In the year I started my insolvency career, there was what has been described as the most important decision in commercial law during the 20th century. The year was 1976 and the case was Aluminium Industrie Vaassen B.V v Romalpa Aluminium, which introduced the concept of extended reservation of title into English law, more commonly known as Retention of Title (“ROT”) or the Romalpa clause.
Some thirty eight years on and many landmark cases later which have sought to clarify the rules relating to ROT, in the last few months Administrators have had some useful guidance relating to ROT claims by creditors from HHJ McCahill QC (sitting as a Deputy High Court Judge) in his decision in the case of Blue Monkey Gaming Ltd v Hudson & others  EWHC (Ch).
The case involved gaming machines and a claim against Administrators personally for;
(i) allowing the machines to be used in the administration to make money, and
(ii) for conversion, for selling the machines after they allegedly had received an unequivocal demand for their return.
The Court held that the Administrators had not converted or wrongfully interfered with the machines and dismissed the claimant’s claim in its entirety.
The practical importance of this case to both Administrators and potential ROT claimants is that it gives welcome clarification on the extent of an Administrator’s obligation to a creditor claiming ROT and what actions a claimant should take to maximise the chances of a recovery;
I would argue all experience Administrators have strict procedures relating to dealing with ROT claims and these are conveyed to creditors at the beginning of any administration.
The decision in this case sets out clearly the obligations of an Administrator but as importantly highlights that the responsibility for pursuing a claim for ROT rests with the creditor. It is not for an Administrator to root out potential ROT claims but when he receives notice of such a claim, he must allow the claimant the opportunity to substantiate such claim and adjudicate on such claim based upon the evidence provided.
All suppliers these days are likely to have ROT clauses in their documentation and many will ensure that the terms of such clauses are properly incorporated into their dealings with customers. However, if at the very time such clauses are needed, (i.e. when a customer becomes insolvent) a supplier does not take fast and decisive action, such clauses can become worthless.
Therefore, my best advice is to act swiftly and take advice.
Committee members of the newly styled Co-operative Societies or Community Benefit Societies, historically and more commonly known as Industrial and Provident Societies, need to understand that although the position is very often voluntary, being a committee member or officer of such organisations can carry onerous penalties in certain circumstances.
The introduction of new legislation affecting the third sector means that the provisions of the Company Directors Disqualification Act 1986 apply to societies as it applies to companies. As a result, reference to a director or an officer of a company in the disqualification legislation now includes a member of the committee or an officer of a registered society.
Therefore, members of a committee or an officer of a registered society found guilty of offences relating to the mismanagement of a society could be banned from holding office at another society or from any other company for anything between 2 and 15 years.
In addition, this information is in the public domain because a list of those disqualified as a consequence of their actions can be found on a register maintained at Companies House.
Arrangements, Reconstructions and Administrations
From 6 April 2014, societies in financial trouble are able to make use of two additional insolvency procedures that have been available to companies since 1986, namely Voluntary Arrangements and Administrations. Before these changes, liquidation was the only option available to societies.
These two procedures apply to most Industrial and Provident Societies, including Credit Unions, but it does not apply to Industrial and Provident Societies which are private registered providers of social housing or registered social landlords.
The availability of these two procedures brings the provisions governing insolvent societies in line with company legislation and emphasises the similarity of the two types of entities as regards insolvency legislation and therefore the actions that may be taken against committee members and officers of societies if they do not act properly.
Wrongful Trading and Personal Liability
An insolvency practitioner appointed to wind up the affairs of a society will consider the actions of committee members and officers during the period leading up to the winding up and in particular will consider whether such persons allowed the society to continue to trade, whilst insolvent, thereby causing further losses to either creditors or members.
In deciding whether or not a committee member or officer ought to have known or ascertained the society was insolvent, the conclusions which he ought to have reached and the steps which he ought to have taken are those which would be known or ascertained, or reached or taken, by a reasonably diligent person having both;
(a) the general knowledge, skill and experience that may reasonably be expected of a person carrying out the same functions as are carried out by that committee member or officer in relation to the society, and
(b) the general knowledge, skill and experience that committee member or officer has.
If found guilty of wrongful trading the court, on the application of the liquidator, may declare that that person is to be liable to make such contribution (if any) to the society’s assets as the court thinks proper. This means that a committee member or officer will be made to pay their own money into the society for the benefit of creditors.
From 6 April 2014, new powers have been given to the Secretary of State, based on the powers exercisable against companies, to appoint inspectors to investigate the affairs of a society and wider powers have been given to require documents and information recorded in any form and in any circumstances to be produced.
Being a committee member or officer of a society can be onerous and the penalties for not acting properly severe. It is essential that the financial position and trading performance of a society is review by everybody in such positions on a regular basis. Do not leave it to others as this will be no defense if things do go wrong.
If you have any questions arising from this article or wish to discuss any aspect of solvency issues in relation to societies, please contact either Brett Barton on Tony Mitchell at Cranfield Business Recovery who will be happy to be of assistance.
The PAYE and National Insurance legislations require an employer to pay over to HMRC the PAYE and National Insurance Contributions (NIC) due on the earnings of an employee within 14 days of the end of the month in which the deductions were made (or 17 days if by electronic method).
If the correct amount of PAYE/NIC (“the contributions”) is not paid then HMRC has the powers to recover such amounts, plus any interest and penalties, from the directors or other officers of the company by issuing a Personal Liability Notice (“PLN”).
PLNs may be issued when a company has failed to pay the contributions due at or within the prescribed time and the failure is in the opinion of HMRC attributable to the fraud or neglect of one or more individuals who, at the time of the fraud or neglect, were ‘officers’ of the company.
In respect of a company, an officer is defined as any director, manager, secretary or other similar officer of the company, or any person purporting to act as such (including shadow directors) and in a case where the affairs of the company are managed by its members, any member exercising functions of management with respect to that company or purporting to do so (“culpable officers”).
Neglect is not defined in the legislation and it is therefore necessary to look to case law for its commonly accepted meaning. One case frequently referred to for the meaning of neglect is Blyth v Birmingham Waterworks Co, 1856
Under the legislation, any failure to pay contributions on time could constitute neglect because a taxpayer who knows of an obligation to pay PAYE/NIC by a prescribed date and fails to satisfy that obligation, could be regarded as being to some degree negligent.
However, in practice, and in order to protect officers of genuinely failed companies and those regarded to have taken all reasonable steps to minimise a company’s PAYE/NIC debt, a PLN will only be issued where HMRC believes that the failure to pay the contributions due was attributable to fraud or more serious levels of neglect.
Serious neglect may exist where HMRC can establish that against a background of persistent failure to pay contributions, the company was making significant and/or regular payments to other creditors, or to connected persons or companies, or paying directors’ salaries.
In addition, a case may also be judged to involve more serious neglect where culpable officers have been associated with previous companies that have demonstrated a failure to comply with their statutory PAYE/NIC obligations.
The legislation will often be applied to phoenix companies.
The legislation does not restrict the issue of a PLN to liquidated companies. For example a PLN may be issued in respect of a company where it is considered that the officer’s previous record poses a significant risk to the payment of outstanding contributions.
HMRC is careful to protect directors of genuinely failed businesses and those who are regarded to have taken all reasonable steps to prevent or minimise a company’s PAYE/NIC liabilities and therefore, before a PLN is authorised, a thorough enquiry will always be undertaken by trained specialist officers to establish the specific facts and circumstances behind the company failure to pay. They will establish whether there is sufficient evidence for HMRC to prove ‘on the balance of probabilities’ that the failure to pay was attributable to fraudulent intent or negligent conduct. HMRC currently limits the application of the legislation to cases involving fraud or what is considered to be more serious levels of neglect.
In respect of a company’s Value added Tax (“VAT”) liability, culpable officers may be personally liable under a PLN penalty where
The use of this power is limited to circumstances where
In conclusion, although the risk to officers and culpable officers of companies in respect of personal liability may be small, it is real, and great care needs to be taken to ensure that responsibility to pay taxes due and to pay on time is taken seriously.
On 16 June 2014, the Government published the findings and recommendations of its own commissioned report on pre-pack administrations by Teresa Graham CBE.
In its initial response, R3, the Insolvency professions trade body commented that the report is an excellent contribution to the pre-pack debate and it fully supported the report’s conclusions that there is a place for pre-packs in the UK’s insolvency framework, which can help save jobs and does provide benefits for creditors too.
For the Government, Jenny Willott MP, Parliamentary under Secretary of State for Employment Relations and Consumer Affairs confirmed that the package of reforms proposed by the report would improve business confidence in the pre pack process and improve returns to creditors.
To be clear, a pre-pack administration is where arrangements are made for the sale of all or part of a company’s undertaking before formal insolvency is entered into, with the sale to be executed at or soon after the appointment of an administrator. The largest pre-pack deals have included the sale of EMI, the UK music group, to Citigroup in 2011, and of Blacks Leisure to JD Sports in 2012.
