Letter from Great Britain – 07-04-20

“The Financial Jigsaw” has been serialised here and now is replaced by this weekly “Letter from Great Britain.”

NOTE – If anyone would like an electronic copy of the complete book, I should be pleased to email a free PDF on request to: [email protected].

One website about the UK is always worth reading because the author, Dr Richard North, is an experienced health professional and provides useful information on a daily basis.  http://eureferendum.com/

INDEPENDENCE DAY EDITION!

Yes I know, it’s America’s celebration, but this year the date is also significant for us here in Great Britain. Today is the re-opening for our pubs and restaurants – at least some of them anyway – and Britain is celebrating – I hope, not prematurely.

As the days pass it is becoming increasingly clear that many hospitality venues will remain closed due to the government’s onerous rules and regulations.  This is particularly true for small independents that are least able to cope with the new systems and reduced turnover.

My local pub, The Sun Inn, Bruton, will be opening according to ‘Mike’ the landlord so I will be able to report next week on how it all works out.  Mike is fortunate to be an owner of his pub (he owns the ‘freehold’ with a mortgage and is known as a ‘free house) as opposed to the many pubs owned by the brewers and who charge rent, often as a proportion of sales with a base minimum.  The people running these pubs and restaurants are either managers for the brewery or ‘tenants’ who pay a capital sum to buy the franchise/lease.

Tenants are therefore independent operators and the most vulnerable to the extended closure as some brewers are demanding rents for the whole period; it is possible that many of these will eventually close.  There has been no help from the government for this category, except to agree a deferment of rent and the small self-employment grant.

Combined with the rent overhead is the local government charge for all businesses, known as ‘business rates’ – ‘rates’ being the general description for all local property and business charges managed by our local authorities in amounts that vary considerably from area to area, but can often be as much as the rent!

Mike says that he has been able to weather the closure by ‘furloughing’ his staff (the government pays 80% of the payroll to a maximum £2,500 per month) and securing a government guaranteed loan to continue the monthly mortgage payment.  But of course, this loan will still need to be repaid in due course.

Pub landlords have spoken of their fears that the lockdown will cause them to shut their doors for good.  Dave Law, who runs The Eagle in Battersea, London, said: “If I’m expected to pay all that rent back and continue to pay rent as we were prior to lockdown once pubs reopen, we are going to go bankrupt. We might as well walk away now and throw the keys in.”  Dave Mountford, from ‘The Boat Inn’ in Derbyshire said: “Nobody is making any money – the rents are very high. Publicans are simply going out of business, many of them overnight. Pubs are shutting down as we speak.”

In common with most businesses, Mike looked into the question of an insurance claim on his ‘business interruption provision’.  As expected, the insurance companies are denying this claim on the grounds that: “the pandemic was not the cause of closing; it was the government that voluntarily issued closure legislation and therefore is outside the general intention of the provision.”  There are legal challenges to this defence and it will be interesting to see how it turns out because, if it is upheld, I doubt that the insurance companies would survive the magnitude of claims without government intervention.

Most pubs in Britain operate as low-cost ‘restaurant-bars’ because few can survive on the traditional model of liquor only.  To be viable they rely on footfall, as do all retail businesses, and therefore the restrictions may well preclude many to remain open for long before they discover that it is unprofitable.  Mike’s pub is fortunate in having a good local liquor trade but he does rely on tourists for that extra bonus profit – we can only wait and see how this turns out.

Pubs and restaurants in England must reopen in a “Covid secure” way, which will involve more hand washing and table service.  Customers will be encouraged to book online, will not be able to stand at a shared bar in future, and one household can meet only one other in the pub at a time – no groups or parties.  Venues will be expected to keep a register of visitors’ contact details in case they are needed for test and tracing in the event of an outbreak.  Nightclubs will not yet be reopening.

The Government released a 50-page document outlining how restrictions could be eased, however, there will be considerable restrictions in place: the two-metre distancing rule will be relaxed to one metre (3 feet), with some “mitigating” factors, being dubbed ‘1m-plus’.  Customers will be able to sit closer together than first imagined (which will come as some relief to restaurant owners), but only if measures such as back-to-back seating, perspex screens, partitions between  tables, disposable menus and regular cleaning of commonly touched surfaces are put in place.

Inside the restaurants and pubs will be where people may see the most drastic of changes. No live performances of any kind are permitted (a regular source of income for many venues). Any play areas for children must be closed. No more propping up the bar or ordering at the till is allowed; instead, only table service will be permitted, and the Government will ask staff to limit contact between staff and customers.

Waiters will be required to wipe down surfaces more often and collect glasses and plates more frequently. Guidelines also recommend a one way system for places which cannot create a distance between people.  Contactless payments will be encouraged and some places may well use disposable condiments, which would otherwise need cleaning in between every use.

