Charities losing out on millions in pandemic support after state aid confusion

01 Mar 2021 News

Charities are losing out on millions of pounds in government support because they are unable to access vital lockdown grants, experts have warned.

The Charity Retail Association (CRA) and Charity Tax Group (CTG) said that the government is following old EU state aid rules on capping emergency grants available to charity shops, even after the EU amended those rules to become more generous.

They have urged the chancellor to use this week’s budget to resolve the uncertainty.

Applying EU caps

Trading charities and other high-street businesses are entitled to lockdown grants to offset the financial impact of coronavirus restrictions.

The CRA and CTG said that these grants had been capped at €1m per organisation, rising by another €3m if other conditions are met, based on European Union state aid rules.

Last year the EU increased the cap to €1.8m and €10m respectively, the organisations said, but the government is still applying the older, lower limit.

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

The CRA and CTG said in a statement: “There is no reason why the UK government cannot deliver greater support to the UK high street.”

They warned that charities are also missing out on support because some local authorities, which are responsible for the grants, are unsure which high street businesses qualify for lockdown grants. 

CRA: Application of old rules is 'inexplicable'

Robin Osterley, chief executive of the CRA, said: “As many as half of the UK’s charity shops are unable to access vital lockdown grants due to the inexplicable application of EU state aid limits which the EU itself no longer applies. 

“This is an issue that needs urgent attention if the UK chancellor is going to fulfil his commitment to do ‘whatever it takes’ to support the country through this crisis. 

“We are calling on the chancellor to use the Budget next week to help support the future of the high street for future generations.”

Help in the budget

Richard Bray, acting chair of the CTG, said: “All high street charity shops are in need of support. Lockdown grants are a perfect opportunity for the chancellor to recognise this.  

“It would be a tragedy if dithering over EU state aid rules that no longer apply to us should scupper access to what will be a lifeline for many charities.  

“We just hope that the chancellor will have the foresight to recognise this.”

The CRA has estimated that charity shop closures cost the sector £28m every month during lockdown, before government support.

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