Ever since the UK’s decision to leave the EU was announced, there has been a lot of speculation surrounding what will happen to the Irish border. Northern Ireland is part of the UK, which would leave the EU when Brexit goes through, but the Republic of Ireland will remain in the EU. This has led to many calls for border controls between the countries. It’s generally agreed that customs checks on goods will be required, yet whether passport checks are needed remains debatable. Recently the Chancellor of the Exchequer has suggested using blockchain to solve the issue.

In this post, we assess whether implementing blockchain will solve the Irish border issue. We conclude that it’s highly unlikely that blockchain alone will solve the problem, but a solution that incorporates blockchain as part of the process is more likely.

Why Blockchain?

The current line from the Treasury according to one source is that they are ‘actively considering technologies that could help facilitate trade over the Northern Ireland – Ireland land border.’ This was confirmed by Chancellor Phillip Hammond, who, when asked about how the government could achieve smooth trade after Brexit announced “there is technology becoming available ... I don’t claim to be an expert on it, but the most obvious technology is blockchain.”

Yet there are a few theories as to how blockchain could be involved practically. That’s not so surprising, as the only real major use of blockchain so far has been to power the cryptocurrency bitcoin.

What Could Blockchain Do?

Essentially, blockchain is a decentralised ledger which stores a digital record of transactions which is tamper proof. There have been a number of companies that have started to apply blockchain technology to their supply chains, with the most common reason to keep track of goods. One such example is of a start-up that used blockchain to track its tuna stock, every time it changed hands from net to supermarket the blockchain was updated.

This could be applied to the Irish border for documenting the movement of British goods through the supply chain, as a way to verify compliance with the EU’s rules. Checking blockchain certifications should be more efficient than paper ones, but it will be slower and it’s still unclear what other benefits this could hold.

Are There Any Other Options?

Presumably there are other options, given that the Treasury has revealed barely any details as to how blockchain might be applied. Especially as research into dealing with 6,000 heavy goods vehicles per day crossing the border has shown that using blockchain as a solution is ‘untested or imaginary’.

There’s still a chance that there won’t be a hard border and no technological solution will be required. Until the logistics and exact requirements are sorted out, it remains to be seen what will happen in terms of a solution.

Will it Be Successful?

According to most experts who have thought about the logistics of using blockchain to solve the Irish border issue, probably not. However, a solution that includes blockchain in part could be possible.

Indeed, in an interview with Cointelegraph, Vili Lehdonvirta, an associate professor and senior research fellow at the University of Oxford stated that “in my assessment there is zero chance that blockchain technology will help deliver a ‘frictionless’ border between Northern and the Republic of Ireland.”

Added to this, Nick Nick Botton, an expert on trade affairs and digital economies at Landmark Public Affairs stated that “The Northern Ireland issue is sadly not one that will likely ever be solved via technology, it's strictly a political issue at this stage.”

For businesses whose model relies on importing and/or exporting over the Irish border, seeking out financial options in case plans to use blockchain or other technology to sort out the issue fails is a good idea. Currently, it seems like there isn’t much of a plan, but that should all change in the near future.

Company voluntary arrangements (CVAs) have been a mainstay in the financial news over the last six months due to their status as the restructuring tool of choice for many of the UK’s high street stores. House of Fraser, Mothercare, New Look and plenty more retailers besides have all used CVAs to try to renegotiate their existing debts with unsecured creditors. But with this increasing use has come more scrutiny, with a number of parties unhappy with the way the current system works.

Are CVAs fit for purpose?

There is growing concern among a number of parties that CVAs, as they stand, are being abused. Company voluntary arrangements are an insolvency tool that’s designed to give struggling businesses more time to repay their debts and an opportunity to restructure away from the constant threat of legal action from creditors. However, they are increasingly being seen by creditors as an easy way for businesses to avoid administration and downsize their operations to the detriment of their creditors.

Landlords, in particular, feel like they’re getting the raw end of the deal. That’s because many struggling retailers, with House of Fraser being a recent example, are using CVAs to force reductions in the rent they pay and even break leases to close stores. It’s not only landlords who are feeling aggrieved. Other retailers that are battling to stay afloat are having to watch their rivals secure lower rents through CVAs while they are left to pay the going rate.

Landlords feel they’re not having their say

For a CVA to be put in place, it must receive the approval of 75% of the company’s creditors by the value of debt. However, while it is only unsecured creditors that will be affected by the terms of the CVA, secured creditors like banks and other financial institutions are still allowed to vote on the proposals. That means many CVAs are being approved without being accepted by landlords and other unsecured creditors who will take the financial hit.

Landlords are also concerned that CVAs are not always being used by retailers as an absolute last resort. Some landlords claim that retailers are not ‘on the cliff edge’ and are simply seeking a way to reduce their debts. This is often to the detriment of landlords and the benefit of the retailers’ shareholders. As an example, House of Fraser asked its UK landlords to accept a 30% rent cut, yet in the same month it opened a new 400,000sq. ft. store in China.

What reforms, if any, are needed?

The insolvency trade body R3 recently published a report that evaluated the success and failure of CVAs and recommended some changes that could be made to make the process more attractive. The report made a number of recommendations:

• CVAs should not last longer than three years without good reason.
• The duties of company directors should be made clearer and include a requirement to address financial distress immediately.
• CVA documentation that’s filed at Companies House should be more transparent and informative.
• Public sector creditors that vote on the CVA proposal should have to explain their decision fully if they refuse to support it.
• Standard terms and conditions for CVAs should be made available and adopted.

This will provide some relief to landlords who will be pleased to see the recommendation relating to director’s duties and the requirement to address financial distress earlier. They will also be reassured by R3’s agreement that CVAs in their current form are too long.

As yet, there’s no indication as to whether the recommendations are likely to be implemented. However, the report does make a strong case for the government to look again at the CVA process and implement at least some of the reforms.

Mike Smith is the Senior Director of Company Debt and a turnaround practitioner who specialises in giving small and medium-sized businesses debt advice and guidance on CVAs.

The Bank of England (BoE) has released its latest data on mortgage lending this morning which reveals that new lending commitments are at their highest level since 2008 Q1.

BoE also reports that first time buyers increased their share of the market to 21.4% in Q2 2018 - a rise of 1.8% against the previous quarter. Despite the surge in lending, the mortgage market continues to be challenged by a combination of fierce competition from traditional and non-traditional players.

With the rise in the lending market, there is an ever-growing need for traditional lenders to offer innovative solutions that provide faster and more efficient end-to-end mortgage resolutions.

In the FCA’s Mortgages Market Interim Report 2018, the need for more customer-facing innovation in the mortgage market is being encouraged for traditional lenders. On average the loan procedure can take approximately 45 days and this can be exasperated if the loan requires additional underwriting.

Most of the time the lenders will underwrite applications manually, which risks inaccurate pre-approval. Traditional lenders are seeking out next generation technology solutions to compete with non-traditional players to better manage the entire mortgage lifecycle.

Across the assessment, valuation, offer and contract completion process, manual data-entry errors can be reduced using Optical Character Recognition technology (OCR) by attaining customer data from key documents automatically. These bots extract applicant’s personal details from know your customer (KYC) documents and automatically review the applicant’s credit history which will speed up the mortgage application lifecycle, thus reducing the probability of manual error.

Puneet Taneja, Head of Operation at Intelenet Global Services, comments: “Buying a property is an important chapter in anyone’s life - dragging out the process creates a great deal of stress, preventing customers from getting their dream home as quickly as possible. Rather than having to wait for days to find out whether an applicant is eligible for a mortgage, automating the checks required across the assessment, valuation, offer and contract completion process takes away the headache away from mortgage brokers so they are able to communicate to customers and give them offers in 30 minutes.

Puneet continues: “Using this AI & Automation based initiative which uses bot technology to gain business intelligence alleviates the pain of mortgage brokers getting applicants data to find out if they are eligible. Digitizing the home-buying process by intelligent reporting & dashboards reduce processing times by 40% and costs by 50%.”

(Source: Intelenet Global Services)

To hear about tax planning and the things that need to change in the UK tax legislation Finance Monthly speaks with Adele Raiment, Director of the Tax Advisory team that specialises in entrepreneurial and privately owned businesses at Mazars LLP. Adele’s main area of expertise is working with privately owned businesses to develop and implement a succession plan, to ensure that any assets that the shareholders wish to retain are extracted in a tax efficient manner and she also works with all parties to assist in the smooth running of transaction.

What are the typical challenges faced by shareholders of entrepreneurial and privately owned businesses in the UK, in relation to the management of their finance?

I think the main concern on the horizon is the potential impact of Brexit on the UK economy and business confidence more widely. For privately owned businesses in the UK, many are still very cautious following the 2008/09 recession, and with the uncertainties surrounding Brexit, it is difficult to plan too far ahead. One of the main priorities of shareholders is ensuring that they have sufficient cash reserves to ride any potential downturn in the economy whilst recognising that they need to invest and innovate to thrive.

What is your approach when helping clients with tax planning?

My approach is to primarily understand the client’s commercial and personal objectives in priority to considering any tax planning. When planning for a transaction, I frequently find that the most tax efficient option isn’t always going to meet the key objectives of the shareholders or the business. It is important to consider the shareholders and the business as one holistic client, and therefore strike the right balance between personal, commercial and tax objectives. In respect of tax specifically, it is important to take all relevant taxes in to consideration whether it be corporate or personal. A good understanding of all taxes is therefore required.

My clients vary from FDs, to engineers, to self made entrepreneurs - all requiring different approaches. I believe that it is fundamental to get to know your client and adapt your approach to ensure that they understand you and what you are trying to achieve.

What are some of the day-to-day challenges of operating within tax planning? How do you overcome them?

As I predominantly work on transactions, I often work very closely with other professionals such as corporate finance professionals, lawyers and other accountants. The key challenge to this is making sure that the whole team is working collaboratively to achieve the best result for our client.

We are also under pressure to keep costs down, whilst ensuring that we provide quality advice. This can be difficult if the team has multiple transactions on the go at the same time and senior resource is constrained or if the project is wide-ranging, requiring several specialists to input in to the advice. The key to this is having a driven and supportive team, where teamwork and openness is pivotal to success. The working environment of my team at Mazars is incredible as we encourage open discussions on a variety of areas but one of the most useful ones is on technical uncertainties, which encourages consultation in times of uncertainty and technical development.

In your opinion, how could UK tax legislation be altered for the better?

Despite an exercise to ‘simplify’ UK tax legislation over more recent time, the legislation has increased in volume. A good example of this is that there are now two separate corporation taxes acts, when previously there was one. Having said this, the majority of the language used in more recent acts has made the legislation more user-friendly. However, there are still pockets of the legislation that seem to have been rushed through parliament and the practical use of the legislation was not considered fully prior to being enacted. This has resulted in several pieces of legislation being amended a year or two down the line. Although there does seem to be an element of consultation between Practice and HMRC prior to some legislation being enacted, I’m not always convinced that HMRC take on board the feedback. I therefore feel that a more rigorous consultation process should become standard to ensure that the commercial and practical elements of legislation are considered prior to enactment.

Contact details:

T: +44 (0) 121 232 9583/ M:+44 (0) 7794 031 399

Website: www.mazars.co.uk

Email: adele.raiment@mazars.co.uk

LinkedIn: http://uk.linkedin.com/pub/adele-raiment/13/693/360

Email: adele.raiment@mazars.co.uk

LinkedIn: http://uk.linkedin.com/pub/adele-raiment/13/693/360

The UK’s passion for innovation means it is now seen as a global leader in the development of financial services that are powered by prepaid technology, according to data released by Prepaid International Forum (PIF).

PIF, the not-for-profit trade body representing the prepaid sector, reports that the percentage of UK adults using tech-based financial services has risen to 42% (up from 14% in 2015). The UK is at the forefront of this growing market in Europe, ahead of Spain (37%) and Germany (35%). The UK is third globally to only China (69%) and India (52%).

Fueling this growth in the UK is prepaid, which has become a driving force for the fintech companies who are rapidly transforming the way we pay and get paid. The prepaid sector in Europe is growing faster than anywhere else in the world (up 18% since 2014 compared to just 6% growth in the US) is now worth $131bn*.

Experts believe that the UK’s passion for innovation may help to offset the potential negative effects of a no-deal Brexit, should UK financial service providers lose its right of automatic access to EU markets.

Diane Brocklebank, spokesperson for PIF, says: “The UK is a globally significant player in the creation of prepaid-enabled financial services with consumers keen to adopt new and innovative services and a growing industry of experts with the knowledge needed to develop such products and bring them to market.

“In a global sector, the UK stands out as being a key market and one that should retain its prized status even if it loses its financial passporting rights as a result of a no-deal Brexit.”

The UK’s status in prepaid is significant as it is a sector that is growing much faster than other financial services. In Europe, the 18.6% growth in prepaid since 2014, compares to just 7.8% growth in consumer debit and 5.8% growth in consumer credit markets*.

Diane Brocklebank, continues: “Prepaid and Fintech are the areas where people looking to invest in financial service businesses are seeing the most potential. This is being driven by increased dissatisfaction with mainstream financial services and a desire for greater innovation and flexibility, particularly amongst consumers looking for lower costs and fees as well as smartphone accessible products.

“The UK’s status as a global player is therefore crucial to it continuing to be seen as a key market for such investment. To maintain this, it must continue to be a positive environment for innovation with a supportive regulatory environment and strong skills base.”

(Source: PIF)

In a recent study into Britain’s largest landowners, ABC Finance Ltd has uncovered who really owns the UK.

Owning a lucrative property portfolio has become a dream for many people in the UK. This is unsurprising as the returns on savvy investments can be substantial. As of the start of 2018, there were upwards of 750,000 property millionaires in Britain but even they can’t hold a candle to the largest overall landholders.

The UK is made up of approximately 60 million acres. The top 50 landowners currently own 7.3 million acres combined which equates to over 12% of Britain’s landmass.

So, who are these people and companies that own so much of the UK?

While many people assume that the Royal Family have the largest land holdings, in reality, charitable organizations like the Forestry Commission and National Trust own the most land in the UK.

To put this in perspective, land owned by charitable organizations makes up 5.4% of Britain’s entire area. The Forestry Commission alone owns 4x the landmass of the Lake District while the National Trust’s land could comfortably fit the entire island of Tenerife.

This isn’t to say that the Royals are stuck for space. The Crown Estate owns more land in the UK than makes up the nation of Luxembourg and the holdings in Queen Elizabeth’s personal portfolio could fit Buckingham Palace 1,000x over.

Then we have the British Military, who own a substantial amount of land, set aside for the “defence of the realm”. Both the MOD and the Royal Artillery Company made the top 50 landowner list with combined holdings of almost 1.2 million acres – around 2% of the UK.

Interestingly, the group that claims fourth place in the land ownership leaderboard is made up of foreign business moguls and royalty, such as retail mogul Anders Holch Povlsen and Sheikh Mohammed Bin Rashid Al-Maktoum. In fact, the amount of land owned by foreign interests (562,285 acres) could be used to construct 23 million average-sized UK homes.

Further down the list sit the UK’s utility companies including Severn Trent and United Utilities. The companies that have made the property rich list are involved in water supply and mining, with enough land between them to fit Manchester, Leeds and Birmingham twice.

These are followed by British entrepreneurs and large business owners, such as Sir James Dyson, who personally owns enough land to fit 3,000 Wembley Stadiums. Altogether, these captains of industry control an equivalent amount of real estate to The Channel Islands and The Isle of Man combined.

At the bottom of the land ownership rankings sits a selection of property developers, with Homes England, Taylor Wimpey and the Haworth Group making an appearance in the top 50 with overall holdings of 55,003 acres.

The remaining notable landowners include the Church of England (105,000 acres) and Oxford University’s Merton College which, as a stand-alone campus, owns enough land to fit the entire city of Oxford.

New research reveals a UK technology market which has attracted the eye of US businesses and seen a huge increase in transactions, with acquisitions of UK technology companies up 386% in 2017 than there were in 2009).

Of the 247 UK companies to have exited into the US in 2017, almost a third (32.3%) of those were technology companies, followed by manufacturing, which has also seen an increasing interest from the US over the same period.

