Councils sitting on £1.4bn in Covid-19 grants due for businesses

Simon Neville, PA City Editor

Thousands of business owners are struggling to access much-needed funds from local authorities with councils failing to hand out £1.6 billion in funds, according to new data.

The Events Industry Alliance (EIA), which represents the UK’s event organisers, venues, and suppliers, submitted Freedom of Information requests to the 314 councils across England who are responsible for distributing the Additional Restrictions Grants (ARG).

Extra funding worth up to £3,000 per month per company had first been announced by Chancellor Rishi Sunak at the end of October, with £1 billion pledged. A further £594 million was allocated last month.

Lockdown and restrictions have seen stores, pubs and exhibitions cancelled
Lockdown and restrictions have seen stores, pubs and exhibitions cancelled (Stefan Rousseau / PA)

But of the 40 councils that responded to questions, just 13% of the money had been handed out. Extrapolating out the figures suggests councils are still sitting on around £1.4 billion, the EIA found.

Companies entitled to the funds include retail, hospitality, and leisure sectors, health centres as well as events and exhibitions businesses.

The data revealed that the figure was even lower for some local authorities – including Bristol City Council handing out £965,000, or 7%, of the £13.4 million allocated, Manchester City Council only £1 million, or 6%, of £16.6 million available and North Tyneside giving £586,000 of a £6.1 million pot to local firms – or 9.6%.

Some local authorities, such as Ealing Council who received £9,872,400 in ARG funding, had not made any payments as of January 26.

Of those councils that responded, only South Lakeland District Council had handed out more than half the funds it received – with £2.1 million of a £3 million pot distributed – 68%.

Andrew Harrison, a director at the Event Supplier and Services Association (ESSA), which is part of the EIA, said: “It is deeply concerning that local authorities appear not to have paid out 87% of the emergency funding first given to them by the Government nearly four months ago.

“Banks stepped up to the challenge with the bounce back loans schemes they administered, with many making payments to eligible businesses rapidly and we urge councils to show the same urgency.”

The bounce back loan scheme, which launched last April, allowed businesses to borrow up to £50,000 and was 100% backed by taxpayers.

At the time, the Government relaxed rules around checks that needed to be made on businesses before the cash was handed out, meaning some applications were processed within 24 hours.

Mr Harrison called on the Government to do more to ensure ARG funds are received faster with Covid-19 restrictions remaining in place.

He said: “We are making an urgent call on the UK Government and local MPs across England to provide clear guidance to local authorities on issuing the Additional Restrictions Grant, in order that payments are made to eligible companies as soon as possible.”

Chris Stewart, the boss of exhibition business Smart Display, based in Brighouse, West Yorkshire, explained the firm applied to its local authority, Calderdale Council, for £2,000 a month in ARG payments soon after the scheme was launched.

But despite an early application, the company, which previously saw annual revenues exceeding £1 million before Covid-19 forced the closure of the sector, has still received no funding.

Mr Stewart said: “While we are very appreciative of the measures that have been put in place by the Government, such as the Coronavirus Job Retention Scheme and the deferral of VAT payments, a source of constant frustration is the running battle we have to endure with our local council to receive the additional support that we are due.

“We are hugely frustrated that this money simply is not getting through to the companies who need it the most and that support that is being targeted for us is simply being held onto by the local council.”

Other sectors, including the drinks industry, have already raised issues around failures by local authorities to process payments and some councils have even failed to provide the necessary information to local businesses on their websites.

A spokesperson for the Department for Business, Energy and Industrial Strategy (BEIS), which is overseeing the grants, said: “All of the £1.6 billion in Additional Restrictions Grants funding has been paid to Local Authorities.

“We have already issued clear guidance to Local Authorities, which are responsible for administering grants, and are working tirelessly with them to ensure that funds are paid out as quickly as possible to those that need it.”

The department was unable to provide an exact figure for how much money has not been paid out by councils, adding that the amounts paid out to businesses through Covid-related support schemes will be released “in due course”.

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