The Government is today publishing its response to the report by the Independent Commission on Banking (ICB), which sets out plans to fundamentally reform the structure of banking in the UK. This response agrees with the ICB’s recommendations and outlines how the Government will legislate to create a stable banking sector that supports lending to businesses and families, and removes the implicit taxpayer guarantee in the event of a bank failure.

The Government will implement the ICB’s advice in stages with the full package of reforms completed by 2019. All necessary legislation will therefore be put in place by the end of this Parliament. The Government will publish a White Paper in spring 2012 setting out further detail on how the recommendations will be implemented; in advance of that, the Government is open to views on how to implement these plans.

The Chancellor of the Exchequer, the Rt Hon George Osborne, said:

“The Independent Commission on Banking was set up last year to look at what I have called the ‘British Dilemma’: how Britain can be home to one of the world’s leading financial centres without exposing British taxpayers to the massive costs of those banks failing.

The Government is preparing the most far reaching reforms of British banking in our modern history – our objective is to make sure what happened in Britain never happens again.”

The Secretary of State for Business, Innovation and Skills, the Rt Hon Dr Vince Cable, said:

“Sir John Vickers has produced a comprehensive plan to give the UK a more stable banking system that removes the implicit taxpayer subsidy. We will take forward a full programme of reform with legislation in place to implement the ring-fence by 2015.

“The potential costs of an unsafe banking system are clear to everyone. Our reforms will protect taxpayers from the riskier aspects of banking and boost competition without harming the ability of UK banks to lend, to invest and to compete.”

Please note: Information in this blog post is content property of Business Credit Management UK (www.creditman.co.uk) and the full original article can be found by clicking here.

As unemployment figures reach a 17 year high, businesses in the UK are calling on the Government to offer more financial incentives to create jobs as lack of confidence in economic growth is hindering recruitment, according to a new report by Bibby Financial Services.

The jobless total has now reached 2.6 million which has led to calls from UK businesses for the Government to act by providing the kind of financial incentives which could lift businesses out of the ‘growth trap’.

Many of the 1,000 businesses taking part in the research said they cannot take on more staff because of uncertainty in the wider economy and 34 per cent say financial incentives would help to stimulate job creation in areas of most economic need.

The results of the research by Bibby Financial Services come shortly after Chartered Management Institute’s Future Forecast report which points to a pessimistic 2012 with 43 per cent of UK managers saying they are expecting further redundancies next year, and that 38 per cent feel insecure in their current jobs.

While businesses are keen to invest in more staff in order to build their business, they find themselves stuck in a ‘growth trap’ as they do not have the funds to take on more resources which they would need to grow their business.

And with just seven per cent of businesses blaming the lack of relevant skills and experience among potential employees, the survey suggests the greatest barrier to recruitment is confidence in the economy going forward, which 34 per cent cited as the main reason.

There is also concern about the new business pipeline with 30 per cent feeling uncertain about their own prospects over the next 12 months. In addition, one in four, 26 per cent say there is a lack of funding options available to enable them to recruit.

Edward Rimmer, UK chief executive of invoice finance specialist Bibby Financial Services, said businesses want to invest in new staff but need support from the Government to make it possible.

He says: “Businesses in the UK are in a growth trap where they want to invest in their firms, take on more staff and see significant growth going into 2012 after many hard years of cutting back.

“But those firms cannot make that step because they don’t have the level of business needed, so they will remain at a stagnant level. But if the Government stepped in, as previous governments have done in the past, and offered financial incentives for each new member of staff for instance, it would give the businesses that much needed support for real growth.

“It is clear from our survey that businesses want to grow but have come up against a number of barriers which the Government could act to remove. Unless these businesses can find ways to invest in staff we will not see the growth from small and medium-sized enterprises that the Chancellor is hoping for.

“At the same time the financial services industry can play its part by making access to business funding much more open and clear. Our research has revealed that one in four businesses cannot find the finance they need to fund new staff, which suggests many business owners are losing out without being aware of all the options.

“At Bibby Financial Services we are working hard to connect with those businesses and have seen a significant increase in demand for our services over the past 12 to 18 months. But as an industry, there is still more that can be done to ensure that businesses do not fail because they were unable to access the funds they needed to grow their business.”