The report found that there were many positives to pre-pack administrations:
The report however did identify several negative aspects of pre-pack administrations:
The report is detailed and far ranging and has come up with six key recommendations;
Key recommendation 1: The Pre-pack Pool:
On a voluntary basis, in respect of pre-pack deals involving connected parties, such connected parties approach a ‘pre-pack pool’ before the sale and disclose details of the deal, for the pool member to comment upon. The pool should consist of a pool of experienced business people able to independently scrutinise a pre-pack deal to a connected party. This will enable independent scrutiny of the deal yet retain overall secrecy before the event.
Key recommendation 2: Viability Review:
On a voluntary basis, if the business and assets are to be sold to a connected party, that connected party will be required to draw up a ‘viability review’ on the new company, stating how the company will survive for at least 12 months from the date of the statement. A short narrative will also be required, detailing what the new company will do differently from the old company in order that the business should not fail again. The statement or narrative will be drawn up by the connected party prior to administration.
Key Recommendation 3: SIP 16:
The Joint Insolvency Committee considers, at the earliest opportunity, the redrafting of Statement of Insolvency Practice 16 (“SIP 16”). At Annex A to the report is a suggested revised SIP 16.
Key Recommendation 4:Marketing:
The report recommends that all marketing activity of businesses that are to be pre-packed comply with six principles of good marketing set out in the report and that any deviation from these principles be brought to creditors’ attention.
Key Recommendation 5: Valuations:
SIP 16 should be amended to the effect that valuations must be carried out by a valuer who holds professional indemnity insurance.
Key Recommendation 6:SIP 16:
The Insolvency Service withdraws from monitoring SIP 16 statements and that monitoring be picked up by the Recognised Professional Bodies.
In the words of Teresa Graham;
“I believe that implemented as a complete package, my proposals will lead to real improvements in pre-packs; will help preserve jobs; and contribute to the UK economy as we emerge from the recession.”
For those who would like to read more, Teresa Graham’s full report can be found at:
The issue of contingent claims are more common than you would appreciate and they typically come about either because of a customer contract which has gone wrong, a legal dispute, an industrial tribunal claim brought by an employee or an unforeseen assessment by HM Revenue & Customs (“HMRC”). Such claims can result in the directors reluctantly having to take the decision to take steps to place their company into Administration or insolvent Liquidation.
Dealing with contingent claims in insolvent companies is relatively straightforward. In Administration and Liquidation, the Insolvency Practitioner (“IP”) is helped by the legislation and there is a clear pathway to deal with such claims. The directors estimate the value of the contingent claim in their Statement of Affairs, the creditor submits a formal claim in the insolvency proceedings and it falls to the IP to adjudicate upon the evidence and to make a formal determination of the quantum of the claim. In some of the more complex cases, this is undertaken with the assistance of specialist legal advice. If the IP rejects the claim in whole or in part, the creditor has 21 days to either agree with the adjudication of the IP or to appeal against the decision by making a Court application. If the creditor makes an application to Court, the Court will either ratify the decision of the IP or make its own determination.
As part of the adjudication process, the IP must be mindful that the insolvent company may not have significant assets and when there are limited funds to be distributed to the unsecured creditors, the IP has to carefully consider the commercial merits of adjudicating upon contingent claims. For example, if there are funds of £20,000 to distribute amongst unsecured creditors totalling £500,000, this equates to a dividend of 4 pence in the pound. If the level of unsecured creditors is increased by a contingent element of a claim of say £50,000, this would reduce the dividend to 3.6 pence in the pound but in real terms, the sum involved is a relatively small amount of £1,818.
Let us now consider the situation where a successful company is notified of a contingent claim which if it crystallises will force the company to cease to trade. The dilemma that faces the directors is whether to continue to trade or to seek professional advice as to their personal positions. If they allow the company to continue and the contingent claim turns into an actual claim they could be held personally liable for allowing the continuation of trading. In such situations I often get asked what steps a company can take to protect itself in such a position. One solution is to enter into a Company Voluntary Arrangement (“CVA”). A CVA protects the directors personally and provides a structure to deal with contingent claims whilst allowing the company to carry on trading successfully.
My advice to all directors when considering whether a contingent claim could result in the company having to cease to trade is to seek advice from a qualified IP. I am happy to spend time with directors to consider the particular circumstances of the situation and to offer practical advice and solutions which may avoid formal insolvency procedures to secure the future of the company and to protect the personal interests of the directors.
