Coronavirus 'devastating' pubs and clubs, business leaders warn
Businesses could collapse and thousands of workers lose their jobs as a result of pubs, clubs, restaurants and other venues closing due to coronavirus.
Industry leaders have called on the UK Government to provide an urgent support package to rescue the sector.
Most businesses do not have the right insurance cover in place to enable them to claim for coronavirus-related losses even if the government formally orders them to close, it has emerged.
The government advised people on Monday to avoid pubs, clubs and theatres, resulting in an immediate and huge drop in customer footfall for those businesses.
The move has provoked widespread anger in the hospitality sector which has warned that, unless the government formally orders the venues to close, businesses will not qualify automatically for insurance pay-outs that could help keep them afloat.
However, the Association of British Insurers (ABI) has said that even if the government orders the closures, most such venues will not have purchased cover that enables them to claim on their insurance.
Emma McClarkin, chief executive of the British Beer and Pub Association, said the impact of coronavirus on pubs was “devastating”.
She said: “The very existence of thousands of pubs and a lot more jobs is now at risk.
“The government needs to give clear instructions and detail on the support package to rescue the sector and hundreds of thousands of jobs.
“Urgent measures to support cash flows and enable cost reductions is an absolute necessity. Government action now will save thousands of jobs and save our pubs.”
Ian Murray, the Edinburgh South MP, who ran pubs before going into politics, has written to Business Secretary Alok Sharma to outline the industry’s concerns.
In his letter, he said: “I know from my own experience that the overwhelming majority of independent businesses do not have large cash reserves and many only survive week-to-week.
“Their cash flow problem isn’t one that’s going to be felt in months – it is likely to be felt within days.
“Following the government’s advice, many establishments which have served their communities for decades will simply close and never be able to re-open.
“This will result in the loss of tens of thousands of jobs, destroying livelihoods, isolating communities, and leading to a wider negative impact on the economy.”
He added that the impact on staff would be considerable, with many on zero hours contracts.
He said: “If the government is asking businesses to support their staff over the period, then the government has to support them to do so. Urgent action is needed.”
He called on the UK Government formally to order the closure of pubs, clubs, cafés and restaurants so they could make a compensation claim from their insurance supplier.
But the ABI said: “Irrespective of whether or not the government orders closure of a business, the vast majority of firms won’t have purchased cover that will enable them to claim on their insurance to compensate for their business being closed by the coronavirus.
"Standard business interruption cover - the type the majority of businesses purchase - does not include forced closure by authorities as it is intended to respond to physical damage at the property which results in the business being unable to continue to trade.
“A small minority of typically larger firms might have purchased an extension to their cover for closure due to any infectious disease.
“An enforced closure could help them make the claim, but this will depend on the precise nature of the cover they have purchased so they should check with their insurer or broker.”
Among the pubs coming to terms with the news is Dreadnought Leith, which said in a Facebook post that “we can't even think about lodging an insurance claim until we're officially ordered to close”.
The post continued: “By issuing a wishy-washy diktat, [the Prime Minister] has also placed all the moral responsibility on us to decide whether we should stay open or not. In a time of an escalating global pandemic, I think it's fair to expect the government to provide clear, unambiguous advice.”
Murray called on the insurance industry to help struggling businesses: “I urge insurance firms to show leniency in these unprecedented times and help ensure the survival of businesses on which the industry relies.”