Please note: Information in this blog post is content property of Business Credit Management UK (www.creditman.co.uk) and the full original article can be found by clicking here.

Research from MoneySupermarket.com Britain’s number one comparison site found that almost 10 million UK consumers could be tipped into or pushed further into debt this Christmas. Just over half of Brits (57 per cent) will have enough money saved to cover the cost of Christmas this year – six per cent less than those who had money saved in 2010 (63 per cent).

The research found that 40 per cent of people are currently in debt, excluding mortgage and student loans, meaning they will be entering the Christmas period with their finances stretched to begin with. Of those already in debt, more than a third (36 per cent) expect Christmas to push them even further into the red, while a fifth (20 per cent) plan to use their December salary to pay for Christmas.

For those not already in debt, the figures reveal that a shocking one in ten will be pushed into arrears by funding the festive period this year.

Overall, for those going into debt and those going further into debt, 69 per cent said they will resort to spending on a credit card, 23 per cent plan to use their overdraft and nine per cent will take out a loan to tide them over.

Tim Moss, Head of Loans and Debt at MoneySupermarket.com (http://www.moneysupermarket.com/money) , said: “This year has been incredibly tough for consumers with the rising cost of living really hitting the nations wallets hard. It comes as no shock that such a high number of people will be tipped into debt this festive season, particularly as Christmas is a time when people generally increase their spending. With many people also being paid early in December, January payday may seem a long way off, so planning ahead is vital to avoid carrying over the debt burden into next year.

“For the large number of people who are unable to save, there are a number of ways they can reduce the Christmas spending hangover by the New Year, and it is essential to use the right product to meet their needs. For example, a credit card [http://www.moneysupermarket.com/credit-cards ] offering zero per cent interest on purchases might be the sensible option if they are able to pay off the balance in full within the zero per cent period. Dipping into the unauthorised overdraft may prove costly for those unable to pay this off, particularly as the charges for dipping in the red may not hit until January.”

The research revealed that Scotland was the region which saw the greatest increase of consumers in debt compared to last year, with an increase of nine per cent finding themselves owing money (47 per cent) compared with 2010 (38 per cent) and this year, the region is seven per cent above the UK average.

Tim Moss continued: “Almost 20 million consumers will be heading into the most financially stressful time of the year already in debt, and further people will be pushed into the red as a result of the festivities. It is vital that steps are taken immediately to manage debt, especially in the current economic climate. Brits should ensure they are on the best possible rates across their savings, current accounts, credit cards and loans, so that 2012 can be started with a financial bang, for all the right reasons. Reducing your outgoings is vital and even opting for a frugal Christmas, may be a better option for many.”

Please note: Information in this blog post is content property of Business Credit Management UK (www.creditman.co.uk) and the full original article can be found by clicking here.

The Institute of Credit Management (ICM) and the Minister of State for Business and Enterprise Mark Prisk have published their monthly ‘tip’ for small businesses to better manage their cashflow.

“If you haven’t been paid when you should have been, contact your customer immediately, be assertive about what you expect and when you expect it, and make the consequences of non-payment clear.”

The cashflow ‘tips’ are derived from the series of Managing Cashflow Guides published by the ICM for BIS that have to date been downloaded more than 260,000 times.

For further information, log on to http://www.creditmanagement.org.uk/bisguides.htm

A group of leading organisations have joined together to urge the Government to tackle the growing problem of late payment in order to help small firms survive, grow and drive economic recovery.

The industry bodies, including those representing UK-based suppliers, have written to the Business Minister, Mark Prisk, to call for a plan of action to address late payment, which decimates small firms’ cash flow.

The group, which is supporting the Government’s new ‘Finance Fitness’ campaign, believes any plan to encourage better payment practices should include the following measures:

