Monday, 16 March 2020

The government needs to issue guidance on how it will be helping people and businesses pay their bills

The current situation in the UK is a nightmare for just about everyone. The fear attached to the thought of a pandemic is horrific. Whilst we are in unprecedented times and we have to give the government some latitude whilst it works out its response, people have bills to pay. Many people work for small businesses, many of whom were just about getting by before the pandemic. As the owner and operator of a small business, we are looking at a nightmare scenario. We are already seeing many studio bookings cancelled. We have reserves that will see us through a couple of bad months, but should the government ban our business from operating for four months, where do we stand? We have bills to pay and staff to pay. If we can't pay these, where will they survive? We can't pay people with money we don't have. Where will our staff be if  we can't pay them and they can't pay their rent? I don't know of any small business, working in the people industry that could support a four month period of unplanned closure at the busiest time of the year.

We are probably one of the more robust small companies, however from a cash flow perspective, it will be a very difficult period. For businesses like ours, my suggestion would be for the government to back emergency finance with our bankers. Our business has been on a solid growth path since 2012, when we opened our new block. Loss of one third of our annual income would clearly be catastrophic, but over a five year period, I would still expect our financial position to be robust by 2025. Emergency loan or overdraft facilities would tide us through and I would fully expect these to be repaid withing five years, if not sooner.

My view is that for the government, it is always better to pay people to work and  keep economic activity going, than to let companies go bust and have talented staff doing nothing.  I know the owners of many other music studios and music companies. I don't think any will be able to get through a lengthy period of closure for a period of many months, without huge damage to their business.

As for the staff, if they are laid off for a period of months, what will happen when the business is able to resume. It has taken us decades to build up our team. They are skilled and know the business. Some work on a freelance basis and if there is no work, they will earn no money. People insure for illness, but if they are well and simply have no work, that is not covered.

The government needs to make an announcement ASAP to give us all some certainty. I cannot believe that the Government would be foolish enough to let important businesses in all sectors go to the wall. I don't believe the music sector needs special protection, rail, air, retail, pubs and restaurants all need help. We need to be in the position that when the crisis passes there is still an economy in the UK. We need a situation where people still have roofs over their head and enough money to eat. Whilst some may say that the government can't write firms a blank cheque to everyone, the real choice is emergency finance for these businesses or pay the people who work for them unemployment benefit for decades whilst the economy is rebuilt. That would be lunacy, as the economy would recover far more quickly if companies are able to reopen, rather than having to rebuild from scratch.

I fully expect many businesses that are just about surviving to go under. That is tragic and will be a major shock to the economy. When the risk of the virus passes, we all need to resume normal life and we need these businesses to be there. So come on Boris, think this through.

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