Finance ยท 19 January 2021

Full details of a new Government lockdown grant scheme reveals cracks

New government lockdown grant schemeDetail of new Government grant scheme revealed ? but many companies still falling through the cracks says experts.

The Government?s new grant scheme may still leave many companies out in the cold, say business rates experts at Colliers International, since unlike the grants announced in the first national?Lockdown in March, office-based businesses are this time not included nor were they in November.

The government has now issued full guidance to confirm the business support package for the January lockdown in England, which is geared at businesses mandated to close (i.e. non-essential retail, leisure, personal care, sports facilities and hospitality businesses) due to national restrictions from 5 January 2021.

While?John Webber, head of business rates at Colliers International thinks?it is good to see the details of the scheme in England confirmed and we are pleased that the Government has decided to support those businesses that have had to close due to the lockdown, “there are still many wrinkles,” he says.

  • This is unlikely the first lockdown grant scheme as there is little support for office -based businesses. The government seems to assuming that office-based businesses can work from home/remotely- but many will still see a massive disruption to their business practices.
  • Some businesses ? such as?those in serviced offices without their own rates bill in some areas such as the City of London did not receive any grants from the first grant scheme.
  • The grant applications are difficult to fill in and many businesses are?struggling to complete applications due to the amount of supporting information required.
  • The Discretionary Grants are to some extent a post code lottery- with some?boroughs processing grants at much greater speeds to others. Some local authorities are requesting differing levels of evidence to others – and different boroughs are deciding which?businesses to prioritise.
  • Although the UK has now left the EU and the EU state aid rules no longer apply, the UK remains bound by international commitments and the guidance advises that local authorities can still pay out subsidies (grants) under the State Aid Temporary Framework (up to ?3m) until further guidance on subsidy control related to these schemes is issued.
  • There is a shortage of administrative staff in many local billing authorities to process the grants. With shortages already prevalent as a result of Covid-19, the situation has been made worse by the government?s failure to pronounce on its business rates policy after the end of March, when the business rates holiday for the retail and leisure sector comes to an end.

?The failure to announce whether the struggling retail/ hospitality/ leisure sector will see an extension of its business rates holiday after the end of March means that local?billing authorities will need to be getting their systems ready now with a view to sending bills early March,” Webber says.

“However, the people who will be dealing with this are often the same people who are now struggling under the weight of distributing a new grant scheme.”

“We urge the Government to say something quickly and extend the business rates holiday for this sector post March– or they will be giving out grants with one hand but taking it back for rates payments with the other- an economic as well as an administrative headache.?

?The first national lockdown grant scheme which ended in August last year, still had over a ?1billion left to distribute before the scheme closed. Let?s hope local authorities can be more efficient this time, but I am afraid the odds are stacked against them?.

Full detail of the grant scheme

The following grants will be provided:

  1. Closed Business Lockdown Payment (CBLP)? one-off top up grant
    1. ?4,000 for businesses with a rateable value of ?15,000 or under
    2. ?6,000 for businesses with a rateable value of between ?15,000 and ?51,000
    3. ?9,000 for businesses with a rateable value of over ?51,000
  2. Local Restrictions Support Grant (Closed) (LRSG Closed Addendum) ? usual 14-day cycle will move to a 42-day allocation
    1. ?2,001 per 42-day qualifying restriction period for businesses with a rateable value of ?15,000 or under
    2. ?3,000 per 42-day qualifying restriction period for businesses with a rateable value of between ?15,000 and ?51,000
    3. ?4,500 per 42-day qualifying restriction period for businesses with a rateable value of over ?51,000
Eligible businesses are those mandated to close with rateable values in the local rating list as shown above on 5 January 2021. Businesses must have been trading the day before the national restrictions came into force unless they were forced to close due to local tier restrictions.

Businesses that can operate their services effectively remotely, and which have chosen to close rather than being mandated to, in administration or exceeded state aid/subsidy limits, are ineligible.

The applications for the grants will close on?31 March 2021 so that final payments can be made by 30 April 2021.

The government has also provided a further ?500 million for local authorities to provide through the ?Additional Restrictions Grant (ARG)? and can be used in financial years 2020/21 and 2021/22. The ARG is a discretionary scheme designed by each local authority but may include:

  • businesses outside the business rates system
  • businesses which supply hospitality, leisure or retail sectors
  • businesses in the events sector
  • larger businesses important to the local economy
These grants are in addition to the ?November lockdown? and various Tier 2/3/4 restrictions for forced closures. Additional discretionary grant schemes remain available where businesses have remained open but ?severely impacted? (generally aimed at hospitality, hotel, B&B and leisure) and sector specific closures (nightclubs etc).

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Praseeda Nair is the editorial director of Business Advice, and its sister publication for growing businesses, Real Business. She's an impassioned advocate for women in leadership, and likes to profile business owners, advisors and experts in the field of entrepreneurship and management.