• Clarify that the EU Late Payment Directive making 30-day payment terms mandatory, in the absence of any specified/agreed payment terms, is being brought forward to 2012 as originally stated and ensure any new legislation prevents suppliers being coerced into agreeing to vary payment terms against their will.
• Given that small businesses suffer serious cash flow problems as a result of late payment from large customers and public sector bodies, impacting their ability to pay their own suppliers, ensure that the Directive is implemented in a flexible way to account for this ‘domino effect’.
• Clamp down on large companies taking ‘prompt payment discounts’ and imposing retrospective changes to payment terms and conditions that are not contractually agreed.
• Pledge to continue with the UK’s public sector 10-day and 5-day payment initiatives, and ensure they are embraced by more local public sector bodies across the country and that prompt public sector payment is passed on down the supply chain. Indeed, to give added surety to those in the supply chain, the requirement in central Government contracts for contractors to pay their sub-contractors within 30 days should be extended right across the public sector.
• As part of this, introduce a national league of local authority payers including incentives to encourage councils to perform.
• Strengthen the Prompt Payment Code, including requesting businesses to sign up to the Code – exploring ways of making it an ‘opt out’ rather than an ‘opt in’ arrangement – and calling for examples of where it has been breached.
• Require FTSE companies to report more detailed information on their payment times.
• Use the public procurement process to promote best practice, assessing evidence of prompt payment via Pre-Qualifying Questionnaires (PQQs) and avoiding using businesses with over 250 employees if they are notoriously bad payers.
• Under the principle of more open data, work towards a culture of more transparency and standardisation of financial information for firms and financial organisations, including credit rating agencies, in order to help small businesses better establish their creditworthiness and properly assess the payment credentials of companies with which they consider trading.
• Allow the Groceries Code Adjudicator to impose financial penalties on retailers who are found guilty of treating their suppliers unfairly.
• Consider ways of encouraging and supporting more suppliers to pursue interest on late payments under the Late Payment of Commercial Debts (Interest) Act 1998.

A  full list of the organisations backing the late payment campaign, and which have signed the letter to the Government, is:

Graydon UK Ltd; Lloyds TSB Bank Plc; the Asian Business Federation, the Brewing, Food and Beverage Industry Suppliers Association; the British Home Enhancement Trade Association; the British Printing Industries Federation; the Business Woman’s Network; the Federation of Master Builders; the Federation of Petroleum Suppliers and the Forum of Private Business.

Backers also include the Institute of Chartered Accountants in England and Wales; the Institute of Credit Management; PCG – the Voice of Freelancing; the National Association of Commercial Finance Brokers; the National Farmers’ Union; the National Pig Association and the Tenant Farmers Association.

New data from Graydon UK, a credit reference agency, shows that 76% of respondents believe the Government is not doing enough to protect UK businesses from late payment.

This is despite 51% reporting that the problem has become worse during the past year, 45% that it could threaten their ability to invest in their businesses and 20% that it could prevent them from continuing trading.

In addition, recent research from the payment body Bacs shows that late payment to small businesses, mainly originating from large companies at the head of supply chains across a broad range of sectors, has hit an all-time high.

The company’s figures show small and medium-sized enterprises (SMEs) are now owed a total of £33.6 billion in outstanding invoice payments – a rise of 10% in the last 12 months and the highest figure since records began in September 2007.

This is backed by recent research from the information company Experian, which found that late payment among UK firms of all sizes increased by almost a day on average during July, August and September 2011, compared to the April to June period.

Yet the same figures show the UK’s smallest businesses – those with one or two employees – managed to limit their late payment of bills to just half a day, representing the lowest rise during the period.

Further, with the use of credit checks more than doubling since last year in response to increasing late payment, a survey from Experian and the Institute of Credit Management (ICM) has found that small firms are more than twice as likely to suffer as a result of significant variations in credit scores.

“There is mounting pressure on the Government to crack down on the growing corporate late payment culture, which is already a huge problem for small businesses and is in danger of becoming endemic,” said Phil Orford, Chief Executive of the Forum of Private Business.

“Late payment and enforced retrospective changes to payment terms and conditions force firms out of business, plain and simple. It is time to tackle the problem once and for all so that prompt payment becomes the norm, unless there are good, justifiable reasons otherwise.

“In addition to the actions we want ministers to take, we recognise there are proactive steps available to business owners, including implementing proper credit management and credit checking procedures, but there is clearly a culture of fear when it comes to naming and shaming large late payers.

“We are also urging anyone subjected to this kind of treatment to tell us about it – we’re not afraid to take these companies on.”

Please note: Information in this blog post is content property of Business Credit Management UK (www.creditman.co.uk) and the full original article can be found by clicking here.

