And still it rains. Britain has just lived through the wettest January since 1776, and, well into February, the bad weather is showing no sign of abating. Since the clouds started to gather in December, thousands of businesses have been put out of action – and seriously out of pocket – by the rising water, with no respite from the flooding in sight.
About one in five UK firms was affected by flooding last year, according to the Federation of Small Businesses, but that figure looks set to soar in 2014, after weeks of torrential rain have left many parts of the country underwater. The Environment Agency calculates that about 185,000 commercial premises in England and Wales are at risk of flooding, and thousands of businesses have been overwhelmed by water in recent weeks, with properties in the South West and the Thames Valley particularly badly affected. The Association of British Insurers has estimated that the cost of insurance claims over the Christmas and New Year period alone will be in the region of £426 million, and the floods have spread considerably since the beginning of the year. As many business owners have found, they needn’t be located near a river or the sea to be at risk of water damage. The record levels of rainfall have seen excess ground water, burst water mains, and sewer overflows causing havoc to commercial properties across the UK.
Not only are affected firms unable to make their living as work premises and equipment languish underwater, but many SMEs are facing ruinous insurance bills, with new rules guaranteeing affordable cover excluding many small companies. Small business groups have been quick to criticise the new Water Bill, which passed through Parliament recently, replacing the existing flood insurance guarantee, the Statement of Principles, with the Flood Re proposal. This new plan will exclude home-based micro firms and smaller commercial premises in high flood risk areas from officially capped insurance cover, leaving many SMEs at risk of paying excessive insurance premiums. Research from the Royal Institute of Chartered Surveyors (RICS) has found that about seven out of ten businesses affected by flooding experience an increase in the annual premium and excess of the property insurance cover, a serious concern for smaller, cash-strapped firms.
However, businesses that operate in high flood risk areas do need to have flood-specific insurance – the RICS study showed that SMEs overwhelmingly rely on insurance to recover from flood damage. Typical insurance packages will cover the clean-up after floods subside, plus the costs of getting the business up and running again, including business interruption insurance. You may also need to fund a move to temporary alternative premises, replace water-damaged stock, and cover staff wages while the company is out of action. There can also be health and safety and sanitation checks to pay for once you return to your usual working home.
But insurance only goes so far and there can be delays in insurers paying out on policies. When it comes to business continuity, most firms will be desperate for funding to see them through the present difficulties. As well as investigating your eligibility for any emergency grants, you could ask your bank for an increase in your overdraft facility or a higher credit card limit to get through the coming weeks when business income is likely to be negligible, if non-existent. Many firms will also seek short-term loans to keep them afloat. The Government is also providing some help through a series of measures targeting flood-affected firms.
- A £5,000 grant for flood-hit businesses that tops up insurance payouts and helps with repairs, as well as building flood resilience into premises to minimise future flood damage.
- All companies affected can apply to their local authority for 100 per cent business rate relief for three months, plus a three-month hiatus on other business taxes, such as PAYE, VAT and corporation tax.
- Farmers whose land is waterlogged will have access to a £10 million fund from the end of February, offering one-off grants to help farm businesses get agricultural land back into production and introduce flood prevention measures.
- The major banks have committed £750 million to provide financial support to individuals and businesses in flood-hit areas, as well as repayment holidays, waived fees, loan extensions, and greater flexibility of terms. RBS has announced a £250 million interest-free loan fund , while Lloyds and Barclays have created similar-sized help packages for customers affected by the floods. HSBC, Santander and Nationwide are also offering flooded business customers support.
If you are as yet unaffected by the bad weather, find out if your business is at risk by calling the Environment Agency’s Floodline on 0345 988 1188 or 0845 988 1188, or you can register for free flood warnings to your mobile, via email, fax or phone call, using the agency’s Floodline Warnings Direct service. And make sure that you have a flood plan in place for your business operation – most firms can save between 20 and 90 per cent of the cost of lost stock and movable equipment by taking simple precautions in times of flooding.
- Ensure that your plan is written down and accessible by all members of staff. Key contact numbers should be clearly visible in the document, such as the official Floodline number, building services, such as plumbers and electricians, and evacuation contacts for staff. Listing the full emergency contact details of employees is very important, particularly those who may need help during a flood due to a lack of mobility, disability, or advanced age.
- Explicitly detail, possibly in the form of a map, essential pieces of property that should be salvaged in case of emergency, the location of any protective equipment, and shut-off points for services including electricity, gas and water supply.
- Note where key objects such as first aid kits are located, and take into account any materials that could be dangerous in a crisis. Chemicals, including cleaning products, and items such as gasoline or even cooking oil should be considered, with instructions on how to protect them from flood water.
- Give instructions as to where to move valuable equipment, be it paper files, computers, electrical items, or vehicles. Think about whether it might be appropriate to make copies of important documents and store them in a separate location as a preventative measure, or if you could raise some items above ground level or even to a higher floor in the building. If the flood risk is sufficient, research the cost of flood resistant items or flood protection products.
- You might also invest in an emergency power generator, torches, sand bags, tools, and plastic sheeting to prepare for the worst.
If you want more guidance and support, you could join a local flood action group via the National Flood Forum or the Flood Group UK Facebook page. And don’t forget your human capital during an environmental crisis. It is vital to think about your workforce who will need clear instructions during these testing times with regards to pay, as well as a possible return date to work. Your people are your business, and they need protecting as much as your possessions.
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