Online Resource for Business

According to the Belfast Telegraph, the accountants PricewaterhouseCoopers (PwC) have just published a report that supports corporation tax varying powers to Northern Ireland.

Entitled “Making the most of devolution”, it calls for “Enterprise Zone status and tax-varying powers to make the region more attractive to overseas investors.”

It builds on the report earlier this year by the Independent Review of Economic Policy (IREP), which also recommended differential rates of corporation tax in Northern Ireland, a move which is being considered by George Osborne.

What is relevant to Wales is the call, by PwC chief economist Dr Esmond Birnie, for Northern Ireland “to work with their Scottish and Welsh counterparts to exploit every advantage to make devolution real”.

This follows a similar call by Gerry Holtham and his recent review that:

“The Assembly Government should seek discussions with the UK Government and the other devolved administrations about the feasibility of devolving corporation tax. Any specific proposal will need evaluation to ensure its compatibility with European law, notably the question of whether any UK-wide agreement on limits to rate changes would be permissible.”

Given that the current state of indirect business support seems to be in a  complete mess, the question is whether WAG has started any discussion, with either the other devolved regions or the UK Government itself, about improving the environment for direct support to businesses in Wales via lower business taxes.

In my opinion, that discussion cannot start soon enough.

A blizzard of privacy breaches is blowing through Britain, undermining confidence in government and chilling the private sector who fear, quite rightly, that their company might be the next to suffer.

In December 2007, the transport ministry admitted it had lost personal information relating to more than 3m learner drivers, a month after the HMRC agency revealed it had mislaid 25m people’s personal data in the post. Also, it emerged that nine National Health Service trusts had mislaid information on hundreds of thousands of patients.

In October 2009, the then Environment Secretary Hilary Benn confirmed the Rural Payments Agency could locate data backup tapes containing personal data, including banking details, of more than 100,000 farmers. Shortly afterwards, the Ministry of Defence admitted 91 laptops, 23 desktop computers and 47 USB memory devices had gone missing, with only 66 of the laptops reported as stolen.

The very next day, Maidstone and Tunbridge Wells NHS Trust were reprimanded by the Information Commissioner’s Office over the theft on an encrypted laptop which contained sensitive personal data on 33 patients. Another Three unencrypted laptops were also stolen in August 2009 from the Trust’s Maidstone site. The Information Commissioner’s Office said that 209 NHS bodies had reported data protection breaches in the previous two years, and incidents involving NHS organisations accounted for almost 30% of all data breaches reported since November 2007.

In fact, this is a high-level global problem: as information is collected more easily, put to more sophisticated uses and shared more widely, breaches of the rules have become both more common and more likely to be serious.

HMRC lost two CDs that included people’s addresses, bank account details and national insurance numbers. The CDs’ disappearance – which triggered the resignation of the Revenue head –created a potential goldmine for fraudsters. But this should also prove a ‘tipping point’ for the way companies deal with data loss.

Indeed, there have been even larger data disasters in the private sector. They include the 2003 theft of 92m email records from AOL, the internet service providers, and the illegal access last year of tens of millions of credit and debit card numbers through the systems of TJX, the US discount retailer.

In 2007 Richard Thomas, the then UK information commissioner, said he had received numerous anonymous confessions of problems, many of them from companies that had suffered privacy breaches and were anxious not to do so again.

Data security breaches are becoming a costly problem for companies, both financially and in terms of reputation. The Privacy Rights Clearinghouse, a US not-for-profit group, has identified more than 215m records of US residents that have been exposed since January 2005 because of security failures.

According to the Ponemon Institute, breaches cost US companies an average of $204 (£130) per record compromised, up 43 per cent since 2005. Data breach costs represent a significant risk to organisations of all sizes and industries.

Yet even as the problems expand, there is increasing evidence that many companies simply do not take them sufficiently seriously. A survey of US and British businesses by Kroll Ontrack, an information management company, found that fewer than half of the businesses in both countries had a strategy or policy in place on how to deal with electronically stored information. This comes at a time when the explosion of electronic information and the onslaught of new rules, regulations and laws have made it incredibly difficult for companies to stay on top of everything.

For the public, the potential implications of lax data security are even more troubling. It can lead to identity theft and other types of fraud. On the same day the driver data loss emerged, regulators fined Aviva, the UK’s biggest insurer, £1.26m over a breach that allowed fraudsters to alter customer addresses and bank account details as part of a £3.3m scam.

This reflects both the explosion in the amount of personal information stored by institutions and changes to the ways business is done. Technical advances allow data to be held in ever more convenient forms that also happen to be easier to lose or steal. Lost or stolen devices such as laptops account for half of all data losses (ask the MoD about this one), while other security menaces include hacking and mistakes by third parties such as contractors and consultants.

Another latent threat to data security is that companies are gathering greater quantities of information from individuals and doing more with it. Information is shared and synthesised for use in targeted marketing, meaning that data is moved around more widely and seen by more people, increasing the chances of it being mislaid or stolen.

A more subtle contributor to data privacy breaches is the conflict between two social trends: the rising institutional appetite for information, and falling job security. While sensitive data is collected in rapidly increasing amounts, the people processing the information are sometimes among the most casual members of the labour force. A small minority will make mistakes through inexperience or take advantage or their positions to cream off information to use for fraud.

So what should businesses do to safeguard themselves? Luckily, computer experts have developed ways to help small firms protect themselves against the most common security threats. For example, most personal computers sold today come equipped with virus protection. Since passwords can be guessed or stolen, some companies use more sophisticated authentication technologies, such as coded ID cards, voice recognition software, or even retinal scanning systems.

