Government more than trebles State Aid cap

By Stuart Stone contact

- Last updated on GMT

Funding boost: 'Extending our support will help retail and hospitality chains and the thousands of staff they employ,' Paul Scully said
Funding boost: 'Extending our support will help retail and hospitality chains and the thousands of staff they employ,' Paul Scully said

Related tags: state aid, Legislation, Finance, grants, coronavirus

The State Aid cap has been increased to more than £10m, offering larger pub, bar and restaurant firms greater access to Government-backed grants outlined in the Spring Budget.

According to an announcement by the Minister for Small Business, Consumers and Labour Markets, Paul Scully MP, on 4 March, the cap on grant support firms are able to claim will increase from £3.5m to £10.9m. 

Taking to Twitter to confirm the news, Scully said: "We continue to back businesses of all sizes through the pandemic and I’m delighted to see the cap on Covid-19 support grants raised to £10.9m.

"Extending our support will help retail and hospitality chains and the thousands of staff they employ."

The announcement comes after it was revealed that pubs will be able to access Government grants of up to £18,000​​ to help them survive until restrictions are eased – worth an estimated £400m to operators according to the British Beer and Pub Association (BBPA). 

Properties with a rateable value of £15,000 or under will receive £8,000 while those with a value between £15,000 and £51,000 will receive £12,000. Pubs with a rateable value of £51,000 or over will receive £18,000. 

A further £425m has also been added to the Additional Restrictions Grant (ARG) fund to help businesses not receiving the grants. 

However, in their reaction to Chancellor Rishi Sunak’s Spring Budget on 3 March​, the BBPA’s chief executive Emma McClarkin and Greene King CEO Nick Mackenzie urged the Government to clarify its stance on State Aid, which both believed could prevent pubs from accessing financial support.

“We need Government to clarify this urgently and remove the cap to ensure all businesses can benefit,” Mackenzie said.

Rules retained

The State Aid cap is a legacy of the UK’s involvement in the European Union’s State Aid scheme – which controlled Government distribution of subsidies – before Brexit.

Having now left the EU, the UK has set out plans for a new State Aid regime but has so far largely retained rules inherited from the scheme.

In December, the European Commission confirmed that the UK can apply a revised Covid-19 State Aid Temporary Framework, which includes an increased limit from the original €800,000 (£731,160) threshold per company over three years to €3m (£2.7m). 

According to the temporary framework,​ aid can be offered to companies facing shortages due to the Covid-19 pandemic in the form of direct grants, repayable advances and tax advantages. 

Related topics: Legislation

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