A survey late last year by Experian, the global information services company, highlighted how small and medium sized enterprises (SMEs) are heavily dependent on directors using their personal funds to finance their companies. The personal funds are raised from mortgages, credit cards and current and savings accounts.
Nearly half of the directors admitting to funding their own businesses used the funds to set up their business, over a third to buy new equipment or premises and the rest to pay off debt or suppliers.
I have seen directors become ever more resourceful in finding ways to fund their businesses and raising personal money is often easier than securing business funding.
Unfortunately, however, what directors nearly always forget is that when they invest their own money in their company they should take some form of security, usually a floating charge debenture, over the assets of the company. By doing this they ensure that if things do go wrong they stand a much better chance of getting their money back than if no security is held.
A director’s debenture is very easy to put in place and costs a few hundred pounds. As the Experian survey highlighted, almost a third of directors investing funds did so by using a personal mortgage. Therefore, if things do not work out they may not only loss their company but also their home.
My advice is that every director who is investing personal money into their company should investigate putting in place a director’s debenture to secure their investment. As long as the debenture is registered at Companies House before the funds are introduced, the security is immediate. Even if the funds are already in place it is still possible to take security by way of a director’s debenture but it will take two years before it becomes effective.
If you have a client looking to invest in their own company please speak to me first about how they can be better protected for the future.
If ever a reminder was necessary as to the seriousness of bankruptcy it has been given by HHJ Kelson Q.C at Sheffield Crown Court in January 2014.
The judge sentenced a bankrupt to two years imprisonment for failing to disclose cash of £33,160 at the time of the bankruptcy and failing to account for payments totalling £97,074 out of personal bank accounts in the 12 months before he became bankrupt. In addition, the bankrupt’s discharge from bankruptcy has been suspended indefinitely.
The prosecution came about following an investigation by the Insolvency Service and the Department for Business, Innovation and Skills (“BIS”). The undeclared cash was discovered when the bankrupt was the victim of armed robbery a few weeks after he declared himself bankrupt when a holdall in his possession with £33,160 in cash was stolen from him. Subsequent enquires into the source of the cash revealed that a further £97,000 remained unaccounted for from his personal bank accounts.
The robust approach to the case by the Criminal Investigations and Prosecutions team is part of BIS’ mission to build a dynamic and competitive UK economy by investigating and prosecuting a range of offences, primarily relating to personal and company insolvencies.
After yet another visit to Birmingham Children’s hospital to visit a very brave little girl, I decided to enrol for the Wolf Run Challenge taking place on the 27 April 2014. My goal is to raise at least £5,000 for the Ronald McDonald House charity which provides free accommodation for the families of sick children who are inpatients at Birmingham Children’s Hospital thereby ensuring that during the most testing of times, loved ones and siblings can be close by, providing a brief respite from the ward.
The brave little girl is Georgia who is 12 years old and has overcome so many challenges and obstacles in her life that has seen her face over 60 brain surgery operations, as a result of which, she has been rushed into Birmingham Children’s Hospital on many occasions as a medical emergency. During these times her family has been provided with free accommodation at Ronald McDonald’s House in Birmingham, one of the 5,000 families that have been provided with accommodation since the house opened in November 2009.
Despite the many medical issues and setbacks Georgia has experienced, she remains positive and upbeat, inspiring everyone that surrounds her. On the many occasions I have visited Georgia at hospital and the first question she asks is “How are you?” which as you can imagine is completely humbling. So as a fitting tribute, if I reach the £5,000 target, I will be able to rename one of the rooms “Georgia” at the Ronald McDonald House in Birmingham. I also want to raise awareness about the charity so they can help more families like Georgia’s.
It is appropriate that to raise funds in honour of such an important person the challenge I should choose should be one that tests my psychical abilities. WOLF is an acronym that stands for Woods, Obstacles, Lakes and Fields, and contestants have to complete a 10k off-road run that features a series of man-made and natural obstacles located throughout the course. The race takes place three days after my 40th birthday and at the start of 2014 I weighed 18½ stone and my BMI was well inside the critically obese category. As I write this blog, with 66 days to go and after 7 weeks of gruelling workouts and a tailored diet, I find myself half way to completing this challenge, having lost 2 stone in weight and more motivated than ever to reach my fund raising target. I have also run my first 5k park run race (first time in over 15 years I have run this distance) and plan to walk up Snowdon as part of my training plan.
If you feel that you can help there is a limited opportunity for ten companies or organisations to sponsor a space on the t-shirts that I and the other wolf pack members will be wearing on the day. For a donation of £200, your logo will be added to the t-shirts and you will get a special mention in the build up to the big event and in the post-race photo/media coverage. I’m already half way there and would like to say a big thank you to my first five t-shirt sponsors The Brooke charity, GVA Grimley, Bridge PR, Wright Hassall and Murphy Salisbury for their support. If you are interested in becoming a t-shirt sponsor, please contact me.
Any amount you are able to donate will be gratefully received, also, I would like to thank Patrick and Tony, my fellow directors, who have agreed to match the funds I manage to raise. To find out more or to make a donation please click here.
How the world of debt has changed over the years.
In 1839, over 4,000 individuals were arrested for debt in London and put into prison, and nearly 400 of those unfortunate men remained in prison for the rest of their lives”. Notice the word “men” because up until 1864 and the case of Jolly v Rees, it was men who were responsible to pay the debts of their wives and although judges slowly began to find women liable for their debts, married women did not gain full contractual rights and liabilities until 1935. It was not until the Debtors Act of 1869 that imprisonment for debt was abolished, although debtors who had the means to pay their debt, but did not do so, could still be incarcerated for up to six weeks.
Under the Bankruptcy Acts of 1883 and 1914, the constraints imposed on a bankrupt were designed to ensure his co-operation in the administration of his estate as well as to prevent him from participating in some of the aspects of public life and from engaging in activities that required a degree of trust. This clearly demonstrated the sentiment of the day that a debtor, by the very fact of becoming bankrupt, was not someone in whom society could place its trust or confidence.
A debtor could not apply for his discharge from bankruptcy until a public examination had been concluded which was heard in open court. In practice, a bankrupt usually waited a considerable time before making such an application, if he applied at all. Many bankrupts who had moved on with their lives did not want their conduct examined in public once again. Accordingly, a large proportion of the bankrupt population remained bankrupt for many years, sometimes for a lifetime.
The Insolvency Act 1976 introduced a form of automatic discharge from bankruptcy which usually meant that the debtor was released after 5 years. In the Insolvency Act 1986, the automatic discharge period was reduced to 3 years and in 2004, under the Enterprise Act 2002, this was further reduced to 1 year.
Whist some may argue that personal insolvency was becoming less penal, The Cork Report of 1982 introduced the idea that one of the aims of good modern insolvency law was “to provide means for the preservation of viable commercial enterprises capable of making a useful contribution to the economic life of the country”. This was followed in 2001 by the publication by the Insolvency Service of a report entitled “Insolvency – A Second Chance” which argued that companies should not be allowed to close down unnecessarily and that honest individuals should be given a “fresh start”.
It was this kind of modern thinking that was first incorporated in the Insolvency Act of 1986 which introduced the concept of the Administration Order (an attempt to replicate the American Chapter 11 regime) and the Individual and Company Voluntary Arrangement. The Enterprise Act of 2002 subsequently sought to further encourage and promote the culture of entrepreneurship and rescue.
So has the promotion of the rescue culture had an impact on the attitudes of debtors and directors? In my opinion, yes as it has led to a decline in the moral code of individuals and company directors towards the obligation to repay money due to creditors.
The explosion of personal debt pre 2008, with little regard to how such debt was going to be repaid, resulted in unprecedented numbers of bankruptcy orders being made. I am sure such individuals would have preferred not to have been made bankrupt but the reality is that many saw little or no noticeable difference in the way they lived and were automatically discharged from bankruptcy after 12 months.
A survey in 2012 by R3, the insolvency trade body, reported that 58% of the British public felt that bankruptcy is too lenient and it found that almost 82% of people surveyed believed that some people were taking advantage of the bankruptcy system to get rid of debts they had built up through reckless spending.
The survey highlighted that 64% would like to see the system altered by changing how people were treated in bankruptcy dependent on their previous spending patterns, potentially introducing a direct correlation between prior spending habits and the term of the bankruptcy. A similar number also thought that a majority of people might be able to avoid bankruptcy if they altered their current spending habits.
Five years into the longest recession that any of us have seen, I am still seeing situations where shareholding directors have continued to draw money in lieu of salary, in anticipation of the overdrawn loan account that this creates being repaid by the dividend to be declared at the end of the year.
By adopting this strategy, there is an obvious saving to be made in the amount paid in National Insurance contributions by both the company and the director and this is all perfectly legal. The problem arises, however, when the company does not have sufficient profits or distributable reserves to declare a dividend at the end of the year. In such circumstances there is an overdrawn director’s loan account sitting in the accounts at the end of the financial year which will attract a S455 taxation liability which is payable by the company.
Far worse than this, however, is if a director has been withdrawing funds by way of an overdrawn director’s loan account, as described above, but the company becomes insolvent and a liquidator is appointed before dividends can be legally declared to repay the loan account, the consequences are very serious indeed.
One of the duties of a liquidator is to review payments made to directors and shareholders in the period leading up to the insolvency of the company. I am experiencing cases where an overdrawn director’s loan account is sitting in the accounts at the date the company ceases to trade and the director explains to me that on the advice of his accountant, he had been taking drawings instead of a salary through the PAYE system and therefore it is not really an overdrawn loan account. Unfortunately the law does not see it this way and the overdrawn loan account is repayable in full to the company. Had the money been taken as a salary in line with the director’s terms of employment, then nothing would have been repayable.
Problems also arise where in earlier years dividends have been declared to clear a director’s overdrawn loan account but when a liquidator looks at the financial position during the period in question, it can be shown that the company did not have sufficient reserves to declare such dividends. In such cases, again, a director may be required to repay the value of the illegal dividends back to the company.
During these uncertain times, my advice to all directors is that if there is any doubt about the solvency or profitability of the company, consider very carefully whether the savings that can be made in National Insurance contributions are worth the possible claim by a liquidator for the repayment of previous drawings received.
Similarly, accountants and financial advisers should review all their client’s arrangements where directors are taking minimal salaries and receiving drawings in anticipation of future dividends to test the solvency position of the company and if necessary advise their clients to join the PAYE system, even if this adds additional costs to the business.
The debate continues about the effect Zombie companies are having on the economy and I even saw the other day the term “Zombie bank”. The FT has also extended the debate by highlighting the rising number of European Zombie companies that exist and in part, blaming them for the weak economic recovery in Europe.
The definition of a Zombie company is well rehearsed, being a company only able to cover interest on its borrowings and making no inroads into capital debt. Last November R3, the insolvency industry trade association, reported that one in ten companies in the UK is able to pay only interest on their debts but not reduce the debt itself, an increase of 10% over the preceding five months. The term must surely also be applicable to certain members of the Euro zone creating the frightening term “Zombie countries”.
There are two very distinct schools of thought on the subject of Zombie companies. The first is that the existence of such companies is stifling growth by utilising scarce resources in the form of available funding to keep alive an entity that has no future. The belief is that market forces should dictate whether a company is good enough to survive and a company should not be propped up for artificial reasons. Zombie companies could be likened to the Red Weed in the War of the Worlds, choking everything in its path and leaving a trail of death in its wake.
The second school of thought is less dramatic advocating that stability and employment at the moment is of greater importance than adhering strictly to the law of true market forces and by supporting Zombie companies, time is being given to allow the economy to recover rather than pushing such companies into insolvency.
History will be the judge of which view was correct but in my opinion, Zombie companies will continue to exist for the next few years until the economy starts to properly recover, the Banks have strong enough balance sheets to act against non performing borrowers and the pressures of growth finally brings the existence of the Zombie to an end.
In the 1990’s the Government sold a number of licences for mobile phone networks to be erected across the UK. It was in 1994 that Orange was officially launched and since then, telecommunication and electronic giants have been fiercely competing to bring us the latest in technology.
We have seen an increase in internet speeds and the evolution of hand held tablet devices and smart phones. There are in excess of 190 million active websites now available at your finger tips, wherever you happen to be. Would your grandparents have believed you if you had told them 50 years ago they could watch television on a small handheld device that makes phone calls, with no wires, anywhere in the UK. They would be amazed and rightly so.
The electronic age has certainly had a big impact on the traditional high street. The increase in online spending has contributed to the downfall of iconic stores such as Our Price, Woolworths, TJ Hughes, Adams and Peacocks. The list of casualties continues to grow and in 2012 saw the permanent closure of Habitat and Comet stores.
Recent reports in the media suggest that the signs don’t look good for the small independent retailer with average sales during the lead up to Christmas unable to repair what has been a poor 2012. With business rates set to increase and the rent falling due on 21 December 2012, it looks like the retail sector will continue to face very difficult trading conditions.
My message is therefore very simple. If you wish to retain the character of your local high street and enjoy your weekend amble with the family, make sure you buck the trend of online shopping and get out there and support your local independent retailers. In my experience, the little bit extra that you pay is more than offset by the level of customer service that you receive.