The European Commission has now confirmed this week that the UK can apply the revised COVID-19 State Aid Temporary Framework, which includes an increase limit from the original €800,000 per company over three years, to €3 million.
This increase is welcomed by business rates experts at Colliers International, although as John Webber, Head of Business Rates said, “It’s a shame the Government up to now has hidden behind State Aid limits and has not provided the retail and hospitality sectors the monies they have desperately needed to cope with national and local lockdown periods.”
Up to now, due to State Aid restrictions, none but the smallest of businesses were eligible to receive meaningful Government help. Retailers with multiple stores for example were not able to claim enough relief to keep all their stores mothballed and prevent long term job losses.
The new framework has come into play from 8 December, but the timing has meant that many businesses in the retail and hospitality sectors could not apply for sufficient help during the three-month Spring Lockdown nor this recent Autumn lockdown. In fact, the government’s latest national grant scheme for properties required to close (non-essential retail, leisure and pubs), for the period 5th November to 2 December 2020, gave a deadline for application 6 days before the lifting of the State Aid restrictions. As a result, many more businesses have closed, or jobs been lost than perhaps needed to.
From 8 December 2020, the new revised COVID-19 State Aid Temporary Framework applies to the following schemes:
- Local Restrictions Support Grant (Closed)
- Local Restrictions Support Grant (Closed) Addendum
- Local Restrictions Support Grant (Open)
- Local Restrictions Support Grant (Sector)
- Additional Restrictions Grant
- Christmas Support Payment for wet-led pubs
The aid* is granted to businesses that suffered a decline in turnover that incurred during the period between 1 March 2020 and 31 December 2020 of at least 30% compared to the same period in 2019. Companies need to give detailed accounts of their losses. And aid should not exceed €3m per business.
In line with this, Colliers approach would be to give hard pressed companies in the sector what they need to survive and to re-visit and simplify the grant schemes. Colliers suggest that:
- properties with a rateable value of less than £15,000 should receive a grant of £10,000 per property
- properties with a rateable value over £15,000 should receive £25,000 per property
These grants could be funded by monies left over from the original grant scheme (where about a £1 billion was not distributed) plus the business rates windfall from the supermarkets repaying their rates granted during the year’s rates holiday (over £2 billion).
Webber concludes, “The current government grant schemes has become complicated, particularly when combined with regional variations depending where you live in the country - adding to confusion and red tape. Whilst we support the Government in creating grant schemes and are relieved that the limits to receive State Aid have been increased, we campaign for simplicity and immediate help now. We hope the lifting of State Aid rules has not come too late for many hard-pressed retail and hospitality businesses, who may have already made difficult decisions over closing stores and jobs. With the latest news about London entering Tier 3, there is no time to lose if we want to see such businesses survive into the New Year.”
- The aid covers an undertaking’s uncovered fixed costs incurred during the period between 1 March 2020 and 31 December 202
- The aid is granted to undertakings that suffer a decline in turnover during the eligible period of at least 30% compared to the same period in 2019.
- The calculation of losses will be based on audited accounts or official statutory accounts filed at Companies House, or approved accounts submitted to HMRC which includes information on the businesses’ profit and loss
- ‘Uncovered fixed costs must meet the definition set out in the Temporary Framework
- The aid must not exceed 70% of the undertaking’s uncovered fixed costs
- The overall aid to an undertaking under this measure must not exceed €3m per undertaking
- Aid may not be granted to undertakings that were already in difficulty on 31 December 2019
- Aid under this measure shall not be cumulated with other aid for the same eligible costs.
- Local authority do not have to revisit any applications rejected prior to 8 December on the grounds that the business had breached State Aid limits. Fresh applications are required where this is the case
Businesses must be able to provide the necessary documentation to demonstrate they are eligible for funding. Further information on requirements is to be issued by local authorities.