Clodagh Hayes

The reaction of the vast majority of people to the news that my husband and I bought a village pub is one of excitement and enthusiasm, with a touch of wistful “I’ve always thought I’d like to do that”.

The wise few ask “Are you mad?”

Over the last six months, I’ve queried my sanity on many occasions. However, the events of the last few days have brought the wisdom of my decision into sharp and unwelcome relief.

The original plan was for my husband and me to play a background role while a young local couple, with some experience in the hospitality trade, did the day-to-day work. Naively, none of us had anticipated the amount of paperwork that running a small business requires. I quickly had to become more hands-on than originally planned.  As a former corporate partner, I was used to drawing up lists and telling people what to do.  But I soon realised the only person I could order around this time was myself.

I became the HR department, the IT department, the finance & book-keeping department, the outsourcing department.  At one point, I spent so much time on the phone to our waste collection supplier that my husband thought I was having an affair.  I was not; I was trying to organise a very simple weekly collection of general waste, recycling and glass and it took me longer than it did to negotiate a billion dollar takeover.

I battled with call centres for electricity suppliers, water, wifi and telephone and credit card machines. Time is too short to recount the difficulty of opening a company bank account, even one with no credit attached. The process of setting up all the essential services we needed to run the pub in a short space of time was more difficult than any corporate transaction I’ve worked on.  (This may be false memory syndrome and time has lent a rose-tinted glow to my memories of those mammoth all-night negotiating meetings.)

And then, Coronavirus.

On Monday, the Prime Minister announced that people should avoid pubs but without telling pubs to close. This was both expected and devastating. On Tuesday, the Chancellor announced a package of measures which so far amounts to an offer of loans (to be repaid out of what?), a rates holiday (amounting to less than 5 per cent of our monthly fixed costs), the possibility of a grant of up to £25,000 (when? How much? On what terms?) and some, as yet unspecified, help for employees.

As a responsible pub owner, what do you do?

If we shut immediately, I will have to make eight local people redundant – most of whom have families and rents and obligations.  I will still have to pay exorbitant fixed costs each month – including electricity, water, insurance costs, website hosting fees, music licence fee, council tax for the staff accommodation – even while we are closed and earning no income.

If we remain open, but no one comes or trade dwindles to a trickle (as it should, given government advice to “socially distance”), I will still have to pay a skeleton staff and pay the weekly bills for stock on top of all the fixed costs.

Surely my business interruption cover will bail me out?  But when do insurance companies ever rush to accept liability? Their initial response was: “Business interruption wouldn’t respond to Coronavirus due to not existing when cover was underwritten”.  Obviously, no lawyer worth her hourly rate was going to let that lie. A quick read of the policy showed that business interruption caused by either notifiable diseases or a public emergency shut down should, in fact, be covered by my policy.

But there’s a long way to go before – if – we get any money. There has now been a more general statement from the insurance industry which accepts some form of responsibility for Coronavirus related closures, while hastening to add that most policies still won’t cover it.  So much for us all being in it together.

Then we face the inflexible monolith that is HMRC.  Along with small shop owners, pubs are, in effect, the country’s greatest tax collectors.  VAT bills are due in a couple of weeks and, as with most quick turnover, cash businesses, we rely on a continuing good turnover to raise the cash to pay the VAT bill that relates to the period of trading over Christmas, generally a healthy time for pubs.  My accountant tells me to file the VAT return and phone HMRC and beg them to give me a delayed payment plan over three months.  But there’s no guarantee they will accept this.

Currently, we have just enough in the bank to cover this month’s wages and the bills outstanding for food and drink already bought.  Without borrowing, the business does not have the £10,000 needed to pay the VAT bill. And now that people have – sensibly – been told to stay away from pubs, we have zero chance of raising that money in the three weeks before the payment date.

We are not alone in this. All small (and probably bigger) businesses face the same problems. The Government has pledged to do whatever it takes to get us through. Let’s hope they mean it.

In the meantime, stay safe and see you all for a pint when we are through the other side.

Clodagh Hayes is a former corporate partner at Linklaters. Her pub is The Ship at Upavon, Wiltshire.