A new report following the Autumn Statement has revealed a quarter of UK businesses (25 per cent) think the Government’s approach to funding is unrealistic and unlikely to achieve positive results. And 61 per do not believe the Government is providing the right support for economic growth, according to invoice finance specialist Bibby Financial Services.

The research, which took place over seven days following the Autumn Statement and saw 1,000 company owners and directors surveyed, highlights that 23 per cent think the Government lacks the knowledge to address businesses’ specific needs.

It also shows that just eight per cent believe the right measures are in place to avoid a double-dip recession next year, despite Chancellor George Osborne’s plans to kick-start the economy announced in the Autumn Statement.

The OnePoll survey revealed that 40 per cent think a VAT reduction by 2.5 per cent in 2012 would provide real support to small and medium sized-enterprises, and almost a third (30 per cent) want to see the 50p rate of income tax scrapped to encourage better trading conditions.

More than a quarter, 26 per cent, also believe compelling banks to provide better access to finance for smaller businesses will provide effective support. And 24 per cent say there should be more investment in core sectors to help growth.

Edward Rimmer, UK chief executive at Bibby Financial Services, says the results of the survey highlight real concerns about business support and the shape of the economy moving forward into 2012, and that effective action on issues such as tax will make a real difference.

He says: “Our research is the biggest survey we have undertaken this year to gauge the mood of small and medium-sized business owners after a very difficult 12 months. And looking ahead to next year it is clear there is great uncertainty among the business community as well as a lack of faith in government plans to take the economy forward.

“Many of the business owners in the survey said there has been a lack of information available about funding and that sole traders and micro businesses are finding it particularly tough.

“That is why as an industry we need to be reaching out to those businesses who feel they have few options when it comes to funding and support to make them aware of the funding solutions that are available, such as invoice finance, so that next year is a better prospect for business growth.

“Even with the announcement of the £40billion boost to the National Loan Guarantee, barriers still remain for smaller firms wanting to access finance as the credit risk is still firmly with the banks so they will be applying the same credit-scoring measures which has been a real obstacle for small and medium-sized businesses.

“The Government has claimed to be the Government for business and recent steps do demonstrate a solid commitment, however, perception is everything and our survey shows that almost a quarter, 23 per cent, believe it lacks knowledge of the specific needs of business. Regardless of measures put in place it is, therefore, essential that the Government encourages a sense of confidence amongst UK SMEs going forward.”

Please note: Information in this blog post is content property of Business Credit Management UK (www.creditman.co.uk) and the full original article can be found by clicking here.

The Institute of Credit Management (ICM) has thrown its weight behind an initiative from the Forum of Private Business to tackle the issue of late payment.

Philip King, Chief Executive of the ICM, has added his signature to a letter to Mark Prisk, the Business Minister, from more than a dozen business leaders that calls for a clear and detailed plan from the Government to help small businesses improve cashflow, create employment and drive economic growth.

“Late payment continues to be a major problem for small businesses,” he says, “and what is needed is a more co-ordinated and consistent message from Government on how it should be tackled.”

While Mr King welcomes the Government’s recent ‘Finance Fitness’ campaign, launched in November, he believes the Government should do more to support those initiatives that are already in place, such as the Prompt Payment Code: “The Government is great at getting such initiatives underway, but lets itself down on the follow-through,” he says. “As such its actions can appear disjointed and more focused on chasing headlines rather than executing well-conceived ideas.”

The letter references a number of specific actions the Government could take, including strengthening the Prompt Payment Code, and requesting businesses to sign up to the code by making it an ‘opt out’ rather than an ‘opt in’ arrangement.

The recommendations also include: making a 30-day payment period mandatory (in the absence of any specified/agreed payment terms) in line with the new EU Late Payment Directive; clamping down on the actions of larger companies changing payment terms and conditions mid-contract; and requiring FTSE companies to report more detailed information on their payment times.

But Philip also believes that small business should be doing more to help themselves: “The onus cannot all be on the Government,” he says.

“Small businesses could be much more proactive in trying to minimise the impact of late payment via measures such as improved credit management,” he says, “and getting the basics right. Suppliers need to talk to their customers and make sure that whenever terms are being negotiated, or payment terms extended, they are getting something in return.”

Please note: Information in this blog post is content property of Business Credit Management UK (www.creditman.co.uk) and the full original article can be found by clicking here.