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09 November 2017

Urgent law change needed to help small firms be resilient to terror threat

The Government must act urgently to change the law to help local economies protect themselves in the face of today’s rapidly evolving terror threat, according to a new report out today from the Federation of Small Businesses (FSB).   

The report,Small business as usual – strengthening resilience against 21st century terrorism’, calls on the Government to release the UK terror cover safety net, Pool Re, from outdated law which prevents businesses from insuring themselves against ‘non-damage business disruption’ in the wake of a terror attack. Current rules do not cover loss of trade, or other impacts of modern terrorism.

Alongside this, the Government should introduce emergency resilience measures for businesses affected by terrorism, providing extra financial relief and allowing businesses to delay bill payments to ease the pressure on short-term cash flow.  

The report draws on examples from recent terrorism incidents including the attack at Manchester Arena and on London Bridge, where businesses in Borough Market were forced to close for 11 days costing them an estimated £1.4 million [1].

Alongside a push to raise awareness in the business community about the need for resilience planning, the report sets out how the Government could require regulated utilities, such as banks and energy companies, to introduce a ‘flexibility clause’ in supply contracts to allow small firms to delay payment in the event of a terror attack. FSB is also calling for local authorities to be mandated to give temporary business rates relief to small firms affected by terrorism.

Mike Cherry, FSB National Chairman, said:

“Sadly, terrorism continues to be a regular feature of life in the UK and our thoughts are with all those who have suffered heart-breaking human tragedies following terrorist attacks. Terrorists aim to create loss and disruption to ordinary life, and that means we also need to be as prepared as possible to limit the potential damage on local economies if the worst happens.

“For a small business, the kind of disruption experienced in the aftermath of the London Bridge attack can be impossible to recover from. We need to review how we help small firms to bounce back from terrorist events so that if the worst happens, our communities can make a swift return to business as usual.

“We want small businesses to continue to play their part in defying the current and ongoing terror threat but they need to be supported to increase their resilience. That starts with adapting the outdated law which governs Pool Re so that small businesses can insure themselves against losses due to non-damage business disruption. Ministers acknowledge the gap in insurance cover and today we ask them to act, by updating the law to match the evolving terror threat. Without this, small business livelihoods are at stake. Alongside this, giving business owners some extra time to pay the bills, as well as relief on their business rates, would go a long way towards helping affected businesses back on their feet and able to serve their communities as quickly as possible after a terrorist attack”.  

Julian Enoizi, Chief Executive of Pool Re, said:

“We’re very pleased that FSB has joined us in calling for this important change, a change which we have been discussing with the Government for some months. Small businesses should be given every opportunity to cover themselves against what can be significant business interruption that follows a terrorist attack, even when their own property is not damaged.”

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