Bankers and rating agencies……

March 8th, 2011

So who do we trust? The market, the Greek Government or the rating agencies?

Moody’s have downgraded Greece’s credit rating so that it now stands on a par with Fiji and Vietnam. It’s debt is now graded Ba1 – or what we would all probably call “junk”.┬áThe fact that corporate bonds based on repackaged dodgy mortgage debt was rated as AAA1 prior to the banking crisis is beside the point apparently.

The financial markets, the economy, banker-bashing and bonuses – sometimes we just have to stop and laugh!

Plymouth, the UK cities report and confidence

January 25th, 2011

The Cities Outlook 2011 report tracks the changes in various economic indicators for cities across the UK. As a Plymouth based firm, we’re interested and heavily invested in the city and its future. And that makes for some difficult reading in this survey.

The Plymouth numbers are shown here and the one that strikes me (as an accountant) as being the most significant for the future of the city is the figure for “business stock per 10,000 population” – a measure of the number of businesses in the city. On this measure Plymouth is ranked 61 out of 64 UK cities with 202.6 businesses per 10,000 people against a UK average of 334.7 per 10,000 people. That’s seriously low! There’s a history for VAT registrations (a guide to new business start-ups) here which shows Plymouth in the bottom 10 “business creating cities” ┬áup to 2007. It doesn’t appear that there has been much improvement since.

So why is this? This article reviews some of the historical reasons and compares Plymouth with other previously heavily industrialised cities such as Newcastle and Liverpool. It also goes on to talk about the dependence that Plymouth (and other cities) have had on the public sector including healthcare, education and in our case, the Navy.

In the most serious public spending squeeze for years, cities like Plymouth which have relied historically (and I mean up to the last couple of years) on public sector job creation to soak up working age population will be most adversely affected. So we start from a low base as a business creating city and enter a phase where David Cameron has commented that “We are going to get out of this recession by trading our way out, by business deciding to employ people to create wealth, to go after new markets, to export”. Peter Mandelson said “First and foremost we need to foster a new climate for enterprise in Britain. The recovery cannot be driven by consumer debt or public spending. It will be driven by private sector investment and private enterprise.” It makes you wonder what they were doing during their time in government if they are suggesting a change in business climate as the “first and foremost” task of government!

It’s clear that we’re not going to get any real help from government – either “won’t or can’t” is not going to change anything here. What we suffer from is historical reliance and a need to change culture, and that doesn’t happen overnight. There has been a change in the city over the last twenty years but it takes time. It comes from attitude, desire and ambition. The drive and motivation of the few that helps to inspire the weaker amongst us to jump on their band-wagon and help. And more than anything it comes from the young, the lack of concern for barriers and the blind optimism that we all lose so soon.

As a city we need to celebrate the ambitious, encourage the risk takers while helping to reduce their exposure, expound on the success stories and reach into the schools with them to help inspire the next generation. What we mustn’t do is drag down business with negative attitudes, snipe jealously at the successful or ambitious or constantly bemoan the ways of the world. What creates wealth ultimately starts with confidence – and that needs us all to want success and believe that we can create it in the city.

Disruptive innovation

November 5th, 2010

One of our alumni, Richard Wyatt-Haines put me onto this blog post today about disruptive innovation. We’ve been banging on for some time about the transformational power of cloud computing and I’m presenting a seminar next week which you can read about here on that topic. Richard’s “heads-up” to this article was therefore the perfect timing because (as usual) I’m still writing the content – quelle surprise.

We all see the disruption produced by the new low cost alternatives in mature markets – just think Easyjet and Ryan Air. The arrogance of the market incumbent is often clear to those of us on the outside but it must be fascinating to watch the┬áperturbation┬áof those in the incumbent boardroom when the “jumped up start up” starts to get traction for a fraction of the price and often makes a virtue of the fact that they do it with a fraction of the features.

The thing that struck me so much was the “takeaways” – to quote from the article….

