Having already been delayed, the UK Budget is now set to be further delayed as the new chancellor  Rishi Sunak needs more time to prepare ahead of the official decisions.

This weekend, Transport Secretary Grant Shapps said: "I know that the Budget plans are well advanced but I also know that Rishi Sunak, the new Chancellor may want time…I haven't heard whether the date of March is confirmed as yet. He is probably looking at it, I should think this week."

Nimesh Shah, partner at Blick Rothenberg, had this to say for Finance Monthly: “We would expect a lot of the Budget material will already be in place, more so because a Budget was already planned before the election which had to be postponed.

He added: “However, any major changes and decisions that were to be announced would presumably need to be put on hold and assessed by the new Chancellor.

“There has been a lot of speculation around entrepreneurs’ relief being changed or restricted in the forthcoming Budget – it’s possible that any such changes which were driven by Sajid Javid could now be shelved, and delayed in their introduction until a future Budget.

“More recently, there has been suggestion higher/additional rate relief for pension contributions could be scrapped and a wealth tax on property introduced – surely such significant proposals would almost certainly need to be reconsidered by the new Chancellor.”

Nimesh said: “The Conservatives have promised not to raise income tax whilst, at the same time, have made some significant spending commitments. To bridge this gap, I think Gordon Brown’s 1997 strategy will be dusted off and replicated. That is, income tax rates will remain unchanged but revenue will be raised by adjusting threshold’s for existing tax reliefs and other such measures.

He added: “It is also possible that Boris Johnson could push to introduce his leadership pledge of increasing the basic rate tax band to £80,000 – this was expected to cost the Treasury around £8billion, and it still remains difficult to see how such a tax cut could be justified given the significant spending plans. However, nothing should be ruled out now as Boris Johnson could finally get his way with this measure.”

The company officially went under after failing to secure a £900m plus bailout on Saturday. Thousands of British holidaymakers found themselves stranded abroad without a replacement flights and others were left seeking assurance that their money would be refunded.

Customers have been left in disarray in the biggest repatriation effort since The Second World War. Similar situations have happened in the past, such as the BMI Insolvency case and the liquidation and collapse of WOW Air, but the chaos of the Thomas Cook collapse is on a different level. Throughout the chaos, customers have been looking to their insurance policies to provide assurance that they will get their money back.

However, two travel policies – SAFI and ATOL – are often overlooked and can be instrumental in protecting your money and trip in such a scenario.

What do SAFI and ATOL cover and why do you need them?

Scheduled Airline Failure Insurance (SAFI) and the Air Travel Organiser’s License scheme (ATOL) are mentioned in a lot of articles recently as Thomas Cook customers seek answers.

By having SAFI cover, you’re guaranteed peace of mind should your provider go into liquidation prior to booking with them. R3, the trade body for the insolvency and business restructuring industries has amplified the message to passengers to take a closer look at their insurance policy. They’re emphasising the value of having SAFI cover.

Often, insurance policies are taken out but not checked by customers, which can lead to missing some important details of their cover. It’s become more important than ever to consult your insurance policies and research the more comprehensive options when it comes to European travel especially. Studies from Defaqto have shown that almost half of UK policies tailored for holidaymakers do not include SAFI cover as standard.

Also, the method of payment that you use for your holiday could also affect the protection available. If you booked your holiday with a credit card then you’ll have more guaranteed protection and right to redress than if you paid via other methods for example.

The other comprehensively recognised travel policy is the Air Travel Organiser’s License scheme — popularly referred to as ATOL.

This cover safeguards customers who are flying from the UK if their provider collapses. It prevents people from paying any extra costs or being left stranded abroad.  Typically, ATOL certification will be included in your booking documentation, so it’s advised that holidaymakers keep reference of these important pieces of paperwork. ATOL purchases are automatically covered, and your travel provider has a duty to declare that their deal fits the outlined regulations.

One important thing to be aware of is that the ATOL scheme doesn’t apply to flights which are booked separately. This is where SAFI cover would come to cover any travellers.

It can be taken out as a separate policy if your insurance doesn’t include it already, and it could also cover any situations of company liquidation in advance.

Liquidation and holiday blues

The holiday blues being experienced by many UK travellers at the moment are not the kind many of us usually associate with the end of a holiday.

Dealing with the aftermath of a large-scale company liquidation can be a long and difficult process often having to go through systemic and other internal issues to find the cause.

We asked Chris Horner, Insolvency Director from Business Rescue Expert for some insight into what is still a sensitive topic: “Normally large companies would be expected to enter a rescue process such as administration and continue trading whilst a buyer is found. This is essentially impossible for an airline, so much so that the costs and complexity of the matter require the company to enter compulsory liquidation, with the Official Receiver as principal liquidator, before KPMG and Alix Partners were appointed. This also had the effect of automatically and immediately terminating all staff contracts of employment.”

