Anomaly in London- Businesses in City and Westminster due to receive only one third of grants allocated to businesses in Cornwall
Business rates experts at Colliers International are concerned about the lack of urgency many Local Authorities are showing in paying out much needed grants to businesses, during the COVID-19 pandemic and about how fairly many these have been allocated.
According to latest data published by the Government, five weeks after the grants were announced, 38% of the amount allocated to Local Authorities to pay to businesses has not yet been paid out. The 62% paid represents £7.6 billion of the £12.33 billion- an increase from the 49% figure of paid out grants announced last week.
Colliers has analysed the percentage of grants actually paid to businesses compared to what the local authorities have been authorised to allocate and have found massive discrepancy across the country:
- The most efficient place in the country in paying out its allocated grants is the London Borough of Ealing which has paid out £64 million or 94% of the £68.2 million which it has been allocated to distribute.
- One of the worst places is Sandwell Metropolitan Borough Council which has paid out less than a quarter of the grant monies allocated- just £17.27 million of a total allocation of £73 million which is 24%.
Other findings Colliers has discovered analysing the tables is:
- Of the major cities, Birmingham City Council and Manchester City Council have been particularly slow in handing out much needed grants and have distributed only 37% each.
- Birmingham City Council had £231.58 million to allocate. So far it has given out £86.1 million. Sitting next door to Sandwell, highlighted above, it is clear small businesses in the West Midlands can feel particularly aggrieved.
- Manchester City Council had half the number of grants to distribute as Birmingham - £121million- of which it has so far allocated only £45.3 million.
- The UK’s cities vary widely as to how successful they have been in allocating their grants. Cities who beat the national average include Cambridge (78% distributed), Reading (74%), York (84%), Newcastle (71%), Bristol (76%) and Leeds (69%). However, Slough (28%), Nottingham (49%), Manchester (37%), Sheffield (49%) have still paid out less than half their grants. Along with Liverpool at (55%) they still have some way to go.
- The Council with the biggest allocation of grants to hand out is Cornwall Council – with £281.45 million to allocate to 23,828 properties (of which it has allocated £194.825 million or 69%.) This implies that there are more small businesses and retailers claiming rates relief in Cornwall than in any other part of the country. To quote John Webber, Head of Business Rates at Colliers International “That’s a lot of holiday homes businesses!”
- Although Westminster City Council appears to have been efficient handing out 93% of its grants, it only had £78 million to distribute to a total of only 4,536 businesses -of which £72.79 million has been given out. And the City of London’s numbers are even more extraordinary -with only 968 businesses eligible for the grants or £14.74million to allocate, or which 81% has been distributed.
According to John Webber, “The implication here is that there are more businesses eligible for grants in Cornwall than there are in the City of London and Westminster combined. If there was ever evidence that more small businesses and retailers in London are falling between the cracks in the process of grant allocations - this is it.
“Many have been cut out of consideration because the criteria for grants is based on business rates and given the high rents (and thus high rates) in London, many businesses in London do not qualify for relief at all, whereas they probably would do if they were based in other part of the country.
“In addition to this there are small businesses in serviced offices who have been missed out of the grant allocation, purely because of the way they pay their business rates.”
The COVID-19 Grants, announced on March 24th were designed to cover a business’s fixed costs and promised:
- A grant of £10,000 for all businesses in receipt of small business rates relief or rural rates relief.
- Businesses in retail, leisure and hospitality to receive a grant of £10,000 if they have a rateable value up to and including £15,000 and a grant of £25,000 with property with a rateable value between £15,000.01 and less than £51,000. This is paid per property.
Colliers has been campaigning that purely using the business rates system as a means of allocating the grants has meant thousands of small businesses have missed out. The firm has also written to the Treasury to show flexibility to those SMEs that rent space in serviced offices, who usually pay one fixed all-inclusive monthly service agreement to their office provider to cover rent, rates and service charges, and therefore do not have an individual businesses rates assessment.. As a result, many such companies are thus not eligible for their much-needed grants.
Webber concludes: “Small businesses are the lifeblood of the economy and in these difficult times, many are struggling to stay solvent. Without the grants on offer, even more will go under. We urge Local Authorities to dish out the grants more efficiently and quickly. A week ago, less than half (49%) of grants had been issued. Whilst it’s good to see this figure is now above 60%, it is now over five weeks since the grants were announced. In these turbulent times, five weeks is an awful long time to be without funds and for nearly 40% of grants not to be distributed. Those boroughs with the lower percentages must improve efficiency.”
“We also urge the Government to close the anomaly where more businesses in Cornwall are able to receive grants than those in Westminster and the City combined, by threefold. Whilst we have nothing against holiday let businesses or second home owners who make their properties available to let and thus can claim small business relief, this should not be at the expense of retailers, SMEs and entrepreneurial firms in the capital, many of whom we are going to need to survive if our economy is going to pull out of recession.”