Category: Regulation

Overview of UAE’s new Commercial Companies Law
LegalRegulation

Overview of UAE’s new Commercial Companies Law

Although the New Law maintains the cornerstones of the Old Law, it introduces some fundamental provisions that must be observed carefully by existing companies and investors in the UAE. All commercial companies operating in the UAE are required to adjust their positions in compliance with the provisions of the New Law within a maximum period of one year from the Effective Date.

The New Law eliminated two of the seven forms of commercial companies that may be registered in the UAE, namely Joint Venture Companies and Share Commandite Companies. Any company that does not adopt one of the remaining five forms will be null and void and the parties contracting in the name of such companies will be personally and jointly liable for any and all of the liabilities deriving from such contracting.

The main provisions relating to Limited Liability Companies (the “LLCs”) in the Old Law are maintained by the New Law. However, the New Law makes several positive changes which can be summarized as follows:

– An LLC can be incorporated in the UAE now by one natural Emirati shareholder;

– The pledge of an LLC’s shares is now expressly permitted under the New Law;

– A shareholder intending to sell his shares in an LLC is obliged to disclose the name of the intended purchaser of the shares, as well as the terms of the purchase to the other shareholders;

– The shareholders can now nominate managers for an LLC without any limitations;

– The statutory required notice period for general meetings has been reduced to only 15 days; and

– The statutory quorum required for general meetings has been increased from 50% to 75%.

– The New Law has also made key changes to the provisions affecting Joint Stock Companies (the “JSCs”), these include the following:

– The minimum founding partners required for Private Joint Stock Companies have been reduced from 3 to 2 and from 10 to 5 for Public Joint Stock Companies;

– The minimum and the maximum limits for the subscription of the founders of a Public Joint Stock Company have been increased to 30% and 70% respectively;

– The Securities and Commodities Authority in the UAE has been given the right to issue a resolution to regulate the mechanism of subscription in new shares on the basis of book building;

– The cap on the number of board members of JSCs has been reduced from 15 members to only 11;

– The minimum notice required for convening a general assembly meeting has been reduced from 21 days to 15 days;

– The minimum share capital required has been increased from AED 2 Million to AED 5 Million for Private Joint Stock Companies and from AED 10 Million to 30 Million for Public Joint Stock Companies;

– The shareholders’ pre-emption rights can now be sold to other shareholders or to third parties;

– The New Law gave the UAE’s Cabinet the right to issue a resolution determining and regulating other classes of shares issuable by Public Joint Stock Companies;

– Public Joint Stock Companies are now prohibited from providing any of its shareholders with financial assistance to enable them to hold any shares, bonds or Sukuk issued by the company;

– A JSC company may increase its share capital by the entry of a strategic shareholder in consideration of the technical, operational or marketing support that such shareholder may extend to the company; and- The appointment of JSCs’ auditors have been capped at only 3 consecutive years.

The New Law introduces several new penalties which all companies and their management operating in the UAE should consider and observe. These include a daily penalty of AED 2,000 on any company that fails to amend its Memorandum of Association and Articles of Association in compliance with the provisions of the New Law within one year from the Effective Date.

There are almost two months left before the expiry of the period granted for existing companies to comply with the provisions of the New Law and any company that fails to achieve that, may be considered as dissolved.

Authored by Mojahed Al Sebae, www.galadarilaw.com

Homebuyers save Hundreds of Millions from Stamp Duty Reform
LegalRegulation

Homebuyers save Hundreds of Millions from Stamp Duty Reform

Transactions levels at the top end of the market remained constant under the new regime and stamp duty receipts from homes costing more than £1 million went up by 15% across the year.

In December 2014 the government reformed the residential stamp duty system, changing it from a ‘slab’ to a ‘slice’ structure and reducing stamp duty for 98% of people who pay it.

New analysis released by HMRC shows that the benefits of this reform have been felt across the country, with homebuyers saving an estimated total of:

– £24 million in the North East or £900 for the average house
– £90 million in the North West or £700 for the average house
– £74 million in the East Midlands or £500 for the average house
– £131 million the South West or £4,800 for the average house
– £38 million in Wales or £800 for the average house

The Chancellor George Osborne said:

“In 2014 I cut stamp duty and already three-quarters of a million home-buyers across the country have benefitted. The overwhelming number of home-buyers – 98% – are saving money thanks to our reform, which has done away with the unfair old system that meant increases being imposed on those paying just a pound over the threshold.

“These figures show that the benefits are being felt across the country. It’s a fair, workable, lasting reform to the taxation of housing.

“I am determined that this government will continue to take bold action to support a home-owning democracy.

Under the old slab system, homebuyers would have paid stamp duty at a single rate on the entire property price. With the new system, home buyers only pay the rate of tax on the part of the property price within each tax band.

The news coincides with new analysis from the International Monetary Fund (IMF) finding that the reform has “reduced distortions and is a step in the right direction. The IMF commented on the impact of the Stamp Duty reforms as part of its annual Article IV consultation with the UK.

European Commission Adopts Position on Portugal's 2016 Draft Budgetary Plan
Global ComplianceRegulation

European Commission Adopts Position on Portugal’s 2016 Draft Budgetary Plan

In the context of elections on 4 October 2015, Portugal did not submit a DBP on time by 15 October, but only on 22 January 2016. A preliminary analysis identified a serious risk of non-compliance with budgetary policy obligations and, in line with the rules, the Commission asked the Portuguese government to clarify outstanding issues.

Taking into account a) the Draft Budgetary Plan, b) further structural consolidation measures announced by Portugal on 5 February as well as c) additional information regarding the 2015 baseline, the structural effort planned by the Portuguese authorities for 2016 is now estimated to be between 0.1% and 0.2% of GDP.

Vice-President Valdis Dombrovskis, responsible for the Euro and Social Dialogue, commented:

“Following intense technical and political contacts, the Commission did not have to request a revised draft budgetary plan from the Portuguese authorities. Nevertheless, the government’s plans are at risk of non-compliance with the rules of the Stability and Growth Pact. The Portuguese Government is invited to take the necessary steps to ensure that the 2016 budget is compliant. In spring, the Commission will reassess Portugal’s compliance with its obligations under the Stability and Growth Pact, including under the Excessive Deficit Procedure.”

Pierre Moscovici, European Commissioner for Economic and Financial Affairs, Taxation and Customs, said:

“This is a good outcome for all concerned: Portugal, the Commission and the euro area. Without having had to request a revised draft budgetary plan, a constructive dialogue has led to additional measures worth up to €845 million, which will help safeguard the soundness of Portugal’s public finances. The reassuring message to investors today is: the EU’s fiscal framework is robust and the Commission welcomes Portugal’s reaffirmed commitment to it. At the same time, the risk of non-compliance remains and we will continue to monitor developments in the coming months as part of the ongoing Excessive Deficit Procedure.”

Portugal has been in the corrective arm of the Stability and Growth Pact since December 2009 and was asked to correct its excessive deficit by 2015, i.e. to bring the deficit to below 3% of GDP by 2015. For 2016, the Council recommended that Portugal make a fiscal adjustment of 0.6% of GDP towards the medium-term objective. According to Portugal’s DBP and the Commission’s winter forecast, the general government deficit is expected to have been 4.2% in 2015.
Source: European Union.

Setting up a Business in the UAE
LegalRegulation

Setting up a Business in the UAE

About James Berry & Associates
Our services range from businesses entering into the country and establishing legal status, to setting up a business, advising on corporate transactions, or concluding employment arrangements, right through to advising clients of need in their personal affairs.

Our associates are legal professionals with qualifications obtained from various international jurisdictions. As a result, their training and experience enables them to provide a high standard of advice and legal expertise in every case.

What differentiates us is that, apart from being knowledgeable in the law, and experienced in advising on transactions, we recognise that what ultimately matters to our clients is the outcome. As such, we make it our business to set and manage realistic expectations.

Drawing on our years of experience and highly trained lawyers, we provide our clients with clear and practical advice on all their legal issues in a friendly and accessible way. We provide legal advice for businesses through our Corporate/Commercial department and for people personally through our Private Client department

In our region, there is a wide range of options is available to individuals and to international companies who are looking to establish a business presence. This ranges from companies incorporated under the Commercial Companies Law to companies incorporated within the Free Zones. The incorporation team at James Berry & Associates provides professional and personalised assistance to clients. We assist our clients in setting up and maintaining in good standing companies incorporated in Dubai, Sharjah and/or Abu Dhabi.

Furthermore, we assist our clients with registrations such as limited liability companies, branches and representative offices of non-UAE companies, professional licenses, professional associations, non-profit organisations and/or business forums as well as free zone companies.

Alongside these services, we also work with offshore companies incorporated within UAE Free Zones and/or within other offshore locations. We are registered offshore agents and are therefore fully authorised to assist you in the setting up of offshore companies in the Jebel Ali Free Zone. We also incorporate offshore companies in other popular offshore locations outside the UAE.

With offices located on Sheikh Zayed Road, James Berry & Associates provides clients with central and accessible offices to meet our associates.

Company: James Berry & Associates
Email :[email protected]
Web: www.jamesberrylaw.com
Address: 304, API World Tower, Sheikh Zayed Road
P. O. Box 52294, Dubai, UAE
Telephone :+ 971(4)3317552
Fax :+ 971(4)3317553

Arbitrator of the Month
LegalRegulation

Arbitrator of the Month

One of the key components to arbitration in corporate cases is understanding the facts of business life. This is emphasised by famous English maritime arbitrator, Cedric Barclay, who used to say: “To be a really good maritime arbitrator, one must have gone through a £3mn loss in a shipping downturn, withstood the loss, and made £5mn in the following upturn.” It was a caricature, and if the test were to be applied not many of the international arbitrators most busy today would remain in business. But, as with all caricatures, it contained a core of truth: breadth of actual business experience is paramount to understanding the facts of a case.

Allow me to recount a memory which I believe proves that having business experience by proxy only may not be enough.

It was the case of a joint venture for a large industrial project which had turned sour. My co-arbitrators and I were interrogating the claimant’s main witness, a flamboyant, tycoon-type executive. At issue was whether the defendant, one of the venture partners, had discharged its obligation to sell the output. One of my co-arbitrators, a reputable professor who was also senior partner of his law firm and sitting on boards of various companies, was insisting in his questions that the defendant had actually performed sales, the adequacy of the sales prices being for him a totally different issue. Looking at him in disbelief, the witness bent over and simply said: “Mr. Arbitrator, any fool can sell a dollar for ninety-nine cents.”

Experiences such as this have shaped my careers as an arbitrator. I am also fortunate to have had direct business experience with two major multinational corporations, Nestlé of Switzerland and Cargill of the United States. These experiences have enabled me to become an efficient arbitrator, and I draw on my vast experience in every case I undertake.

Monitoring the integrity of the arbitral process is another a key factor in arbitration, which can involve protecting witnesses.

An example of this can be found in an arbitral tribunal I chaired last year in Paris which included two Middle Eastern firms and one German company. A Middle East witness was called by the German defendant, and although he had arrived in Paris for the hearing, refused to appear as he had received death threats for him and his family back home should he testify, delivered to his hotel in Paris.

As soon as we were informed of this, we took a proactive approach to protecting the witness and ensuring the continuity of the trial. We immediately asked the parties to confirm in writing that they had no part in this, which they did. We
advised the arbitral institution, but they had no clues. Calling the police was obviously not an option, as the witness had immediately left Paris and flown back home. The only weapon we had was drawing adverse inference from these
events and we used it. The integrity of the arbitral process was endangered there, and it was our duty to protect it, which I feel we achieved.

Contact Details

Contact Name: Jacques Werner

Company: Werner & Associés

Address: rue du Rhône 13

Case postale 5134

Geneva

CH-1211

Geneva

Switzerland 

E-mail: [email protected]

Website, with detailed biography: www.ggaf.ch

 

 

 

 

 

 

Arbitrator of the Month
LegalRegulation

Arbitrator of the Month

“Since the firm was launched in 2013 it has more than doubled in size. When we opened our doors in 2013 we were regarded as an arbitration boutique, today, our clients are asking more and more for us to defend them in commercial litigation, in particular high-profile cases and international disputes” Jean-Georges Betto explains.

Financial performance
“In our first year we doubled our turnover, the second year we were up another 25%” enthuses Betto when asked about the firm’s financial performance this year. He goes on to explain the reasons for their success:

“In the current economic environment we are extremely proud of these results that are more and rarer today. The success of our firm is partially down to the partner’s willingness to take risks, to step out and launch the firm, to dedicate all of their time and energy to this project. We also have a unique approach to invoicing which is much appreciated by our clients, instead of billing by the hour, which can often mean that proceedings costs can skyrocket over time, we sit down with our client at the beginning of the case, evaluate the work required to handle the case and agree on a flat fee for the whole proceeding.

“This means that our clients have a clear view from the get-go, which helps them manage their finances, and our firm shares with them the risks of an unexpected increase in costs, which builds trusting relationships with our clients.”

Recent developments
With an optimistic outlook set for the future, “over this past year we welcomed a new partner, Julien Fouret, a leading specialist in international investment arbitration and public international law, widening our scope of legal expertise and once again offering our clients a more comprehensive service” Betto explains when asked what his company is doing to capitalise on this as well as sustain their success.

“We also welcomed a new Portuguese speaking associate Marie-Claire Da Silva Rosa in order to strengthen our lusophone team and our outreach in the Brazilian Market, in which we are already present as we have the advantage of having one of the rare Parisian practitioners (Thierry Tomasi) who can litigate in the Portuguese language. We have also made our stamp on the French speaking African market, representing French blue chip companies in disputes opposing them with African States which has recently had a lot of media attention, and also the Republic of Gabon in a dispute against the Chinese-owned petrol giant Addax Petroleum (Sinopec Group)” he adds.

Of course, when working in an industry that is constantly evolving measures do need to be taken to ensure that a firm is at the forefront of any emerging developments. Jean-Georges Betto lifts the lid on how this applied to the company betto seraglini, “as a ‘start-up’ firm we knew from the get-go that we were going to have to do everything to implant ourselves in the market as one of the go-to firms in matters of international arbitration and commercial litigation” he explains.

“How were we going to do this? Since the launch of the firm we have always tried to ensure that the firm is always visible, this is to say high presence on social media platforms, a focus on communication and getting information about our firm out there and last but not least with the creation of an association entitled ‘cabinets de croissance’ which roughly means ‘firms on the grow’. This Think-tank aims to bring together several specialised boutique business law firms with the aim of sharing our knowledge and experience, in particular with future entrepreneurs, and lobbying the Paris Bar authorities in order to make sure that the needs and concerns of this new generation of firms is addressed at all levels” he adds.

2016 and beyond
“Law firms today are more than ever, a people industry. This means that we invest heavily in the people we work with” Betto emphaises. Developing this pearl of wisdom, he adds: “We aim to keep our partner/ associate ratio low as we feel this is the best way to teach our associates as well as motivate them, we invest enormously in our associates, who we pay as would any large anglo-saxon firm even though we have a much smaller effective, as well as our support staff and we believe that internal promotion is the best way to construct a solid and dedicated team”.

At the close of 2013, the partners, associates and employees of betto seraglini announced the creation of the betto seraglini for International Justice Fund. “This Fonds de dotation fights to allow access for societies most vulnerable, to international justice and protection of fundamental rights by educating and representing victims” Betto explains. “Thanks to the mobilisation of its team betto seraglini for International Justice develops not only its own projects and also supports existing organisations in order to work hand in hand with human rights NGOs and be part of a more global approach” he concludes.

Financial Conduct Authority Chief Executive Appointed
AccountancyRegulation

Financial Conduct Authority Chief Executive Appointed

The Chancellor of the Exchequer, the Rt Hon George Osborne MP, commented:

“Andrew Bailey is the outstanding candidate to be the next Chief Executive of the Financial Conduct Authority, and I am delighted that he has agreed to lead it.

“We have cast the net far and wide for this crucial appointment and, having led the Bank of England’s response to the financial crisis, Andrew is simply the most respected, most experienced and most qualified person in the world to do the job.

“His appointment is an important next step in the establishment of the FCA as a strong regulator, independent of government and industry.

“The government is determined that the financial sector operates to the highest standards. Anyone who has dealt with Andrew knows he will be tough but fair, and understands the flaws and merits of the sector better than anyone.

“Simply, I am confident that he will ensure that our financial services industry is the best regulated in the world.

“He has already done a superb job at the Prudential Regulation Authority; where he has shown how effective he is as a leader, able to build strong relationships and use his fine judgment to steer the PRA through its formative years.

“I would also like to thank Tracey McDermott for the excellent job she has done in leading the FCA in this interim period. Her experience, dedication and professionalism have been greatly appreciated.”
Chairman of the Financial Conduct Authority, John Griffiths-Jones added:

“I am delighted that Andrew has been appointed as the new Chief Executive. He brings unrivalled regulatory experience, a proven track record and an excellent reputation in the UK and internationally. Having been an FCA Board member since 2013 he has been fully engaged with all the regulatory issues that we have faced in recent years and in setting our strategy for the future.

“I look forward to working with Andrew. He has done a great job at the PRA and he will build on the work the FCA has done over the last three years as a strong, independent regulator.

“I would also like to thank Tracey McDermott for the excellent job she has been doing as the Acting CEO and for agreeing to remain in post until Andrew starts.”

The government has also announced the appointments of Ruth Kelly, Bradley Fried, Baroness Hogg, and Tom Wright as Non-Executive Directors of the FCA today.

Businesses Could face £2
LegalRegulation

Businesses Could face £2,675 Foreign Worker Recruitment Charge

Emma warns the bill for recruiting employees from overseas could soon hit a record £2,675 – or more.

Emma says: “If the UK removes the current exemptions for EEA nationals and ceases to be a signatory to the Treaties which enshrine the rights of free movement in the EU, companies would likely need to navigate Tier 2 of the Points Based System to recruit from the EU. This can quickly become a very expensive exercise.

“Under Tier 2, an employer needs a sponsor’s licence which carries a one-off cost of £1,476. For each employee, they also need a Certificate of Sponsorship which carries a fee of £199. The employee needs to apply for their visa but often the employer meets this cost to which currently stands at £575 for entry clearance and £664 for leave to remain.

“The Immigration Act 2016 imposes an Immigration Skills Charge which was due to be introduced in April 2017. I anticipate that this could now be brought forward. The proposal is for businesses that recruit from overseas to pay a charge of £1,000, or £364 for small business, for every employee when they apply for entry clearance or leave to remain. They would usually pay the charge twice in the lifetime of a person’s leave under Tier 2.

“When you add up the sums, the immediate cost of taking on an overseas worker could soon be a staggering £3,250 per employee or more – and that doesn’t even take into account the cost of recruitment, legal fees and regulatory administrative costs.”

The dedicated Immigration section on Simpson Millar’s website has seen a 1,100% increase in enquiries since the Brexit vote was announced on 24th June, driven by a 290% increase in unique visitors. “Our website stats are a clear indication of just how many people and businesses are concerned about the implications of Brexit. It is the law of inevitability. I suspect we will see a record number of residence card and permanent residence card applications this summer – many from people who never thought they would need it.”

Simpson Millar holds weekly drop-in clinics in Manchester and Leeds which saw three times as many people attend as normal in the week following Brexit.

According to the Office for National Statistics, there are currently over 2 million non-UK nationals from EU countries working in Britain.

A breakdown of the potential costs for employers is as follows:
Sponsor’s licence £1,476
Certificate of Sponsorship £199
Potential Immigration Skills Charge £1,000 (£364 for SMEs)
TOTAL £2,675 (£2,039 for SMEs)

Visa costs sometimes met by employers
Entry clearance £575
Leave to remain £664

Mediator of the Month - Globis
Global ComplianceRegulation

Mediator of the Month – Globis

Workplace and employment mediation is coming of age. More organisations are using it to resolve workplace conflict than ever before, an increase that is due to organisations’ desires to seek more effective, less time-consuming and less costly methods of conflict resolution within the workplace. The reason for this change in approach to conflict resolution, and the increase in conflict resolution methods per se, is the rise in workplace conflict. The causes of this, as we shall see in this book, are both multifaceted and complex, but what is very clear to the outside observer is that the current system of workplace conflict resolution in
this country is broken.

The employment tribunal, the mainstay of workplace conflict resolution, has been with us over half a century, and despite reforms along the way it is now recognised by many, myself included, as an analogue process in a digital world. It is too black and white in a world where complex grey areas exist, especially where human beings are at the centre. Workplace conflict is not always about wrong and right, about the innocent and the guilty, and certainly not about who can afford the best lawyer. Too often the ‘resolution’ aspect of conflict resolution is ignored, but this is something that forms the core of mediation. Mediation aims to resolve conflict quickly, fairly and cheaply, something that is of benefit to both the individual and any organisation that values its time, money and reputation.

Most organisations now recognise that conflict is a part of working life, but surprisingly few are equipped to deal with it quickly and effectively or even acknowledge its effect. In my book, Difficult Conversations – 10 Steps to Becoming a Tackler Not a Dodger, I liken difficult conversations to small fires that can burn out of control if not dealt with quickly, and the presence of an effective conflict management policy is similar to this—if conflict is not dealt with swiftly and effectively it can spread across teams and departments, causing damage that can only truly be realised when the fire is finally extinguished. Even then, embers of resentment can burn long afterwards. This is where mediation comes into its own, taking days or even on some occasions only hours to halt a conflict in its tracks and get all the parties concerned back to focusing on their jobs, not the conflict that has arisen because of them. Conflict can in fact be strategically managed fairly easily, and organisations that recognise this will benefit over organisations that have not, or will not, embrace the concept. We have seen similar developments in other fields, for example coaching, which reached maturity in the UK some years ago and has successfully ironed out issues associated with issues such as accreditation and supervision. It is my belief that mediation is likely to follow a similar path.

As mediation in the workplace matures, there will be a need to learn from our experiences with it and review how the profession develops in practice. Using mediation to resolve conflicts in the workplace is still a relatively new concept (despite mediation first being used by the ancient Greeks), and there is always an opportunity to improve the experience those involved in conflict situations undergo as they find their path to peace and reconciliation. I am very confident however that the future of conflict resolution in the workplace is through flexible practices such as mediation rather than one-dimensional tribunals.

Thousands of people have benefitted from being users of mediation services, but unlike employment tribunals they are confidential in nature, meaning that we are unlikely to hear of many successes. A book like this helps draw attention to the positivity of mediation and its advantages for both individual organisations and communities. Like other fields such as art and science, developments in mediation occur as a result of new discoveries, developments which are even more likely as its use grows and diversifies.

About the book

The book incorporates a number of themes and is split broadly into two parts, exploring a number of themes. First, I felt it important to set the book in some context in terms of the British workplace. To this end I look at the history of the British workplace and discuss how it has changed from the days of the industrial revolution to today’s multicultural, dynamic workplace, paying particular attention to how and why these changes have wrought a rise in workplace conflict.

Next I examine the business case for mediation in dealing with conflict in the workplace compared to the existing forms of conflict resolution. I realise that busy HR professionals and CEOs want evidence of how mediation can benefit their bottom line, and here I offer evidence from various sources to detail how conflict costs businesses more than they realise and why mediation is a sound economic platform on which to build an effective conflict resolution programme.

Following this I discuss the power of storytelling in mediation. Some of you reading this will already be well aware that storytelling is the premise upon which many a mediation session is based, as everyone involved within them has a story to tell (something that employment tribunals do not generally engage in). The mediation process flushes out many stories of hurt, disbelief, justification and clarification, stories that can be vital to understanding the core reasons behind a conflict and that may have otherwise gone unheard.

The second part of the book focuses on the practical application of mediation as a method of conflict resolution within a workplace, the different ways to go about implementing it and best practice in regards to running it, drawing on my extensive experience as a mediator. This includes, at the end, a toolkit containing advice, templates and other documents that I use daily within my mediation work, providing you with everything you need to get started with your own in-house mediation strategy.

Each chapter is followed by a case study drawn from real life experiences. This is something I believe is very important in getting across both the various turns a mediation session can take and the power inherent within it to not only resolve a conflict but also cleanse and heal emotional wounds, allowing previously combative individuals to work effectively with each other once more. These case studies are, of course, all anonymous, and in them I try to draw a balance between the dynamics of the parties, triggers that caused the conflict and eventually prompt a requirement mediation, the impact the cases had on me as mediator and the learning that can be drawn from those in the mediation industry. There are also a number of brief case studies interspersed throughout the remaining parts of the book to illustrate certain points. In providing these case studies I recognise that I make myself vulnerable as I write openly about my experiences, including my failures and points for learning. I do not suggest for a moment that I have all the knowledge or answers, partly because the thrill of mediation is that when you think you’ve seen everything something comes along that knocks you for six! We are, after all, dealing with human beings. Like others I seek to continue to learn throughout my life, something that applies very strongly to my work in this field. All I can do, as all any mediator can do, is simply reflect on my ten years of mediation experience and use this experience to assist those with a shared interest in this field.

If you have read this far I am going to assume that you have at least a passing interest in mediation and its suitability in dealing with workplace conflict. Perhaps you are an independent mediator, organisation, commentator or government official. I have written this book with the intention of making a small contribution to demystify the concept of mediation and highlight its advantage as a commercial, pragmatic tool. If I increase your awareness of mediation within the workplace and leave you viewing it in a more positive light than you had before reading, then I will have achieved my purpose. I hope you enjoy the book.

About
Clive Lewis is a Business Psychologist, specialising in employee and industrial relations. He is the UK’s most published writer on the topic of mediation in the workplace. He is the founding director of Globis Mediation Group.

Company: Globis Ltd
Name: Clive Lewis OBE DL
Email: [email protected]
Web Address: www.globis.co.uk
Address: 1 Wheatstone Court, Waterwells Business Park, Quedgeley,
Gloucester GL2 2AQ.
Telephone: 0330 100 0809

New EU Rules on Financial Benchmarks
LegalRegulation

New EU Rules on Financial Benchmarks

The European Commission welcomes last night’s agreement between the European Parliament and the Council of the EU on a Regulation of financial benchmarks.

The new rules were first proposed by the Commission in September 2013 in the wake of the alleged manipulation of various benchmarks which were to the clear detriment of consumers and companies throughout the EU. Following last night’s preliminary political agreement, the EU is setting a leading standard globally.

A benchmark is an index or indicator used to price financial instruments and financial contracts or to measure the performance of an investment fund. Yesterday’s agreement will improve the governance of such benchmarks produced and used in the EU in financial instruments such as bonds, shares, futures and swaps. The new rules are also directly relevant for consumers as benchmarks determine the level of mortgage payments of millions of households in the EU.

The new rules will reduce the risk of manipulation by ensuring that benchmark providers in the EU have prior authorisation and are subject to proper supervision.

Jonathan Hill, EU Commissioner responsible for Financial Stability, Financial Services and Capital Markets Union said “Benchmarks are critical for the functioning of our financial markets. Manipulating benchmarks amounts to stealing from investors and consumers and undermines confidence in markets. Today’s agreement will help to rebuild confidence in financial markets in the European Union”.

In the financial industry, benchmarks are calculated from a representative set of data or information and determine the prices of many (highly leveraged) derivatives. Examples include: the London Interbank Offered Rate (LIBOR) and the Euro Interbank Offered Rate (EURIBOR) (both benchmarks for interbank interest rates); oil price assessments; and stock market indices.

The proposed regulation will now be subject to a vote by the European Parliament.

The Commission proposed new standards for benchmarks in September 2013 in the wake of the alleged manipulation of various benchmarks including inter-bank offered rates (EURIBOR, LIBOR, etc.), benchmarks for foreign exchange (FX) and commodities including gold, silver, oil and biofuels.

The regulation will implement and is in line with the principles agreed at international level by the International Organization of Securities Commissions (IOSCO) in 2012 and 2013. The Council agreed on a negotiating mandate for that proposal in February 2015.

The Regulation will contribute to the accuracy and integrity of benchmarks used in financial instruments and financial contracts by:

– ensuring that benchmark administrators are subject to prior authorisation and supervision depending on the type of benchmark (e.g. commodity or interest-rate benchmarks);

– improving their governance (e.g. management of conflicts of interest) and requiring greater transparency on how a benchmark is produced;

– ensuring the appropriate supervision of critical benchmarks, such as EURIBOR/LIBOR, the failure of which might create risks for market participants and for the functioning and integrity of markets.

UK Economy Trapping Working Capital
AccountancyRegulation

UK Economy Trapping Working Capital

Newresearch commissioned by American International Group, Inc. and PrimeRevenue indicates thatlimited access to working capital finance and inflexible payment terms are having an adverse impact on UK business.

The YouGov poll of UK businesses that provide goods or services to large organisations found that 17% of their revenue is currently tied up in invoices with non-standard payment terms, suggesting that around £29bn is being withheld from UK plc. Over three quarters (77%) of companies have been asked to accept longer payment terms, with 28% saying the issue has increased in the past year.

Businesses reported that on average 20% of their customers insist on terms longer than the norm. This can have a significant impact on business operations with respondents saying extended payments affect cash flow (55%), require additional administration (33%) and strain client relationships (29%).

And the risk of not providing extended payment terms can be costly. One in five respondents (20%) report
that they have lost business after denying customers longer payment terms.

With these business risks in mind AIG and Prime Revenue today launched a new supply chain finance offering for mid-market, non-investment grade companies that could free up significant funding for UK businesses.

Supply Chain Finance from PrimeRevenue and AIG is the product of a partnership between a leading global insurer and the largest working capital finance platform in the world. The solution provides funds that enable suppliers to take early payment less a small discount, while enabling buyers to standardise and potentially lengthen their payment terms. This provides low cost access to working capital on both sides of the transaction.

Until now, supply chain finance platforms have been limited to supporting the largest, investment grade businesses. Supply Chain Finance from PrimeRevenue and AIG is able to cater to the thousands of mid-market, non-investment grade companies, by providing financing with the credit risk insured by AIG’s market-leading trade credit insurance.

“The inability to get access to low cost working capital can affect our clients and is holding back thousands of very well run businesses. Ultimately, it can have a significant impact on the economy as a whole,” commented Neil Ross, Regional Manager EMEA Trade Credit, AIG.

Ross continued, “Leading publicly-rated companies can borrow quickly and with favourable terms to take advantage of
emergent market opportunities. Now, by combining PrimeRevenue’s market-leading platform with AIG’s Trade Credit underwriting experience we’re able to extend this advantage to many more businesses.”

The ongoing financing requirement will be organised by PrimeRevenue Capital Management, by providing investment access to banks as well as non-bank entities such as insurance companies, pension funds, hedge funds and capital market investors looking for stable returns. The offering will be rolled out to other European countries and the United States in coming months.

Rob Barnes, Founder, PrimeRevenue, said: “PrimeRevenue has been serving the supply chain finance market for over a decade, with over $120bn flowing through our system in the last 12 months. We have seen first-hand the benefits that this approach can bring to businesses through unlocking cash flow and working capital to fund day-to-day operations and investment for the future. Our partnership with AIG means that these benefits are now available to a broader market of buyers and their suppliers.”

 

 

Opus Bank Announces Further Expansion of Its Merchant Bank
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Opus Bank Announces Further Expansion of Its Merchant Bank

Opus Bank has announced that Paul E. Kacik has joined Opus as Managing Director, Head of Healthcare Investment Banking within Opus’ Merchant Banking division. Mr. Kacik, a 24-year investment banking veteran, is responsible for providing M&A advisory services, debt and equity capital solutions, and other strategic advisory services to healthcare providers and practitioners.

Stephen H. Gordon, Founding Chairman, Chief Executive Officer and President of Opus Bank, stated, “Over the years, banks have become exceedingly product focused and have failed to effectively provide broader and more sophisticated client centric solutions, including access to alternative sources of capital, M&A and other strategic advisory solutions. The addition of Paul joining our Merchant Banking division enables Opus to integrate our niche Healthcare Banking focus with complimentary investment banking expertise, better positioning Opus to provide a comprehensive and customized financial and strategic solution for those within the healthcare industry.”

Dale Cheney, Senior Managing Director, Head of the Merchant Banking division, stated, “We are pleased that Paul has joined Opus to lead our Healthcare Investment Banking efforts. He is a highly-talented and experienced investment banking professional whose background complements our merchant banking model of providing a comprehensive and integrated principal investing and advisory solution to middle-market companies.”

Mr. Kacik joins Opus’ Merchant Banking division from Duff & Phelps Securities, LLC in Los Angeles, where he served as Managing Director – Healthcare Investment Banking and was responsible for the origination and execution of middle-market Healthcare M&A transactions. From 2009 and following its acquisition by DA Davidson & Co. in 2011, Mr. Kacik served as Managing Director – Head of Healthcare Investment Banking with McGladrey Capital Markets, LLC where he led the national healthcare investment banking practice and was responsible for the oversight of all origination and execution efforts in the healthcare sector. From 2004 and following its acquisition by Wells Fargo Securities in 2006, Mr. Kacik served as Senior Vice President – Head of Healthcare Investment Banking with Barrington Associates, where he was responsible for originating and executing corporate finance transactions, including buy and sell-side M&A, equity and debt fundraising, and private equity recapitalizations. Earlier in his career, Mr. Kacik served in banking and finance roles with Smith Barney, Solomon International, LP, and Technomark. LTD. Mr. Kacik holds a B.S. from the University of Southern California and an M.B.A. from the Sir John Cass Business School – City University, London, England.

EU Finalises Proposal for Investment Protection and Court System for TTIP
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EU Finalises Proposal for Investment Protection and Court System for TTIP

The European Commission has finalised its new and reformed approach on investment protection and investment dispute resolution for the Transatlantic Trade and Investment Partnership (TTIP). This follows another round of extensive consultations with the Council and the European Parliament. The proposal for the Investment Court System has been formally transmitted to the United States and has been made public.

The final text includes all the key elements of the Commission’s proposal of 16 September, which aims at safeguarding the right to regulate and create a court-like system with an appeal mechanism based on clearly defined rules, with qualified judges and transparent proceedings. The proposal also includes additional improvements on access to the new system by small and medium sized companies.

The new system would replace the existing investor-to-state dispute settlement (ISDS) mechanism in TTIP and in all ongoing and future EU trade and investment negotiations.

“Today marks the end of a long internal process in the EU to develop a modern approach on investment protection and dispute resolution for TTIP and beyond,” said Trade Commissioner Cecilia Malmström. “This is the result of far-reaching consultations and debates with Member States, the European Parliament, stakeholders and citizens. This approach will allow the EU to take a global role on the path of reform, to create an international court based on public trust.”

Since the publication of the Commission’s initial proposal, the text was circulated extensively for consultation to ensure broad endorsement of its main innovative elements, notably amongst co-legislators: EU Member States and the European Parliament.

These elements refer in particular to the strengthening of the right to regulate through a new article, the establishment of a new system for resolving disputes – ‘the Investment Court System’ –, and the creation of an appeal mechanism to correct errors and ensure consistency.

One of the changes made to the 16 September proposal is an additional improvement for small and medium-sized enterprises that would benefit from faster proceedings and would enjoy privileged treatment in comparison with large multinational companies.

EU Commission Considers Completion of the Banking Union
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EU Commission Considers Completion of the Banking Union

This debate is an indispensable part of achieving a full and deep Economic and Monetary Union (EMU), and in particular about bringing forward a proposal for a European Deposit Insurance Scheme (EDIS).

The recent Five Presidents’ Report set out a number of steps to further strengthen EMU. One of them is to move towards guaranteeing deposits at the European level with a European Deposit Insurance Scheme (EDIS). EDIS would mark an important step forward in terms of reinforcing financial stability by reducing the link between banks and sovereigns, and it would enhance confidence by protecting citizens’ deposits at the European level, independent of their bank’s location in the union. It would be based on a system of reinsurance, as a first step.

The Commission’s proposal, which will be made on 24 November, will be accompanied by a Communication which will set out other concrete measures to further reduce risks in the financial system.

Valdis Dombrovskis, Vice-President for the Euro and Social Dialogue, said: “Financial stability is a precondition for economic growth and convergence. We need to complete Banking Union as one of the pillars of a resilient and dynamic Economic and Monetary Union. Today’s discussion in the Commission demonstrates our commitment to propose first steps towards an EU Deposit Insurance Scheme already this year. In parallel, we will work on further reducing risks in the banking sector.”

Commissioner Jonathan Hill, responsible for Financial Stability, Financial Services and Capital Markets Union, said: “Everyone agrees that there is unfinished business on the Banking Union. Alongside supervision and resolution, we need an effective system for deposit guarantees. By gradually developing that at the European level, we can reinforce the confidence that depositors have in their banks, and further weaken the link between banks and their sovereigns.”

Financial stability and the confidence of citizens are indispensable preconditions for economic growth. A proposal for EDIS, as suggested by the Five Presidents’ Report, would consist of a reinsurance of national Deposit Guarantee Schemes (DGS) as a first step, moving towards a full European system of deposit guarantees in the longer term. While national DGS are already in place and provide for the protection of EUR 100.000 per person/per account per bank, they are not backed by a common European scheme.

EDIS would help to reinforce depositor confidence in banks across the Banking Union. Pressure on banks would be reduced and the loop between banks and Member States would be further weakened by helping to ensure that all national DGS would have sufficient funds available to weather periods of high stress.

The Commission emphasises the need for all Member States to implement fully the agreed rules of the Banking Union. On 24 November, together with the EDIS proposal, the Commission will also present concrete ideas about how risks can be further reduced in the financial system in general and in the Banking Union, in particular.

Bank of America Expands National Community Advisory Council
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Bank of America Expands National Community Advisory Council

The National Community Advisory Council (NCAC), a diverse group of nonprofit and private-sector leaders convened by Bank of America, recognizes its 10th anniversary with the addition of five new members representing environment and sustainability expertise. Meeting this week in Washington, D.C., the group of senior consumer, community and academic leaders gathers twice a year to advise the bank on critical issues impacting society.

Formed in 2005, NCAC initially provided guidance on the bank’s community development lending and investment activities. While continuing its focus on community development and consumer policy issues, the council’s concentration has evolved into a broader focus on environmental, social and governance (ESG) issues and performance.

As part of the broad portfolio of climate change goals and transformative finance initiatives the bank has engaged with several leading environmental organizations. This led to an increased focus and expansion of environmental NCAC membership, which now includes:
• Armond Cohen, executive director, Clean Air Task Force
• Rick Fedrizzi, founding chairman and CEO, U.S. Green Building Council
• Bob Perciasepe, president, Center for Climate and Energy Solutions (C2ES)
• Andrew Steer, president and CEO, World Resources Institute
• Mark Tercek, president and CEO, The Nature Conservancy

Another recent addition to the NCAC roster is Jane Nelson, a globally recognized leader in the CSR arena who currently serves as director of the Harvard Kennedy School’s Corporate Social Responsibility Initiative.

“Our members challenge us and collaborate with us to strengthen the impact of our collective work in the communities we serve, and we welcome new voices around the table to further that goal,” said Andrew Plepler, Corporate Social Responsibility executive, Bank of America, and NCAC chair. “We are proud that what started out as a conversation about community development has evolved into a decade of engagement on some of the biggest issues facing society.”

This week’s meeting will provide an opportunity for NCAC members and bank executives to sit down together and engage in meaningful dialogue on a broad range of topics, including neighborhood stabilization efforts around affordable housing, the state of civil rights, and environmental sustainability issues. These meetings are meant to address important topics and open the lines of communication between NCAC members and the bank on the state of the economy and how these collaborative efforts can lead to meaningful solutions.

“Bank of America has long set a high bar for social responsibility programs that enhance the communities they serve,” said Rick Fedrizzi, founding chairman and CEO, U.S. Green Building Council. “I’m honored to be part of its National Community Advisory Council, and look forward to serving with such an exceptional group.”

The six new members join a seasoned group comprised of nationally recognized consumer advocates, academic leaders, civil rights leaders, and community development and environmental experts

Scepter Partners Backs Former CEO of Santos with $5.1 Billion
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Scepter Partners Backs Former CEO of Santos with $5.1 Billion

 Scepter Partners, a standing syndicate of ultra-high net worth individuals and sovereign investors, confirms that on 20 October 2015 it made a non‐binding indicative proposal (“Indicative Proposal”) to acquire 100% of Santos Limited (“Santos”), a significant independent oil and gas company in Australia.

The offer was at A$6.88 (US$4.97) per share in cash by way of a scheme of arrangement subject to a range of market‐standard conditions which equates to a market value of equity of A$7.1 billion (US$ 5.1 billion).

The Indicative Proposal, if implemented, would deliver the following to Santos’ shareholders:

26% premium to Santos’ closing price on 19 October, being the last trading day before the proposal was submitted.
38% premium to Santos’ 1-month volume weighted average (VWAP) price up to 19 October.
40% premium to the VWAP since 21 August 2015 which was the date on which Santos announced its strategic review.
John Ellice-Flint led Santos management to create over A$8 billion (US$5.8 billion) of value while the company was under his stewardship from December 2000 to June 2008. Mr. Ellice-Flint is widely regarded as one of the foremost oil and gas executives in Australasia.

Mr. Ellice‐Flint would serve as Executive Chairman of the privatized Santos should any Indicative Proposal ultimately succeed. Mr. Ellice‐Flint commented, “Our vision is to build Santos into an Asian oil and gas leader, based in South Australia, harnessing the skills and experience of the Santos workforce.”

With offices in New York and representative offices in London and Beijing, Scepter was founded by financier Rayo Withanage to acquire large assets with a focus in natural resources, infrastructure, real estate and media and telecommunications. Scepter’s global merchant banking activities are led by natural resources investment banking veteran Anthony J. Steains and his former Blackstone Asia Advisory Partners team.

Mr. Steains commented, “Scepter considers that this Indicative Proposal, if implemented, would provide Santos shareholders with an attractive premium and the certainty of cash in the face of significant future uncertainty. Scepter’s plan would be to build and grow a significant oil and gas business that advanced the presence of Australian companies in Asia.”

As a principal investor, Scepter is supported by the discretionary assets of a core syndicate of investors who have combined resources to invest in large transactions globally. Scepter is represented in this transaction by Highbury Partnership and Gilbert & Tobin. For more information, please visit www.scepterpartners.com.

Main Changes Regarding Buy-to-Let Taxes and How It Will Affect Landlords
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Main Changes Regarding Buy-to-Let Taxes and How It Will Affect Landlords

The biggest shake up to landlord tax rules is the amendment to the interest only mortgage payment on a buy to let property and how this is offset against your tax bill. There shouldn’t be any change to how basic rate tax payers and mortgage free properties are taxed, the change is only applicable to high rate tax payers. Beware, if you are a basic rate tax payer and your rental income pushes you into the higher rate tax bracket, these changes will also affect you!
Currently higher rate tax payers pay 40% tax on the rental income over and above the interest only mortgage payment. E.g. £1,000 per month rent with a £400 per month interest only mortgage payment means that you will pay 40% tax on the £600 per month difference. You are given full tax relief on the £400 per month interest only payment so do not have to pay any tax on this and just pay tax on the profit. Makes sense.

With the new changes high rate tax payers will no longer be able to claim full tax relief on the interest only payment and will only be able to claim tax relief up to the basic rate of 20%. Therefore if we use the same scenario: £1,000 per month rent and a £400 per month interest only mortgage payment this now means you will pay 40% tax on the £600 profit and 20% tax on the £400 per month mortgage payment. This is an increase in this example of £2,400 a year.
In the current climate of low interest mortgage rates this is certainly a blow as it will mean higher rate tax payers paying more tax and making less profit on their portfolios. However, what should worry landlords are the consequences when interest rates start to rise.

A rise in interest rates equals a rise in tax!
Under the new rules, interest rates don’t need to rise that much to make buy to lets costly for landlords. As an example let’s say a landlord owns a property valued at £250,000 with an outstanding mortgage of £187,500 (75%). They charge £1,000 per month in rent and have a current interest only mortgage payment of £400 per month. Under the new system they will receive £600 per month income and pay tax of £320 per month. So they will make a net profit after tax of £280pm. If the interest rate on the mortgage rises to just 4.80% they will be paying £750 per month in mortgage interest payments and making a profit of £250 per month. Under the new tax scheme they will also be paying tax of £250 per month. Therefore the net profit from the property will be zero. If interest rates rose to 6.40% this landlord would be charging £1,000 per month rent, paying £1,000 interest and still be charged £200 per month tax from HMRC.

If a landlord reaches the point where they are making no profit from the rent, are spending time managing it and possibly even making a loss on it, the it is understandable that a landlord will consider two things; Firstly, they may look to increase the rent. This is a likely scenario and it seems grossly unfair that the new tax changes could ultimately have a detrimental effect on the tenants themselves. Secondly, the landlord will look to sell the property. Again, this will involve notice being given to tenants and will create a very unstable environment for many tenants who thought they had a long term let agreed as the properties which have long term tenants are more likely to be sold first as these tenants generally have fewer rent reviews and therefore these properties will become unsustainable for the landlords first.

What’s likely to happen as a result of the new tax?
The expected effect of this tax then will be that more property will come on to the market but only from those landlords that are hitting a higher rate of tax due to personal income (as well as a bit from rental income) these are the landlords that were only really in the BTL game for capital growth (“It’s my pension”) and who have perhaps found themselves enjoying the extra few hundred pounds a month income, it is probably they that will be selling their buy to let houses and flats as the profit margins become less attractive. We have already spoken to several property landlords who will be instructing agents to sale their property.

Those landlords (sometimes referred to as accidental landlords) selling up will bring more property on to the market for first time buyers and home movers and could see property price inflation easing in certain areas of the UK. This scenario would be a good result for First Time Buyers who are currently up against other FTB’s as well as property investors. It is worth remembering that landlord mortgages are not subject to the same regulation as residential owner occupier mortgages. BTL landlords can have a Buy to let mortgage up to 85% on an interest only basis making the monthly payments much less than a regulated mortgage which at 85% must be on a capital and interest basis.

For the landlord with only a couple of properties and not earning above the higher rate tax bracket or the property developer that is offsetting costs through refurbishment expenses that doesn’t pay higher rate tax or indeed the wealthy landlord with no mortgages anyway then it will be business as usual. The other tax changes to how much you can offset for wear and tear will have some affect but is not a game changer. So it would seem that the real likely result will be that where one type of landlord sell’s up, a different type of landlord will come along with a desire to buy up that same property.

Watch out Brussels is coming!
Whilst on the subject of the different types of landlords now is a good time to mention the European led Mortgage Credit Directive which comes into effect in March 2016. The new regulation will regulate some buy to let’s. The legislation will differentiate between 2 types of BTL. They may be referred to as either an ‘Investment Property Loan’ or a ‘Consumer Buy To Let loan’.

The accidental landlord that has perhaps been unable to sale their house and who has instead re-mortgaged it to a buy to let will fall under the consumer BTL category and will be subject to new guidance overseen by the FCA. This guidance could see lenders checking affordability for the buy to let using personal income or only lending where there is sufficient savings in place to cover 3 months’ rent in the event of a rental void. Those clients with existing buy to lets or those buying a property specifically to let it out will fall under the Investment Property Loans and will be subject to less scrutiny!

In summary the Buy to let market as we know it is changing and interference from Europe and its blanket policies is changing the face of Buy to let.

Budget Blues
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Budget Blues

The investment organisation has announced that the newly announced budget will make life difficult for customers and businesses alike and its success depends heavily on whether businesses will be able to rise to the challenge, according to their summer forecast.

Against a background of tax rises and a sharp squeeze on welfare spending, reconciling the Chancellor’s fiscal goals with maintaining healthy growth in the economy will require businesses to step up their investment and export plans, according to the firm. They also suggested that if this did not occur then the adjustment will have to come through slower growth and imports.

The club’s forecast predicts that companies will respond positively to the Chancellor’s challenge. Business investment is
expected to accelerate to 7.4% in 2016, from 5.1% this year, and 7.1% in 2017. An improvement in the UK’s overseas investment income and exports of services will also provide some of the room needed for the Chancellor’s budget surplus and help to rebalance the economy away from the consumer spending-led growth prevalent this year. However, investment and exports are unlikely to extend far enough to prevent growth slowing over the next few years. As a result the EY ITEM Club expects GDP growth to reach 2.7% for 2015 and 2016 before it slows to 2.4% in 2017 and 2018.

The Chancellor’s plans for the UK economy are serious gamble which could go either way, according to Peter Spencer, Chief Economic Advisor to the EY ITEM Club.

‘The Chancellor has thrown down the gauntlet to businesses in a risky strategy that will require them to rise to the challenge and respond positively to his Budget announcements. Companies will have to invest in plant and skills to boost productivity and allow them to pay higher wages. However, we expect this strategy to be only partially successful and we are likely to see growth and imports slow down as well.’

Mark Gregory, EY’s Chief Economist, added in his comments that the living wage could potentially cause major problems for businesses.

‘Businesses will have to dust down their export and investment plans and increase spending and borrowing levels. As labour is becoming more expensive, following the Chancellor’s announcement for the introduction of a living wage, investment levels should increase. This could be the time for businesses to consider investing in technology as a way to reduce labour costs.’

Banks to Invest Heavily to Comply with Reforms
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Banks to Invest Heavily to Comply with Reforms

56% of the finical institutions which participated in the Accenture 2015 Global Structural Reform Study, including banks, insurers and capital markets firms, are expecting to invest at least $200 million on projects which will overhaul how they do business, in order to comply with the global structural reform legislation. Nearly a third expect to spend over double that amount, $500 million, over the course of the year.

The new regulations were introduced to re-shape financial services institutions and make them more resilient following the issues they faced during the financial crisis of 2007-2008.

Steve Culp, Senior Global Managing Director for Accenture Finance and Risk Services, emphasised the vast scale of these reformsand the impact they will have on the industry.

‘Over the past five years, many firms have struggled to keep pace with the multitude of regulatory, conduct and compliance related issues. Their responses have been fragmented and they have made significant investments in people, process and tools to remediate.

Looking ahead, the financial services landscape will continue to be re-written, given the cumulative impact of global structural reform, especially for internationally active banks and insurers. Those with a clear and connected global implementation plan in place will be best positioned to get the most from their investments.’

The financial industry as a whole is confident that they are prepared for the reforms, with 60% of the survey’s participants stating that they are ‘well prepared’ and a further 35% claiming to be ‘extremely well prepared’ to become compliant with the changing structural regulations.

Samantha Regan, a Managing Director in Accenture Finance and Risk Services and the lead of the Regulation and Compliance practice, was keen to highlight the importance of taking the reforms seriously but also using attitude to bring about a positive outcome to the situation.

‘Financial institutions cannot afford to adopt a wait-and-see approach in their response to the challenges presented by GSR. They need to tackle structural reform with the same bold, strategic thinking that they are using for other industry challenges. First movers can potentially turn this challenge into a competitive advantage with clients and customers drawn to firms with clear business strategies.’

Queen's Speech Announces Enterprise Bill
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Queen’s Speech Announces Enterprise Bill

“The announcement in the Queen’s Speech today introducing a new Enterprise Bill – giving additional support to SMEs to settle payment disputes – ought to be welcomed by businesses across the UK. To have this Bill included in the speech should give hope to many struggling businesses that the government is serious about the need to protect SMEs and bring an end to the issue of late payments.

The current payment terms that many suppliers in the UK are subjected to mean that goods delivered today wouldn’t need to be paid for until long after summer is over; a practice that isn’t sustainable, but it is a reality that, until now, SMEs have had very little power to change. The implementation of a Small Business Conciliation Service should protect SMEs against larger and more powerful entities, and should reduce the number of SMEs that fold due to intense cashflow problems.

Whilst acknowledgment in the Queen’s speech has symbolic importance, businesses have been waiting for support from Government to tackle this issue for a long time, so will be watching the progression of this Bill with care and limited expectation.

In the meantime, there are options available that cover the gap between work completed and money in the bank. It’s therefore important for firms to thoroughly review their options and make use of any free financial advice that their own financial partners and suppliers can offer before pressure from large customers impacts their growth or operations.”

Olgiers: Global Offshore and Legal Advice Relevant to Tax
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Olgiers: Global Offshore and Legal Advice Relevant to Tax

Ogier has launched a cross-jurisdictional Tax team in response to requirements from corporate clients, their advisers and trustees.