In addition to protecting their own computers from security threats, companies that conduct business over the Internet must also take care to protect their online customers. Businesses should never store customer information – especially credit card numbers – on its web server or any other computer connected to the internet. It is also a good idea to avoid putting any sensitive information on these machines.

In order for hardware and software security measures to be effective, firms must incorporate computer security into their basic operations. Business owners should establish a set of policies and procedures for internet security, which should encompass computer activity at both the user level and the system administrator level.

I have never been inclined to be the harbinger of doom. However, from where I’m standing, the facts, and what they might mean for the future of ‘High Street’ shopping, seem irrefutable.

We are already seeing businesses in ‘High Streets’ up and down the country suffer. More and more are closing. This might partly be attributed to the recession; and of course there has been a decline over a number of years that could be due to other means. The increase in out-of-town shopping centres certainly has not helped, the retail giants massed together with enormous car parks, fast food outlets, cinemas and more. But now a new threat has emerged: much larger and more virulent than ever before. The traditional customers are now staying at home and doing their shopping on the internet.

Month by month we see a continued increase in the number of people buying online. These people used to shop in the ‘High Street’ of the villages, towns and cities all over the UK. If you’ve watched the news on TV or in other media at all over the last few months, you can’t fail to be aware of the problems local (and often national) retail traders are experiencing.

Online however, it is quite a different story. In July 2010, online retail sales in the UK reached £5 billion. This is approximately 20% of UK retail sales, and represents an increase of 18% compared with the same month in the previous year, with sales volumes up by 1.1% on June 2010.

Online sales are increasing year-on-year at an exponential rate. Back in 2001, the average (mean) spend was just under £150 million per month (total online sales for the year 2001 were £1.8 billion), and there are no signs of this growth rate slowing.

To put this into perspective, the top three shopping streets in the UK (in terms of sales volumes): London’s Bond Street, Oxford Street and Regent Street, together, took just over £5 billion in sales for the whole of the year 2009. This is by no means a small sum, but the whole of the annual income is comparable to just one month of sales for the shops along the ‘online high street’!

Interestingly, almost all non-food sectors are reported as showing strong growth online, with the biggest increase of 68% being seen in clothing and accessories. This is certainly not the same kind of performance that is being seen elsewhere.

What’s more, the online shops are open 24/7 and accessible from every home, office or even café that has an internet connection, Wi-Fi hotspots have sprung up everywhere and many people are now shopping (and comparing prices on the spot) from their smartphones.

A series of reports from research company IMRG/CapGemini adds some weight to this. IMRG/CapGemini predicts that if current trends continue, within 10 years 50% of the UK’s retail sales will be carried out on the internet.

Of course, a prediction is only that, a prediction, but even the most sceptical can not ignore the enormous increase in online sales, and actual performance has surpassed all predictions made in recent times.

While this is likely to have a devastating affect on those who have their livelihoods in the high street, the broader impact is potentially far bigger.

I wonder if councils – not known for being fast moving when it comes to policy – are ready and equipped to rethink their development strategies and seek innovative ways of attracting people to town and city centres. Or to find ways of their communities engaging with the local area through the internet (beyond finding out when the next refuse collection is from a bloated, confusing website).

Governments might also experience falling tax revenues, where companies that are set up to trade and sell online only, can base their headquarters in offshore locations more easily that traditional ‘bricks and mortar’ companies thus benefiting from lower taxes as well as labour costs.

Speaking of Governments, most major countries are pushing for the roll out of faster broadband and service providers are also developing faster and better ways of providing internet access. In South Korea, and perhaps more surprisingly Latvia, broadband download speeds are in excess of 20Mbps, with 10Mbps broadband being considered slow. Yet in the UK we can’t even get it together for 50% of the population to have 2Mbps download speed, with many in rural UK areas restricted by no-go zones or not-spots. Finland has declared broadband to be legal right for every citizen (from July 2010)! So when will the UK catch up with this, if we are to compete in a global marketplace, we at least need to be competing on a level playing field. This is even more important post-recession.

The larger national chains are already preparing for this transition of customers’ activity, with Tesco being current leaders in the race to gain market share with online grocery, home products and everything else they can manage to provide while providing home delivery for the weekly shop.

Young, fast-moving and well-funded start-up businesses are looking at the marketplace and seeing that there is a raft of opportunities to be had online as internet usage becomes mainstream – not just for the geeks or the young – and continues to permeate the population.

The future is exciting for those who are determined to take part, be engaged and make the investment. However, those who are determined to stick their heads in the sand, or make smug remarks about not really being ‘into’ technology, or even worse all those people out there who say: “Oh yes, our website is under construction,” or more often: “… redevelopment at the moment.” But when we look at the sites, there is so often evidence that they have been ‘under-construction’ or ‘redevelopment’ for years (or even in some cases – a decade). I can only assume they are hoping ‘it’ (the internet) will stop soon or maybe they think it just won’t ‘catch-on’, as someone said to me back in the 90s. What are they waiting for and what are they going to do when they can no longer rely on the dwindling numbers who take the journey through a high street that has only a few shops in it?

The reality is, in a mere 15 years, the internet has become the most dominant feature of daily life, creating unimagined opportunity for many and changing the very fabric of our society. We have no way of really telling what effect it will have in the next 5 or 15 years, or whom it will affect the most.

In part 2 we will be discussing how the high street has been under attack since the 1980s and how business owners need to act to stay afloat.

Expanding the current loan scheme for small businesses and providing incentives for firms to green their buildings are just two of the measures that Government must look at in order to achieve the UK’s tough carbon emission reduction targets, according to a new report from the Federation of Small Businesses (FSB) today.

All micro firms should be exempt from the automatic enrolment pension scheme due to come into force in 2012, the Federation of Small Businesses (FSB) said today.