Please be aware that although the dot2dot offices are closed, the team are still working remotely and you can contact them on their direct dials and also through the switchboard number.
26/03/2020 – Government Support for the Early Years Sector
Below is the latest blog from the specialist Corporate Law, Childcare team at Brabners Solicitors. You can read and share the blog online here – https://bit.ly/BRABNERS
With the country on lockdown and nurseries restricted to all but key workers’ children, virtually every nursery will be suffering. The government has announced a series of measures designed to help businesses through the current crisis, but many have yet to have the details fleshed out. This is perhaps understandable given the scale of the problem and the ambition of the measures, but it does add to the climate of uncertainty. From what has been announced so far, there are a number of measures that could assist nurseries.
Early Years Entitlements
Early Years Entitlements will continue to be paid, notwithstanding nurseries may have to close. Depending on the make-up of a nursery’s intake, this could make a significant difference. In any event, it is likely to make a sizable contribution towards covering the fixed costs of a nursery should it decide to close its doors.
Job Retention Scheme
The Job Retention Scheme will see the government reimburse businesses 80% of the wages of employees (up to £2,500 per month) if they are furloughed i.e. sent home but retained as employees. If nurseries combine this with a mutually agreed salary cut it could see staff costs for furloughed employees reduce to zero. Salary cuts may seem an extreme measure, but the net effect on employees may not be as severe as it sounds if they do not have to incur expenses associated with their work, such as travel. If you are planning to change employee’s terms, we recommend you seek advice from a specialist (such as a member of our employment team) before doing so.
Coronavirus Business Interruption Loan Scheme
The government says that payments to businesses under the Job Retention Scheme will begin at the end of April. But in the meantime, businesses still have to pay employees. This could cause significant cash flow issues if no income is being received. In practice, this may be the main reason businesses seek assistance under the Coronavirus Business Interruption Loan Scheme.
This is a scheme offering loans of up to £5m with the first 12 months of the loan being interest-free. The precise lending eligibility criteria are still to be set out (much to the frustration of businesses and banks) but in general, it is thought they will only be available to businesses who are viable and have a plan to repay; short term finance to cover the period until the Job Retention Scheme payments kick in seems to satisfy this requirement. If this is of interest, businesses should speak to their bank, it may also be beneficial to speak to a finance professional to assist with any application.
Business Rates Holiday
Although initially excluded, nurseries are now to receive a business rates holiday for 12 months from 1 April 2020. It will be administered by local authorities with no need to apply.
Nurseries are still excluded from the grant scheme for businesses in the retail, hospitality and leisure sectors, but there are grants of £10k available for businesses receiving small business rates relief. Local councils should be in touch regarding these as there is no need to make an application.
Commercial Forfeiture Moratorium
Legislation is due to be passed that will prevent landlords foreclosing on leases due to non-payment of rent until the end of June 2020. This could provide breathing room for delaying rental payments, but it is always advisable to have an open dialogue with landlords if you wish to delay rental payments. If you are looking to stop rental payments without landlord agreement, we would advise you speak to our Real Estate Team to ensure there are no nasty surprises.
Loan Repayment Holidays
Most high street banks are offering their customers loan repayment holidays to help with cash flow; if you have outstanding loans you should speak to your bank if this is of interest.
We are living in uncertain times and the government is introducing unprecedented support to businesses, but guidance and details are still not clear, and the situation is changing every day. Our Childcare Team is on hand to help, so get in touch if you have any questions.
Thanks to Brabners for their insight. If you want to speak to directly or you have any specific queries, the author of this piece was Simon Lewis and you can find his contact details here: https://www.brabners.com/people/simon-lewis
Stay safe & stay well
24/03/2020 – Temporarily Unoccupied Premises
Further to our update on the 20th March and the Government’s decision last night, we have now managed to agree cover with our insurers, Aviva, in respect of Temporarily Unoccupied premises. Unrestricted cover will apply to premises that have followed Government advice to close temporarily. This cover will stay in place for as long as the premise is closed up to 90 consecutive days.