Having advised financial institutions, multinational corporates, funds and asset managers on offshore and legal advice relevant to tax for many years, the firm has now drawn together a team of partners with specific tax expertise.

‘Our tax team is global, reflecting the fact that many of our clients operate in more than one jurisdiction,’ said Jersey based partner Chris Byrne. ‘The depth and breadth of our knowledge ensures that we are able to support our clients’ business needs by providing access to lawyers who understand tax issues across our global network of offices.’
Ogier is the only offshore law firm with a Luxembourg capability and Luxembourg partner Caroline Bormans is a recognised tax expert.

The other team members are:
BVI – Simon Schilder
Cayman – David Cooney
Guernsey – Marcus Leese
Hong Kong – Nathan Powell
Jersey – Chris Byrne 

Ogier’s Tax team will primarily work with tax departments at onshore law firms and with clients direct on all aspects of cross-border advisory and transactional tax matters. It will not provide tax structuring advice or offer the type of tax compliance services offered by accountancy firms

.
For further information please contact:
Kate Kirk
E: [email protected] or
T:+44 1534 753842

ECB can Pause for Breath.... but Still a Lot Left to Do
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ECB can Pause for Breath…. but Still a Lot Left to Do

This should give the ECB a chance to catch its breath after a bumpy start to the year. Its quantitative easing programme (QE), launched to address the currency union’s anaemic economic performance, is show¬ing results. Much has happened through the currency channel, with the euro depreciating sharply against major currencies since the policy was announced. Consumers are also starting to feel the benefits: confidence across the Eurozone is up and retail sales are growing at their fastest pace since 2005. This has caused some to think that the ECB may ter-minate QE earlier than the currently suggested timeframe of end 2016.

The last two years suggest that trying to gauge the economic climate a year ahead can be tricky. Cebr remains on the cautious side. The Eurozone job is definitely not done yet, let alone well done. Germany is carrying on a decent path to recovery but the union’s second-largest economy, France, is still far from finding its way there. Much needed labour market reforms have been absent from the picture, and with the presidential election season approaching fast, appetite for pressing on with unpopular measures is bound to decline.

Conditions seem brighter in the South, especially in Iberia. Looking ahead to the rest of the year, the Eurozone’s southern periphery will most certainly enjoy an uptick in the summer as tourist season kicks in. Receipts from tourism should be especially strong this season given the weakness of the euro and geopolitical tensions in regional competitors such as North Africa. But the fundamentals remain weak.

Greece, while closer to a deal now after a new reforms package emerged from the new negotiating team in Athens earlier this week, is still at a very fragile state. Its banking sector is heavily dependent on the ECB’s willingness to continue providing funds through the Emergency Liquidity Assistance mechanism. In 2015 thus far, around €30 billion of deposits have been withdrawn from Greece’s banks. And non-per¬forming loans are at 35%, much higher than 2012 levels of 25%. The banks remain systemically sound: capital adequacy ratios at above 12% are exceptionally high. But any “accident” in the negotiation process would quickly make banks lose deposits. It will then be up to the ECB to decide the country’s fate.

Concerns over Rising  Employment Costs  and Competition
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Concerns over Rising Employment Costs and Competition

Less than half of small business owners (49 %) expect business growth within the next 12 months, according to the latest Small Business Health Index from CAN Capital, Inc., the market share leader in alternative small business finance. This is a decline from the 58% of small business owners who expected growth in the previous index conducted in September 2014. It seems that small businesses expect 2015 to be a year of stability rather than expansion, with 40% of owners saying they expect their businesses to remain about the same over the next 12 months, up from 34% in the fall.

CAN Capital’s Small Business Health Index, powered by SurveyMonkey™ taps into key issues and trends that can help business owners across the country expand and grow their businesses including access to capital, marketing, government regulation, competition and talent recruitment and retention.

“After years of growth, small business owners seem to think things are leveling off,” said Daniel DeMeo, Chief Executive Officer, CAN Capital. “They’re concerned about rising employment costs, competition, regulation and new trends in digital marketing and digital payments. While they recognize the opportunities that exist from investing in their businesses, they also appear to be feeling more cautious than they’ve been in the past.”

Small business owners in the Southwest and the West are the most optimistic, with 62 percent of owners in the Southwest and 60 percent in the West saying the small business environment in their regions is either excellent or good. In contrast, only 48% of small business owners in the Northeast described the environment as excellent or good, making it the only region of the U.S. where fewer than half of respondents had a positive view.

Threats & Opportunities
Rising employment costs from regulations including new minimum wage laws and the Affordable Care Act were cited by 44% of respondents as the biggest threat facing small businesses today. Competition was a close second, cited by 40%.

Many small business owners also recognize the need to do a better job of reaching their customers online, with 60% saying their knowledge of digital/social media marketing was either fair or poor. Only 29% of small businesses said they have optimized their websites for mobile devices and 27% said they don’t have a website at all.

Small businesses are also coping with the shift to digital and mobile payments. The survey found:

Less than half (44 %) of small businesses currently accept payments online. Only 13% accept mobile payments such as Apple Pay. While more than half (55%) are familiar with the transition to EMV (chip & PIN) credit cards, only 19% have taken steps to update their point-of-sale systems to be compatible with EMV. Just 18% say they plan to invest in new payments technology in the next 12 months.

“Technology is bringing revolutionary changes to small businesses,” said James Mendelsohn, Chief Marketing Officer, CAN Capital. “From new payments technology to the analytics and customer insights that are now much more readily available, there are incredible opportunities for small business owners to use these tools to better serve their customers and grow their businesses. At the same time, it can be hard to compete with the technological know-how of larger companies, and there’s danger in being left behind if they don’t invest time and money in increasing their capabilities.”

Capital Access
Only 30% of small business owners surveyed anticipate needing external capital to run their small businesses in the next year, down significantly from 43%last quarter.

For those who do apply, capital appears to be easier to come by. 38% said it is quite or extremely challenging to gain access to working capital, compared with 61% who said the same thing in the previous survey.

This survey marked the first time that bank loans through a traditional process were the number one way small businesses successfully secured funding/working capital, replacing loans from friends and family. Notably, 44% of small business owners said they have not faced any challenges obtaining access to working capital, a large increase from the 27% who said the same thing in the previous survey from September 2014.

DeMeo said, “While small businesses are having an easier time obtaining working capital, nearly half still report challenges, from being unsure of where to turn to lacking adequate collateral. Many of them are also waiting longer than necessary, with more than a third saying it took them more than a week and sometimes several months, to secure funding. CAN Capital is committed to offering fast, efficient access to capital, as well as tools and advice to help small businesses grow.”

Parties Fail to Address Needs of Renewables Industry in Election Campaign
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Parties Fail to Address Needs of Renewables Industry in Election Campaign

Renewable energy companies overwhelmingly believe that the needs of the industry have not been properly addressed during the ongoing election campaign, a survey carried out by the Renewable Energy Association (REA) has revealed.

Of the 136 REA members who responded to the survey, 95% said that they did not ‘feel that the political parties are addressing the needs of the renewable energy during this election campaign’.

The Green Party was viewed as the party that would be ‘best for the renewable energy industry’ (29%) with the Liberal Democrats seen as the next best.

Members were less optimistic about the two parties most likely to form a government after the election. Nearly a fifth (18%) of respondents believed that the industry would be in the best hands under Labour, whereas the Conservatives received the support of 15%.

Members also stated the government policies which would be a priority for their business. Over half (56%) stated that the Feed-in Tariff was the most important policy, with the Renewable Heat Incentive close behind on 52%. Moreover, the 2030 decarbonisation target was high on the list of priorities for a significant number (44%) of respondents.

Commenting on the findings of the survey, Chief Executive of the Renewable Energy Association (REA), Dr Nina Skorupska, said:

“These figures show first-hand the concern of renewable energy companies up and down the country at how the political parties are failing to adequately address the needs of our industry.

“The next government will need to show much more leadership early on and face-up to the challenge of ensuring that the UK meets its ambitious renewables targets, which will allow our industry to play a key role if the regulatory environment enables us to expand, innovate and thrive.

“We very much look forward to working with the next government to address the concerns of the renewable energy, ensuring the UK makes the transition to the low-carbon economy that will bring with it cheaper bills, more jobs and greater energy security.”

Pension Reforms Could Spark Surge in Small Business Start-Ups
LegalRegulation

Pension Reforms Could Spark Surge in Small Business Start-Ups

Findings from research carried out on behalf of pension investment specialists, AXA Wealth, which questioned 1,500 UK residents aged over 55, indicate that one in ten (10 per cent) of the UK’s over 55s who are due to retire in the next 18 months would consider drawing down on their pension pots to start a small business or go into consultancy. This ‘later-life entrepreneurs’ trend could see over half a million over 55 year olds shun retirement in favour of starting up their own business venture.

The average value of a pension pot of those asked was found to be £550,000, and of those considering withdrawing money to invest in a new business, almost half (47 per cent) intend to use their 25 per cent tax-free lump sum to fund their start-up.

Top three reasons stated for starting a new business with released pension funds:

– For those planning on starting a new business, realising a lifelong dream to be a business owner was cited as the top motivation by over a third (35 per cent)

– For those planning on starting a new business, monetising a hobby was revealed as the investment incentive for a quarter (25 per cent)

– For those planning on starting a new business, nearly one in five (19 per cent) are driven by the urge to utilise the experience and skills gained throughout their professional career in order to supplement their pension income

The research also reveals how the pension reforms will vary in impact upon the UK’s different regional economies. The South West is expected to most likely experience a mini boom in teashops and restaurants with 22 separate new establishments being considered, while the Midlands could see a resurgence in manufacturing, with 25 new production facilities being considered in light of newly invested start-up capital.

Adrian Lowcock, head of investing at AXA Wealth, comments; “We’re seeing a revolution when it comes to retirement spending. The widespread concern that pensioners will blow their whole pension on a supercar feels exaggerated. Instead we are seeing a diverse approach; with the over 55s taking to the freedom and opportunities created by the pension reforms – in this case fuelling a whole new generation of later-life entrepreneurs.”

(UK) Ending Austerity and Increasing Spending Is Foolish
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(UK) Ending Austerity and Increasing Spending Is Foolish

“Proposals to end austerity and increase departmental spending are wholly misguided given that the UK is still running a deficit of £90 billion a year and the government is spending nearly half of national income. Small steps to reduce the deficit have been made over this Parliament and today’s SNP manifesto would eradicate this progress.

“Clamping down on zero hours contracts, raising the minimum wage and championing the Living Wage would make UK labour markets resemble those in continental Europe where youth unemployment has reached up to 50 per cent in some countries.”

Commenting on the announcement on the NHS, Mark Littlewood said:

“Funding of the NHS is unsustainable in its current format and simply promising more money will do little to improve healthcare in the UK. Politicians need to be far more open minded when it comes to the gains to be had from expanding the role of the market within the provision of healthcare. The success of more market-orientated systems across Europe illustrates that combining different sources of funding does not have to be at odds with patient empowerment and high standards.”

(UK) What Will it Take for Your Party to be in the Next Government?
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(UK) What Will it Take for Your Party to be in the Next Government?

In what is being billed as the most unpredictable general election in UK history, Independent Strategist Olivier Desbarres has made working out what each party will need to gain power, easy.

Olivier, who has a background in Emerging Markets and G10 Research, has created the UK General Election Predictor, which is available to utilise via his website.

It allows the user to enter the number of seats he/she thinks the parties will win and then generate the most likely outcome(s). For first time voters especially, understanding how the election works and the many potential outcomes can be puzzling – but the Predictor cuts through the confusion and presents clear and concise conclusions.

Creator Olivier Desbarres commented: “The UK General Election Predictor is a powerful yet simple to use tool to get a handle on who will likely be in government and set policy for the next five years.

Rather than focussing too closely on opinion polls, which are fluid and to an extent an unreliable way of predicting the election result, I wanted to create a tool that gave users the freedom to input their own party-seats forecasts.”

Olivier relied upon his own knowledge and expert opinion from a vast number of sources to detail the likelihood of parties winning that number of seats and what that combination of seats would entail in terms of likely government composition. These sources include opinion pollsters, analytical models, thinks tanks such as the IPPR, party statements and sources, politically affiliated societies and official sources including the UK Parliament.

European Business Leaders Support EU and Want UK to Stay
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European Business Leaders Support EU and Want UK to Stay

84% of European business leaders believe their country’s membership of the EU has a positive impact on their business, 83% believe it has a positive impact on their country and 79% believe it has a positive impact on them personally. Furthermore, 67% believe they have a role to play in promoting the EU to their country’s wider population.

The main reasons given in support of the EU were the economic advantages brought by membership, the competitive position a united Europe has against China, Russia and the US, and the importance of integration, stability and unity in the current climate. Costs and bureaucracy were the focus of the minority view.

Adrian Tripp, CEO of The European Business Awards, said: “These strong results show that for the European business community the case for the EU is clear; the benefits far outweigh the costs. From a business perspective, people see the value in the commercial opportunities; from a wider perspective, stability and integration are key.”

He continued: “At the European Business Awards we see these benefits of the EU on a day to day, firm to firm, country to country basis. It creates economic opportunities, breaks down barriers and builds understanding. A united European business community is integral to a safer future for all of us.”

The survey conducted by The European Business Awards, Europe’s largest business competition now in its 9th year, and supported by RSM since its inception, also asked business leaders whether the UK should stay in the EU.
The results show that 86% of European business leaders* think the UK should stay in the EU, with 11% saying the UK should leave. The survey also shows that the majority believe a UK exit would have a negative impact on all concerned.

84% of business leaders believe a UK exit would have a negative impact on the EU itself, 76% think it would have a negative impact on the UK economy, and 67% think it would have a negative impact on their own country’s economy.
Of the respondees who think the UK should stay in the EU, 25% were from the UK.

Jean Stephens, CEO of RSM, the 7th largest network of independent audit, tax and advisory firms, said: “The Eurozone is the biggest trading partner for the United Kingdom and the potential impact of the UK exiting the EU would be highly significant to our clients around the world. This survey clearly shows that European and UK business leaders feel strongly that Europe must maintain its competitive edge in the global marketplace and that the UK’s membership is key to doing so.”

Research Shows Two-Thirds of British People Can't Name the UK Foreign Secretary
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Research Shows Two-Thirds of British People Can’t Name the UK Foreign Secretary

Online training specialist, Filtered.com has today revealed the results of a study it has conducted into the political awareness and knowledge of people in the UK. The research, which surveyed 700 British citizens across the UK at the end of March 2015, revealed that despite almost 60% of people feeling well informed about casting their vote:

– 1 in 3 lack basic political knowledge such as how many votes a candidate needs to be elected as an MP

– Over 50% don’t know how many constituencies there are in the UK

– Nearly 2 in 3 (63%) don’t know who the current Foreign Secretary is

– Almost a quarter don’t know who the current Shadow Chancellor of the Exchequer is

– 5% admit to not knowing which political parties form the current coalition government

The survey also revealed some interesting statistics about the rise in popularity of smaller parties. In contrast to the 2010 election where 91% of people voted for one of the big three parties (Conservatives, Labour or the Liberal Democrats), this year’s election shows a different picture. Mirroring similar data from the Electoral Calculus, these findings indicate many voters are still undecided, but of those who have already decided, the number of people set to vote for the traditional 3 parties has fallen to 71%. Looking at those who will vote for the first time this May, the figure is even lower with only 66% predicted to vote for the traditional big three – with 13% saying they will vote UKIP, 11% Green and 9% SNP.

Perhaps unsurprisingly given people’s dissatisfaction with the big three parties and their lack of political engagement in general, just 10% of people feel ‘very happy’ about the work of their local MP. There is a massive range in the importance of political issues with the economy (26%), cost of living (22.5%) and the NHS (15%) ranking top three and foreign affairs (1%), the environment (2%) and crime (2%) at the bottom.

Looking ahead to May, this latest survey shows there is a clear opportunity for political parties to engage more with voters to help them improve their political knowledge. 83.6% say they will vote in May but 36% are still undecided on their vote. In what might be seen as a clear indication that political parties should engage more with online media, 2 in 3 believe we should be able to vote online.

As the election approaches, online learning specialist Filtered.com has launched a free online course to help improve political knowledge ahead of 7th May 2015. The course covers all the crucial areas of politics such as the electoral process, the 2010 election, the parties and their leaders, and key political issues from the economy to education, immigration and unemployment. The engine behind the course uses the company’s adaptive algorithm which removes any content the learner doesn’t need. The result is an individually tailored syllabus which accelerates learning and saves time.

Commenting on the findings of the survey, Marc Zao-Sanders, Managing Director and Co-Founder of Filtered.com explains: “With only weeks now to go until May 7th, it’s concerning that vast swathes of the British electorate have such large gaps in their political knowledge. There are many reasons for low engagement with politics and one of the most important but least discussed of these is education.”

“Learning about the political issues that most concern an individual needn’t be complicated or onerous.” Zao-Sanders continues. “As our survey shows, not all political issues are important to everyone. So our message to voters is simple: acquaint yourselves at least with the issues important to you, and especially now the manifestos are published.”

“It would also help if the political parties did more to describe and explain their policies more clearly and with less bias. Schools and universities should support the process by equipping young people with a grounding in politics, the ability to analyse policy critically and imbue more of a sense of citizenship. Providing relevant resources for teachers to teach or at least signpost is also essential. To see a dramatic change in voter knowledge and engagement, investment needs to be made in the core curriculum, resources and broadcasting required to truly engage people in political discussions as informed citizens.”

Cyber Security Insurance: New Steps to Make UK World Centre
Global ComplianceRegulation

Cyber Security Insurance: New Steps to Make UK World Centre

The report, ‘UK cyber security: the role of insurance in managing and mitigating the risk’, has been produced in collaboration with the UK’s insurance market and a number of top UK companies. It aims to make the UK a world centre for cyber security insurance. In particular, it highlights the exposure of firms to cyber attacks among their suppliers with a key agreement that participating insurers will include the government’s Cyber Essentials certification as part of their risk assessment for small and medium businesses.

Read the report: UK cyber security: the role of insurance in managing and mitigating the risk.

Cyber threats are estimated to cost the UK economy billions of pounds each year with the cost of cyber attacks nearly doubling between 2013 and 2014. The report found that, while larger firms have taken some action to make themselves more cyber-secure, they face an escalating threat as they become more reliant on online distribution channels and as attackers grow more sophisticated. It issues a call to arms for insurers and insurance brokers to simplify and raise awareness of their cyber insurance offering and ensure that firms understand the extent of their coverage against cyber attack.

Companies are recommended to stop viewing cyber largely as an IT issue and focus on it as a key commercial risk affecting all parts of its operations. The product of collaboration between government and the sector following a summit held last November, the report recommends that firms examine the different forms of cyber attacks they face, to stress-test themselves against them and to put in place business-wide recovery plans.

The report also notes a significant gap in awareness around the use of insurance, with around half of firms interviewed being unaware that insurance was available for cyber risk. Other surveys suggest that despite the growing concern among UK companies about the threat of cyber attacks, less than 10% of UK companies have cyber insurance protection even though 52% of CEOs believe that their companies have some form of coverage in place.

On 23 March, Francis Maude, Minister for the Cabinet Office with responsibility for the UK Cyber Security Strategy, is hosting an event at the Cabinet Office for chairmen and senior executives of insurers and top UK companies on the role of insurance in managing growing cyber threats.

Francis Maude, Minister for the Cabinet Office and Paymaster General said:

“It is part of this government’s long-term economic plan to make the UK one of the safest places in the world to do business online. The UK’s insurance market is world renowned and we want it to be the same in relation to cyber risks. The market has extensive knowledge and experience of more established risks to help businesses manage and mitigate relatively new cyber risks.”

“Insurance is not a substitute for good cyber security but is an important addition to a company’s overall risk management. Insurers can help guide and incentivise significant improvements in cyber security practice across industry by asking the right questions of their customers on how they handle cyber threats.”

A Positive Budget for the Energy Sector
AccountancyRegulation

A Positive Budget for the Energy Sector

What a difference four years has made. The windfall tax introduced at 2011’s budget was widely criticised by industry and commentators who suggested it would stifle investment and add cost to an already high cost basin. After four years the Chancellor has reversed the windfall tax (after a slight reduction at the Autumn Statement), reduced the petroleum revenue tax on older fields, introduced an investment allowance and put money aside for seismic surveys to boost exploration. These measures are welcome and come at a time when government support is essential if we are to fully maximise the potential of the UK continental shelf (UKCS).

While the fall the oil price helped push the issue of UKCS taxation and the future of the basin up the political agenda it is not the reason why action on the fiscal regime last week was essential. The 2011 windfall tax was justified because oil prices were around £120 per barrel. However the assessment that these high oil prices meant the industry could bear a higher tax rate – a marginal rate of more than 80% in some fields – was incorrect.

