Business Essentials

What a local lockdown could mean for your business - Brought to you by NatWest

What a local lockdown could mean for your business - Brought to you by NatWest

Thursday, 16 July 2020

With the UK’s first regional lockdown now in force in Leicester, this is the ideal time for firms elsewhere in the country to ensure they are prepared for a reintroduction of restrictions.

 

The news that the government has responded to a fresh coronavirus outbreak in Leicester by re-imposing lockdown rules on the city and surrounding areas should prompt businesses in other regions to prepare for similar scenarios.

 

While pubs, cafes, cinemas and restaurants in the rest of England were allowed to open for the first time since March on 4 July, their counterparts in Leicester were forced to remain closed as health officials tried to limit the spread of a new coronavirus flare-up.

 

Health secretary Matt Hancock said in a statement that the seven-day infection rate in Leicester had reached 135 cases for every 100,000 people, three times the level of the next highest city.

 

As a result, the non-essential retailers that had been allowed to open from 15 June were ordered to close, with schools also shut and the government advising against all non-essential travel to and from the locked-down areas. Restaurants, pubs and cafes were still able to offer takeaway services.

 

Ministers are planning to review the current arrangements in Leicester on 18 July and every two weeks after that.

 

It seems unlikely that Leicester will be the only city affected by a local lockdown – so what steps could other business owners consider taking to prepare themselves?

 

Employment issues

Businesses such as hospitality firms or non-essential retailers will be able to re-furlough employees if they are subject to a local lockdown, says Nick Soret, head of consultancy technical development at advisory service Mentor.

 

“The government’s furlough scheme has changed, which means you no longer have to do it for a minimum of three weeks – so if a local lockdown is for, say, two weeks, employers can put people on furlough and bring them back when it ends,” he explains.

 

“But employers should note that the furlough scheme will become less generous in the weeks ahead: from August, companies will be expected to meet the cost of employer national insurance contributions and minimum pension contributions; in September the government element of the scheme reduces to 70% of pay from 80% at present, and then to 60% in October.”

 

This means that, under the new rules, a business that is subject to a local lockdown in October will be required to make up a higher percentage of furloughed employees’ pay. Soret says: “So it makes sense to think now about what your approach would be if your area was subject to a local lockdown at a time when the furlough scheme was less generous.”

 

Meanwhile, owners of essential businesses that will be permitted to remain open during a local lockdown should consider introducing additional health and safety measures to keep their staff and customers safe during a period when infection levels remain high.

 

“It certainly could make sense for employers to take extra precautions: for example, they could encourage customers and staff to wear face masks. In Scotland they are going to be compulsory in retail settings [from 10 July],” says Soret.

 

Predicting a local lockdown

The situation in Leicester has shown how swiftly a new lockdown can be imposed, and with very little warning. 

 

“Drawing on the experience of the March lockdown, ask your team what you could do better, such as additional ways to generate digital revenues and increase reach – and put them in place now”Erica Wolfe-Murray, author of Simple Tips, Smart Ideas

 Where possible, business owners should remain informed about the number of coronavirus cases in their area so they are aware of any flare-ups and the subsequent likelihood of a local lockdown. This will give them time to put any necessary remote-working practices in place or re-furlough staff who will be unable to work if the business is forced to close for the length of the lockdown.

 

Erica Wolfe-Murray, author of business book Simple Tips, Smart Ideas, adds: “Keep an eye on ‘R’-rate [infection rate] statistics in your area to be ahead of the game. The coronavirus app developed by King’s College London together with health science company Zoe now has close to 4m users and features infection hotspots on its website.

 

“You can both add data and use the data to keep an eye on your area. This is the largest public science project anywhere in the world.” The app is available on IOS and Android .

 

Public Health England also publishes a weekly surveillance summary and infographic showing the latest information relating to the number of cases and incidence rates in each region. Data on coronavirus cases in Scotland is also published via the Public Health Scotland daily dashboard. Public Health Wales’s own dashboard can be found here , and the Department of Health’s dashboard for Northern Ireland is available to view here .

 

Learning from previous lockdowns

Businesses that are forced to close their doors as a result of a local lockdown will also face the challenge of keeping revenues coming in. Michael Waters, businesses expert and author of The Power Of Surge, says owners should consider how successful firms responded to the original lockdown imposed in March.

 

 “That’s likely to bring to mind the numerous successful pivotal surges that emerged in the coronavirus response, when businesses turned overnight from making one thing – drinks or clothes, say – to making another, such as sanitisers or masks,” he explains.

 

Wolfe-Murray says: “Drawing on the experience of the March lockdown, ask your team what you could do better, such as additional ways to generate digital revenues and increase reach – and put them in place now.

 

“Create a step-by-step plan that can be quickly implemented when your area lockdown is announced. This should include roles and responsibilities, communicating to suppliers, staff and customers, and shifting to digital-only mode.”

 

Waters adds: “Finally, a key element of any post-local lockdown plan should be on surge readiness and what will enable the firm to surge ahead as soon as the lockdown is lifted. Questions such as: ‘Can we do more with less? Is this the time to consider automation? Are there conversion possibilities here? Are there strategic alliances to explore while we’ve got the chance?’ could be worth addressing.”

 

The government could also have a role to play in offering additional support to businesses affected by local lockdowns. Soret says that the government will need to think about whether the furlough scheme should be extended past October if lockdowns are imposed later in the year or in 2021, while Wolfe-Murray adds: “HMRC could look to offer a VAT reduction for those businesses operating in lockdown areas. They know where you are, so this could be an easy option, allowing you to retain a bigger slice of the revenue you are generating.”

 

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