Business frustration grows as Covid grants stick to EU state aid rules
Business leaders have called on the Government to diverge from certain EU state-aid rules that are blocking hundreds of millions of pounds in Covid grants getting to struggling companies.
Helen Dickinson, chief executive of the British Retail Consortium, said ministers should "look again" at the decision, which, if changed, "could provide a lifeline to many businesses that have been forced to close because of Covid restrictions".
She added: "It’s bizarre that EU state-aid rules are standing in the way... of financial support that will protect jobs."
It comes after businesses said they were being locked out of Chancellor Rishi Sunak's £4.6bn Covid grant scheme, leaving jobs hanging in the balance as the third national lockdown bites, the Financial Times reported.
Under the European Commission's emergency "state-aid temporary framework", which the Government signed up to last year, individual companies cannot receive more than €4m (£3.6m) in grants to weather the pandemic.
The cap was initially set at €800,000 but was increased to €4m as the severity of the economic crisis became more apparent.
But British business chiefs are scratching their heads as to why the Government appears to be obeying EU rules after the UK has left the bloc.
James Martin of the British Chambers of Commerce said: “With the UK in another lockdown it is critical that firms of all sizes continue to get the access to the financial support they need to weather this economic storm. Ministers must provide additional flexibility to the temporary state-aid framework to help protect both our largest firms and the extended supply chains of smaller businesses who support them.”
Despite the forced closure of stores, some British retailers and other large companies reportedly reached the limit from grants obtained last year and cannot access the £4.6bn scheme.
The issue has been raised with business secretary Kwasi Kwarteng and small business minister Paul Scully in recent days, according to the FT.
Earlier this month the Government issued guidance that said EU state-aid rules no longer applied to UK subsidies post-Brexit. However, it added: "The State Aid Temporary Framework provisions set out in previous guidance should still be applied to these schemes until further guidance on subsidy control related to these schemes is issued."
