A third of the UK’s food & farming businesses effected by Brexit

A third of the UK’s food & farming businesses effected by Brexit

Over a third of the UK’s food and farming business could become “unviable” after Brexit

A report by the Food and Drink Federation (FDF) has revealed that one in three of the UK’s food and farming businesses would become “unviable” without European workers – 36% of business owners said that their business model will fail if they can’t hire EU nationals.

The research was gathered from 627 businesses, including the Association of Labour Providers, the British Beer and Pub Association and the National Farmers’ Union. To protect the future of food and drink businesses in the UK, the FDF are calling on the government to secure the rights of EU nationals currently living and working in the UK, and to review how immigration data is recorded.

In the UK at the moment, there are two million EU nationals within the economy. 20% are working in the food and drink supply chain, and to make matters worse, more and more EU workers are looking to leave the EU due to uncertainty over their residential future in the UK.

17% of businesses also said that they would have to move their operations overseas if there was a block on EU nationals working in the UK. A mass departure could be extremely damaging to the UK Agriculture Industry.

The results of this mass-departure would obviously be catastrophic, with business struggling to fill gaps in the workforce, and ultimately leading to a short to medium term skills deficit. Although ‘upskilling’ can be a solution to this issue, it does not alleviate the problem in the short term.

It seems that, at least for now, EU workers are key to getting British food and drink on our shelves, from producing food, through transport, to providing service in our stores, immigration is vital to the supply chain in the UK. EU employees currently working in the UK will need further clarity about their status once the UK leaves the EU.

Self-driving lorries heading to UK roads by the end of 2018

Self-driving lorries heading to UK roads by the end of 2018

Self-driving lorries

Self-driving convoys of lorries are set be tested on some of Britain’s public roads late next year, after similar testing was carried out in Europe two years ago.

The trucks will be wirelessly linked, which will allow them to synchronise braking and accelerating – this technique is known as ‘platooning’, and is hoped to significantly improve congestion on the roads. There is one human driver, who controls the leading truck, with all the other trucks in the convoy responding immediately to the leading truck. Due to this synchronised braking system, the self-driving lorries can drive much closer to one another than they would otherwise be able to do with human drivers. This in turn reduces wind resistance, congestion and as a result lowers fuel consumption.

Advances in this technology could be a huge benefit to businesses, and other road users. Lower fuel emissions mean cheaper fuel bills, and hopefully less hassle for those on the roads.

The trial will be carried out in three stages; the first trial will focus on the potential for platooning on the UK’s major roads. Information from this test will then help determine details such as distance between the lorries, and which roads would be best suited for the self-driving vehicles if they are used within the UK. These trials are expected on the roads by the end of 2018, and the Transport Research Laboratory have reassured drivers that each phase of the testing will only be undertaken when the previous phase has completed safely.

However, some motoring groups have questioned the usefulness and the safety of the autonomous vehicles. A spokesperson for the AA expressed their concerns, stating that despite “wanting to promote fuel efficiency and reduce congestion” they are “not yet totally convinced that platooning on UK Motorways” is the best way to achieve this.

The RAC foundation echoed these concerns, stating that “streams of close-running HGVs could provide financial savings on long-distance journeys, but on the UK’s heavily congested motorways, with stop start traffic, and constant lane changes, the benefits are less certain”.

Finally, it’s unclear how this move to platooning lorries will impact on the jobs situation in transport – moving to one driver for an entire convoy is an effective way to streamline, but the implications could be considerable.

Paul Wormald, Partner at Hawsons commented: “The advance of technology impacts on many business sectors, and haulage is no exception. It will be interesting to see how these trials progress and the results that they deliver. If successful, the concept of self-driving lorries have the potential to rewrite the economics of road haulage, with the possibility of lower labour and fuel costs per tonne carried. Although the sight of self-driving lorries being commonplace may be some way off yet, haulage business need to anticipate how they may alter their recruitment programmes, capital expenditure plans, and pricing models in future years.”

Paul Wormald is a partner at Hawsons, working in the Doncaster office. He worked previously with two national firms of Chartered Accountants prior to joining Hawsons in 2001. For more information or advice on anything covered in this article, please contact Paul on [email protected] or 01302 367 262.[/author_info]

Could a Charity merger be the answer for saving your charity?

Could a Charity merger be the answer for saving your charity?

Could a Charity merger be the answer for saving your charity?

Despite evidence that a merger can have a wide range of benefits in the not-for-profit sector, it seems to be an option that charities are shying away from.

There are 167,000 registered charities in England and Wales – and this figure doesn’t include charities with a turnover of less that £5,000, as they don’t need to register. There has been a stark reduction in charity funding over the past 5 years. This has ultimately resulted in multiple charities working towards the same cause but competing for the same pot of money.

In 2015-2016, there were 54 mergers from a population of 160,000. That represents 0.07% of registered charities, and even as funding gets tighter, this figure is down on the previous year. To compound this, last year there was a net increase in the number of charities being registered – perhaps it is time for organisations to look to work with, and enhance, the work of existing charities. This would potentially be more valuable to beneficiaries than a new charity with similar charitable objectives starting from scratch.

Additionally, there are multiple positives to charity mergers. Firstly, they can increase the efficiency of a charitable organisation. In the case of two, very similar charities, they often fund the same research projects, and in rare occasions, have trustees in common. Merging can streamline not-for-profits, you halve the number of offices and databases required, but double the resources and amount of work you can fund. You can also help pool collective trustee knowledge.

Merging can also aid fundraising. New forms of fundraising can be considered, because it’s much easier to forge new funding relationships when a charity is not duplicating the work of other organisations. Potential donors are often more willing to support one charity and one cause wholly, instead of splitting their donations between two different organisations that are working towards a similar.

So, given the positives a merger, why do very few not-for-profits choose this as an option?

To start, mergers tend to be more productive and have more positive outcomes when they are conducted from a position of financial strength, after a clear strategy has been planned out. However, it tends to be an option that is ignored up until the final moments of financial difficulty. A merger prearranged well before any financial trouble arises puts both parties in a far more robust position when considering problems such as partnership and succession.

Of course, as with any massive change to infrastructure, there will probably be people who lose their jobs, or will at least have to alter their way of working. However, as charities, it is important that not only internal infrastructure is secure, but also that beneficiaries are put first and therefore that money is spent in as efficient a way as possible.

Another cause of hesitancy when considering a merger is that they can be, financially speaking, agonisingly difficult to pull off. Pension liabilities and the cost of merging are two red flags that immediately spring to mind, especially for smaller charities. The cost of merging is fairly fixed, regardless of the size of the charity. Smaller charities can find this unaffordable, and can become lost in mergers with much larger organisations.

In all cases, but most notably in those of small charities, it is advisable to seek external advice when considering the future of your charity – and well before any issues begin to rear their heads. In order to provide the best possible services for beneficiaries, charities should work from the inside out.

Simon Bladen, Hawsons Charity expert says that “I think it is fair to say that mergers can be something of a taboo among charities. However in many cases, where they are managed and carried out diligently, they can be of great benefit to the public, and can reduce the amount of duplication and unnecessary competition within the sector.”

 

Simon Bladen is the partner responsible for looking after the firm’s charity clients and has worked at Hawsons throughout his career. For more information or advice on anything covered in this article, please contact Simon on [email protected] or 0114 226 7141.

Trustees…Be Warned! New Charity Commission warnings

Trustees…Be Warned! New Charity Commission warnings

Trustees… Be Warned! New Charity Commission warnings  

The Charity Commission used newly granted powers for the first time in mid-August to issue an official warning to the Trustees of a national charity.

The matters picked up on by the Commission in their warning to the National Hereditary Breast Cancer Helpline highlight a number of areas that can be overlooked by charities. They should make sure that their financial resources are properly controlled, and that there is clear, collective accountability exercised by Trustees in their decision-making process. The National Hereditary Breast Cancer Helpline’s statement in response to the warning can be found here.

The Charity Commission did issue an action plan to the Trustees following an earlier review, but found that they had fallen short in complying with all of its terms, resulting in the official warning.

The areas highlighted in the warning were:

– making unauthorised payments to a connected person;
– entering into an informal loan agreement with a connected person;
– improperly delegating the administration and management of the charity;
– failing to keep proper minutes and other records of decision making;
– failing to properly implement and manage financial controls.

In more detail….

The Charity Commission identified that the charity had made unauthorised payments to a former chair of trustees. This was seen to be both a breach of the charity’s governing document and in contravention of the legal duty that a trustee must not receive any benefit from the charity unless it is properly authorised and clearly in the charity’s interests.

From a financial control viewpoint, the trustee in receipt of the payment was believed to be the only authorised signatory on the charity’s bank account.

It was reported that the charity had received interest free loans from a trustee, with no formal loan agreement having been put in place or a schedule of how that loan was going to be repaid.

The former chair of trustees did resign from the board, but continued to run the charity’s operations and receive payments.

A lack of regular, minuted Trustee meetings was also observed by the Charity Commission, and whilst following the initial review, meetings had been held, there was a lack of evidence that the Trustees were making collective decisions about the running of the charity.

The investigation also highlighted that the charity’s financial model was seen as unsustainable with a number of its shops operating at a loss.

What can be learned?

1. The Charity Commission takes matters of financial control and probity seriously. In addition, they are also concerned that charities should be able to demonstrate good and robust governance procedures. All payments should be appropriately authorised and be within the powers of the charity to make.

2. Trustees need to ensure that financial models are sustainable and that these can be monitored regularly through the charity’s accounting records. Where a charity has trading operations, they need to generate income and not be detracting from the charity’s funds.

3. Trustees also need to beware of any potentially dominant individuals and ensure that key decisions are taken collectively and not by one individual. Evidence should exist to demonstrate this. Trustee meetings need to be regular, effective, and minuted.

4. The Charity Commission first became involved with the charity as it was randomly selected from a number of charities whose accounts indicated that they may be in financial difficulty. Regular dialogue between a charity and its auditors/accountants can help in avoiding these situations before they spiral out of control, and before the need for regulatory involvement.

Paul Wormald, Partner at Hawsons Doncaster office, commented:

“This unprecedented official warning from the Commission to the Trustees of the Charity concerned shows that the regulator is prepared to make use of its new powers and take trustees to task where they believe legislation and guidelines have not been complied with.

The need for trustees to demonstrate that they are exercising effective stewardship over charity funds is vital to maintain and improve the public’s trust in charities.

Matters such as having proper financial controls in place and having access to good quality financial information are imperative to demonstrate this, as are having regular Trustees’ meetings where the actions of a charity’s executive management can be monitored and brought to account where necessary.”

National Hereditary Breast Cancer Helpline: Charity Commission case report is here.

How healthy is your charity? Take our charity health check, or book a free consultation.

Paul Wormald is a partner at Hawsons, working in the Doncaster office. He worked previously with two national firms of Chartered Accountants prior to joining Hawsons in 2001. For more information or advice on anything covered in this article, please contact Paul on [email protected] or 01302 367 262.[/author_info]