The Family Business UK Magazine. Featuring an interview with Sir John Timpson CBE, inheritance tax insights from Europe and Sweden and a look ahead to the Autumn Budget 2025.
FBUK The Family Business UK Magazine
All change... Cost of scrapping BPR
Party Conference Updates FBUK Members in the news
Workplace Pensions FBUK Communities
Edition 2 - December 2024
SUZI’S HAD A HAND
IN YOUR BREAKFAST
Not literally, that would be weird. Suzi’s farm has been supplying us with wheat for over 25 years. We take pride in developing long-term relationships with our farmers because they take pride in
producing the highest quality wheat they can. We think Suzi’s at the top of her grain. Good stuff. It’s baked in.
Welcome from FBUK CEO
Given the events in Westminster since we published our first edition of the FBUK magazine in June, it won’t be surprising that our second edition focusses heavily on the new Government’s plans, and crucially the announcements made by The Chancellor on October 30th when she presented Labour’s first budget after 14 years in opposition. This was our new Government’s chance to lay out its ambitions for the term of this Parliament. Given the political turbulence over the past few years, few expected anything but a landslide victory for Labour. And they got it. Elected on the back of a campaign promising change and growth, and a pro-business stance, this was arguably one of the most eagerly anticipated and most closely watched budget statements a Chancellor has delivered in years. Labour promised change. And they are delivering that. But growth? The backlash from businesses about the raft of tax increases, and the cumulative effect on the cost of doing business have severely dented business confidence. Few businesses feel well positioned or incentivised to invest; in fact, many are adjusting their own business budgets and forecasts for the opposite. I’ve been in the room when Ministers have repeatedly heard that message from business leaders, including from FBUK. For family businesses, the budget poses a more existential threat. Independent research we commissioned from CBI Economics modelled the economic impact of removing BPR on family businesses. It makes for sobering reading. You’ll see that in this edition. FBUK has been campaigning hard for a reversal of the Chancellor’s decision to cap BPR and APR, and we continue to press for a formal consultation on the proposals. I said to the FBUK executive team before the election that any changes to BPR would be the making or breaking of us, and many family-owned enterprises. Despite the widespread concern shared by family businesses over the past few months, I remain optimistic. I’m optimistic because the support we have received in response to our ‘Back Family Businesses’ campaign has been genuinely overwhelming. On behalf of the team, I want to say Thank You to everyone who has backed us and supported us, and continues to do so.
I’m optimistic because family businesses are legendary for taking a long-term view towards people, businesses, and the communities where they operate. The resilience shown by family businesses over generations is not to be overlooked or underestimated by anyone. I’m also optimistic because developments in Westminster over the last few weeks and months have proved a lightening-rod for FBUK Members to mobilise. That momentum is something we are working hard to build on. FBUK is working to create a movement of family businesses who want to create a more prosperous and sustainable future for generations to come. We are here for all family businesses of any size, any sector and any generation. Our message to every family business is simple; if there is anything you need, call us.
Neil Davy CEO, Family Business UK
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Contents
3 5 6 7 8 9
Welcome from CEO
Principles of Good Governance in family businesses
FBUK Advocacy
Party Conference Updates
Sir James Wates, CBE Chairman, Family Business UK
Forward thinking legislation
FBUK Masterclasses
10 12 13 14 15 16 18
Workplace pensions
Good governance is an essential part of good business, and it’s something that every business needs to think about. We often focus on family governance, which of course is essential in ensuring there is clarity and effectiveness in how shareholders align family interests and direct their enterprises. Family councils, for example, can be effective mechanisms for agreeing shareholder goals and communicating with the business. But corporate governance – how we are structuring and steering our businesses – is the other side of the coin. It’s the nuts and bolts of how the board is structured and the mechanisms for ensuring purpose and strategy are integrated throughout the enterprise. It’s the side of governance that our workforce, business partners, and other stakeholders see. Good governance, and transparent communication about it, is vital for building trust. That was part of the reasoning behind developing the Wates Corporate Governance Principles six years ago. With guidance from the Financial Reporting Council and participation of a Coalition Group that included Family Business UK, we developed a set of principles that businesses can use to review and report on how they’re governing their businesses. As Chairman of the Coalition Group, I’m proud of what we produced. Research published earlier this year by the FRC shows that the Wates Principles are the most popular code for the large private companies that are required by law to report against a corporate governance code in their annual Directors Reports.