We appreciate some of our clients are still operating to support Key Workers and others have decided to close their nurseries.
We would firstly like to advise you that there is no need to notify us that your premises have closed temporarily due to the Covid-19 outbreak.
If you have already closed your premises, we appreciate that you will not be able to visit the premises for at least the next 3 weeks.
If you about to close your premises, we would advise you of the following best practices to keep your nurseries protected during this difficult period:
- Heating left on but other critical services powered down if not required, unless to support protection or detection systems
- All external areas must be clear of waste and combustible materials
- Consider waste build-up and the controls needed if waste collection services are affected
- All fire protection, detection, and security systems to remain active and monitored remotely, where possible
- Secure and seal all letter boxes and openings and redirect post, if necessary
- Consideration should be given to accumulation of vehicles, proximity to buildings, and their security when premises are unattended
- Perimeter security, fences and lighting are in good condition and operational
- All physical security and locking devices are working and in place
- All protection and detection systems are operational
- There are no leaking fluids or spills
With more action from the government likely in relation to social distancing and potential for further “lockdown measures” we will continue to review the position, with the insurers. If you have any queries or concerns, please do not hesitate to contact us.
Whilst writing, we would remind you that although some premises are closed, insurance protection is still required in respect of possible fires, burst pipes, thefts, Property Owners Liability. If you are in financial difficulty, our finance provider, Close Brothers Premium Finance, will speak with you about potentially reducing payment for 2 months, moving the additional premium into months 11 and 12, rather than in the 10 months we usually charge in. This is considered on a case-by-case basis and you can call them directly on 0333 321 8566 quoting your loan reference number.
20/03/2020 – dot2dot & Covid-19
Due to the changes that are taking place today, we would firstly like to confirm that if you are staying open to care for key worker’s children, then our policy will continue to provide the relevant insurance.
If you do need to close your nursery following Government advice cover will continue to apply to your premises whilst unoccupied for a period of up to 45 consecutive days. If in the event the premises continue to be unoccupied past this period, it is important that you contact us. We are in dialogue with Aviva to agree how we will manage this situation should it occur.
Turning now to the wider issues, I’m truly sorry that at a time of such immense challenge for you, we cannot provide the answers you want to hear. The outbreak of Covid-19, coronavirus is uncharted territory.
We have always aimed to be a human face/voice of the nursery insurance. Which is why during the past few weeks, we have tried to speak to as many of you as we can to explain the situation in person and over the phone. At the last count, my team had spoken to over 600 nursery professionals. I took the decision to speak to you directly rather than send an email, as the situation has been changing at such a fast pace.
However, as the advice from the Government has moved far beyond what we all anticipated, now is the time to write to explain the current situation and reiterate what we have said verbally.
I wanted to reach out to you as a fellow business owner and be clear about your dot2dot insurance policy and the Covid-19 strain of coronavirus.
dot2dot is backed by Aviva and our policy wording is one of the strongest and most flexible in the sector. However, it does not and will not cover you for closure due to Covid-19.In the latest release from the Government titled Covid-19: support for business, they also offer guidance on Insurance it states “Insurance policies differ significantly, so businesses are encouraged to check the terms and conditions of their specific policy and contact their providers. Most businesses are unlikely to be covered, as standard business interruption insurance policies are dependent on damage to property and will exclude pandemics”.
Why is it not covered by the Business Interruption Section of the policy?
The intention of the Business Interruption Insurance Section of the policy is to cover losses resulting from physical damage to insured property by an insured peril such as flood or fire. In respect of certain industries, such as food, care and leisure, policies are often extended to include interruption to the business due to ‘specified diseases’. The dot2dot policy falls into this category and provides cover for ‘specified diseases’ such as measles, meningitis, chickenpox and rubella.
