The UK government has pledged to assist businesses concerned they are not insured against the impact of the coronavirus crisis and social distancing.
Chancellor Rishi Sunak (pictured) pledged a £350bn ($418bn/€381bn) package of loans and grants to support businesses in an address on Tuesday. He warned that the country has never faced an “economic fight like this one” in peacetime.
The financial measures include £330bn in loans, £20bn in other aid, a business rates holiday for hard-hit retail, leisure and hospitality sectors, and grants for retailers and pubs.
Noting the concerns expressed by theatre and venue owners who are concerned their insurance policies do not protect them against the impact of a pandemic, the chancellor vowed to offer extra assistance.
“Following the changed medical advice yesterday (Monday), there are concerns about the impact on pubs, clubs, theatres, and other hospitality, leisure, and retail venues,” Sunak said. “Let me confirm that, for those businesses which do have a policy that covers pandemics, the government’s action is sufficient and will allow businesses to make an insurance claim against their policy.
“But many of those businesses don’t have insurance – so we will go further.”
The move follows his original promise of £12bn of support for businesses in last week’s Budget, which he admitted were insufficient and said he would do “whatever it takes” to steer the UK through the crisis.
For bigger companies, a new lending facility will be made available to provide low-cost and easily accessible commercial paper while SMEs will be supported by extending the business interruption loan scheme unveiled at the 2020 Budget. It will offer loans of up to £5m, instead of £1.2m originally, with no interest due for the first six months.
Sunak said: “The coronavirus pandemic is a public health emergency. But it is also an economic emergency. We have never, in peacetime, faced an economic fight like this one. But we are well prepared. We will get through this.”
The announcement comes a day after UK Music called for “urgent clarity” on the impact of coronavirus on the music events industry, as the government advised people to avoid theatres, pubs and other venues but did not order a shutdown.
During a public address on Monday, Prime Minister Boris Johnson said the government would no longer be “supporting” mass gatherings by using emergency workers. He also advised people to avoid mass events such as concerts, theatres, pubs and clubs, but stopped short of an official ban, which could mean businesses are not able to claim compensation through insurance.
However, the Association of British Insurers (ABI) said the government’s refusal to outright ban public gatherings would make little difference to payouts.
The ABI clarified that standard business interruption cover does not include forced closure by authorities while at the same time stressing that irrespective of whether or not the government orders closure of a business, the majority of firms won’t have bought cover that will allow them to be compensated for their operations being halted by the coronavirus.
In a statement it said: “The chancellor’s statement today is consistent with our statement this morning where we said in the event businesses have the right cover, this type of notification could help make a claim. But, as the chancellor acknowledged, the vast majority won’t have purchased extended cover and this remains unchanged.”
Image: Chris McAndrew