Responsibility in a family business
An insider’s view on the Budget
£29bn, the cost of scrapping BPR
What the Chancellor should say next year
New FBUK Members
FBUK Members in the news 20 Family Business and B Corp 21 FBUK Corporate Partners 22 1698 - A tale of two halves – Part II 24 FBUK Annual Conference 26 FBUK Communities 29 The Matterhorn Moment 30 NextGens go for ‘solvitur ambulando’
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Principles of Good Governance in family businesses Coalition Group members
l Family Business UK l Institute of Directors l Confederation of British Industry l Institute of Business Ethics l British Private Equity & Venture Capital Association
l The Investment Association l Climate Disclosure Standards Board
l The Governance Institute l Trades Union Congress
In 2021/2, the 547 companies applying the Wates Principles had a combined annual turnover totalling more than £850 billion. These companies included private equity owned, employee owned, subsidiaries of foreign corporations, and of course family businesses. What made the Wates Principles so attractive is the fact that they are flexible – six broad principles with guidance under each category of Purpose, Board Composition, Director Responsibilities, Opportunity and Risk, Remuneration, and Stakeholder Relationships and Engagement. The principles are aligned with acknowledged best practice and consistent with the UK Corporate Governance Code for premium listed companies. company to use them – the principles are broad enough to apply to organisations of any size. They are not a set of boxes to be ticked. Applying the principles requires companies to examine their own governance practices and carefully consider how they need to improve. Then companies need to explain themselves – articulating how they’ve implemented the principles in their annual report – drawing from specific examples of challenges they’ve faced in the boardroom throughout the year. It’s got to be genuine and authentic – not boilerplate language borrowed from other companies. It’s a worthwhile effort. Ultimately, if you explain your governance clearly, in simple, specific and direct language that stakeholders can understand, you will build understanding and trust with everyone you work with. Companies that genuinely apply the principles and explain how they do so are not just jumping through regulatory hoops; they are in fact improving their own governance – and as a result doing business better. You don’t have to be a large
Wates Principles Purpose - An effective board develops and promotes the purpose of a company, and ensures that its values, strategy and culture align with that purpose. Board Composition – Effective board composition requires an effective chair and a balance of skills, backgrounds, experience and knowledge, with individual directors having sufficient capacity to make a valuable contribution. The size of a board should be guided by the scale and complexity of the company. Director Responsibilities – The board and individual directors should have a clear understanding of their accountability and responsibilities. The board’s policies and procedures should support effective decision-making and independent challenge. Opportunity and Risk – A board should promote the long-term sustainable success of the company by identifying opportunities to create and preserve value and establishing oversight for the identification and mitigation of risks. Remuneration – A board should promote executive remuneration structures aligned to the long-term sustainable success of a company, taking into account pay and conditions elsewhere in the company. Stakeholder Relationships and Engagement – Directors should foster effective stakeholder relationships aligned to the company’s purpose. The board is responsible for overseeing meaningful engagement with stakeholders, including the workforce, and having regard to their views when taking decisions.
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FBUK Advocacy
Labour’s return to government on 4 July was the landslide victory that most had expected. The 411 seats secured at the election (reduced to 403 after 7 suspensions and one resignation) gives the party an overwhelming majority in Parliament. Labour has replaced a sitting Conservative government just five times in the last 100 years. Yet this “historic” win was achieved with one of the lowest turnouts and vote shares ever. Nevertheless, with such a large majority in Parliament, we are under no illusion of the importance of making sure the voice of family businesses are heard in Government. Like all other organisations FBUK have been working to re- establish connections we built with Labour in opposition and build relationships with MPs and advisers new to Westminster. We have raised the importance of family businesses in every constituency in the country and the importance of Business Property Relief (BPR) to family businesses. Our message to government has been simple: BPR works. It is a positive story of how tax reliefs can be used to support growth and create opportunity for all. We have made good progress communicating this to government – corresponding with the Chancellor, attending meetings with policy officials in the Treasury and holding regular meetings with the Department for Business. As the leading organisation making the case for preserving Inheritance Tax reliefs
Martin Greig Chief Advocacy Officer (maternity cover) FBUK
The first 100 days of any new Government are critical. They move us beyond campaign slogans to the business of governing. The first 100 days can show us that a government is serious about getting things done. Walking the tightrope between business and the unions on employment legislation was never going to be easy – and so it has proved. If you would like to know more about our work in these areas, or get actively involved in policy, email info@familybusinessuk.org
for family-owned businesses, this will remain our number one priority. Labour promised to deliver four pieces of legislation in its first 100 days in government: railway privatisation, setting up GB Energy, reforming renter’s rights and an employment rights bill. Labour’s flagship policy - Make Work Pay - is a set of policies designed to redress what it describes as “one-sided flexibility” in the workplace. These rules impact family businesses across the country. The Bill is contentious. Some of the more headline grabbing reforms heralded during the election campaign, like giving employees the right to switch off away from work, have had to be dropped, for now. But reforms being pushed through, despite concerns of business, include reforms to sick pay, zero-hours contracts, cutting probationary periods, new rules around maternity pay and protections against unfair dismissal from day one. The detail of exactly how these policies will be implemented will, however, have to wait for secondary legislation while even more difficult issues, like reforming employment tribunals, have been pushed back long into the Parliament.
Given the importance of these issues to our members, and the existential nature of BPR, we will maximise every opportunity to raise these matters with Government.
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Party Conference Updates
Go-Ape into a successful business.
Arriving in Liverpool for Labour’s annual Party Conference, you would imagine that a newly elected Government would be in the mood to celebrate? But, despite turning 14 years of opposition into one of the largest majorities in Parliament, the mood on Merseyside felt distinctly flat – even accounting for the (mostly) dreadful weather. The reason is simple. Given the timing of the General Election, the Party Conference came before the Budget – something which is without precedent for a Labour Government. And so MPs, party members and business leaders all turned up asking questions. But the Government’s lips remained sealed. What’s more, this was the biggest Labour party conference ever. More than 20,000 delegates crammed into the conference centre. Business Day, where hundreds of senior business leaders gather to hear from senior Ministers, sold out in hours. Such was the attendance at each event that chance meetings were rare and opportunities for meaningful conversations were few and far between. But, a programme of meetings for FBUK, planned in advance, led to plenty of very good conversations with stakeholders and organisations whose members share a common interest in retaining Business Property Relief. Perhaps the most important meeting was a 30 minute one-to-one conversation with the special adviser to the Business Secretary Jonathan Reynolds. Labour’s mission-driven government means that where issues span more than one government department advisers will work together to find a solution.
that built Go-Ape into a successful business.
Contrast the rather subdued atmosphere in Liverpool to the positively boisterous mood in Birmingham for the Conservative Party Conference. It was obviously less well-attended than Labour. But, freed from the responsibility of government and buoyed by the prospect of political renewal under new leadership, the party conference was buzzing. FBUK attended SME day. An opportunity to renew connections with long-time family business supporter Kevin Hollinrake, now the Shadow Housing Secretary, and make new connections with MPs like Jerome Mayhew who, it turns out, has connections to a family business and was part of the team that built
Business Property Relief is high on the agenda for Conservative politicians. In the shadow business department there is a clear understanding of BPR as a positive story that supports growth, jobs and opportunity. With just 121 seats in Parliament, the Conservatives make no bones of the fact that they cannot oppose the Government (403 seats) and, under a new leader, Shadow Cabinet posts will change. But having conversations in these environments is crucial. Most Conservative MPs will be in Parliament for the next five years where they can champion family businesses.
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Forward thinking legislation goes into reverse
Steve Rigby Co-CEO, Rigby Group Board Director, FBUK
decision not taken lightly and which came with a fear of loss of control and purpose for the founding generation. If we had certainty about the existence of BPR continuing unchanged we might have delayed things, but it now feels like it was a very wise thing to do. If it is fear of loss of control over your legacy that is stopping you considering the transfer to trust, I would reassure you by saying that these issues can be dealt with by trustees working to a clear letter of wishes. For instance, you can stipulate that the primary business asset cannot be sold or broken apart. With taxation rates for PAYE and dividend tax after corporation tax now all looking very similar, the argument of dividends being more beneficial no longer carries weight and therefore with a combination of salary payments and transference to trust, the risks can be managed. These are issues that frankly none of us will relish having to deal with. Working your entire life to build a legacy and leave your children with a thriving and prosperous business is a privilege, but also adding greatly to the nation’s economy, culture, capability and skills. FBUK will continue to make these points and to make our voice heard with the aim of reversing or amending this vital legislation.
It is somewhat ironic that it was Labour who introduced Business Property Relief (BPR) back in 1976 as a forward -thinking piece of legislation. For five decades we have been able to rely on BPR to make long term growth plans for our family businesses, avoiding complex tax and restructuring planning. Unfortunately, on 30th October 2024 that all changed. Despite valiant efforts by Family Business UK to avert this outcome, with a letter to the Chancellor signed by 70 of our biggest members, meetings with Treasury, national press advertising and dozens of media articles, our very worst fear materialised and business assets will now be captured by inheritance tax relief. It’s no understatement to say that alongside changes to Agricultural Relief our regional and rural economy is set to be scarred for years to come, putting jobs and communities at risk. The new legislation will come into force on 6thth April 2026 giving us a short window to lobby for an amendment and ideally its removal. The role of FBUK has become more important than ever. You can help create momentum by supporting us and also contacting your own MP. Given where we are, I would urge any company that has not undertaken family structuring to consider their future ownership structures immediately. Instead of considering growth, unfortunately all energy now needs to be inward focused to consider how to best protect the longevity of the family business whilst providing for the current generation. The priority must be considering the future of your enterprise, having discussions with the next generation about their intentions and planning for optionality. In Rigby Group, one the UK’s largest family businesses, these discussions concluded earlier this year with the final transfer to trust from the first generation. It was a
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FBUK Masterclasses Launched in 2024, FBUK Masterclasses
tips, tricks and insights on a variety of aspects of owning or running a family business. FBUK Masterclasses focus on four key aspects of owning, running, working in or for a family business: Ownership, NEDs, Succession and Governance. In 2024, speakers, panellists and case studies came from a wide range of family businesses, including:
FBUK Masterclasses give family business owners and employees unparalleled access to subject matter experts and prominent family businesses
give family business owners and employees unparalleled access to subject matter experts and prominent family businesses. All provide their unique perspectives and learnings on family business life in a confidential, peer-to-peer learning environment. With a new series planned for 2025, these 1-day programmes give ample opportunity to make lasting connections and walk away with
Ownership l Exploring the different models of ownership, and the relative pros and cons of each l Expert insights on structuring shares, trusts, tax, non- family management, ownership transition and succession l Peer-to-peer working group sessions and ideation workshops to explore new ways to approach the evolving and unpredictable nature of family business ownership, responsible stewardship and the role of trustees l Personal accounts of successes and failures both day- to-day family business management and ownership, as well as during key transition stages such as succession A great opportunity to network with family business peers, with a strong culture of sharing best practice and supporting each other to learn and develop
A superb selection of speakers on relevant and interesting topics with first class engagement with attendees
NEDs l An introduction to the unique role and nuances of a Non-Executive Director (NED) in a family business l The value NEDs can bring, knowing when to hire, and how to make the most of their interactions and relationships with other Board members, and the wider family l How to find, identify and recruit the ‘right person’ for both your family and the business – and successfully induct and onboard them l Real life case studies and personal accounts of when it’s worked well (and hasn’t!) – backed up by insights from independent subject matter experts Governance l An introduction to the fundamentals of good governance in a family business context l Working groups on topics ranging from responding to tax and regulatory change; navigating policy and political uncertainty; responding to geopolitical risk; the values and priorities of the emerging generation; the impact of ESG, sustainability and environmental factors on established business models and operations l Effective models and structures to build resilience into family business governance
Succession l How to align family and business purpose in the
succession process, navigating the complexities of family dynamics whilst preserving legacy, and implementing change across generations l Exploration of each person’s role and responsibilities in the succession process, and group workshops that explore each person’s role l The importance of effective communication and engagement l Personal accounts of the success process; the highs, lows and everything in between
To find our more about FBUKs Masterclass series, please visit: familybusinessuk.org/event-category/masterclass
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Workplace pensions are about to experience a succession event
company - not ideal if the core capability passed down through the family is making our daily bread, transforming the built environment, or brewing beer and serving it in pubs.
them for their remaining years.
Collective Defined Contribution (CDC) offers fresh hope for a rising generation of workplace pensions – promising higher pensions, payable for life, and without additional costs or obligations for employers. Ask employees what they want from their pension. Most tell you they want a stable income that lasts as long as they do and rises with the cost of living. They also want someone trustworthy to manage it for them, so they don’t have to think about it. Ask family business owners what they want for employees after a lifetime of service. Most say they want to reward loyalty with a dignified retirement that provides a moderate level of comfort. They also say they don’t want to create open-ended commitments that future generations will need to stand behind.
CDC - the next generation of workplace pensions
Defined contribution
There will soon be a third option for workplace pensions which will better meet the needs of employees and align more comfortably with the values of most family firms. Collective Defined Contribution (or “CDC”) schemes combine elements of DB and DC. l Just like DB schemes, employees build up an annual amount of pension that is payable for life and is expected to increase with inflation each year. The main difference is that the amount of pension is not guaranteed. l Just like the DC schemes, contributions are fixed for employers and there is no balance sheet commitment or ongoing liability to pay more in the future. Members will bear all the risks, but they will do so collectively with current and future members. The sharing of investment risk across generations of members allows a CDC scheme to invest for the very long- term in a wide selection of asset classes, including private markets and productive investments, which promise higher returns.
DB pensions have been replaced with Defined Contribution (or “DC”) schemes. In a DC scheme, contributions are paid into a “pot” for employees to access when they retire. Whilst they offer flexibility and certainty of cost, they also transfer all the risks for investment performance, inflation, and life expectancy to employees. There are three reasons why DC pensions don’t compare well with our basic tests: l Firstly, contributions going into DC schemes are not adequate to provide a moderate level of retirement income for most people. According to the Pension Policy Institute, the average employee receiving the statutory level of contributions for their working life can expect to live a comfortable retirement for just four years. For current retirees, it’s just two years. l Secondly, contributions need to be higher to compensate for inefficien- cies in the design of DC investment strategies. Because individual DC savers carry the risk of market volatility, money is switched automatically into safer, lower-returning investments in the run-up to retirement. l Thirdly, DC schemes don’t provide pensions. When employees retire, they face a set of complex decisions about how to use their pot. If they want an income, they need to choose between an expensive annuity or a drawdown product, which may or may not last
Defined benefit
Defined Benefit (or “DB”) schemes used to deliver these essential requirements with a lifetime pension linked to service and salary. In a DB scheme, the pension is guaranteed, and the employer is legally obliged to fund the promised level of benefits. There are 500 family firms in the UK with DB schemes. Most were set up by a previous generation when there was only a “best endeavours” commitment to securing the promises they had made. It’s thanks to those “pension founders” that a store of wealth has been created (at the last count £40bn) to sustain several generations of employees in retirement. Regrettably, DB pensions are in terminal decline. The costs, risks, and complexity of managing them now are akin to operating a life insurance
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Moreover, there is no need to de-risk the assets in the years before retirement. And because there are no guarantees on the amount of pension, there is no need to hold expensive capital reserves. Instead, each year, the scheme’s assets and liabilities are valued with the amount of increase adjusted upwards or downwards depending on performance. The studies show that CDC pensions will be at least 30% higher than a DC pot converted into an annuity for the same contributions. A study from Willis Towers Watson concluded that CDC pensions would be 70% higher (and 40% higher than a typical DB pension). Whilst pensions can be reduced, it would take an extreme market shock for this to happen. A study by Aon tested the CDC model over the previous 100 years. They found that pensions would only have reduced three times: after the Great Depression, during World War II, and again during the 1950s. How will family firms access CDC pensions? CDC pensions operate successfully in places like Canada and the Nordic countries. The concept was introduced
Ben Fowler Managing Director Western Pension Solutions
Workplace pensions are going through generational change. Like family firms moving from one generation to the next, the expectation is that the new generation will build upon the successes of their predecessors, learn from their challenges, and continue to grow and innovate to secure future prosperity.
into UK legislation following a dispute between the Royal Mail and the Communication Workers Union. The Royal Mail couldn’t afford its DB scheme, and the Union wouldn’t accept a DC scheme as its replacement. The solution was CDC, and the Government responded with a legal framework for employers to set up and operate CDC schemes for their own employees. Most family firms won’t be large enough to operate their own scheme, but regulations going through parliament will allow family firms of all sizes to join in a collective scheme (or Master Trust).
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Responsibility in a family business
Charles Wookey Co-founder and former CEO of the charity Blueprint for Better Business
Who are the family shareholders answerable to, and for what?
What, if anything, is distinctive about family businesses when it comes to responsibility? The language of “responsible business” is now happily mainstream, widely seen as a useful shorthand for accepting that a business has duties not only to its customers and its owners but also to employees, suppliers, the communities it depends on, the environment it affects, and the state authorities on which it also relies. It signals that business is a part of society, not apart from it. But there is a very distinct way in which the duty to be responsible plays out in family businesses, particularly those that have undergone one or more generational transfers. The word “responsible” means answerable, and often the most challenging situations in family businesses arise when it is unclear who exactly within the family is answerable to whom and for what. What I have seen in my own work is the necessity for great communication and clarity of expectations. The earlier these are captured the better, for instance in a family charter that is reviewed periodically. It’s so easy for lines to be blurred between family members about exactly what role is being played at any one moment. Am I meeting my uncle as my uncle or as my boss as the CEO of the business I’m working in? Are we having this conversation as cousins or as fellow shareholders? Misunderstandings can easily arise when one party has one view of the basis of a dialogue, and another has a very different one, even if over a family meal good conversations out of roles can be very valuable. There are as many ways of organising life as there are family businesses, and there is no ideal template. But the same issues will tend to crop up. One is how the wider family relates to the family members who are the custodian shareholders of the business.
Then there is the relationship between the family shareholders and the board. When the shareholder directors step into a board meeting they take on the Companies Act legal duties of company directors to promote the success of the business. They are therefore engaged in a careful balancing act, responsible both to the company itself as directors, and to the family who look to them to ensure their family investment is safeguarded and developed. And if there is a family CEO, are they given the freedom to lead the business? Do the older generation let them? Do they bring in external leadership in good time if there is need for that? As one family director put it to me, they have to ask themselves “are we thinking of the business as a cash cow or an orphan child”.
I love the idea of seeing a business as a child that needs care, security, and nurture.
The best family businesses are exemplars of this deep sense of responsibility for the future, to the long-term benefit of both business and society.
Charles Wookey now runs his own consulting practice, Charles Wookey Associates
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An insider’s view on the Budget
Adam Smith Managing Director of Granville Park Partners Former Chief of Staff to the Chancellor of the Exchequer
implications of such changes. Spreadsheets simply cannot quantify that sort of thing. That final reason is why the Chancellor I worked for took a different view to Rachel Reeves. Although presented with the same advice, Jeremy Hunt was ultimately not persuaded to touch BPR, even though he was interested in closing some reliefs in order to fund a cut in tax. In Rachel Reeves, you have a Chancellor who needed revenue, with no private sector experience, and presented with a policy that only affects a small number of people. Add in the fact that having floated abolishing it completely she may have thought that restricting it would be seen as a win. I can see how the decision was made even if I disagree with it. So, is there a ray of hope? The good news is that the decision is not due to come into force until April 2026. This gives plenty of time to marshal troops and shape arguments.
In the last government I was the Chancellor’s Chief of Staff for two Budgets and two Autumn Statements. These included the repair job that was carried out in the Autumn of 2022 following the mini-budget and the one a year later that was the biggest tax cutting fiscal event since Nigel Lawson. In just under two years, I saw most of the policy options that were no doubt put to Rachel Reeves ahead of her first Budget. Amongst these included the disastrous option to effectively abolish Business Property Relief as we know it. Given the damaging consequences this decision will have for family businesses up and down the country, their employees, the communities they serve and the economy as a whole, it is worth understanding why this is something that was put to Chancellors of both political colours, and why this government chose to implement it. Understanding the motivations behind a move that will seem baffling to anyone who actually runs a family business can help build a path to challenge it effectively. Firstly, Treasury officials do not really like tax reliefs. The very fact they are routinely described as ‘loopholes’ is designed to set the tone for getting rid of them. The basic economic principle behind this position is the view that a tax system should be as simple as possible, with a broad tax base paying as low a rate as is deemed necessary. Secondly, they particularly dislike any reliefs that relatively few people or businesses make use of (on paper at least). That is why the Budget documents point out that the changes announced to BPR and APR will “only affect around 2,000 estates each year”.
In my view, the focus should be on whether the change really will raise the money the Treasury says it will and demonstrate to the Treasury just how many – and how badly - people will in fact be affected.
