Businesses risk missing out on Covid grants unless the Government lifts the state aid cap on the amount of help that can be given to each firm, the Beer and Pub Association has warned.
Rishi Sunak, the Chancellor, is to give companies in the retail, hospitality and leisure sectors another £5bn in support to get through lockdown, but Emma McClarkin, the industry group’s chief executive, said some would be blocked from claiming it.
This is a legacy of the UK’s participation in the EU state aid scheme pre-Brexit, she said, which governed the way in which Governments could dish out subsidies to companies.
“State aid has become a big blocker, for pubs particularly within a parent company,” said Ms. McClarkin, speaking at the CBI event. “There is a state aid cap of €800,000 (£690,000), which was raised to €3m, but the EU has raised its cap to €10m, so we are quite a way off that in the UK. There are many people who hit that cap, given the length of time now we have been closed, and it has become a major block for many of our operators.”
The UK has set out plans for a new state aid regime, but, as in many other areas, has so far largely retained rules inherited from Brussels.
Ms. McClarkin added that discretionary grants, dished out by councils, are often difficult to obtain.
Last week The Telegraph revealed that local authorities are still sitting on £1.6bn of funds that were earmarked for struggling companies, including those in the retail or hospitality supply chain but have not been given as much support from central Government as those front-line customer service firms.
Ms. McClarkin suggested a name-and-shame system might prod councils into action.
“Local authorities have been dealing with this with different mechanisms, different processes, and different application forms, and it has been very, very slow in some areas,” she said.
“There were league tables last year which ranked the efficiencies of local authorities in getting these grants to the people who desperately need them. We need to bring those back.
“It is really important people get access to these grants.”
The Federation of Small Businesses said the council system had resulted in “ a complete postcode lottery” for businesses.
“One of the reasons is the sheer amount of paperwork involved for councils, and in some cases, an overly strict interpretation of the guidance. There may be plenty of businesses out there that need help, but because local authorities have strict definitions of who qualifies under their scheme, they still may not be able to get access to the funds,” said Mike Cherry, the group’s national chairman.
“Clearly removing the red tape will be key to releasing this funding. Government needs to make it clear to local authorities that these grants are genuinely discretionary and that they are in control of ensuring the funds are quickly distributed to help businesses survive.”
A Government spokesperson said: “We have published a full breakdown of local authority grants payments to businesses, detailing what each local authority has been provided with and subsequently paid out.
“We continue to urge local authorities to ensure funds are paid out as quickly as possible to those businesses that need it.”
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