Even with the relaxation of the two-metre rule, the number of people allowed in enclosed spaces will be reduced. Staggering entry times has also been suggested in order to reduce the numbers. Enabling returning customers to eat in the dining room is welcome news, says Mike Foalks, landlord of The Crown Inn in Weston, but indoor dining poses “another set of challenges.”  The need to collect contact details from customers, as is currently the case in several other countries, in order to aid ‘track & trace’ should cases emerge will offer further problems of confidentiality and risk turning customers away.

There is also the case when a customer is found to be infected when the venue will have to close for a minimum two weeks and all staff quarantined.  My local up-market restaurant told me that they are not even bothering to open and will stay with take-ways and bakery which is proving more profitable after factoring staff costs and overheads.

Even now some restaurants have announced closures and job losses as a result of the pandemic. Already 6,000 jobs are in danger at Bella Italia and Cafe Rouge after owners gave notice of intent to appoint administrators, and 61 of the 80 branches of Tex-Mex chain Chiquitos will be closing permanently.

Though many larger restaurants are waiting for Government advice to be issued before putting plans in place (Honest Burger has said is reluctant to make provisions for the future until it receives more information from the Government, and though Nandos has reopened 216 restaurants for takeaway, its eat-in facilities will remain closed), some are cautiously considering how they might allow customers to eat in. “Our plans involve extensive site-specific risk assessments with measures likely to include card or contactless payment only, restricted capacity and dwell times, and enhanced sanitising and cleaning services,” says Gavin Adair, the chief executive of Rosa’s Thai Cafe, which has 19 restaurants across London, Manchester, Liverpool and Leeds.

Healthy fast-food chain Leon, which has remained open for takeaway throughout the lockdown and has dedicated four restaurants to serving NHS staff, is planning measures including table spacing, floor markers to indicate where diners can queue safely, cashless payment and a reduced menu to accommodate fewer chefs in the kitchens.

Despite the uncertainty over official advice, and fears about whether the public will feel safe eating out in the near future, restaurateurs remain optimistic that the hospitality industry will survive – in whatever form that may be.  In typical British fashion, one optimistic restauranteur remarked: “Sometimes it is our greatest challenges that bring out our best, and we are hoping for a brighter future – but this will only be possible with more support from the Government and our landlords.”  “I don’t think we’ll get back to normal for a while. The model will change, for sure; it’s going to be a minefield for a while, but we’re going to have to work through it together, and take things as they come.”

BUT the old model of drinkers interacting at the bar may be gone forever.  This article explains the history of this British unique and cherished pub activity:

“Before the 19th century, propping up the bar would have been an unfamiliar concept in England’s dense network of alehouses, taverns and inns. Alehouses and taverns in particular were seldom purpose-built, but were instead ordinary dwelling houses made over for commercial hospitality. Only their pictorial signboards and a few items of additional furniture distinguished them from surrounding houses. In particular, there was no bar in the modern sense of a fixed counter over which alcohol could be purchased and served.

Instead, beverages were ferried directly to seated customers from barrels and bottles in cellars and store rooms by the host and, in larger establishments, drawers, pot-boys, tapsters and waiters. The layout of Margaret Bowker’s large Manchester alehouse in 1641 is typical: chairs, stools and tables were distributed across the hall, parlours, and chambers, while drink was stored in “hogsheads”, “barrels”, and “rundlets” in her cellar.”

https://theconversation.com/coronavirus-is-taking-english-pubs-back-in-time

Now that UK has left EUROPE I will comment on relevant EU – UK events as they arise:

“Director of ‘Get Britain Out’ writes how the negotiations are far from being done and with time running out and many hurdles to pass No Deal cannot be ruled out.

Since the majority of the Great British Public voted to leave the European Union on June 23rd 2016 – almost 4 years ago – we have understood negotiations for all of our agreements would be through Michel Barnier, the EU’s Chief Negotiator – an unelected official who wields seemingly endless power. In the Free Trade Agreement negotiations this is the same. Even though the EU internally agreed its negotiating mandate back in February, since then Barnier has operated to the letter of this mandate, with no scope for any flexibility or compromise.

Is this something rooted in Barnier’s own personal view, or the EU’s clearly mistaken belief the Political Declaration should be treated as some sort of legally-binding precursor to a trade deal – which it is not? In fact, the document is clearly stated as: “…a framework for the future relationship between the European Union and the United Kingdom”. The UK is well within its rights to break away from this document and ask for a less binding and simpler Free Trade Agreement. After all, the document was largely concocted by a previous Government with a very different agenda under Theresa May and Olly Robbins, along with his counterpart in Brussels, Sabine Weyand.”  Read more:

https://getbritainout.org/eu-negotiations-a-deal-is-still-far-from-guaranteed/

To be continued next week.

Click to visit the TBP Store for Great TBP Merchandise

Author: Austrian Peter

Peter J. Underwood is a retired international accountant and qualified humanistic counsellor living in Bruton, UK, with his wife, Yvonne. He pursued a career as an entrepreneur and business consultant, having founded several successful businesses in the UK and South Africa His latest Substack blog describes the African concept of Ubuntu - a system of localised community support using a gift economy model. View all posts by Austrian Peter