Thirdly, unless you or someone in your family has run a business it is difficult to understand the behavioural
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£29 Billion - the cost of scrapping BPR
Martin Greig Chief Advocacy Officer (maternity cover) FBUK
Reverse the Changes
At the heart of our Back Family Businesses campaign is a simple message: policies that support family businesses are good for the economy and removing them would be counterproductive. But is it possible to put a cost on removing them? The short answer is yes, and it is a lot! Knowing the Government might remove Business Property Relief (BPR) and Gift Holdover Relief (GHR) in the Budget, FBUK commissioned CBI Economics to assess the impact of doing so. The results make for sobering reading. Removing both BPR and GHR would re- duce economy activity by £29.3 billion over the next five years and lead to 391,000 job losses. Almost of half (48%) of family-owned businesses would reduce investment, (33% saying “significantly”), 30% would reduce headcount and almost one quarter would expect to see lower revenues as a result. An estimated 347,243 businesses would be forced to close – 83,850 of which being businesses that employ people. The effects would be felt across the economy but with sectors such as construction; manufacturing; logistics and retail particularly hard hit. And the money raised by government by removing the reliefs? Nothing! Actually, less than nothing. Over the course of this Parliament, removing BPR and GHR would produce a net fiscal loss to the Exchequer of almost £1 billion. When the Chancellor unveiled the Budget on 30 October it was presented as a set of measures to drive growth and investment. As it turned out, the changes to Inheritance Tax (IHT) reliefs announced in the Budget are not as simple as just removing them. But, for the vast majority of family businesses, the net effect is likely to be similar.
BPR and GHR sit at the heart of the family business model. But they are so much more than financial measures. They are tools that sustain the values of hard work, responsibility, and opportunity - values that sit at the heart of the British way of life. Changing IHT reliefs in the way the Government has done undermines the fabric of our society. Well run businesses that patiently invest in people and communities up and down the country will be sold or managed for tax purposes and extracting maximum return on assets. For many UK family businesses who compete with international companies, the changes are simply too much. In addition to hikes in employer’s National Insurance, employment legislation, minimum wages and business rates they are yet another way in which they are disadvantaged. We believe the Government has got these changes wrong. Our Back Family Businesses campaign is now a call to reverse them, and at the very least offer a consultation on the proposed changes. For a government elected on a pro-growth agenda, and that claims to be listening to the voice of business, open and constructive dialogue is vital if business confidence in the new Government is to be restored. These are the messages and financial data we are taking to Ministers. You can help us by sharing your views and stories and lobbying your local MP. You can find details on our campaign webpage .
by the numbers...
£29billion loss to the economy (-£29bn GVA = Gross Value Added) 391,000 jobs lost £1billion net loss to the Exchequer ie, by scrapping it the Gvt could raise £7.4bn over 5 yrs but that would cost £8.4bn over the same time scale 48% of family business would reduce investment 30% reduce headcount 24% expect lower revenues 16% would have to sell-up to pay an Inheritence Tax Bill 347,000 micro businesses would be forced to close
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What the Chancellor should say next year
the implementation of all of them to be subjected to constructive challenge in a non-partisan way. All of us who have taken part in these dialogues believe that, as a result of the hard work of our citizens and their representatives, we have now laid the foundations for a more long-term, more legitimate, more harmonious and more productive process for the shaping of the policies that determine the quality of life of so many of our citizens. I might add the hope that by seeking to find and reinforce areas of mutual agreement we may well have strengthened our democracy for future generations and contributed to a climate of greater trust in politics and politicians. I commend these priorities to the House. Footnote: This is not the speech Rachel Reeves made in 2024. But what about 2025? After all, on the steps of Downing Street, our Prime Minister said: You have a government unburdened by doctrine… Guided only by a determination to serve your interests… You have given us a clear mandate… And we will use it to deliver change… To restore service and respect to politics… End the era of noisy performance… Tread more lightly on your lives… And unite our country. I invite you all… to join this government of service… in the mission of national renewal . So Prime Minister, Chancellor. Maybe next year?
l A plan to build on and improve our arrangements for apprenticeships, further education and vocational education – without further reorganisation l A plan to improve and better fund the operation of our policing, justice, probation and court system without further reorganisation l An agreement in principle to build on the success of the Welsh Wellbeing of Future Generations Act and work together through a further consultation and Citizens’ Jury to introduce similar legislation covering the whole of the UK Outside of these six headings there are many aspects of this Autumn Statement on which political parties will disagree. For example, we don’t agree on how the money should be raised; who should be taxed and how much; on social security, pensions and benefits; the approach to international trade and international development; transport policy; trade unionism and conditions under which there is a right to strike; the part if any which European courts should play in our affairs nor on the need for an in- dustrial strategy. We see all these topics as the necessary subject matter for healthy disagreement between us. Nonetheless all parties are confident that the policies and strategy on which we have been able to find common ground will serve the nation well and greatly increase international confidence in our economy. They will also help those working in the affected parts of the public sector to concentrate on the core essentials of their task without the distraction of further reorganisations. Our memorandum of understanding includes a commitment to all-party dialogue and further consultation before any structural reorganisation of public services is embarked on by an elected government. We also hope that the all-party select committees of both houses will serve as guardians of each of these six commitments, enabling
In November 2022 I heard Rachel Reeves, then Shadow Chancellor, speak at the Anthropy Conference. Her speech stimulated me to suggest a new kind of Autumn Statement. It was published under the title ‘What if the Chancellor Were an Anthropist?’. Here it is, unchanged. Mr Speaker, today I wish to present the House with an entirely new kind of Autumn Statement. This comes after extensive dialogue with all political parties, and it follows a major consultation with stakeholders of all sorts. Its policy pillars are based on the three month national conversation which followed the modified and dynamic Citizen’s Jury processes that were carried out across the regions and nations that make up the United Kingdom. The cumulative result of all these conversations is that we now have a way forward with six key points on which government and opposition parties together are agreed, and from which the country does not intend to deviate even after a General Election. The underlying six points will be revisited in a further all-party dialogue every two years and tested regularly in opinion surveys of affected stakeholders. I would like to thank the Leader of the Opposition and all opposition party colleagues for their co-operation in arriving at agreement on these six commitments. They cover: l A plan to meet our international climate and bio-diversity commitments as set out at recent COP and related conferences l A joint commitment to policies that will genuinely contribute to reducing inequality and levelling up different parts of the UK l An agreed strategy for the steady improvement and better funding – without further re-organisation - of health and social care
Mark Goyder Founder of Tomorrow’s Company and Senior Advisor to the Board Intelligence Think Tank. He is the author, with Ong Boon Hwee, of Entrusted - Stewardship for Responsible Wealth Creation, published by World Scientific in 2020 .
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New FBUK Members As Family Business UK continues to go from strength to strength, we’re delighted to welcome a growing number of family businesses to the network. Some of our most recent new joiners include:
Cleenol - a family-run, ISO accredited manufacturer specialising in cleaning and hygiene solutions for the professional market. With 76 years of industry experience, Cleenol offers a comprehensive range of products, including hand soap, surface disinfectants, and laundry care items. Their expert technical team and in-house lab focus on product innovation and creating customised cleaning chemicals to meet specific client needs. Cleenol is proud to be a B Corp accredited business, reflecting their dedication to social and environmental responsibility. They also operate a Community Interest Company (CIC) to enhance their positive impact on the local community. RCP Parking - founded in 1994 by brothers Shapoor and Ardeshir Naghshineh, RCP Parking has grown to manage 60 car parks nationwide. Now under the leadership of second- generation director Sarah Naghshineh, the company is expanding ambitiously. RCP Parking was recently recognised as a Great Place to Work and featured in The Economist, RCP is also a finalist in the Eastern Daily Press Best Large Business Award. The company is known for its commitment to professionalism and ethical management, building long-standing relationships with clients such as Renaker, Homes England and Targetfollow. With some client partnerships spanning over 15 years, RCP Parking continues to foster trust and reliability while achieving long-term success in the sector. Gerald McDonald - a fourth-generation family business in the food and drink ingredients sector, which has been supplying high-quality ingredients for over a century. As they approach their 108th anniversary in January 2025, their mission remains unchanged: sourcing and providing the finest quality ingredients to the food and drink industry. Led by Managing Director Maxim McDonald, with his father Gerald still serving as a director, they blend, process, and mill ingredients to customer specifications from their food safety certified facilities in the UK, EU, and Asia. Their product range includes juices, concentrates, herbs, spices, and essential oils. Innovation is central to their business. Their new Japanese office has introduced exciting ingredients like yuzu juice, which won the 2024 British Frozen Food Federation award for best ingredient.
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If you’re a new – or existing – FBUK Member and would like to have your family business profiled in a future edition of the FBUK magazine, please get in touch! info@familybusinessuk.org
Neville Trust - founded in Luton as T&E Neville by brothers Thomas and Edward in 1875, who were builders, joiners and coffin makers. In 2025, Neville Trust will celebrate 150 years of operating as a family business which today includes Neville Funerals, Neville Special Projects and Neville Joinery. Their 150-year celebrations will involve shining a light on their role as a major employer, their dedication to the training and upskilling their 180-strong workforce, their reputation for craftsmanship and care, and their involvement with local schools and public services over the course of a century and a half. Their commitment to charity is something which sets the company apart. The Trust gets involved in as many community projects as possible and is an Age-Friendly Employer, Disability Confident and registered with the Committed2Equality scheme. Sigma Pharma - is a family-owned business founded in 1982. It’s grown to become one of the UK’s largest wholesale distributors of pharmaceutical and healthcare products. Sigma is part of a group of companies that includes Sigcare, OPD and RXFarma. Currently under the leadership of its second-generation management, the company has seen incredible growth in recent years, fuelled by the energy of a diverse workforce. People are at the heart of Sigma, and the management team is guided by core values, which include a deep commitment to equality, diversity, and engendering a strong sense of belonging. Sigma take pride in the unique blend of experience and fresh perspectives among its 500+ staff and are committed to creating an inclusive environment where everyone feels they belong.
Walkers Nonsuch – a family company celebrating 130 years of toffee making in 2024.
Using just good ingredients, such as whole milk and butter, the company makes toffee bars, traditional slabs and fourteen varieties of twist wrapped toffees and chocolate eclairs. Katie and Emma are from the fourth generation of the family with Jonathan Rae (Emma’s son) just being appointed as Operations Director.
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Karen Greenshields honoured with 2024 Inspirational Leadership Awards
FBUK Member Karen Greenshields (GAP Group) has been awarded Highly Commended in the Inspirational Leadership category at the 2024 Inspiring Women in Construction and Engineering Awards. This accolade is a testament to her unwavering dedication, exceptional leadership, and innovative contributions to the industry. Under Karen’s guidance, GAP Hire Solutions has achieved remarkable success, fostering a positive and inclusive work environment. Her ability to inspire and empower her team has been key to this success. Chris Parr, COO at GAP Hire Solutions said Karen’s leadership has been instrumental in the creation and expansion of our Technical Services Divisions. Her mentoring has helped many team members develop professionally, equipping them with the skills to build successful careers – often becoming inspirational leaders themselves The Inspiring Women in Construction and Engineering Awards celebrate the achievements of women who are making a significant impact in the industry. By recognising leaders like Karen, the awards inspire the next generation of female leadership. Congratulations to Karen on this well-deserved recognition. Her leadership underscores the vital role of women in construction and engineering. Alongside Karen, we also congratulate Irena Stec of WOLFFKRAN on her win, setting a powerful example for female crane operators in a male- dominated industry.
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RITM0124525_Once in a lifetime_190x275_v7 copy.pdf 2 11/10/2024 15:49 RITM0124525_Once in a lifetime_190x275_v7 copy.pdf 2 11/10/2024 15:49
Sale or succession? A once in a lifetime opportunity for family business owners One of the most difficult decisions as a family business owner is deciding and agreeing the right next step for the business and the family. Do you hand the reins to the next generation, or sell your business to the management team or a third party? Whatever your choice, the process can be challenging, with financial, emotional and practical considerations. One of the most difficult decisions as a family business owner is deciding and agreeing the right next step for the business and the family. Do you hand the reins to the next generation, or sell your business to the management team or a third party? Whatever your choice, the process can be challenging, with financial, emotional and practical considerations. One of the most difficult decisions as a family business owner is deciding and agreeing the right next step for the business and the family. Do you hand the reins to the next generation, or sell your business to the management team or a third party? Whatever your choice, the process can be challenging, with financial, emotional and practical considerations. Sale or succession? A once in a lifetime opportunity for family business owners A once in a lifetime opportunity for family business owners
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of UK family businesses say protecting the business as the most important family asset is the key long-term personal goal 93 % want to ensure the business stays in the family 53 % are looking to sell 47 % are looking to sell 47 % are looking to sell of UK family businesses say protecting the business as the most important family asset is the key long-term personal goal 93 % want to ensure the business stays in the family 53 % of UK family businesses say protecting the business as the most important family asset is the key long-term personal goal want to ensure the business stays in the family
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Emma Suchland Partner, Tax - UK Head of Private Business emma.k.suchland@pwc.com Emma Suchland Partner, Tax - UK Head of Private Business emma.k.suchland@pwc.com Emma Suchland Partner, Tax - UK Head of Private Business emma.k.suchland@pwc.com
There are so many things to think about when planning the next phase for your family business that it can be easy to feel overwhelmed. If you decide to sell, how do you work out what your business is worth? Or if you’re preparing the next generation to take the lead, how can you support them in transitioning to the role and successfully building on your legacy? Working with many family businesses, our team understands the unique challenges owners face, and our insights into family dynamics mean that we’re uniquely positioned to support them in navigating this once in a lifetime opportunity. We want to help you make the right decision for your family and your business, and support you on whichever path you choose. support them in navigating this once in a lifetime opportunity. We want to help you make the right decision for your family and your business, and support you on whichever path you choose. Working with many family businesses, our team understands the unique challenges owners face, and our insights into family dynamics mean that we’re uniquely positioned to *PwC’s 2023 Family Business Survey support them in navigating this once in a lifetime opportunity. We want to help you make the right decision for your family and your business, and support you on whichever path you choose. There are so many things to think about when planning the next phase for your family business that it can be easy to feel overwhelmed. If you decide to sell, how do you work out what your business is worth? Or if you’re preparing the next generation to take the lead, how can you support them in transitioning to the role and successfully building on your legacy? There are so many things to think about when planning the next phase for your family business that it can be easy to feel overwhelmed. If you decide to sell, how do you work out what your business is worth? Or if you’re preparing the next generation to take the lead, how can you support them in transitioning to the role and successfully building on your legacy? Working with many family businesses, our team understands the unique challenges owners face, and our insights into family dynamics mean that we’re uniquely positioned to
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Sarah Middleton Partner, Valuations - Private Client and Family Leader sarah.middleton@pwc.com Client and Family Leader sarah.middleton@pwc.com Client and Family Leader sarah.middleton@pwc.com Sarah Middleton Partner, Valuations - Private Sarah Middleton Partner, Valuations - Private
Tim Armstrong Partner, Corporate Finance - Private Business Leader tim.a.armstrong@pwc.com Tim Armstrong Partner, Corporate Finance - Private Business Leader tim.a.armstrong@pwc.com Tim Armstrong Partner, Corporate Finance - Private Business Leader tim.a.armstrong@pwc.com
*PwC’s 2023 Family Business Survey *PwC’s 2023 Family Business Survey
Scan for our top five considerations on sale or succession © 2024 PricewaterhouseCoopers LLP. All rights reserved. ‘PwC’ refers to the UK member firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details. RITM0124525 Scan for our top five considerations on sale or succession Scan for our top five considerations on sale or succession
© 2024 PricewaterhouseCoopers LLP. All rights reserved. ‘PwC’ refers to the UK member firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details. RITM0124525 © 2024 PricewaterhouseCoopers LLP. All rights reserved. ‘PwC’ refers to the UK member firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details. RITM0124525
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