The proposals, benefits, drawbacks etc.

[Guy951]

I think, Si, a valuable point was made - one which had slipped my mind. The CTC Council commissioned independent advice on the tax position. The vast majority of the members have never seen the unedited version of that advice - the one that Council decided quite deliberately not to publish.

That's exactly what I took Yorkshireman's comment to mean.

If the council won't tell us where our money is being spent it begs the question "what are they trying to hide?". Are they trying to hide anything? If not, why not just publish the unedited report and let us see it for ourselves?

If we can't trust our own (elected) council to be open with us as to where our money is going, how can they expect us to trust them when they tell us how great this charity thing will be for us?

To me, this whole thing stinks, and it certainly isn't why I joined the Cyclist's Touring CLUB (NOT charity). I'm seriously considering whether I want to continue my memnbership when it comes up for renewal next spring, and I know I'm not the only one.

[Si]

I think, Si, a valuable point was made - one which had slipped my mind. The CTC Council commissioned independent advice on the tax position. The vast majority of the members have never seen the unedited version of that advice - the one that Council decided quite deliberately not to publish.

If that is the case then I unreservedly apologise to Yorkshireman for comments regarding the 'editing' of things - I think that it was unfortunate that this subject should come up at the same time as the other issue of 'editing'.

[Yorkshireman]

I think, Si, a valuable point was made - one which had slipped my mind. The CTC Council commissioned independent advice on the tax position. The vast majority of the members have never seen the unedited version of that advice - the one that Council decided quite deliberately not to publish.

If that is the case then I unreservedly apologise to Yorkshireman for comments regarding the 'editing' of things - I think that it was unfortunate that this subject should come up at the same time as the other issue of 'editing'.

No need to apologise Si I didn't see your comments (I was referring to the independent advice on the tax position). I know all too well the potential problems re text being edited when submitting anything to the press and wouldn't normally comment, but as the subject has 'cropped up' (and the matter is quite important in this case in my opinion), I wonder how many members will only see the published copy (both for and against) and how many will see the discussions on here (and other fora) as well.

[simonconnell]

I think, Si, a valuable point was made - one which had slipped my mind. The CTC Council commissioned independent advice on the tax position. The vast majority of the members have never seen the unedited version of that advice - the one that Council decided quite deliberately not to publish.

I'm afraid you're mistaken. The report on the tax position was originally commissioned for the use of Council, and thus contained one section relating to enagement with the Inland Revenue to optimise the outcome for the CTC. As I'm sure you can imagine, publishing that section might be counterproductive in such discussions, so it was redacted from the publicly available copy. No conspiracy theory, no smoking gun, and indeed for that matter nothing to do with the current club / charity vote either.

For the purposes of transparency, I think it was originally me who noted the section had been included in the report circulated to Council and therefore suggested it be removed.

Simon Connell
Financial Advisor to Council

[Simon L6]

eh? How does redact differ from edit? And I beg to differ. I think it has a lot to do with the club/charity vote.

Here's a thing. Wrioting in Cycle magazine the CTC's Honorary Consulting Solicitor provided advice on the casting of proxy votes
'............The view on the resolutions was clear, and those giving the chair discretion can reasonably be assumed to have expected him to vote with the stated position of Council'

Except that Kevin sent a memo out to staff members suggesting that they simply get people to tick the box

I will be asking some of you to send out tailored messages to some targeted
> groups but what really matters now is the personal impact of individuals.
> Most of you work for CTC Charitable Trust, you know the sort of nonsense
> that has been said about your work, but you also now that you are making a
> huge difference for cyclists everywhere on a daily basis. You have friends,
> families, contacts and clubmates who care about cycling and CTC but may not
> regard voting as relevant to them, it is your job to get them to vote. To
> avoid complexity they can complete the form with just one tick, giving their
> proxy to the Chair of the meeting.

It seems to me that nothing's changed. Council had the opportunity to enter in to discussions with the savethectc team after the AGM, but they decided not to. Now we have the same old same old. One sided stuff in Cycle Clips. Jeff's statement gets edited. I imagine the circulars from 'reliable' councillors are being drafted for them at this very moment.

While we're being transparent, Simon, how about the bridging loan?

[John Catt]

While we're being transparent, Simon, how about the bridging loan?

That old "Red Herring". Think this reply that I gave to a member cover it.

As to the loan, it is as broad as it is long, and just a book keeping exercise. The ownership of National Office was passed to the Trust to avoid paying a chunk of tax. In addition to simply purchasing the building using the proceeds from the previous offices, funds were needed for equipping the building. The Club could have just passed this to the Trust but chose to put it in the accounts as a loan so that if there was ever the need the Club could get the money back out of the Trust. If it had just been included with the transfer of the building the funds thereafter could only ever be used for the charitable purposes of the Trust.

We could now ask the Trust to arrange a mortgage on the building and pass the funds back to the Club. But then all the would be happening is that the Trust would borrow from the Bank at a figure above its base rate and lend to it back to the Bank as the Club at a figure below its Base Rate. Overall I would suggest that the present arrangement is the most sensible.

Do really want us to increase the profit of the Bank's Simon L^?

Regards,

John Catt

[Jonty]

Given the lack of clarity surrounding this proposal and the fact that some knowledgeable members, who have been considering the proposal for sometime, have considerable doubts about it, strongly suggests that it should be withdrawn in my opinion.
I have found in my professional life that people who are on top of their subject can explain complex issues clealy and simply and answer probing questions in the same manner.
It is not appropriate to vote for a major change unless the issues and implications are clearly understood and clearly articulated.
This is clearly not the case with this proposal and in my opinion it would therefore be inappropriate to support it.
jonty

[Simon L6]

While we're being transparent, Simon, how about the bridging loan?

That old "Red Herring". Think this reply that I gave to a member cover it..........

Regards,

John Catt

the bridging loan, John, the bridging loan. The one that's just been asked for............(as in read the question, the second part of which was 'if the loan goes over £600,000 can we retrieve a share in the building?)

[Jonty]

[quote="John Catt"][We could now ask the Trust to arrange a mortgage on the building and pass the funds back to the Club. But then all the would be happening is that the Trust would borrow from the Bank at a figure above its base rate and lend to it back to the Bank as the Club at a figure below its Base Rate. Overall I would suggest that the present arrangement is the most sensible.[/quote

John - your first sentence above isn't comprehensible to me. Are you simply saying that if the Trust paid back the loan to the CTC then it could only do so by taking out a mortage on the property with a bank in order to generate the monies to pay back the loan but this would result in the Trust paying a much higher rate of interest to the bank than it currently pays to the CTC? In addition as the Trust has no money the Club would have to pay the higher rate of interest on the mortgage on behalf of the trust?

Is this what you mean?
By the way just for interest, what is the rate of interest which the Club charges the Trust on the outstanding loan?
jonty

[Simon L6]

the word on the street is that the Trust is asking the Club for a £250,000 bridging loan to cover the cost of running Cycle Champions past the end of the contract. Now, I may be wrong about that, but Simon Connell and John are well placed to correct me if I am wrong...

And John - if the Club retrieved part of the building by way of redeeming the existing close-on-£400,000 loan, would the £30,000 rent that the Club pays to the Trust be reduced?

Oh - talking of £30,000 - how much did the staff conference cost?

[thirdcrank]

May I attempt a little clarification about the "25%" issue? ...

From my reading of what you said in the Motion replay article (p8) in the current CTC mag., there's no need because it seems that the £££ will come straight back to CTC members:-

... the new Charity Act 2006 lets us make our members the beneficiaries of our charity. The "public" in "public benefit" is us - the current and future membership of CTC!
... the Government offer us up to £160,000 in tax relief to help in our work... These will be our funds, to be spent directly by us, on traditional member benefits like local member groups, and additional financial support for local and national events. (emphasis retained.)

That seems pretty clear to me and it makes all my talk of altruism look like claptrap.

(Since there has been discussion about editing stuff, for anybody who doesn't aready know the use of .... is a conventional way of indicating where you have left a bit out.)

[John Catt]

[We could now ask the Trust to arrange a mortgage on the building and pass the funds back to the Club. But then all the would be happening is that the Trust would borrow from the Bank at a figure above its base rate and lend to it back to the Bank as the Club at a figure below its Base Rate. Overall I would suggest that the present arrangement is the most sensible.

John - your first sentence above isn't comprehensible to me. Are you simply saying that if the Trust paid back the loan to the CTC then it could only do so by taking out a mortgage on the property with a bank in order to generate the monies to pay back the loan but this would result in the Trust paying a much higher rate of interest to the bank than it currently pays to the CTC? In addition as the Trust has no money the Club would have to pay the higher rate of interest on the mortgage on behalf of the trust?
Is this what you mean?

Hi Jonty,

Like any company the Trust has certain assets. In the case of the Trust the main asset is NO. If the Trust needs funds it could take out a commercial mortgage or it can borrow from whoever will lend to it unsecured. If it manages to borrow unsecured then the creditor can reclaim the funds and the Trust would have to raise cash by selling assets. In this case almost certainly by selling NO. So theoretically the Club could claim any monies owed from the Trust and it would have to realise whatever assets it has to repay the Club. Not having a mortgage would slow the process but not invalidate it.

We could get the Trust to take a mortgage at Commercial rates. However since we get the benefit of the services it delivers at cost, this would just increase the "Club's" costs, so effectively the Club would be paying the higher rate of interest.

As I tried to explain in my blog during the earlier debate (see http://witherthectc.blogspot.com/2010/02/question-re-message.html the Club and the Trust are managed as one body so the financial flows are for practical purposes irrelevant.

In turn, the way we operate means that Council could be regarded IMHO as "shadow trustees" of the Charity. So effectively we would be forced to ensure that the Trust's commitments were honoured since any commitments it takes on are done so with the approval of Council. One of my reasons for advocating merging the two organisations is to avoid conflicts of interest. Again I attempted to deal with this to some extent in my blog at http://witherthectc.blogspot.com/2010/02/ctc-v-rya.html

By the way just for interest, what is the rate of interest which the Club charges the Trust on the outstanding loan?
jonty

I understand that it is a commercial rate, but I couldn't quote you the current rate. If you get the gist of my comments above and in my blog I hope you will appreciate that it a book-keeping entry and only of academic interest.

[John Catt]

Hi Simon L6,

the word on the street is that the Trust is asking the Club for a £250,000 bridging loan to cover the cost of running Cycle Champions past the end of the contract. Now, I may be wrong about that, but Simon Connell and John are well placed to correct me if I am wrong...

This may well be so. So what? See my response to Jonty. If we run the the organisations in tandem it won't matter, because I don't believe the Club could avoid the liabilities of the Trust.

And John - if the Club retrieved part of the building by way of redeeming the existing close-on-£400,000 loan, would the £30,000 rent that the Club pays to the Trust be reduced?

In Law you have two different legal entities, though the control of these is not so clearly differentiated. The financing of the Trust is one issue. It can borrow from the Club, the Bank or anybody else who will lend to it or give it grants.

If the Club want office space it can choose where this should be and on what terms it is prepared to rent.

They are two separate issues.

Oh - talking of £30,000 - how much did the staff conference cost?

I'm sure that putting my old finance hat on and allocating for management, lost salaries of participants during the period of the conference and for travel, communications, hotel cost and allowance and travel (plus some other things I haven't thought of) i could no doubt get the cost up to over your £30K.

Are you suggesting that we shouldn't train and motivate our staff and arrange for the exchange of ideas and best practice?

From my perspective it appears to have been good value. You may have a different view and ideas.

Regards,

John

[gaz]

By the way just for interest, what is the rate of interest which the Club charges the Trust on the outstanding loan?
jonty

I understand that it is a commercial rate, but I couldn't quote you the current rate.

The rate charged is in fact not a commercial rate but Bank of England Base Rate (currently 0.5%) although the CTC site originally claimed in error that it was a commercial rate. More here.

If you get the gist of my comments above and in my blog I hope you will appreciate that it a book-keeping entry and only of academic interest.

That point is entirely accurate. The Club effectively donates the interest back to the Trust. You can find a great deal more about the loan here.

For the broader picture of the financial relationship between the club and the trust try here.

Don't ask me why this stuff from National Office is so hard to find.

[Jonty]

Hi John
Thanks for that. My understanding of what you meant seems to have been correct.
Can I ask if the loan from the Club to the Trust is at a commercial rate of interest why did the Trust not obtain a loan from a bank also at a commercial rate of interest?
Why is the Club acting as a banker and providing a service which could be obtained from a bank? Surely in the present low-interest environment it would be sensible for the Club to hold on to its assets (cash in this case) and for the Trust to take out a commercial loan from a commercial institution - a bank - at a commercial rate of interest by mortgaging the National Office.
Surely to make financial sense the rate of interest charged by the Club must be a subsidised rate rather than a fully commercial rate? In other words it's a "soft loan" provided by one body to another related body at a lower rate of interest than a true market rate. In effect it's basically a cross-subsidy the value of which is the difference between the interest rate charged by the Club and a fully commercial rate.
Do you agree with this?
jonty