While technology has been one of the principle drivers of the UK M&A market in the mid-market, the results highlight there has also been a wider trend of increasing activity from US acquirers. Overall, the UK has seen the acquisition of companies below £1billion increase by 86% over the last decade (2009 to 2017), with sectors such as Business Services and Manufacturing having increased in the number of sales to US acquirers.

Commenting on the findings, Andy Hodgetts, Senior Corporate Finance Manager at Buzzacott said: “The UK’s technology landscape is changing dramatically and is far more active than it was just under a decade ago. Silicon Valley is no longer the sole proprietor for developing new innovations, the UK is a hotbed for talent, and in the US’ acquisitions of UK companies, they are gaining access to that talent pool.

Hodgetts continued: “There has been a lot of uncertainty around Brexit and what it means for the UK, which has left many businesses unsure as to when might be a good time for them to sell. What we are seeing however is that there are a number of opportunities and buyers out there, especially in the US. For UK companies that are planning on exiting, but have waited due to the uncertainty the UK faces, it is important to not just think about companies within the UK that might want to acquire the business, but explore internationally too as there are plenty of buyers available, whatever the sector.”

(Source: Buzzacott)

Barclays has announced that it has teamed up with the UK Government to provide £1bn of development finance to help build thousands of new homes across England to help increase the pace and volume of housing provision.

Loans ranging from £5 million to £100 million, which will be competitively priced, are available for developers and house builders who are able to demonstrate the necessary experience and track record to undertake and complete their proposed project.   Funding is open to new clients as well as existing Barclays clients, and will put greater emphasis on diversifying the housing market, as at present, almost two-thirds of homes are built by just ten companies.

A key priority of The Housing Delivery Fund is to support small and medium sized businesses to develop homes for rent or sale including social housing, retirement living and the private rented sector, whilst also supporting innovation in the model of delivery such as brownfield land and urban regeneration projects.

Launching the fund, John McFarlane, Barclays’ Chairman, said: “There is a vital need to build more good quality homes across the country.  This £1bn fund is about helping to do exactly that by showing firms in the business of house building that the right finance is available for projects that help meet this urgent need.

“We are very pleased to be working with government to get the country building more homes, more quickly.”

Housing Secretary Rt Hon James Brokenshire MP, said: “My priority as Housing Secretary is to get Britain building the homes our country needs.  This new fund - partnering Homes England with Barclays - is a further important step by giving smaller builders access to the finance they need to get housing developments off the ground.

“This is a fantastic opportunity to not only get more homes built but also promote new and innovative approaches to construction and design that exist across the housing market.”

Chairman of Homes England, Sir Ed Lister, said: “Homes England has been established to play a more active role in the housing market and do things differently to increase the pace, scale and quality of delivering new homes.

“The Housing Delivery Fund demonstrates Barclays’ commitment to the residential sector and will provide a new funding stream for SME developers to help progress sites and deliver more affordable homes across England.”

Today’s agreement with Barclays forms part of the Government’s wider commitment to increase the pace of housing delivery in England. Ministers have been clear on their ambition to achieve 300,000 new homes a year by the mid-2020s, which follows 217,000 homes built last year, the biggest increase in housing supply in England for almost a decade.

(Source: Barclays)

The high cost credit industry hasn’t been rocked by the reported demise of payday lender Wonga, it is just mutating, says financial expert Jasmine Birtles.

Birtles, founder of MoneyMagpie.com, says that high cost credit is alive and well in the UK thanks to continuing lax rules on lending rates and the desperation of vulnerable families, many of whom have been hard hit by austerity cuts and the introduction of Universal Credit.

“One gets a sense of schadenfreude seeing Wonga brought down partly by claims management firms - firms which also often use questionable marketing tactics to get their customers and then charge over the odds for their service,”says Birtles. “However, even if Wonga does go into administration, it doesn’t by any means herald the end of high cost credit. There are many over-priced lenders on the market, and more waiting in the wings, to take up the slack.”

