Local Government Finance: Coronavirus

Treasury written question – answered on 11th June 2020.

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Photo of Rachael Maskell Rachael Maskell Shadow Minister (Digital, Culture, Media and Sport)

To ask the Chancellor of the Exchequer, what steps he has taken to ensure that local authorities distribute funding from Government grant schemes equitably.

Photo of Kemi Badenoch Kemi Badenoch The Exchequer Secretary, Minister for Equalities

The Government has provided Local Authorities with detailed guidance and FAQs to support them in distributing Small Business Grants and Retail, Hospitality and Leisure Grants to eligible businesses.

The Small Business Grant Fund (SBGF) and the Retail, Hospitality and Leisure Grant Fund (RHLGF) have been designed to help the smallest businesses, and small businesses in some of the sectors which have been hit hardest by the measures taken to prevent the spread of COVID-19.

The Government judges that the eligibility criteria for the Small Business Grant Fund and the Retail, Hospitality and Leisure Grant Fund are fair. Both schemes are targeted at small businesses facing high fixed property-related costs. Small businesses are in particular need of support because they are less likely than larger businesses to have sufficient cash reserves to meet these costs. In addition, the RHLGF provides enhanced support to small businesses which occupy properties that are likely to be particularly affected by COVID-19 due to their reliance on customer footfall.

In order to ensure that payments can be made quickly and efficiently to small businesses facing particularly high fixed property-related costs, eligibility for the RHLGF and the SBGF has been linked to the business rates system. However, the Government is aware that some small businesses have found themselves excluded from these grant schemes because of the way they interact with the business rates system. That is why the Government has allocated up to an additional £617 million to Local Authorities to enable them to give discretionary grants to businesses in this situation. The Government’s intention is for Local Authorities to prioritise the following types of business when making discretionary grants, as these businesses are likely to face some form of fixed property-related costs:

  • Small businesses in shared offices or other flexible workspaces, for example industrial parks, science parks, incubators etc, which do not have their own business rates assessment;
  • Regular market traders who do not have their own business rates assessment;
  • B&Bs which pay Council Tax instead of business rates; and
  • Charity properties in receipt of charitable business rates relief which would otherwise have been eligible for Small Business Rates Relief or Rural Rate Relief

Local Authorities may choose to focus payments on those priority groups which are most relevant to their local areas. Local Authorities may also choose to pay grants to businesses outside of these priority groups, according to local economic need, so long as the business was trading on 11th March, and has not received any other cash grant funded by central Government (with the exception of grants from the SEISS).

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