Latest government grant scheme: Light at the end of the tunnel on state aid restrictions?

The Government’s latest grant scheme may miss the mark if it is aimed to prevent major employers from cutting jobs, according to John Webber, Head of Business Rates at Colliers International- unless the EU follows through on proposals that State Aid restrictions* are lifted and change is implemented.

The English Government’s latest scheme of grants for forced closures due to national and local Lockdowns were issued last week. Unlike previous schemes which were aligned to those in receipt of Small Business Rates Relief or Retail Relief, there is now very specific criteria for most schemes for those forced to close or “severely impacted”. On a national level the following grants will be made available for the period 5th November to 2 December 2020 for properties required to close (non-essential retail, leisure and pubs). This excludes businesses that can trade online or those who chose to close:

  • Rateable value: £15,000 or less: could receive £1,334 for 28 days lockdown
  • Rateable value between £15,000 and £51,000: could receive £2,000 per 28 days lockdown
  • Rateable value over £51,000: could receive £3,000 per 28 days lockdown.

Grants have also been confirmed for local lockdown criteria for businesses required to close or for those still open, but severely impacted.

And there is a Discretionary scheme for local authorities to design as they see fit- to help businesses outside the business rates system. These may include businesses which supply the hospitality, leisure or retail sectors, businesses in the events sector, and larger businesses important for the local economy. Details are still to be revealed.

Businesses in Wales and Northern Ireland have different variations of the scheme. At the moment Scotland does not appear to have any open grant schemes, but we understand this position might change.

John Webber comments: “The grant system is becoming even more complicated- particularly when combined with regional variations depending where you live in the country- adding to confusion and red tape.”

“However, our main concern is that the scheme could still be geared to smaller businesses, since unless State Aid limitations are lifted, little support will be  given to the bigger businesses- and these are the ones that will be shedding jobs.”

He continued, “State Aid rules as they stand currently remove all but the smallest businesses from meaningful Government’s help. Retailers with multiple stores for example would not be able to claim sufficient relief to keep all their stores mothballed and prevent long term job losses.”

Webber’s statement comes at a time when unemployment has now reached a new four year high at 1.6 million.

There is however some light at the end of the tunnel. Webber continues: “We understand that the European Commission has announced further flexibility on the limits to State Aid via their “Temporary Framework” and that State Aid originally set at Euros 800,000 per company is due to  increase to Euro 3 million. This increase will apply to companies facing a declining turnover (at least 30% compared to the same period of 2019) due to the coronavirus outbreak and will be subject to certain restrictions.

“Should this go ahead,  it will be a massive sea change. We are waiting for the detail. But so far the outlook on this aspect of policy is looking hopeful. Whilst we are supportive of the Government grant scheme – State Aid restrictions have always been a limitation to those bigger employers who actually control jobs. If the Government has genuinely succeeded in persuading the EU to allow the grants to be outside of State Aid restrictions, meaningful amounts can be given to encourage businesses to keep their stores mothballed, until they can open again- and to keep staff on their books.”