The reason that policies will not respond to the outbreak of Covid-19 is because it is a new and unknown virus, and the exposure and risk cannot be quantified. Insurers including Aviva apply this restriction, as they have not studied and modelled potential claims for this new virus strain, as they have been able to for the other specified diseases mentioned. Insurers must be able to understand their potential financial exposure in order to meet their solvency and claim obligations to policyholders. We estimate that for each day that the 24,000 nurseries across the UK stay closed, it would cost the insurance sector as a whole, approximately £72 million per day.
There is an article within Nursery World which includes a good explanation as to why insurers cannot cover for coronavirus. I have copied an extract from it below.
‘Insurers use historic data to guide them in terms of the cover they are able to offer and the pricing of it. Where new diseases (or new strains of known diseases) emerge there is, by definition, no historic data available for insurers to be able to predict the potential cost of claims from a UK or worldwide pandemic. The potential therefore exists that if the insurance industry did provide unrestricted cover for a pandemic disease event it would result in their mass failure, leaving policyholders unprotected against other events. It is therefore the case that remedies for issues of this magnitude and extent fall towards the Government to be able to respond on a societal basis.
The Government is telling us to close, why are dot2dot not covering?
The Closure by Competent Authority extension in the dot2dot policy excludes “any action taken in controlling, preventing or suppressing the spread of any disease” (page 32 of your policy wording).
Having had many discussions and multiple meetings with Aviva, insurers are remaining strong on there being no protection. As stated in the figures above, we believe there is a real risk that insurers may fail, as the claims bill globally rises beyond anything ever seen before.
So, what options do nurseries have?
Over the last three weeks, we have been looking for ways that we can help and we have had detailed dialogue with Aviva, who have agreed that dot2dot nurseries can do the following (with appropriate risk assessments in place) and still be covered by their dot2dot policy.
- Care for children whilst running relaxed ratios. EYFS guidance allows for relaxed ratios in exceptional circumstances. The dot2dot policy does not have any conditions in relation to ratios, so you can make appropriate adjustments as long as you meet the needs of all children and ensure their safety.
- Take on older children. If you already operate an out of school club, we are happy for you to extend this to care for key worker children throughout the day. If you do not operate an out of school now, you will need to complete appropriate risk assessments for older children, but cover will be in place.
- Extend your hours, if you are caring for the children of key workers, you can extend your hours to care for children when care is needed, whether that is overnight or in line with key worker shift patterns. Please be aware you will need to comply with some additional conditions. We have agreed this cover being included subject to you complying with these additional points and you can find out more here https://bit.ly/d2dextend
- Offer care in the home. You can consider redistributing your staff as ‘nannies’. These staff can care for the children of two families in one family home. There are of course some strict guidelines on what you need to have in place to do this We have agreed this cover being included subject to you complying with these additional points and you can find out more here bit.ly/d2dhomecare
- Look at your contracts. If you have a lay-off clause in your staff contract you may want to consider invoking this, but we advise to speak to an employment law specialist first. You can speak to BrightHR on 0844 800 7061 or our strategic partners Stephenson’s may be able to help.
- Following guidance from HR Advisors you have most likely started communications with your staff now to try to reduce the stress and worry. If you are concerned about how long you can pay wages for, speak to staff now and explain the situation. If you can pay full wages for 2 weeks but after that, it will have to reduce, be as open and honest as you can. That way staff can budget themselves and will appreciate you being candid. Whilst the nursery is closed, stay in contact with your team, set up a nursery WhatsApp group and send a message as often as you can to keep staff up to date and in the loop.
- If you are in financial difficulty and pay your insurance in instalments, our finance provider, Close Brothers Premium Finance, will speak with you about potentially reducing payment for 2 months, moving the additional premium into months 11 and 12, rather than in the 10 months we usually charge in. This is considered on a case-by-case basis and you can call them directly on 0333 321 8566 quoting your loan reference number.
I am truly sorry that at this time, I cannot provide a complete solution for you all, but rest assured that my team and I are trying our best to support you in any way we can. From one business owner to another, I wish you well in this challenging time and please stay safe.