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Annual Report and Accounts for the Year Ended 31 December 2019

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Annual Report and Accounts for the year ended 31 December 2019 HC 351 Annual Report and Accounts for the year ended 31 December 2019 Presented to Parliament pursuant to Paragraph 19 of Schedule 4 of the Hallmarking Act 1973 as amended by the Government Resources and Accounts Act 2000 (Audit of Public Bodies) Order 2003 Ordered by the House of Commons to be printed 2 July 2020 HC 351 © Crown copyright 2020 This publication is licensed under the terms of the Open Government Licence v3.0 except where otherwise stated. To view this licence, visit nationalarchives.gov.uk/doc/open-government- licence/version/3. Where we have identified any third party copyright information you will need to obtain permission from the copyright holders concerned. This publication is available at www.gov.uk/official-documents. Any enquiries regarding this publication should be sent to us at The British Hallmarking Council at 60 Gracechurch Street London EC3V 0HR ISBN 978-1-5286-1852-6 CCS0320326134 07/20 Printed on paper containing 75% recycled fibre content minimum Printed in the UK by the APS Group on behalf of the Controller of Her Majesty’s Stationery Office 1 CONTENTS Page Officers and Professional Advisers 2 Report 2019 1 Introduction 3 2 Performance Report 3 a. Overview 3 b. Performance analysis 7 3 Accountability report 10 a. Corporate Governance Report 10 b. Governance Statement Year Ended 31 December 2019 12 c. Remuneration report 15 d. Going concern 16 e. Parliamentary Accountability: regularity of expenditure 16 f. Auditors 16 4 Members of the Council 17 Appendix 1 19 Appendix 2 20 Appendix 3 21 The Certificate and Report of the Comptroller and Auditor General to the Houses of Parliament 22 Statement of Comprehensive Net Expenditure 25 Statement of Financial Position 26 Statement of Cash Flows 27 Notes To The British Hallmarking Council Accounts 28 1 Preparation of accounts 28 2 Statement of accounting policies 28 3 Analysis of Net Expenditure by Segment 28 4 Staff numbers and related costs 28 5 Income 29 6 Operating Expenditure 29 7 Trade receivables and other current assets 29 8 Cash and cash equivalents 30 9 Trade payables and other current liabilities 30 10 Related-party transactions 30 11 Events after the Reporting Period 30 2 OFFICERS AND PROFESSIONAL ADVISERS Chair Noel Hunter Secretary Susan Green Accounting Officer Noel Hunter Bankers Lloyds TSB Bank Plc 125 Colmore Row Birmingham B3 3AD Solicitors Shakespeare Martineau LLP No. 1 Colmore Square Birmingham B4 6AA Auditors Comptroller and Auditor General National Audit Office 157 - 197 Buckingham Palace Road Victoria London SW1W 9SP 3 BRITISH HALLMARKING COUNCIL (“The Council”) REPORT 2019 1. INTRODUCTION The Annual Report and Accounts for 2019 are drafted in accordance with the Government Financial Reporting Manual. 2. PERFORMANCE REPORT a. Overview Statement of the Chair for the year 2019 The British Hallmarking Council and the Assay Offices perform a vital role in ensuring the integrity of precious metal articles, giving the buyer and any subsequent owner a warranty that the item is what it purports to be. The BHC’s role in regulating hallmarking in turn gives the assurance that the consumer and the industry requires to ensure a level playing field in an increasingly competitive market. Ensuring the industry is protected in the developing global market has been the focus of recent activity by the Council. The UK jewellery industry is a significant player within the UK economy and employs 57,000 people in 6,700 businesses, generating annual revenues of £8.5bn. It is important that this significant and ancient industry can continue to develop in a fair market place. 2019 has seen the Council build on activities to regulate hallmarking and protect consumers. These are challenging times for the industry and for hallmarking, with a declining market for hallmarked goods set against the uncertainties of the UK’s exit from the EU. Enforcement of hallmarking law faces challenges with reducing resources and increasing concerns about unscrupulous traders, particularly online, and particularly online traders based outside the UK. The UK’s exit from the EU brings further uncertainties, with the potential for significant numbers of businesses moving to hallmark their products outside the UK, and fears that Britain’s hallmarks may cease to be mutually recognised in the EU. The BHC is recommending to Government that: x the UK should work towards maintaining the mutual recognition of hallmarks between the EU and UK; x work towards maintaining the frictionless movement of goods, minimising border delays and bureaucracy; x co-ordinate an industry-wide awareness-raising campaign for hallmarking amongst UK consumers; x work with the major online marketplaces to increase hallmarking information on precious metal jewellery listings and raise consumer awareness of what this means; and x to work with stakeholders to develop a robust enforcement strategy to protect consumers and businesses from internet based unfair trading practices, and make recommendations for any necessary changes to legislation to support this strategy. Enforcement of hallmarking law is vital. During the year, the BHC worked with an internet specialist to conduct a survey of precious metal items being sold online. This revealed a significant number of precious metal items being sold online without any indication of their hallmarking or correct descriptions with attendant consumer detriment and detriment to legitimate businesses. A major publicity exercise in collaboration with the Goldsmiths’ Company followed these findings, with extensive coverage in the industry press and national press and television. This was followed up by contacts with major online marketplaces with a view to agreeing protocols for compliance with the Hallmarking Act. Work is in hand to develop a major project to protect and promote the UK jewellery industry, and a project group is working with representatives of retailers and insurers to develop ideas for enhancing information for consumers at the point of sale. 2019 saw the start of a new collaboration between the BHC and the National Association of Jewellers (NAJ), with the NAJ co-sponsoring the prestigious Touchstone Award. In June 2019 the Touchstone Award was presented to Shared Regulatory Services representing Trading Standards services from Cardiff, Bridgend and Vale of Glamorgan for a proactive programme of visits to jewellers, revealing premises selling un-hallmarked items and counterfeit goods, as well as a successful prosecution of an eBay seller selling mis-described, un-hallmarked jewellery and counterfeit jewellery. The field of entries was a strong one, and a Highly Commended award went to Nottinghamshire Trading Standards for an enforcement exercise which brought internet sellers to justice; and a Special Award went to 4 Birmingham Trading Standards for its intensive two year operation concerning fake gold bangles which was featured on television. This demonstrates the continued risk to consumers and the challenge to legitimate businesses. Another highlight of enforcement work during 2019 was an extensive project by Trading Standards in Scotland across 20 local authorities supported by Edinburgh and Sheffield Assay Offices which surveyed 234 jewellery outlets, finding that almost half of the premises were not displaying the Dealer’s Notice. A check of whether items were correctly hallmarked revealed a failure rate of 15.9%. A programme of follow up enforcement work is ongoing and also involves investigating online sellers. An important feature of the project in Scotland was training for Trading Standards officers on hallmarking law. The BHC believes that education on hallmarking is vital to raise the awareness of hallmarking in three key audiences: consumers, businesses and Trading Standards. Birmingham Assay Office has devised an online training module on hallmarking, and this has been promoted to Trading Standards departments across the UK. The BHC’s website has been substantially redesigned and updated to promote hallmarking content to consumers, businesses and Trading Standards. In addition, the industry press has covered a number of issues put forward by the BHC during the year. The BHC has strengthened its relationship with the Queen’s Assay Master during the year, and has established communications between the Queen’s Assay Master’s team and the Applications Committee to ensure best practice in the monitoring of sub-offices, ensuring the integrity of hallmarking. We were delighted to be invited to hold the Council’s October meeting at the Royal Mint, an occasion which proved interesting and informative with a special guided tour of the Mint. The Applications Committee, having conducted a fact-finding exercise, has formulated a programme for the five yearly re-validations of sub-offices set out in the new processes for monitoring sub-offices, starting in 2020. Alongside this the Technical Committee continues its work on technical consistency. It has developed a shared protocol for XRF testing and is reviewing its shared database of technical decisions. The issue of whether a distinguishing mark should be applied to items hallmarked by UK Assay Offices in their overseas sub-offices has been an issue for the Council. The BHC policy on the use of existing marks with no differentiation was established in 2014 following the publication of the Legislative Reform (Hallmarking) Order in 2013. This policy came under review following the decision of Case C-525/14 in the European Court of Justice handed down in 2016. During 2017 a consultation process was undertaken to receive the views of stakeholders on the issue. Taking account of all views, the Council collectively determined to change the previous policy and it decided that hallmarks struck outside the UK by UK Assay Offices should be distinguishable from those struck in the UK. The form of the offshore mark was agreed in 2018 and a 12 month transition period for implementation was agreed. A new Dealer’s Notice was produced, with a requirement that its use be compulsory from 1 May 2020, and a programme of communications with the industry was undertaken.
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