The Pharmaceutical Journal
Vol 270 No 7250 p730-733
24 May 2003

Society summary

162nd annual general meeting

Need to move the Society forward is appreciated by the profession

Consultation on the Society's future governance and constitutional arrangements has shown that the profession has a clear appreciation of the drivers for change, the President of the Royal Pharmaceutical Society, Marshall Davies, told the Society's annual general meeting on 14 May. The consultation had shown a great deal of synergy between the views expressed and the decisions taken by the Council to take the Society forward and make the Council more effective and accountable.

Presenting the annual review of the Council for 2002 (which was circulated with The Journal of 3 May), the President said that It was important for the profession to be fully informed and involved in this process of change. The Council had therefore rolled out a communications programme to explain the need for reform and to gather feedback. It was fair to say that there had been a healthy debate within the profession. The debate was about how the profession should develop in the future, and whether the Society's role as a professional body as well as a self-regulator made it different from other health professions.

By the end of the year, the Council was on track to have its key proposals ready to submit to the government in 2003, the President added.

The President went on to outline other major activities of the Society during 2002. These included the first phase of the rollout of the Society's continuing professional development programme, work relating to the regulation of pharmacy support staff, the investment of resources to ensure that the voice of the profession is clearly heard and understood, the Society's first ever census of the pharmacy workforce and the first phase of a project to map the competencies of the future pharmacy workforce.

The Society had also worked individually and with other health professional regulators to make its views known to the Government and to help clarify Government intentions during the passage of the legislation on the regulation of health care professions. And, as part of the alliance of UK regulators in Europe, it had worked to ensure that public safety was not compromised by a proposed Directive that would allow health professionals to practise unregulated in a member state for up to 16 weeks a year.

The Council had also made some key changes to update the administration of the branches and had agreed a new approach to funding the branches to help target the funds available for branch programmes.

MARK KOZIOL (Birmingham) commented on the statement that consultation on the modernisation programme had shown the profession's appreciation of the drivers for change and a synergy between the views expressed and the Council's decisions. He asked whether the members' views were really synergistic with those of the Society and of the Council.

The PRESIDENT said that the Society had taken into account all the views expressed to it. The views expressed forcibly in the pharmaceutical press were by no means universal and the statement accurately reflected the true position.

CHRISTINE GRAY (project manager for the modernisation programme) said that the results of the consultations were no secret and had been published in The Journal.

GRAHAM PHILLIPS said that the response to one discussion paper had indicated that 95 per cent of nearly 2,000 pharmacists who responded were not content with the broad outline of Council responsibilities in the discussion paper. He did not see the synergy.

Ms GRAY said that Mr Phillips's comment was highly misleading. The 95 per cent figure referred only to 172 pharmacists who had responded individually. However, more than 10 times that number had responded by sending back a questionnaire form sent out with The Journal and that gave a different picture, with the majority accepting the need to increase lay membership on the Council.

Mr KOZIOL said that the annual review referred to Council decisions on the size of the reformed Council, on the proportion of lay members and on the inclusion of pharmacy technicians. If the AGM approved the report, it might create problems for people trying to reverse those decisions in the future. He suggested an addendum stating that none of those decisions were to be construed as binding on the Society or on any future Council. He would not be happy for the meeting to approve the report as it was.

The PRESIDENT replied that the AGM received the annual report of the Council but did not formally approve it. The procedure, as for many years, was that the report was presented to the AGM only for question and comment.

Mr KOZIOL said that the AGM had approved both the annual report and the finances every year for as long as he could remember. Had there been a change?

MICHAEL BURDEN said that the meeting had always been asked to receive the report, which was not the same as approving it. The meeting could debate it, talk about it, ask questions and have it clarified, but he did not recall the meeting ever being asked to approve it.

Branch funding

ANDREW HERSOM (Hull) said that p1 of the report included the sentence: "Work continued to support the branches and regions as the Society's local presence, providing an opportunity for key debate and shared learning." It was ironic that the Society had actually cut branch grants — by 40 per cent in the case of Hull and by 60 per cent in other cases — making effective debate and shared learning extremely difficult.

The PRESIDENT said that he was not aware that the resources made available to branches had in any way curbed branch activity.

BEVERLEY PARKIN (director of public affairs) said that the Society had made available an extra £25,000 for branch meetings on the Charter — an opportunity taken up by 40 branches. The global sum available for branch grants this year was no different from last year. That effectively restored the economies made during the budgeting process last year.

What the Society had sought to do this year was to encourage those branches sitting on relatively large reserves to mobilise those reserves for their meetings. To date, about 25 branches had asked for extra funding because they did not have money to run their meetings. Other branches had been using their reserves. That was a useful, positive development.

For next year the Society would have a creative look at how to maintain that activity. It did not want to damage branch activity but did realise that next year it might need to do things a little bit differently so that branches could maintain their programmes.

The TREASURER said that £250,000 was floating around in the branches, earning little interest and not properly accounted for. Some branches had dormant funds and others were more active. The idea was to try to suck the excess back and reward the active branches. There was a contingency fund so that if a branch managed to overspend, then it could request extra funding. There was no depletion of funding. It was a manipulation to get the fund into a more accountable manner.

Dr NICOLA GRAY (member of Council) said that it was hoped that more branches would bid for extra money because it had not all been used yet. Some branches would actually get more than they would have got under the old system. There was no ceiling on what branches could apply for and they had been encouraged to think creatively — think about doing things other than meetings. Some interesting bids had been received.

JOEL HIRST (Bristol) said that his branch committee had a perception that the Society did not support the branches. His branch was very active and had money that it planned to use on a variety of issues, including training. But there was a definite feeling coming from Lambeth that the branches were being encouraged to reduce their range of activities.

GRAHAM HILL (Hull) commented that a drastic reduction in the number of approved speakers in the list sent to branches could affect the quality of meetings and also affect the bidding process as well.

IAN SIMPSON (Oxford) disputed a statement in the report that for the first time in its history, the British Pharmaceutical Conference in 2002 had attracted more than 1,000 delegates. As chairman of the last BPC to be organised by a local committee, he could say that the 1993 conference in Reading had more than 1,000 delegates.

Ms PARKIN said that the report referred to paying delegates. She accepted that earlier conferences had had 1,000 or more visitors.

Devolution

MAURICE HICKEY (Moray) took issue with a statement in the report that: "The Society has offices in Edinburgh and Cardiff, where executive committees work to implement Society policy in the context of devolved health policy in these countries." First, there was not "an office" in Edinburgh but a department that was written into the current Charter. Secondly, there was a problem with "implementing Society policy in the context of devolved health policy". Society policy was tailored towards Westminster, and the executive in Scotland was not allowed to make policy — even though one third of government health spending in Scotland was on health and pharmacy there was becoming quite different. There had been problems in the past year with the executive being unable to respond to events in Scotland because nothing similar had happened in England and there was therefore no Society policy.

The PRESIDENT replied that the matter was complex because certain Society activities were in areas reserved to the Westminster Parliament while others related to devolved powers. But he was not aware of any particular problem in the Society between British national issues and local issues.

Mr HICKEY said that he was talking not about a local problem but about another country. A good example was the Office of Fair Trading report. There was no Society line on the OFT report but there could have been in Scotland.

The PRESIDENT said that the OFT was part of the Department of Trade and Industry, which was not devolved. It was a Westminster reserved power. The Society had lobbied heavily in support of a national distribution of pharmacies, emphasising that all three countries had pharmacy plans and that what was proposed did not fit comfortably with such policies.

DAVID THOMSON, chairman of the Society's Scottish Executive, said that the response to the OFT report had united the pharmacy representation in Scotland. The executive had aligned itself with the other main pharmacy bodies to lobby hard with the Scottish Parliament. The exercise was extremely successful because Scotland rejected the OFT recommendation ahead of any ruling in Britain. No member of the executive was gagged in any way.

Mr HIRST said that the report contained nothing about the Society's interactions with the Department of Health and the Pharmaceutical Services Negotiating Committee on medicines management. Had there been much activity at Council level on this crucial development?

The SECRETARY AND REGISTRAR said that the Society had been involved in both projects to a considerable degree. She and several Council members served on the group that oversaw the Department's medicines management initiative and many other members of the Society had been involved in its subgroups. The Society had also been involved in the PSNC project from the outset. Several Council members and staff were involved in the project.

Answering a question from MARK WALKER (Oxfordshire), the SECRETARY AND REGISTRAR said that the report was a factual account of the events of 2002. There was no question of voting for or against it.

The PRESIDENT then formally suggested that the report be received, which was agreed.

Society's financial strength substantially increased

The Royal Pharmaceutical Society achieved a substantial increase in its financial strength in 2002, the Treasurer, Kirit Patel, told the annual general meeting on 14 May. Despite having to fund a major programme of new works, the Society had achieved a large surplus, he said.

The Society's finances were well maintained, the balance sheet was much stronger and the outlook for the future was more than satisfactory. The office had done a fantastic job. There was no disarray and the audit and control procedures were tight.

The publications business made an exceptional profit. Income rose 19 per cent to £14m, with expense of just under £9m and a surplus of £5.5m compared to £4.5m in 2001.

The surplus on activities at the end of the year was £2.2m after tax. The tax paid was kept to £430,000 — practically the same as in 2001 — thanks to successful negotiations with the Inland Revenue in the manner in which some of the publication profit and other activities were taxed.

So the Society's balance sheet had been strengthened. Last year there had been talk of the finances being in disarray, but the Society was now well placed. The balance of reserves now stood at just over £13m, up by £2.5m despite modernisation in the Lambeth building to improve the working environment.

The cash position was strong. The net cash balance at 31 December 2002 (and it was much more now) was over £5.25m. This was brought about by the profit increase, by reducing the debtors, controlling costs and controlling the stocks held by publication and other places.

The targeted surplus was now sufficient to meet capital expenditure and finance all future short-term needs. There were tight management controls. In the first quarter of 2003 all the directorates but one were underspent. And for the one that had overspent there was a reasonable explanation. The control process was now very fluid and reactive.

As far as the British Pharmaceutical Conference was concerned, three years ago the Society had subsidised it to the tune of £250,000, but this had reduced to £100,000 in 2001 and £83,000 in 2002. It was hoped to reduce it to less than 50,000 this year.

Finally, turning to branch issues, the Treasurer said that, when £250,000 was floating around unaccounted for, a little cut in branch budgets should help to shift dormant money back up again. The Society was not trying to curtail branch activity, but it was pointless sending money down the line when £250,000 was just floating around somewhere out there in the system.

HUGH MITCHELL, Director of Finance, then gave a detailed presentation designed to provide a clear and concise overview of the Society's financial picture, incorporating some wider aspects of the Society's financial and funding structures. Among other things, he discussed the Society's policy on financial reserves and explained why it was necessary to reduce the Society's dependence on the income from publishing activities.

He also explained how the Society had been using the extra £1.5m raised in 2002 to enable it to expand and develop its programmes.

PHILIP WALTON (Manchester) said that although savings on budget sounded good, the reason for the saving was that some budgeted functions had not been yet completed. Did that affect next year? Would the budgets be the same for the functions that had not yet been completed?.

The TREASURER said that in reality no budgetary process actually started on 1 January and finished on 31 December. There was always an overlap.

Mr WALTON asked whether the Society's honorary auditors had agreed with the financial statement this year because last year two of the auditors said that they had not had all of their questions answered.

IAN CALDWELL, one of the honorary auditors, said that the auditors had had a long and robust session examining the accounts and all their questions had been answered this year.

Mr WALTON said that his third comment was that reserves had been mentioned. He would like similar accounting to be available to the branches so that they could state why they need reserves.

MARK KOZIOL asked whether the external auditors were comfortable with the fact that the meeting was not being asked to approve the annual accounts.

The PRESIDENT, Marshall Davies, said that the meeting was not an AGM in the same sense as a limited company.

The SECRETARY AND REGISTRAR, Ann Lewis, said that her understanding was that the Companies Act merely required the accounts to be laid before a meeting. The Society's Byelaws require that the financial statement prepared by the Council with the auditors' report thereon, should be presented at the AGM.

SUDHIR SINGH, a partner in Howarth Clark Whitehill, the Society's external auditors, confirmed that the meeting was just to receive the accounts.

Mr KOZIOL said that, as it happened, the accounts this year were superb. But if they were not, what remedy existed for the members to suggest that they were unhappy?

The SECRETARY AND REGISTRAR said that if the accounts were in a bad state she doubted that the external auditors would have approved them.

TONY HARRIS (Great Yarmouth) asked why the accounts followed the calendar year rather than the tax year.

The PRESIDENT replied that the calendar year was the Society's financial year.

Mr HARRIS said that according to The Journal 1,500 members and some owners of pharmacy premises had yet to pay their fees for 2003. By his calculation, that added up to nearly £500,000. Was the Society going to tighten up its procedures so as to be less lenient with the late payers? Those who paid on demand felt aggrieved.

The SECRETARY AND REGISTRAR said that the due date for final determination was in the Byelaws. A Byelaw amendment could be considered.

Answering a further question, the PRESIDENT said that the decision to reduce the Society's reliance on its publishing arm had nothing to do with the proposal to change the Society into a charity.

Branch reserves

JOHN GENTLE (Shropshire) asked why, if many branches were sitting on huge sums of money and not organising meetings, the Society had not acted against those branches rather than every branch? His branch was organising nine meetings this year, so how could the change in the financial position make it more active? Why did the Treasurer seem set on a policy that was denying branches the financial comfort zone and security that the Director of Finance had talked about?

BEVERLEY PARKIN, Director of Public Affairs, said that the Society's policy was to mobilise branch money rather than claw it back or leave it in branch bank accounts.

ROGER PHILLIPS (Birmingham) said that the Society did not know what the branches spent. His branch received sponsorship worth more than £3,000, but it presented the bills to the sponsors so that they could reclaim VAT, which was not possible if the branch was given the money. The Society could not get a true figure from the branch accounts. The Treasurer's £250,000 figure was nowhere near the real cost of running the branches.

The PRESIDENT said that the discussion highlighted the need for much closer scrutiny of branch accounts and the way in which the branches managed their financial affairs.

Answering a question from EMMA HOPKINS (Ealing), the PRESIDENT said that the Society had no plans to sell its publications business. It was a hugely valuable asset, but one could not take for granted that the stream of finance would continue and increase as it had done in the past three to four years.

STEPHEN CURTIS (Harrow and Hillingdon) said that the draft new Charter included provisions allowing the Society "to acquire, dispose of or mortgage any real or personal property whatsoever and wheresoever situated; to acquire, build or maintain any building or premises; to receive any form of income, legacy or gift and to borrow money or obtain any form of credit; to invest monies of the Society not immediately required for its purposes in any manner". These appeared to be massive gambles or options.

Mr MITCHELL said that those provisions merely enabled the Society to do such things if it should ever need to.

The SECRETARY AND REGISTRAR said that the detail of how such powers would be controlled would be in Byelaws and Regulations, as now.

Drawing discussion to a close, the PRESIDENT suggested that any further questions should be put in writing or asked personally after the meeting so that a response could be provided.

AGM seeks referendum on charitable status

The Royal Pharmaceutical Society's annual general meeting on 14 May asked for a referendum of members before the Council proceeds with seeking charitable status for the Society.

The meeting carried a motion by Mark Walker that "This meeting directs the Council to gain the approval of members through a referendum before Council's proposal for charitable status is taken further."

Moving his motion, Mr Walker said that he made no judgment about the benefits or issues of charity status. Personally, he had not heard enough to make up his own mind. On the positive side, there would be monetary gains. But these could be short-term, because closing tax loopholes was a favourite pastime of the Chancellor of the Exchequer and his Treasury team.

Turning the Society into a charity was an historic decision that should be handed to the members. Gaining the approval of members would protect the Society, protect the Council, if the Government altered the rules to the Society's disadvantage after it had changed into a charity. A referendum was a democratic way of gaining the members' approval.

If turning the Society into a charity was best for the members, then the Council had to convince the members that its proposal was in their best interests.

Seconding the motion, ANTHONY COX (Birmingham) said that the Council placed too much emphasis on opaque consultation exercises and too little on democratic principles. In-house consultation exercises appeared to create disputes that were difficult to dissect and could also sow the seeds of distrust.

On major constitutional issues, such as membership of the Common Market and devolution in Scotland and Wales, the United Kingdom had been given referendums, The Society too should be willing to put forward its major constitutional changes to democratic debate and scrutiny. The Society's members were intelligent graduates and able to make decisions about the future of the Society if informed objectively.

The PRESIDENT pointed out that the Society had made no formal proposal for charitable status, so there was no position for members to agree or disagree with. Another point was that the motion, if passed, would go into the minutes but was not binding on the Council.

IAN CALDWELL (Glasgow) said that the only apparent sweetener in charitable status was that the Society might save £1.1m per annum. But what was the price of the tax savings? The Society would become directly responsible to the Charity Commissioners. Its assets would fall into their hands. Those assets included a headquarters building with a real value of about £40m, about £1,000 a member, and publications that could be worth, say, another £500 a member. As a charitable body, the Society would have no say in those assets. Their sale, lease or disposal would be subject to the permission of the commissioners. If the Council went down this route it would commit the Society to a structure that had no commitment to the profession, the members or the public. Furthermore, the Government was unhappy with the Charities Act and was in the process of revamping it. No one knows what would be in the new Bill. The Council's proposal, should it come, was at best premature and members should vote for the motion.

BRUCE RHODES (Winchcombe, Gloucestershire) said that, according to the President, the Council had discussed the proposal to seek charitable status and saw only benefit in it. The Secretary and Registrar, in response to a letter from 12 past presidents, had said that it would confer considerable benefits and advantages. If the members knew what these were, they might agree, but they did not know.

The members were told of decisions made and condescendingly told "it will be good for you". They were not told the reasons behind decisions. That was not good enough.

His understanding was that, as a result of a High Court decision in the 1980s, a charity could not directly promote changes in law, government policy or the administrative decisions of government authorities. Unless he heard convincing arguments, as opposed to platitudes, he would continue to voice his opposition to charitable status.

IAN HARRISON (Oxford) said that, according to the President, no analysis had yet been presented to the Council, so one could be forgiven for thinking that the issue was not a high Council priority. He asked the meeting to vote for the motion to buy time for the Council to stimulate imaginations, to stimulate creativity among the Council, the officers, their advisers and the membership.

Asked for a commitment to act on the motion if it were passed, the PRESIDENT said that that would be a decision for the Council, not for him.

MICHAEL BURDEN (Leicester) said that the motion would not achieve what it wanted to achieve. If it were approved, there would be a referendum without information, without evidence, without a question, because there was as yet no proposal for charitable status. What the meeting ought to be doing was asking the Society to get the information, to determine the advantages and disadvantages. That was not what the motion asked, and he would vote against it.

Mr RHODES said that a report in The Journal had said: "The Council of the Royal Pharmaceutical Society is to seek charitable status for the Society." If that was not a proposal, he was not sure what was.

THE SECRETARY AND REGISTRAR said: "Mr Rhodes, I am sure that you will know that journalists report as journalists report. The Council, I can tell you, has not had a formal proposal that it shall seek charitable status or voted on it."

[The wording of The Journal's report (14 December 2002, p866) was based on a news release (PDF 15K) issued by the Society, headed "Society to seek charitable status".]

Summing up, Mr WALKER implored the AGM to pass the motion as a clear message about what it directed the Society to do.

The PRESIDENT then put the motion to the vote, and it was carried.