  • “The incumbent eventually realizes what is happening to them. ┬áThey are run by smart & shrewd people or they wouldnÔÇÖt become leaders in incumbent organizations in the first place
  • They are blinded for too long ÔÇô reinforced by big revenues & profits that come from customers that corroborate┬átheir misinformed views of the future because they have a shared & vested stake in status quo
  • Disruptive technologies are often those the are less performant and feel ÔÇ£chintzeyÔÇØ relative to their well-heeled competitors. ┬áThey are radically lower in price. ┬áThey initially create deflationary pressures in a market. ┬áThey are nearly impossible to react to. ┬áBut while the price points are dramatically lower this often encourages more users, more innovation in the eco-system and therefore often a bigger market opportunity than even the incumbents perceived
  • I am reminded about how dismissive traditionally television media is about YouTube ÔÇô even to this day. ┬áAbout how dismissive traditional print was about blogs or the airlines views the ÔÇ£peanut servingÔÇØ Southwest Airlines. ┬áAbout how Microsoft viewed Google Apps. ┬áSony, the iPod. ┬áUS automakers made the mistake with the ÔÇ£low endÔÇØ Japanese manufactures until the Toyota became the Lexus. ┬áWhat future have telcos for call-based revenue in the era of Skype?”

And his slightly tongue-in-cheek summary about how incumbents can react was interesting too……

“Perhaps the best they can do is to help fund their successors. ┬áPerhaps they can spawn the next generation of innovators and leave a footprint of their DNA along the way. ┬áOr at least diversify the future fortunes of their shareholders in the way that Yahoo! earned handsomely from GoogleÔÇÖs success. ┬áI donÔÇÖt know ÔÇô it may not be intellectually or emotionally possible.

But if I studied every incumbent industry around me and saw the destruction that technology and the Internet was bringing I would at least want to have an ownership stake in my pillagerÔÇÖs future cashflows if I knew the sacking of the castle was inevitable.”

I’m off to buy some shares…..

Jon Stacey

Future Tech Networking Seminar

November 5th, 2010

Jon Stacey is presenting a seminar in the Glo Networks Future Tech series next week:

Cloud Computing ÔÇô A Case Study -┬ápresented by Chris Connor, Glo Networks and Jon Stacey, Partner at Riley Chartered Accountants.

Legacy Cardiff International Hotel, Junction 32/M4 Merthyr Road, Tongwynlais, Cardiff – Wednesday 10th November 2010 – 5.00pm

Riley have been enthusiastic adopters of Cloud Computing. The ability to communicate as a team with their customers is paramount to the firm as is the recording and storing of information in the most efficient and accessible format. Hear how ÔÇ£Cloud ComputingÔÇØ radically changed this organisations business practices and the positive impact it achieved from making the change.

For full details contact Glo Networks on 0845 5210 140 or visit their website Entry to all events is FREE.

Where good ideas come from….

October 14th, 2010

We love this video from Steven Johnson to go with his book “Where good ideas come from”. It’s a fantastic way to introduce the book and a really fun way to present. And no, we won’t be doing accounts this way quite yet….

How fear sabotages success

September 24th, 2010

There is a great article from Seth Godin – Quieting the lizard brain – in which he discusses the way in which we prevaricate, delay, resist progress and generally contradict the way in which we should logically approach change. Now I’ve read it I see evidence of the lizard brain behaviour everywhere. These actions are apparently produced by a physical area of the brain called the amygdala and are therefore complex and difficult to control.

So what can we do to drive through a project to completion and to overcome the resistance to change endemic in many businesses?

We’re just not cricketers!

July 27th, 2010

Last Friday Duncan, Alex and Gemma from Riley joined with Matt, Craig and Mark from Nash & Co, Solicitors, to make up the Rash team for the Plymouth Professionals Cricket Tournament run by Begbies Traynor and Edward Symons.

The plucky but slightly makeshift team took on teams of cricketers from LloydsTSB, Clydesdale Bank, Bond Pearce, Begbies/Edward Symons and the eventual winners, Wolferstans to play at Plymstock Cricket Club.

Neither Alex nor Gemma had ever played cricket before but threw themselves into batting, bowling and wicket keeping (Alex) with gusto. Gemma won two prizes – firstly for the only member of any team to dare to wear pink trousers and secondly for the best dive of the day – she managed a treble somersault with pike while saving her wicket from an almost certain run-out – Tom Daly eat your heart out! Alex batted throughout one of the innings and took a Bond Pearce wicket to hoots of derision from the rest of the Bond Pearce team. Duncan batted and bowled well and even brought along his own kit – no, not a bat, pads or clothing, just a box!

While our results were not what we had hoped (we lost all our matches) we did have a great time and, I like to think, brought a touch of glamour to a game of cricket – well done guys!

Thanks to Matt, Craig and Mark from Nash & Co for putting up with us and also congratulations to the Rash team for winning a signed Exeter Chiefs rugby ball in the quiz – you will see more of that later this year!

Photos of the team can be seen at

Jon Stacey

Distance no object

July 22nd, 2010

I’ve just finished a webinar with a guy in Australia. An hour of screen demo and chat through my desktop. Nothing new there you might think but there was an interesting generational moment this morning at breakfast.

We were all discussing what we were doing today and (for once) the kids were quite animated as it’s the first day of the summer holidays – there was surfing for one and a friends for the day for the other. My turn came and I mentioned that I had to be in the office on time as I was having a webinar with an Australian. And the reaction? Well, normal blind acceptance from the kids and a “wow” moment from my wife to whom this was abnormal, unusual and surprising.

For children now this is not unusual – after all they are quite blas├® about hearing conversations with astronauts on the space shuttle or participating in a web chat with a single-handed sailor in middle of the South Atlantic. However, for my generation it can still come as a surprise that we can chat quite happily through a screen mike and see what someone else is doing thousands of miles away live.

And how business has changed. No longer are we competing just with the businesses we see in our home towns. Our strategy has to cope with what is being offered to our customers from say bookkeeping services based in India, investment houses in the US or Taiwanese manufacturers. The internet has made all this relatively easy for all but the most IT phobic to deal with. To a certain extent we take it all for granted.

We take it for granted that we can get a review of something we have never held in our hands from someone who has; read a report of a hotel visited by someone we’ve never met or ask for advice from a forum we don’t participate in ourselves. It has become second nature for many of us, but we also need to check what is being said or checked or mentioned about our own business.

So do you run automated Google searches on mentions of your business, links to your website, blog, Twitter or Facebook pages? Do you do the same for your competitors and peers? Have you yet recognised that competition comes from the rest of the world, not just the rest of your town, city or country? Have you used Google Analytics to see where interest in your online presence is emanating from or checked LinkedIn to see who else is being checked out when they look at your profile.

All these things are easy to do and produce a wealth of information about how your business may be perceived in the wider world – and if you don’t do it you can be sure that there is generation out there to whom this a natural way of working.

It’s a massive world out there, and distance is no longer an object.

Jon Stacey

The Blue Mile

July 6th, 2010

A team from Riley competed in the Blue Mile, Race for the Environment from the Mayflower Steps on Plymouth’s Barbican on Saturday 3 July. The weather was fantastic for the first running of the Blue Mile, designed to raise awareness of our water environment and to encourage mass participation in events based on and around the water.

There were three competitive events on the first day of the weekend, a mile open-water swim, single/double kayak and stand-up paddleboard. The swim was the most competitive event with nearly 150 swimmers in three “waves” throughout the morning and early afternoon. The kayak (in which there were 5 Riley competitors) starting at around 1.30 pm and the SUP (with 3 of the Riley team) at around 3pm.

The atmosphere around the tented village at the Mayflower Steps was great, competitors mingling with musicians, street artists and visitors to create a frisson of┬áexcitement┬áand anticipation. After registering for the event and changing into race gear, we headed to Elphinstone Car Park for a race and safety briefing before picking up our kit. Some of the Riley team were kayaking or on an SUP for the first time and with a bit of trepidation set out for the start. The breeze was fairly benign within the harbour but on rounding Fishers Nose, there was a fierce head-wind until the half-way mark was rounded. Then it was downwind all the way back to the finish and the most difficult part of the race, getting the “identitag” into the timing machine which was attached to a buoy at the end. There were a few misses there including Alex, who appears to have lost three minutes through a “double-beep”!

As a team we did really well in both our events, winning each heat and coming 6th and 5th in Kayak and SUP respectively. We were however soundly beaten by the Triple Challengers, who did all three events, what stars!

Once finished, a few beers and a good laugh rounded up a really great day. We will be back next year.

My son, Max Stacey has edited together some of the film from the day – we hope you enjoy it.

“We’re all in this together” – Riley Budget summary 2010 – Part 2!

June 23rd, 2010

The first thing that struck me about yesterday’s budget speech was the ties. The shimmery bluey-green of Osbourne’s effort and the blue and yellow of Cameron and Clegg. Wow, what a change from the normal dull red efforts that we have seen for the past 13 years. Perhaps the fashionista broom really does sweep clean. But how would the coalition policy broom do?

Well, what the Chancellor had to do was to persuade all of us that the epic reconstruction job that he has started on the UK economy was worthwhile and capable of careful, intelligent implementation. The buzz during the selling phase of the pre-election waffle was all about “sharing the proceeds of growth”, a phrase that David Cameron spouted on numerous occasions. Well, this budget was all about sharing the proceeds alright, not of growth, but of failure. And to put that problem into its proper context, the Chancellor said he would give it to us straight – there would be no stealth taxes, no hidden bombshells buried in the small-print, no double and triple counting for effect. Figures would not be fiddled for political impact. And largely he appears to have done just that. Stealth and perception have not been buried entirely (this is politics when all is said and done) and we will have to wait until 25 October to feel the bite of the axe in spending – and when it falls, it will be heavy.

So to the highlights excluding those mentioned in our last budget report which you can find here.

Corporate taxation

  • Main corporation tax rate to reduce from 28% by 1 per cent every year for four years to 24 per cent in 2014/15.
  • Small companies rate to be cut to 20 per cent from 1 April 2011.
  • Thresholds for small companies rate and main rate of corporation tax to remain unchanged at ┬ú300k and ┬ú1.5m
  • Taxation of Foreign profits, intellectual property and R&D to be reformed to make UK more business friendly.
  • Reduction in capital allowances from 20 per cent to 18 per cent on main pools, and from 10 per cent to eight per cent on special rate pools, from 1 April 2012.
  • Annual investment allowance reduced from ┬ú100,000 in 2010/11 to ┬ú25,000 from 1 April 2012. There will be transitional rules which, you’ve guessed it, will be available in “due course” – or to translate, when they’ve been written!
  • Introduction of a bank balance sheet levy, initially at 0.04 per cent from January 2011, increasing to 0.07 per cent. This is intended to encourage the banks to move to less risky funding profiles rather than to take less risk!
  • In case you’re interested, the main rate of corporation tax for companies with profits from oil extraction and oil rights in the UK and the UK Continental Shelf (ring fence profits) will remain at 30 per cent
  • Draft legislation has been released to clarify the treatment of certain dividends within UK companies. Hopefully, this will clear up some of the uncertainties including the treatment of dividends from reserves created after a reduction in company capital.

In terms of planning, it’s all about timing, and mainly on the purchase of capital assets. Utilising the higher allowances in the next two years is crucial if you are planning capital expenditure. Any expenditure over and above the ┬ú100k AIA should be planned within the same timescale to allow for the higher capital allowances available during that period. However, overall the reduction in CA’s isn’t as large as many were expecting and the timing allows a benefit from the reduction in CT rates and increased levels of allowances at the same time.

The government have again expressed their commitment to countering tax avoidance and have announced their intention to consider whether a “general anti-avoidance rule” should be implemented. This would have potentially wide-ranging implications for all types of tax planning.

Employment taxation

  • EmployersÔÇÖ NIC threshold to increase above inflation as previously announced.
  • Employer Funded Retirement Benefit Schemes (EFRBS) have been included in the HMRC crackdown on “perceived avoidance”. Surely not?
  • Up to ┬ú5,000 exemption from EmployerÔÇÖs NIC for each of first 10 people employed by new businesses located (broadly) outside South East.
  • Anti-avoidance legislation relating to the Er’s NIC change will be published but guess what, it hasn’t been written yet!

Indirect taxation

  • 20 per cent main VAT rate to be introduced on 4 January 2011, with continued exemptions for essential goods. This isn’t surprising given the amount that it raises (┬ú13bn pa) and the fact that George had nowhere else to go for it as the cupboard was bare!
  • Insurance premium tax rates to increase from 5 per cent to 6 per cent and from 17.5 per cent to 20 per cent.
  • You’ll no doubt all be pleased to know that the Landline Duty that was proposed in the 2009 Pre-Budget Report will not be introduced.

Income tax

  • Personal allowance to increase by ┬ú1,000 from 5 April 2011.
  • Higher rate tax threshold will be reduced so that higher rate and top rate taxpayers will not benefit from the increased personal allowance.

Capital gains tax (CGT)

  • Rate of CGT to increase to 28 per cent for higher rate and top rate income taxpayers (basic rate taxpayers rate to remain at 18 per cent) with no tapering based on length of ownership.
  • New CGT rate to be introduced for gains made from midnight.
  • Gains arising before 23 June will not be taken into account in determining the rate at which gains arising after 23 June are subject to tax.
  • HMRC will not rule out the 28% rate changing for 2011/12
  • EntrepreneursÔÇÖ relief will apply to first ┬ú5m of qualifying gains made from midnight and will continue to produce an effective tax on gains of 10% subject to the qualifying rules.
  • The Government will not be following through with the proposal to repeal the special tax rules relating to furnished holiday lettings. Instead they will consult to ensure the UK rules meet EU legal requirements. Any changes will be effective from April 2011

Pension issues

  • The Government has announced that it will end the requirement to use a pension fund to buy an annuity by age 75 with effect from 2011/12. Pending implementation of this announcement, registered pension scheme members attaining age 75 after 21 June 2010 will not be required to secure an income until age 77.
  • There will be a “step-back” from the higher rate tax relief restriction that was to be introduced on pension contributions from 2011/12. However, HMRC have stated their intention to raise the same amount through other means – the best guess is that this means restricting the level of overall contributions allowable.
  • Remember the QWPS or NEST comments from our last budget commentary? No thought not and it was only a couple of months back too!

Well, NEST is the new State sponsored Trust-based Defined Contribution pension scheme being established to provide an alternative to Qualifying Workplace Pension Schemes (QWPS) when Workplace Pension Reform introduces auto enrolment for pensions for all ÔÇ£eligible jobholdersÔÇØ, starting in October 2012. Bet you can’t wait! The requirements in terms of timing drop down with size of the business. Employers of 50 eligible jobholders, for example, must auto-enrol by July 2014, at the latest.

  • There is an increasing scale of compulsory minimum contributions (beginning at 1 per cent of earnings from the employer, and 1 per cent from employees in 2012), reaching the ÔÇ£steady stateÔÇØ minima of 3 per cent employer and 5 per cent (gross) employee in October 2017.

So that, as they say, is that. The first Budget of the coalition Government pretty much lived up to its promise of being tough, with everyone having to pay something towards reducing the countryÔÇÖs deficit. Certainly, there wasnÔÇÖt much to laugh about apart from the discomfort on the opposition benches and you have to feel sorry for them don’t you? You don’t?

Finally, Mr Osborne said the UK ÔÇÿwill not be joining the euro in this ParliamentÔÇÖ. This is not unexpected but George was also able to announce that he had therefore abolished the TreasuryÔÇÖs euro preparations unit. No doubt everyone will be relieved to know that ÔÇÿthe official concerned has been redeployed to more productive activitiesÔÇÖ. What those activities are we’ll no doubt never know!

Jon Stacey

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