“There is some criticism that the government again failed to intervene, however this would set a terrible precedent for large companies that the government will bail out highly paid executives and managers where they fail to manage the company properly. There have been multiple opportunities to avoid liquidation over the past 3 years - by proposing a CVA, or a sale to Lufthanser, however these opportunities were avoided by the board, who will now have to answer to a formal investigation into their conduct.”

While the demise of such an iconic firm is another sad sign of the times, tackling liquidation in the most responsible, considerate way should be a priority for businesses, especially when it involves a large customer base, many of whom are tired, confused and annoyed.

Sources:

https://www.caa.co.uk/ATOL-protection/Consumers/ATOL-certificate/

https://www.manchestereveningnews.co.uk/news/uk-news/how-old-thomas-cook-founded-16968382

https://www.ft.com/content/18c6356f-d806-3fef-9ff7-29fb80a343c7

https://www.theguardian.com/business/live/2019/sep/23/thomas-cook-travel-chaos-insolvency-leaves-150000-stranded-on-holidays-live-updates

https://www.scotsman.com/news/atol-claim-how-to-get-a-caa-refund-for-your-thomas-cook-holiday-1-5009998

https://www.independent.co.uk/travel/news-and-advice/wow-air-collapse-flight-cancelled-airport-passengers-flybe-rescue-a8845401.html

https://www.ft.com/content/ee2d6c72-2afe-11e9-a5ab-ff8ef2b976c7

Ordering a product recall can give even the hardiest CEO cold sweats, yet if the latest BMW recalls tells us anything it’s that a lengthy delay can cause even more problems. How should businesses approach a recall and what are the best ways of preventing a quality failure? Vincent Desmond, CEO of the Chartered Quality Institute (CQI), discusses with Finance Monthly.

For CEOs and other senior management life is complex in the current climate. There is a confluence of consumers and customers expecting rapid innovation and change in products and services, while at the same time any mistakes are increasingly likely to be held up to public scrutiny. This is all taking place in a globalised backdrop where information can be spread quickly and effectively online.

The questions for any CEO and senior management team confronted by a potential recall, therefore, are; how far are we willing to gamble with trust? What does our response say about us as an organisation and how will that impact our long-term sustainability? What systems can we put in place to prevent similar issues recurring?

With any product or service issue understanding what the fault is, how many people could be affected and what the risk is will be established in the first instance. On a moral level it’s cut and dried. Doing things that aren’t in the interests of your customers or wider society, particularly those that lead to loss of life is morally indefensible. From a societal and business perspective, however, there are mixed messages.

In the case of BMW, the decision was made in 2011 that they would recall vehicles due to an electrical fault that could lead to complete loss of power in some models in the US and other markets, but not the UK. The death of former British soldier, Narayan Gurung brought this decision to light after he swerved to avoid a BMW suffering an electrical failure. Subsequent media attention led to an initial recall of 36,000 vehicles in 2017 and a BBC Watchdog investigation led to the carmaker recalling a further 312,000 in May this year.

“In essence, BMW appears to have taken a short-term view to avoid the costs of a major UK recall. This will have been informed in part by conditions in the UK where the cost of litigation tends to be a lot cheaper and Government issued compulsory recalls are uncommon. One of the questions that remains unanswered, however, is what will be the longer-term impact on the BMW brand, as a result of this decision and the way it has been handled?

Whereas in the business to business market reputational issues have led to swift punitive actions, such as in the case of Bell Pottinger and Cambridge Analytica, the behaviour of consumers has proved much more difficult to judge. Despite controversy around the Volkswagen emissions scandal for example, the company sold a record 2.7 million cars in the first three months of 2018.

A decision-making process that focuses exclusively on the short-term concerns of the existing executive and financial stakeholder only, however, will inevitably impact long-term sustainability. For any leadership team this is the point at which you need to go back and establish what are our values and are they informing our decision-making process? More so than ever before, businesses, need to consider their impact on customers, wider society and the environment not just short-term returns.

For organisations such as BMW and Volkswagen, who trade on their German engineering heritage, taking a new approach to commercial realities is essential. With shorter development times and product cycles, the focus needs to be on prevention rather than cure. This is where extra emphasis at the quality planning stage, identifying and avoiding risks before they occur will pay dividends.

Potential product recalls cannot be judged in isolation. It’s in the long-term interests of organisations that CEOs and senior management take a systemic view of how to deliver for all stakeholders upfront, to avoid having to remedy issues at a later stage.