Small businesses are missing out on millions of pounds of emergency grants promised by the UK government as long ago as November, sparking warnings that many will not survive unless access to this cash is unlocked.
Councils have been struggling to distribute the money, including a share of £12bn worth of support first offered last year according to the Local Government Association, due to the volume of paperwork and changes to lockdown regulations.
There have been 10 different tranches of funding to sustain small businesses without the cash reserves or covenants of larger companies through local tier restrictions established in October and the one month lockdown for England that ran from November 5. The schemes also cover support for different regional restrictions in December and the current lockdown in England, which is expected to run until at least February 22.
Anthony Pender, co-founder of Yummy Pubs, a four-strong chain in south-east England, said that local councils had only paid £19,000 of the £111,000 promised in grants since the autumn.
Only one of the four sites had received money available to pubs forced to close under tier 3 and 4 restrictions in October and December, and none of the money from the January offer of up to £9,000 per venue has been paid.
“If we don’t get the grant money by the end of February we are in serious problems,” he said.
Phil Hales, who owns the family-run True Hair and Beauty salon in Gravesend, Kent, said he had heard from his local council last week that grants should be paid early in February — more than six weeks after lockdown rules prevented trading — meaning that he has been forced to use the state-backed Bounce Back Loan Scheme to pay bills and wages until then.
“For me [the pandemic] is the war that I hoped I wouldn’t see in my lifetime, I am willing to fight it, but I didn’t expect to have to buy my own guns and ammunition,” Mr Hale said.
The British Beer and Pub Association estimates that around three quarters of so-called wet-led pubs, which focus on selling drinks, had not received the £1,000 grant promised by the government in December, while half of pubs were still waiting for support offered in November’s lockdown.
Garry Tallent, landlord of the Red Lion pub in Chobham, Surrey, said that he had received a grant created to cover December’s costs last Friday but feared that the £687 he was receiving each fortnight for January’s lockdown barely helped when faced with £8,000 in overhead costs while the pub was closed.
Although local authorities have received the £5bn funding due for the current lockdown, many are still awaiting cash to cover business losses between December 19 and January 5, the period between a revision of the tier system to include the higher tier 4 level and the current lockdown. The Local Government Association said councils were prioritising paying out the larger amounts due for January’s closures.
Local authorities blame the delays on a combination of bureaucracy created to ensure compliance with state aid rules and vet applications for fraud and the slow release of funds from central government.
Craig Beaumont, external affairs chief at the Federation of Small Businesses, criticised the “postcode lottery” for grants. “Some councils have done well, but others are taking weeks or months,” he said “Councils are afraid of making mistakes and want government clarity; while the government insists they should get the money out.”
Officials said that all £4.6bn of grants announced at the start of the latest lockdown had been paid to all 314 local authorities by January 15 — but not all the money from previous grant schemes had been paid yet.
The Department for Business, Energy and Industrial Strategy said: “We are working tirelessly with local authorities, which are responsible for administering grants, to ensure that funds are paid out as quickly as possible to those that need it.”
Additional reporting by Andy Bounds