushing for more and more transactions and communications to be done online.

However, MTD (Making Tax Digital) for example has already overrun deadlines and had to be scaled back – presumably because of problems with the software.

The Treasury was recently accused by the, until yesterday, business minister Richard Harrington of giving SMEs trading with EU States inadequate guidance, which consisted simply of a letter from HMRC advising them to “buy customs software and seek the advice of specialist agents”.

While Adam Marshall, director general of the British Chambers of Commerce, has called for a one-year delay to “Making Tax Digital” – which HMRC still intends to switch on three days after the now-postponed March 29 Brexit deadline.

He argued that it would “give businesses and the Revenue needed breathing space to deal with change.”

When so many Government-inspired digital initiatives have to be either abandoned, delayed or launched but riddled with flaws perhaps it is time to remember that these systems are devised and managed by human beings.

Human beings, even IT developers and HMRC staff, are fallible, but in order to do their jobs the first thing they need is realistic, accurate, clear and detailed information with which to operate.

The orchestra needs to be ready before the conductor can begin.

UK business rescue culture isn’t working and new proposals won’t work

Rescue culture is surely preferable to the grim reaper of insolvencySince the Cork Report in 1982 that led to the Insolvency Act 1986 (IA86) there have been a number of initiatives that have led to legislation aimed at promoting a rescue culture in UK.

The shift was from a penal approach to insolvency one based on a belief that saving insolvent companies by restructuring offers a better outcome for all concerned than the alternative of simply closing them down.

This can be achieved by putting the company into Administration, where an IP (Insolvency Practitioner) takes over the running of the company, including negotiating with creditors with the aim of saving the company or at least saving the business by selling it to new owners. In addition to benefitting secured creditors Administration also helps save jobs.

The alternative is a CVA (Company Voluntary Arrangement) where the directors effectively reach agreement with creditors for revised payment terms such as “time to pay” and sometimes for a write down of the debt as a condition for the company surviving. A CVA is supervised by an IP but the directors remain in control providing they meet the revised terms.

There are problems with the current regime as both cases require an IP to be involved and both are enshrined in the IA86 which means that they are tarnished by the reference to insolvency. While this might be the case, it encourages a self-fulfilling prophesy and all too many companies fail again shortly after going through Administration or a CVA which might suggest the restructuring measures were not sufficient when perhaps other factors might also contribute to the restructuring not being successful.

One provision that is missing from insolvency legislation in the UK, when compared to the USA’s bankruptcy protection (Chapter 11) and Canada’s Companies’ Creditors Arrangement Act (CCAA), is some breathing space, or moratorium, that works in practice to allow time to develop and agree a plan before entering any formal procedures.

A moratorium would provide for a temporary stay of action by creditors and suppliers while a rescue plan is devised, and it is argued, would encourage directors to act earlier when their business is in difficulties.

Indeed, there are current provisions for a CVA moratorium as a 28-day period to allow for preparing CVA proposals but it doesn’t work and is rarely used because IPs as supervisors of the moratorium have been advised by their lawyers that they could be held liable for credit during the moratorium period. It is logical therefore that IPs prefer Administration which gives them the control necessary to manage any such liabilities.

This has been ignored during the latest initiative by the Insolvency Service who, as part of efforts to improve the UK rescue culture, have consulted on proposals for a different moratorium period, presumably one that that would allow for a broader breathing space than the current CVA moratorium.

While new legislation has not yet been enacted, it would appear that the consultation has resulted in plans for a 28-day moratorium with scope for a 28-day extension. This proposal on the face of it would appear sensible but like the CVA moratorium it won’t work in practice for the same reasons: it must be supervised by an IP and it could expose IPs to liability to creditors.

Further confusion on behalf of those proposing the new moratorium relates to proposals that a business may only apply for a moratorium if it is still solvent and able to service its debts. This makes no sense, why would a business that is able to pay its debts risk damaging its credibility and ability to operate by advertising the fact that it is heading into difficulties by appointing an IP as supervisor of a moratorium that is part of insolvency legislation?

This is surely counter-productive to any attempts at saving a business since the moratorium would cut off its credit.

In my view, rescue legislation should be part of the Companies Act and if supervision is deemed necessary, then a broader range of professionals ought to be approved, not just IPs.

Furthermore, it is hard to see why an IP would not push for Administration instead of a moratorium and taking on the related liabilities; turkeys don’t vote for Christmas.

The credit for the prospective and in my view flawed legislation goes to R3 whose lobbying on behalf of IPs has captured the turnaround space and in doing so has helped kill off initiatives to develop a rescue culture.

Flexible working can foster innovation and creativity

flexible working is good for businessA set of annual awards launched seven years ago is demonstrating the positive benefits of allowing employees to work flexible and part time hours.

The Timewise Power Awards winners for 2019 have just been announced and, as the founders say, they demonstrate the art of the possible.

Among them is Srin Madipalli, a wheelchair user who works 85% full time for AirBnB and combines this with public speaking to raise disability and accessibility issues at forums including the United Nations, Rio Paralympics and the Tech Inclusion Summit.

Chris Bryant, a partner at Bryan Cave Leighton Paisner, works three days a week helping clients from all sectors to prepare for Brexit, and at the same time cares for his daughter and writes for musical theatre. His work has been performed at the Edinburgh Festival and is now being developed for a nationwide tour.

Amy Haworth, a director working on an 80% contract for Deloitte, combines her working life with 60 to 80 performances a year as an international classical singer, and Joanna Munro, creative head of Fiduciary Governance at HSBC Global Asset Management, has managed to combine her three days a week working for HSBC with completing a Masters in creative writing and is now writing a crime novel.

While others have combined their flexible working with starting up a new business, developing an app or caring for relatives, what they all have in common is that the businesses they work for are able and willing to accommodate and see the benefits of allowing their employees to work flexibly.

Often their work feeds back into their work for their main employer, to the benefit of both parties.

How a willingness to accommodate flexible working could benefit your business

There is some truth to the adage that a change is as good as a rest and certainly if you want to retain key people it is important that they feel valued and fulfilled.

However, it is perhaps taking too narrow a view to assume that their focus should be only and entirely on their work for the business.

The stimulation of an outside interest, or the possibility of pursuing a related interest that is not directly within the scope of their primary role can lead to innovative ideas being brought back into your business.

Also, the success stories of the winners mentioned above can benefit your business reputation, not only by demonstrating that it is a forward-thinking company when it comes to the terms and conditions of employment but also in the additional kudos from those employees’ successes in other pursuits.

Such enlightenment can also help a business attract and retain both outstanding and highly motivated people.

Please do respond with your own stories about similar examples.

Can zombie and critically distressed businesses be resurrected from near-death?

zombie and critically distressed businesses - can they be rescued?More than one in ten (11%) UK businesses is a zombie business at the start of 2019, according to the Business Distress Index produced by the insolvency and restructuring trade body R3.

The figure rises to 16% of businesses in the North East, according to the Newcastle Chronicle, and the state of many more UK businesses is graphically illustrated by research from Begbies Traynor’s most recent Red Flag Alert, which showed that the number of businesses in “critical” distress leapt by a quarter to 2,200 in the fourth quarter of 2018 while those in “significant” distress remained roughly flat year-on-year at 481,000.

A zombie business is generally defined as one that is only able to pay the interest on its debts, not repay the principal debt.

As such, economists argue, these businesses act as a drag on investment, productivity and the economy, because they do not have the available capital to invest in new operations, products, or services, while the investment tied up in them is denied to other, nimbler companies.

Also, it is argued, many of them are only surviving because of the continuation of the very low interest rates that Central banks put in place in the wake of the 2008 Crash. Indeed, the BIS (Bank for International Settlements), the umbrella organisation for global central banks, has argued that the steep increase in the numbers of zombie companies has been “one of the dangerous by-products” of persistent low interest rates.

Is there any point in trying to rescue zombie and critically distressed businesses?

Inevitably all this supports the doom and gloom merchants who are predicting an imminent recession exacerbated by Brexit uncertainty, a decline in globalisation and ongoing trade wars.

Ric Traynor, executive Chairman of Begbies Traynor, suggests that in today’s world businesses need to be able to change direction quickly.

“Far too many companies have been caught out by an unwillingness to rapidly evolve and adapt to the new climate we are in,” he says.

We would argue that before such businesses throw in the towel completely it is worth getting help from a turnaround and restructuring adviser.

They will conduct a thorough and in-depth review of the state of the businesses and identify its weaknesses and strengths and may be able to offer solutions, some of which may involve radical restructuring and reorganisation to fundamentally change the business.

This may involve slimming down the business to a core activity that is profitable in a way that justifies investment in a new strategy that becomes the foundation for future growth.

We have some Guides that might help here such as a Guide to Productivity Improvement. Do look up our library of Guides at: