CCR Magazine

Welcome to August's edition of CCR.

To read this month's magazine online, click here

Before the general election, earlier in the year, a now famous opinion poll was published that showed around 95% of those asked were in favour of abolishing “wasteful and unproductive spending”.

Leaving aside the, rather surprising, finding that around 5% of the UK population is in favour of waste, this rather blunt instrument of an opinion poll appeared to confirm the popular mood: cuts were necessary in the public sector, and there was plenty of waste to dispense with.

Yes indeed, pretty much everyone is in favour of cutting waste, but the problem comes in trying to identify what true ‘waste’ is. And now the axe is starting to fall.

Last month, in response to the government’s insistence that it must save money, the Insolvency Service announced plans to cut £100m from its budget, amounting to 11% of its total running costs.

Chief executive Stephen Speed did his best to put a brave face on the situation, but could do little to hide the scale of the problem: “It is inevitable that the cuts will, over time, lead to some reduction in the number of insolvency and live company investigations that we are able to pursue. However, I can assure everyone that the Insolvency Service has very rigorous systems in place to ensure that our work is aimed at providing the maximum protection to the public and businesses at all times.”

So there we have it: just at a time of financial difficulty, fraudsters will go unpunished and the criminal and the negligent will be left, quite free, to continue to infect the British economy, to deceive the unwary or unfortunate credit professional, and to bring down good businesses.

Steven Law, president of insolvency trade body, R3, struggled to control his disappointment: “I understand today’s announcement of 11% cuts in running costs is an unavoidable necessity in this climate, but I am concerned.

“This comes at a time when the number of cases of suspected misconduct by company directors has nearly doubled in 2009-10. Our members believe that, in more than half of the cases they put forward, the decision not to disqualify a director was wrong.

“We know instances of fraud rise during a recession and many of these cases will not yet have filtered through, as the Insolvency Service has two years to follow up a referral. Although I appreciate that the service has been asked to make cuts in line with other departments, reductions in resource for company investigations is the equivalent of taking police off the beat. The key areas of investigations and enforcement should be ring fenced and the cuts imposed elsewhere within the service.”

He concludes with a final plea: “Company directors should not be able to act wrongfully without fear of repercussion.”

In times of austerity we should be careful what we cut, for fear of making our economic problems worse.

Enjoy the magazine!

Stephen Kiely
Editor