Local authorities slammed as small businesses struggle paying rent

Business rates experts at Colliers International are concerned about the lack of urgency many Local Authorities are showing in paying out much needed grants to smaller businesses, during the Covid-19 pandemic and about how fairly many these have been allocated.

According to latest data published by the Government, five weeks after the grants were announced, 38% of the amount allocated to Local Authorities to pay to smaller businesses has not yet been paid out. The 62% paid represents £7.6 billion of the £12.33 billion- an increase from the 49% figure of paid out grants announced last week.

The Covid-19 Grants, announced on March 24th were designed to cover a business’s fixed costs and promised:

• A grant of £10,000 for all businesses in receipt of small business rates relief or rural rates relief.
• Businesses in retail, leisure and hospitality to receive a grant of £10,000 if they have a rateable value up to and including £15,000 and a grant of £25,000 with property with a rateable value between £15,000.01 and less than £51,000. This is paid per property.

Colliers has analysed the percentage of grants actually paid to smaller businesses compared to what the local authorities have been authorised to allocate and have found massive discrepancy across the country:

• The most efficient place in the country in paying out its allocated grants is the London Borough of Ealing which has paid out £64 million or 94% of the £68.2 million which it has been allocated to distribute.
• One of the worst places is Sandwell Metropolitan Borough Council which has paid out less than a quarter of the grant monies allocated- just £17.27 million of a total allocation of £73 million which is 24%.

Other findings Colliers has discovered analysing the tables is:

• Of the major cities, Birmingham City Council and Manchester City Council have been particularly slow in handing out much needed grants and have distributed only 37% each.  Birmingham City Council had £231.58 million to allocate. So far it has given out £86.1 million. Sitting next door to Sandwell, highlighted above, it is clear small businesses in the West Midlands can feel particularly aggrieved.
• Manchester City Council had half the number of grants to distribute as Birmingham – £121million- of which it has so far allocated only £45.3 million.
• The UK’s cities vary widely as to how successful they have been in allocating their grants. Cities who beat the national average include Cambridge (78% distributed), Reading (74%), York (84%), Newcastle (71%), Bristol (76%) and Leeds (69%).  However, Slough (28%), Nottingham (49%), Manchester (37%), Sheffield (49%) have still paid out less than half their grants. Along with Liverpool at (55%) they still have some way to go.
• The Council with the biggest allocation of grants to hand out is Cornwall Council – with £281.45 million to allocate to 23,828 properties (of which it has allocated £194.825 million or 69%.) This implies that there are more small businesses and retailers claiming rates relief in Cornwall than in any other part of the country. To quote John Webber, Head of Business Rates at Colliers International “That’s a lot of holiday homes businesses!”
• Although Westminster City Council appears to have been efficient handing out 93% of its grants, it only had £78 million to distribute to a total of only 4,536 businesses -of which £72.79 million has been given out. And the City of London’s numbers are even more extraordinary -with only 968 businesses eligible for the grants or £14.74million to allocate, or which 81% has been distributed.

According to John Webber, “The implication here is that there are more businesses eligible for grants in Cornwall than there are in the City of London and Westminster combined. If there was ever evidence that more small businesses and retailers in London are falling between the cracks in the process of grant allocations – this is it.

“Many have been cut out of consideration because the criteria for grants is based on business rates and given the high rents (and thus high rates) in London, many businesses in London do not qualify for relief at all, whereas they probably would do if they were based in other part of the country.

“In addition to this there are small businesses in serviced offices who have been missed out of the grant allocation, purely because of the way they pay their business rates.”