Decision details
Approval of amendments to the Discretionary (Covid-19) Business Grant Fund
Decision Maker: Director of Economy and Place (Historic)
Decision status: Recommendations Approved
Is Key decision?: No
Is subject to call in?: No
Purpose:
The Small Business Grant Scheme and the Retail
and Hospitality and Leisure Grant Scheme did not address all
businesses with fixed property costs as it could only provide
grants to businesses that were ratepayers. Government therefore
made an additional allocation of 5% of the previous schemes total
available to local authorities to operate a Discretionary Grant
Scheme.
Government provided mandatory criteria for the scheme and a strong
steer on what the funds should be primarily and predominantly used
for. Government, also asked local authorities to prioritise the
following four groups for these awards:
• Small businesses in shared offices or other flexible
workspaces, who do not have their own business rates
assessment;
•
• Regular market traders with fixed building costs, such as
rent, who do not have their own business rates assessment;
•
• Bed & Breakfasts 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.
The council therefore made a decision to focus on the government
priority sectors during a first funding round and subject to the
availability of funds, widen the scope of the criteria for future
funding rounds utilising the discretion provided by Government. For
the council’s first funding round, the award calculation
rationale was devised to reflect 6 months of property costs
(reflecting the anticipated lost trade) multiplied by half of the
businesses FTE employees (as a proxy for the wider overheads of the
business).
The scheme criteria were developed in consultation with the council
finance teams who had developed experience through their
administration of the other government Covid-19 support grants. In
addition district audit were consulted to ensure that the scheme
criteria could be demonstrated to be equitable and auditable.
The scheme was launched on the 15th June and closed on 29th June.
This round of funding attracted exactly 200 applications. Of this
total approximately 37% were rejected at assessment stage because
the applicants were ineligible. Principal reasons for ineligibility
included:
• Businesses with property related costs over the
£15,000 threshold.
• Businesses who had already received support via the
governments other grant schemes.
•
• Home based businesses who did not have fixed business
property costs.
During the initial funding round officers became aware of the lower
than expected number of applications and instigated paid for
advertising content with the Hereford Times on their website, and
paid for targeted adverts via Facebook.
This additional advertising supplemented initial communications via
the council’s communications team, press releases, social
media content, emails and letters to major partners such as the
Chamber of Commerce, Hereford BID, and Federation of Small
Businesses, and direct emails to over 4,000 businesses on the
Economic Development team’s CRM system.
The council webpage for the Herefordshire Coronavirus Discretionary
Grant Fund received around 1,900 unique hits with around 10% of
these applying during the application window.
Based on evidence from a number of sources initial estimates
indicated circa 600 businesses may have been eligible to apply in
the initial round of funding based on the criteria. The actual
approval rate is circa 23% of eligible businesses.
The above information suggests that significant numbers of
businesses were aware of the Discretionary Grant Scheme but on
viewing the scheme criteria it is considered they either found
themselves to be ineligible or viewed the process as too onerous
for the anticipated level of grant award. The lifting of Covid-19
restrictions for many of the eligible sectors may have meant that
some businesses were focusing on re-opening rather than on this
opportunity.
that the minimum grant award is increased to £2,000, with the
maximum grant of £10,000 is retained and the calculation
amended as follows:
As indicated above 125 awards will be made. It is therefore
calculated that under the initial criteria the grant scheme would
allocate around £440,000 during this funding round with
£2,760,000 funds remaining.
The remaining funds provide the council the opportunity to consider
how the scheme can be extended so that businesses in a greater
range of circumstances or that have missed out on other funding,
can be supported. In addition, there is the opportunity to consider
how funding awards could be increased to reflect the feedback from
businesses that they will be disrupted for a much longer period
than the six months that was previously considered. Additionally
the business applicants are demonstrating a wider set of overhead
costs than is eligible through the scheme (mortgage, rent, licence
or pitch fees).
It is proposed
Property costs (rateable value, rent or mortgage repayments) x 50%
of FTE employees = Grant award
This change to the calculation and minimum award, applied to the
first funding round increases total awards from approximately
£440,000 to £640,000.
It is also proposed that for future rounds the scheme eligibility
criteria is amended as follows:
1. B&Bs without rent or mortgage costs to be eligible for the
fund and receive the minimum award;
2. Charities are able to include evidenced volunteer time in the
calculation of Full Time Equivalent (FTE) employees to be capped at
the cumulative total of 4 FTE volunteers;
3. Businesses with a business rates assessment for a hereditament
with a rateable value of over £15,000 and up to £51,000
and that have not received a previous grant will be eligible and
receive the maximum grant;
4. Proportionately raise the property costs (rent or mortgage)
limit for businesses without rates assessment in the four priority
categories up to £51,000 to reflect point 3; and
5. Should the scheme become oversubscribed in any new funding round
all grants within that round would be reduced on a proportionate
basis.
The recommended changes to the application criteria would evolve
the scheme by maintaining virtually all of the existing criteria
but also directly address some of the points identified
above.
The first two proposals are small amendments to address anomalies
in the original criteria reflecting the norms for these types of
businesses that have become apparent during the first funding
window. It is not considered that they will have a significant
impact on demand or the budget.
Proposals three and four reflect the demand from a number of small
businesses not in the Retail, Leisure and Hospitality sectors that
have been significantly impacted by the Covid-19 situation.
Businesses in this group, include those in sectors such as
manufacturing, wholesale, construction and professional services
that have seen a large impact to their businesses from the Covid-19
crisis. These businesses are also likely to provide significant
employment and be important links within local supply chains.
Providing grant support to these businesses’ fixed property
costs may help them survive and retain employment and the wider
economic benefits they offer.
Whilst the threshold for the property costs criteria would be
raised to £51,000 the grant itself would be capped at
£10,000 to ensure those supported in the original funding
round are not disadvantaged and to reflect the government criteria
which says grants can be given out below £10,000, at
£10,000 or at £25,000.
Applications to these elements of the grant will be sought via an
open funding round within which funding decisions are taken every
fortnight on all applications made within that period. The funding
round will remain open until all funds are allocated. If in any two
week period the applications approved exceed the remaining funding
then all funds awarded within that period are reduced
proportionally. The funding decisions can be taken more frequently
than every fortnight if required.
Unique Circumstances Fund
It is apparent from queries received by the team that there are a
number of businesses that are not eligible for any government
support and are significantly impacted. There are cases where
anomalies in scheme criteria are meaning that businesses that would
otherwise have received support are ineligible for often illogical
and/or unfair reasons.
Developing a Unique Circumstances Fund, ringfenced at 20% of the
total budget, would allow officers to address those obvious
anomalies – subject to the business meeting all other usual
eligibility criteria, and address support for key sectors unable to
access other government funds for example cultural businesses such
as theatres.
The principle and the size of the Fund are included in this Record
of Officer Decision, the detailed criteria against which
applications to the fund will be judged will be drawn up by
officers in consultation with Cabinet Members. If required a
further Record of Officer Decision will be taken recording the Fund
criteria and the awards approval process.
Contact: Nick Webster, Economic development manager Email: nwebster@herefordshire.gov.uk Tel: 01432 260601.
Publication date: 30/07/2020
Date of decision: 27/07/2020
Accompanying Documents: