Home Business Insights & Advice Less than 25% of Local Authorities paid out their full grants from the Covid Relief Fund

Less than 25% of Local Authorities paid out their full grants from the Covid Relief Fund

by LLB Finance Reporter
13th Feb 23 9:45 am

According to the latest Government allocation report, hundreds of businesses promised business rates relief through the £1.5 billion Covid-19 Additional Relief Fund (CARF) did not received support despite government promises in March 2021- as distribution of the fund appeared to descend into a post code lottery.

According to latest figures recently revealed by the government, up to and including September 2022, £1.197 billion (or 80%) of the £1.5 billion fund announced in March 2021 had been allocated to businesses, with 230,540 hereditaments (properties) awarded relief across England. This means 20% of the fund had still not been allocated as of the deadline allocation date. (30 September 2022).  Even with any late awards on the deadline date, which have not been included in the figures announced, the scheme appears to have been vastly under allocated- meaning many businesses have missed out.*

Of the £1.197 billion paid out, £439.6 million has been distributed to businesses in the offices sector, £299.2 million to those in factories/industrial and £259.9 million for warehousing, storage and distribution.

The CARF scheme was announced in March 2021 following the government’s unprecedented step in announcing that businesses impacted by Covid-19 would not be able to appeal their business rates on grounds of a Material Change of Circumstance (MCC)- a move that was lambasted by the rating profession at the time and put paid to the hopes of hundreds of thousands of businesses who had started the appeals process against their rates bills, on the grounds of the impact the pandemic had had on their businesses.

Instead, the new £1.5 billion relief fund was announced to be for those businesses affected by Covid-19, outside the retail, hospitality and leisure sectors, and would be distributed by Local Authorities to “get cash to affected businesses in the most proportionate and equitable way”.

According to Colliers and others, this new fund vastly under-estimated both the size of the problem and the capability of local authorities to pay out in an efficient and consistent way and the system was continually mired in bureaucracy and delay.

According to Colliers Head of Rating John Webber, this was because the government allowed local authorities discretion to allocate funds as they saw fit rather than provide a standard guidance for allocation and distribution. This created “carnage” and a “postcode lottery”.

Webber points out that the system was particularly difficult for any business with multiple sites, having to manage multiple schemes each with its own criteria, exclusions, varying evidence and information requests and deadlines.

The latest figures reveal that 75 local authorities had paid out all of their grant allocations, as of September 2022, but this only represented less than 25% (24.3% ) of the 309 local authorities in England.

In terms of individual local authorities, the biggest distributor by far, according to the September 2022 statistics released, was Westminster Council paying out £87.3 million to local businesses,(98% of allocation) followed by the City of London, £57.8 million (90% of allocation), Birmingham £28.5 million (95% of allocation) and Tower Hamlets £26.4 million (100% of allocation). However, although Camden Council has paid out £27.7 million to businesses, this was only 70% of its grant allocation, and similarly Manchester’s pay out £15.9million was only 66% of its allocation.

There are also 22 local authorities that still had not paid out anything as of September 2022, only six of which stated their schemes had been approved. Among these 22 are Kensington & Chelsea, Lewes, Northwest Leicestershire, Stratford upon Avon, Watford and Torbay.

It is however possible that some local authorities did not make their determinations until the 11th hour of the deadline date and had not sent their returns to Government – highlighting the complexities, bureaucracy and delays by using this methodology to distribute the fund.

John Webber concludes, “The picture is a disgrace. Eighteen months on from the time businesses were denied their right to appeal their business rates, one fifth of the allotted £1.5 billion had still not been allocated to such businesses, despite the passing of the allocation deadline date. Part of this will no doubt be down to some of the Local Authority’s policies being incredibly complicated and rigid and part maybe due to some ratepayers having to decline due to subsidy issues, an issue that would not have applied had the relief been given under the MCC rules.  It has been a nightmare for all concerned- from local authorities to ratepayers and those who manage on their behalf.”

One can only conclude that it would have been a much different and better picture for businesses if they had been allowed to appeal their rates bills under the MCC rules”

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