Comment from the Pulpit

This is is the first newsletter from O’Hara & Co since the change in government, and whilst it was suggested I was becoming too critical in relation to my comments on the last government, I propose to draw a line under their stewardship but by way of a final comment compare the actions of the government with those of directors of failed Limited Companies. I feel certain that if a meeting of creditors had been held then there would have been claims against the politicians, for example selling assets at an undervalue (remember Mr Brown selling some of our gold reserves), trading with the knowledge of insolvency (the huge public sector debt) which could have led to misfeasance claims and possible disqualifications.

In contrast, the majority of the outgoing MPs received excellent severance or compensation payments and failure seems to be a circuitous route to financial security. Failed football managers seem to receive astronomical compensation payments, whilst many officials in the civil service and public sector appear to receive awards far in excess of those awarded to
former private sector employees.
That at leads me into the private sector, and notwithstanding the change of government, due to a combination of banks’ adversity to lending and the inevitable knock on effect from public sector cutbacks, many well run old established companies are struggling.

Currently many companies are aided by the Time to Pay Scheme and of course exceptionally low interest rates. Neither of these two advantages will prevail in the long term. The question is where will cash flow come from?
Traditionally, funding came from banks but currently they are between a rock and a hard place, with the government insisting that banks build up a war chest and at the same time trying to encourage them to lend, thereby oiling the wheels of commerce.
A clear direction has to be given both to the banks and commerce, and whilst the banks are currently posting huge profi ts, it is pointless these profits coming at the expense of jobs and the further decline of the manufacturing sector.
Perhaps a common sense view should be adopted whereby local bank managers can make decisions based upon their experience, and knowledge of the business and the probity and skill of the proprietor and or directors.

Perhaps a good starting point would be for bankers, who work in ivory towers, never as it were worked at the coal face, have at least two years working in the local community to see firsthand what makes businesses and the local community tick.
The banking fraternity may say this could lead to a number of failures, but surely any slight reduction in profits must be better than wholesale unemployment with long established businesses closing.
I have recently been informed by an industrialist that his particular bank has literally millions of pounds available to loan to existing and long term customers, but at the same time they are insisting that new expensive set up fees are in place. Any future advances will bear a higher interest rate and, in certain cases, to add insult to injury, personal guarantees are now being requested from directors who are finding trading terms increasingly difficult due to many suppliers now wanting, because of cash flow problems, to extend their credit terms.
A vicious circle!
The new government has talked about the big tent or big issues and certain entrepreneurs have been encouraged to
advise the bank. Perhaps these powers that be will come up with a workable solution at a fraction of the cost of many of the former quangos

Even from an insolvency point of view, there has been a downturn in quality of work which is reflected by the contraction of business generally in the UK, and I think that all working employees or employers should be
given some form of incentive, whilst at the same time educating those on benefits that they are not received by way of right but have to be earned by other members of society.
Finally, talking to many employees and employers, the general feeling is that job security is their main priority and if a rise is given, it will be minimal which is in complete contrast to many of the unions, whose members often have a job for life, threatening to go on strike for relatively petty issues. The summer (which couple of days was that), is now almost behind us and we can look forward to hopefully some seasonal autumnal weather for the run up to Christmas.

Keep smiling - Peter O’Hara

Autumn 2010 Newsletter

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