State aid cap upped to £10.9m

The state aid cap on government grants has been raised to £10.9m, Paul Scully, the minister for business, consumers and labour markets has confirmed.

In an announcement on Twitter earlier today (4 March), Scully said the Government will continue to back businesses “of all sizes” through the pandemic, and he was “delighted” to see the cap on support grants extended.

“Extending our support will help retail and hospitality chains and the thousands of staff they employ,” he said.

The move will see the cap increase by over £7m, from its current level of £3.5m, allowing several larger businesses across hospitality to access funds through the Chancellor’s new £5bn restart grant scheme.

The scheme, outlined by Rishi Sunak in yesterday’s Budget, will come into place in April, with hospitality businesses able to apply for up to £18,000 per premises to support them through the recovery period.

As with previous grant schemes, funds will be allocated based on premises rateable value. Those with a rateable value of £15,000 or under will receive £8,000, rising to the full £18,000 for properties with a rateable value of £51,000 or more.

Last month, it was reported that ministers planned to scrap limits on state aid – as stipulated by EU legislation – though following a decision within the EU to raise the maximum amount of support a single business could receive to €10m, UK rules remained largely unchanged.

Following the Budget announcement, calls for a scrap or raise in limits were reignited, with several sector leaders including Greene King chief executive Nick Mackenzie and Mitchells & Butlers CEO Phil Urban highlighting the plight of larger businesses unable to access sufficient support.

Mackenzie urged Government to “urgently” clarify whether funds would be affected by state aid, whilst Urban spoke of the frustration of many businesses who were continuing to suffer because of caps post-Brexit.

“The irony is not lost on us that we were capped within Europe,” he said. “Then when we leave, they choose to keep us in the state aid cap. Meanwhile Europe increased their state aid to 10m, or 12m euros.”

Responding to the raise, UK Hospitality CEO Kate Nicholls said it was “positive news”, and ”will will allow more businesses to access the grants that they so desperately need”.

”While this cut-off means that some businesses will continue to miss out on parts of the funding that Government has announced, it is a big step forward and provides certainty for business,” she said.

“We urge Government to take the same pragmatic and sensible approach to rates relief as with subsidies and review their approach on business rates support.”