The UKCS is a mature basin and operators are facing ever higher costs as infrastructure ages and fields become more difficult to develop. Add to this the global nature of the oil and gas sector and the finite capital available to the sector to invest and it’s easy to see how the windfall tax could damage confidence and drive much needed investment abroad. Even with a high oil price the CBI was critical of the UKCS tax regime. In our paper Fuelling Growth in 2013 we said “in seeking to understand how best to enhance recovery in the North Sea the CBI believes taxation is crucial and identifying further opportunities to improve the competitiveness of the tax framework is essential.” As a global commodity the price of oil is consistent across the globe but the costs associated with exploration, development and production are specific to each basin. Government must do all it can to help reduce these costs if we are to attract the private sector investment needed.

We need a stable and competitive fiscal regime that prioritises consistency and whose ultimate goal must be the economic maximisation of resources. The price of oil is volatile and that is a lesson global commodity markets have reminded us of in recent months. Future governments should always think about the UKCS both in terms of the costs associated with operating there and its competitiveness with other regions. Budget 2015 is a good start but the next government, and all future governments, will need to take a long-term view of the UKCS and think hard about how to provide further support to avoid causing unnecessary damage.

Elsewhere in the budget

The Budget also outlined the government’s intention to bring forward the small-scale Feed-In Tariff component of the compensation package for energy-intensive industries to the earliest point at which State Aid approval is received in 2015-16. This fell short of the CBI’s calls to bring forward the full compensation package (covering FITs and the Renewables Obligation), but will provide some relief to these industries. We will continue to press the importance of competitiveness with a new government, and look to ensure a more strategic approach to supporting these industries is taken.

The Chancellor announced that the government has decided to enter in to the first phase of negotiations on a Contract for Difference for Swansea Bay Tidal Lagoon.

Government Creates New Business to Save Up to £105 Million in IT Costs
Corporate GovernanceRegulation

Government Creates New Business to Save Up to £105 Million in IT Costs

In the past, individual departments paid different amounts to either build their own centres or outsource the service as part of their own locked-in IT contracts. This deal will, for the first time, provide a cross-government approach to buying data hosting services and will save up to £105 million for the taxpayer by utilising the government’s combined buying power. It will also allow government to tap into the latest advances in industry and improve energy efficiency – using data centres that are equipped with the latest technological advancements such as real time dynamic cooling and unique monitoring systems, all within secure compounds.

The new service will be available to the whole of government and the wider public sector. The 3 initial customers are the Department for Work and Pensions, the Home Office and the Highways Agency (operations), and each will be able to use the service on a ‘pay for what you use’ basis which will avoid the risk of being locked into long-term, inflexible contracts.

Minister for the Cabinet Office Francis Maude said:

“As part of this government’s long term economic plan, we’re determined to utilise our unique buying power and become a more intelligent customer. It doesn’t make sense for departments to host their servers in different ways and at different costs, and in the past Whitehall wasn’t even sure how many of these centres there were.”

“With this new joint venture, we will save millions and be able to access the necessary commercial and technical skills in the market to create a thriving new business that will deliver better services and allow government to share in its future success.”

Steve Hall, CEO at Crown Hosting Data Centres said:

“The joint venture company will simplify the data centre services selection process in government and further drive the unbundling of large legacy contracts.”

“It provides publicly-funded, mandated and regulated organisations with a pre-approved contract that leverages the buying power of the whole of government for the fastest, simplest access to secure data centre services.”

Minimum Wage Workers Will Be Hit by Chancellor's Cuts
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Minimum Wage Workers Will Be Hit by Chancellor’s Cuts, Says TUC


“For the low paid to get a fair share of the recovery, this was a year in which we could have had a much bolder increase in the minimum wage.

“With one in five workers getting less than a living wage, this is nowhere near enough to end in-work poverty. Britain’s minimum wage workers should be very fearful of the billions of pounds of cuts to government help for the low paid that the Chancellor is planning if re-elected.

“Apprentices will welcome the increase to their minimum wage, which will reduce the shortfall in their minimum pay relative to 16 and 17 year-old employees. But there really shouldn’t be a gap at all. The TUC will continue to call on the Low Pay Commission to recommend a future increase that will match the apprentice rate to that for 16 and 17 year-olds.”

Simplification
Corporate GovernanceRegulation

Simplification, Not Regulation Is the Solution for Tax Avoidance, says IEA

“Successive governments have developed loopholes specifically designed to reduce tax bills, so it’s hardly surprising to see companies use the very schemes politicians have created. Politicians need to stop moaning and reform the system they set up.

“The UK corporation tax system is monstrously complex, with profits taxed not in the hands of shareholders, but according to very complex rules in particular jurisdictions. It’s inevitable this system is gamed by multinational corporations; for as long as it’s legal it’s unsurprising that companies don’t pay more tax than is due.

“Tax avoidance occurs because our system is overly complex and because rates are too high. If the government wants to reduce tax avoidance it should reduce and simplify taxes.”

Politicians Shouldn't Focus on Regulation to Make UK Labour Market Work Better
Corporate GovernanceRegulation

Politicians Shouldn’t Focus on Regulation to Make UK Labour Market Work Better, Says CIPD

With less than 100 days to go until the General Election, the CIPD, the professional body for HR and people development, is warning that regulatory changes shouldn’t form the cornerstone of labour market election promises. According to new research, the UK’s flexible labour market is generally working well in comparison with our international peers, suggesting there isn’t a strong case for the next Government to either de-regulate further or to strengthen employment rights.

The report, Employment Regulation and the Labour Market, indicates that the UK is highly unlikely to get much benefit from more employment regulation or from significant deregulation of the labour market, as it already performs well in comparison to many of its OECD counterparts on a number of measures. The link between the stringency of regulation and labour market outcomes such as productivity or job quality is in many areas either weak or complex and thus difficult to predict. Instead, the CIPD is urging policymakers to focus efforts on improving productivity through a much stronger focus on improving workplace practices while increasing awareness of existing rights and enforcing them more effectively.

The report,commissioned by the CIPD, and compiled by The Work Foundation, considered the impact of employment regulation on broad labour market measures. The Nordic countries (Denmark, Sweden, Finland and Norway) and the Netherlands score consistently well and the UK sits comfortably mid-table or above on most indicators. However, there are some economies in Southern and Eastern Europe, such as Spain, Italy and Greece, where the data does suggest that labour market outcomes could be improved by greater liberalisation.

The report indicates that despite the UK rating below average among OECD countries on measures of employment protection, the quality of employment in the UK compares more favourably with other countries than is often thought to be the case:

-In comparison to other OECD countries, the UK has a high share of permanent employment – 79% of UK workers in 2013 were on a permanent contract, compared to 77% in Germany and 65% in Italy

-Compared with the European average, the UK has a larger proportion of ‘good’ jobs and a smaller proportion of ‘low quality’ jobs. Overall 65% of jobs in the UK are rated as good jobs*, compared to just 54% in Italy, 50% in France and 49% in Germany

-The average weekly hours worked by employees in the UK in 2013 was 36, which was in line with the OECD average. However the UK does have a comparatively high proportion of long hours jobs (those involving 50 hours or more a week) with 12% falling into this category

-In all, 84% of UK workers say they are satisfied with their working hours (EU 28 average 80%) and 77% report they are satisfied with their work-life balance (EU 28 average 74%). UK workers don’t seem much more fearful of losing their jobs than workers in countries with stricter employment protections (12-14% across UK, Germany, France and Italy) and over 40% said they were either optimistic or very optimistic they could find another job at a similar wage.

Ben Willmott, head of public policy at the CIPD said: “The public debate can often seem polarised between calls for greater regulation and employee protections from trade unions and, at the other end of the scale, employer organisations that want to reduce regulatory burdens on business. Our report shows that more or less regulation is not the issue. Overall, UK workers are more satisfied with their jobs, working hours and ability to progress than their counterparts in France, Germany and Italy. The solution to some of the challenges we face in the UK such as poor productivity and the high proportion of low paid jobs in the economy doesn’t lie in quick legislative fixes. We don’t need yet another employment bill or another zig-zag between more and less regulation. Instead, what we need is a fundamental review of the UK’s skills policy to understand how we can generate more high-skilled jobs and better progression routes for those in low-skilled and low-paid jobs. We also need a much greater focus on improving workplace practices in the areas of leadership, management and HR capability to increase demand among employers to invest in workforce development.”

While the UK performs well overall, it performs comparatively poorly in three important areas – productivity, low pay and the integration of young people into the labour market.

-The UK performs poorly on productivity compared to many of its international peers, however, there seems little association between labour market regulation and productivity. Between 1985 and 2013, relative productivity compared with the US fell in relatively lightly regulated UK, New Zealand and Canada. Among the more highly regulated economies, relative productivity fell in Italy and increased slightly in France and Germany

-While the UK doesn’t have the highest share of low-paid jobs in the OECD, it does sit uncomfortably in the top quarter. The UK, US and Canada all have 20-25% of employment in low-paid work compared with 18% in Germany and 10% in Italy

-The UK sits in the lower half among OECD countries in terms of its youth unemployment rate and in the bottom quartile among EU 28 countries on the youth unemployment ratio.

Willmott concludes: “It’s clear that the UK struggles on productivity, low-pay and unemployment among young people, but the wider picture is much more positive. The stage seems set for a good performance but something is missing in the delivery. We have good investment in ICT, above-average shares of knowledge-intensive industries and better quality employment than many European economies, including some with much higher productivity levels. Rather than meddling with regulation, a renewed focus on enforcing and improving awareness of existing rights among employers and workers is needed to help curb any abuses of employment rights where they do occur, as well as a much more explicit policy focus on the workplace to improve practice and productivity.”

The CIPD has suggested the creation of a Workplace Commission to help support a more strategic approach across government to developing policy on the workplace with the objective of improving productivity and enhancing job quality where poor practice exists.

UK Regulators Network (UKRN) Publishes Report on Affordability
Corporate GovernanceRegulation

UK Regulators Network (UKRN) Publishes Report on Affordability

The report focuses on the energy, communications and water sectors. On average, energy and communications household spend is at 5%1 and 4%2of total household spend, respectively. In water, 1.4%3 of household income is going towards paying for this service.

The report considers:

-How affordability issues are approached in different regulated sectors.

-What data gathered from regulators and other sources show about the nature of affordability issues in these sectors.

-The drivers of affordability issues and the role of regulators in addressing these issues.

Work will now begin on the second phase report which will consider how to address vulnerability across regulators. It will also look at what could impact bills in the future, particularly as a result of infrastructure investment. UKRN members will work closer than ever to tackle some of the issues identified in the report and align their work to support vulnerable consumers.