Financial Matters
With David Frederick FCCA | Marcus Bishop Associates | marcus-bishop.com
The Financial Effects Of PPE Plus SD Saturday 4th July, saw the celebratory opening of pubs, restaurants and hairdressers subject to adherence to COVID Secure guidelines. However, if we undertake some deep sea diving behind the scenes the reality is less jubilant for business owners and customers. We may have all transitioned or displayed degrees of agility to move to home working mode or whatever is the hackneyed phrase we’ve learnt in the past 14 weeks. Irrespective of terminology we have experienced some language development. How many of us used or thought about or even cared about PPE or SD (sorry! social distancing) before 23rd March 2020? Be honest! These words now occupy a place in our daily lexicon. However what do they mean? I am not about to provide an English lesson. But, to those unfamiliar or who have forgotten, I’ll remind you. PPE is ‘Personal Protective Equipment’. Similarly, social distancing which has occupied lots of air time in recent weeks, be it 1m, 2m or any combination or variation, is all about our new personal space. The reality is, that whilst we were cheering and lifting our glasses to celebrate our pubs reopening on 4th July, the combination of PPE plus SD has been impacting upon our businesses and households. Prior to the COVID pandemic PPE was not a material expense in the costs of business operation. Similarly, it was not prevalent in the minds of households and consumers. This is so clearly reflected in the words of Dr Ravi Rattan the principal of two dental practices, “pre COVID, PPE consumed some 38p in a patient’s treatment cost but post COVID it now consumes some £10 - £12 albeit much higher a few weeks ago.” The staggering impact of PPE in dental care provides a flavour of our new operating environment. A similar experience was displayed 24 | SE21 - August 2020
by a local beauty salon owner, who now levies her clients a fixed fee to cover her investment in additional PPE. Whilst PPE costs may be transferred to consumers via increased fees; the costs of social distancing are not so transferable. In reality, social distancing results in the reduction in customers that can be served. An owner of a small restaurant estimates the impact of social distancing immediately reduces their covers by some 40%-50%. The consequence of which is a reduction in sales, profitability, employment or ultimately business viability. Dr Ravi Rattan further explained, “dental practitioners are unable to levy additional fees to NHS patients due to contractual arrangements. NHS services and patients charges are set by the Government and there is no ability to vary these; and equally additional PPE costs cannot be passed to NHS patients. However fees for private patients can be varied and it is recognised that the added PPE costs are being passed to patients with a fixed fee being applied to private patients in recognition of increasing costs. Local photographer, Claire Ballard from BALLARD Photography explained, “the only part of my business that has been affected by social distancing is my new born shoots - all other areas were socially distanced to some degree before and continuing that is no problem.” Households can rest assured that not all businesses are increasing their prices due to PPE plus SD. Local plumber, Rosie Reilly, who incurred increased spending on PPE, said, “I am not passing these increased costs onto my customers.” Rosie is conscious that some of her domestic customers are already in challenging financial positions. Business owners are managing the financial effects of PPE plus SD on their customers in a variety of different methods in the quest to get the local and national economy moving again. Nevertheless, it is abundantly clear that the social benefits of PPE plus SD will leave households and business financially scarred for some time to come.
