Government u-turn on business grants signals millions more for charities

08 Mar 2021 News

Charities could be eligible for millions of pounds in additional coronavirus grants, following a government u-turn on business support.

Some charities will now be able to access grants of up to £9m, after ministers raised the amount available to business affected by the national lockdown. Charity leaders last week criticised the government for its “inexplicable” decision to cap grants at a lower level using old state aid rules. 

The Department for Business, Enterprise and Industrial Strategy confirmed the change after last Wednesday’s budget, which will affect charity shops and voluntary organisations relying heavily on trading.

The Charity Tax Group and Charity Retail Association, which led the sector’s campaign to change the cap, said the new rules will help organisations “bounce back” when restrictions lift.

Money through local councils

The change means that trading charities, in common with other businesses, can now claim up to £1.9m in grants to meet uncovered fixed costs, up from €1m (approximately £860,000).

In some circumstances they will be able to apply for an additional £9m, up from €3m (approximately £2.58m).

The grants will be made through local authorities, and campaigners are calling on BEIS to ensure the changes are made swiftly and money reaches charities as quickly as possible. 

Higher state aid cap

The lockdown grants were introduced when the pandemic began, to offset the financial impact of coronavirus restrictions.

The government had previously used European Union state aid rules to cap the grants, but applied an older, lower limit even after the EU raised its cap. The new rules bring UK grants in line with existing EU guidance.

The UK is partially following EU rules while developing its own state aid legislation after Brexit.

'The government has listened to us'

Robin Osterley, chief executive of the CRA, said: “This change is great news for charity shops and the charities they help support. 

“The previous cap on the maximum amount one charity could receive meant many thousands of charity shops were being denied any business grant support which was putting the future of shops at risk. 

“This announcement unlocks millions in additional Covid-19 grants to support charity shops to bounce back from the lockdown.” 

Richard Bray, acting chair of the CTG, said: “We are pleased the government has listened to us.

“For charities with large property portfolios in the retail, hospitality and leisure sectors, this will be worth up to £1m and possibly more. It will provide essential support at a time of great financial difficulty. 

“It is now crucial that local authorities allow charities to make claims as soon as possible as there are deadlines for claims to be made at the end of March and May. We will do all in our power to make sure that happens.”

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