Birtles is calling for a two-pronged approach to dealing with the lending crisis in the UK:

1. Put stricter caps on how much lenders can charge in interest on any loans. Even though Wonga was forced to reduce its interest rate from over 5,000%, it is still charging over 1,500% now which is an insane rate for anyone to pay
2. Make more money available as a Social Fund loan. It used to be that people in dire straits could get a quick loan, at no interest, to buy essentials for their home through the Social Fund. Hardly anyone gets one of these now. If the money were made available again it would stop quite so many people going to high cost lenders when desperate.

What it means for Wonga customers

Sadly, if Wonga does go into administration it won’t mean that current customers will have their debts wiped out. The administrators will take over the running of the business and will demand money in the same way as the company would have done before - possibly even more vigorously

What it means for the industry

It sends a warning shot across the boughs for other high cost credit companies but it won’t stop them charging over the odds for short-term loans. In fact it may even encourage other companies to ramp up their offerings to fill the gap.

Already there are companies doing well out of high cost credit:

• Companies like QuickQuid and Lending Stream offer very quick, short-term loans at very high rates. They haven’t been as much in the public eye as Wonga and, so far, have avoided the bad publicity that Wonga had in recent years.
• Rent-to-own companies like BrightHouse do a roaring trade in household goods which end up costing customers up to five times the original cost of the product.
• There has recently been a proliferation of high cost credit cards for people with poor credit, making it easier for people to spend with interest rates of between 27-35%.

(Source: MoneyMagpie.com)

The estimated 1.8 million British expats living in the EU should consider reviewing their personal financial strategies as ‘no-deal’ Brexit looks increasingly likely, warns the deVere Group.

The warning from James Green, deVere Group’s divisional manager of Western Europe, comes after British Prime Minister Theresa May claimed that a no-deal Brexit “wouldn’t be the end of the world,” as she sought to downplay statements made by Chancellor Philip Hammond.

It also follows the UK government publishing last week its first technical notices advising businesses and consumers on the preparations being done for the prospect of there being no Brexit deal.

Mr Green comments: “A no-deal Brexit is now expected by a growing number of experts and the wider population to be the most likely outcome.

“If the UK crashes out of Europe with no deal in place, the estimated 1.8 million expats living in the EU could be financially impacted in two key ways.

“First, the pound would inevitably suffer and it could fall hard. This would deliver another heavy and serious blow for those who receive UK pensions or income in pounds as the cost of living, in effect, would be significantly more expensive.

“Second, unless there is considerable post-Brexit collaboration between the UK and EU there is a risk that existing payments from British companies, including pension and insurance companies, to those living within the European Economic Area (EEA) could be disrupted or even made impossible. Of course, this would be a major inconvenience to many UK expats.”

He continues: “Against this chaotic backdrop it is prudent that British expats in the EU consider reviewing their personal financial strategies sooner rather than later with a cross-border financial expert. This will help best position them not only to mitigate the risks of a no-deal Brexit, but also to enable them to take advantage of potential opportunities that may arise.”

Mr Green concludes: “Unfortunately, a smooth and orderly exit of the EU is looking increasingly unlikely and this can be expected to hit the finances of many expats.

“They should seek to make their financial strategies ‘no deal Brexit’ proof.”

(Source: deVere group)

Finance Monthly delves into the potential impact of an ‘Amazon tax’ and the alternative solutions that can help the struggling British bricks-and-mortar retailers.  

With a series of high-profile collapses and CVAs, including the recent turbulences that House of Fraser is faced with, Britain has seen its fair share of high-street horror stories in 2018. Stores like Toys R Us UK, Maplin and Mothercare are all facing extinction, whilst online retailers such as Amazon are stronger than ever, cashing in $2.5bn per quarter and paying less and less corporation tax with Amazon’s UK tax bill falling about 40% in 2017, and it paying just £4.6 million ($5.6 million). In times like these, the UK retail industry has naturally called on the Government to review its outdated corporation tax system and take action to help the struggling high street. Chancellor Philip Hammond has in turn announced that he is considering a special retail tax on online business, dubbed the ‘Amazon tax’, in order to establish a “level-playing field” for online retailers and high-street shops. But is a new tax really the solution that will balance the market out? Will it be the solution that traditional trade needs? 

Is Amazon’s Existence the Biggest Problem?

Consumer habits are changing rapidly with the continued growth of online shopping, but the truth is that the extraordinary success of web traders is only one of the aspects to consider when looking for the reasons behind the decline in traditional retail. And even though a hike in the tax that Amazon pays may seem like a necessary and logical step, it will be nothing more than a minor distraction from the bigger issue and something that will mainly benefit the Treasury.

It is worth noting that the UK store chains that have collapsed recently did so due to not having the right products at the right prices, not staying up-to-date with consumer trends, not targeting the right customers or not investing enough in their businesses. Surely, online-only merchants have transformed the trade landscape and the UK tax system needs to be adjusted in order to reflect the current retail dynamics – especially when Amazon’s tax bill for 2017 was only £4.6 million on £2 billion of sales. But is the fact that the web giant is paying such a low amount of tax the reason for the collapse of a number of bricks-and-mortar retailers? I think not.

Moreover, as Bloomberg points out, an internet shopping tax could end up backfiring and hurting the bricks-and-mortar retailers it is intended to help. According to the British Retail Consortium, in 2017, more than 17% of sales were made online. Over half of them were with businesses that also have shops. Thus, retailers such as Next Plc, which has both online and offline businesses, could face “a double tax whammy”.

The Real Problem

Driving restrictions around city centres, increased parking charges by local councils and state demands such as minimum wage legislation and Sunday trading laws have had a negative impact on bricks-and-mortar retail. Then there is the main challenge in the face of sky-high business rates which have been the bane of countless entrepreneurs trying to establish a high-street presence. In an article for The Telegraph, Ruth Davidson wrote that the UK retail sector, which makes up 5% of the country’s economy, is paying “25% of all business rates, over £7 billion per year”. One might argue that in order to help bricks-and-mortar retailers and keep British town centres bustling with thriving commerce, politicians could perhaps work towards reducing the financial burden they’re faced with, before punishing web giants for offering an easy and convenient way to shop in this digital era. In order to keep up with their online competitors, traditional stores need to focus on technology innovation and redesigning the experience that the modern-day customer expects. But most importantly, they need the budget to do so and a reduction in business rates for high-street stores could be one way to provide them with some extra cash to invest in technology.

Another thing to consider, as Andrea Felsted suggests, could be raising business rates for offices and warehouses and cutting them for shops. That would “address the disparity between shopfront-heavy retailers and online-only businesses, which rely on distribution centres to serve their customers”.

A potential Amazon tax for all web-only retailers will not help bricks-and-mortar retail to innovate. Surely, it will level the playing field, but apart from that, all we can expect will be a slowdown in online shopping without doing anything to solve the current problems that traditional traders are struggling with.

More than a third (38%) of IT decision-makers across the UK financial sector believe it has become more difficult over the past five years to find staff with the right skills and experience. Over a third (34%) believe the problem is going to worsen in the coming five years. This is according to a survey across a range of financial and banking sector organisations, including retail and investment banking, asset management, hedge funds and clearing houses.

The survey, commissioned by software vendor InterSystems found a shortage across a variety of roles. Almost a fifth (18%) of respondents cited a lack of data scientists followed by 17% who revealed a shortage in security consultant/specialists, while 16% referenced application developers and 12% mentioned financial analysts.

“IT skills shortages are clearly a major concern for banking and financial services firms across the UK and this is only likely to escalate in the future,” says Graeme Dillane, financial services manager, InterSystems. “Skills shortages are a barrier to innovation in the banking and financial services sector. And as firms upgrade their legacy systems and look to innovate to meet the latest wave of regulations, that represents an increasingly serious concern.”

When survey recipients were asked to name the key qualities that technology can bring to help mitigate the negative affect of skills shortages within businesses today, 44% of respondents said: ‘simplicity of use’, 42% cited ‘ease of implementation’ and 36% ‘high-performance’.   

The study also found that skills shortages are one of the biggest barriers preventing innovation as cited by 35% of the study, behind only cost (41%) while compliance was referenced by 31%.

“These findings match with our experience in talking to customers and prospects across the sector,” added Dillane. “IT employees with the skills that banks and financial services companies are looking for are in short supply. Knowledge transfer is therefore increasingly key alongside solutions which combine ease of development; simplicity of use; high-performance and intuitive workflow transfer.”

(Source: InterSystems)