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LEICESTER CITY COUNCIL

DISCRETIONARY BUSINESS GRANTS FUND POLICY

NOTE: ROUND 3 APPLICATIONS MUST BE MADE BY

6pm ON 28 AUGUST 2020 – THIS WILL NOT BE EXTENDED

1. Background to business grants

In response to the Coronavirus, on 11 March 2020 the Government announced

support for small businesses, and businesses in the retail, hospitality and leisure

sectors, delivered through the Small Business Grant Fund and the Retail, Hospitality

and Leisure Grant Fund. The Council expects to have supported around 6,000 rate-

paying businesses, charities and other organisations in Leicester from these funds.

This original scheme remains open for any eligible ratepayers that have not yet

claimed, closing on 14 August 2020. The Council was not required to publish a local

policy.

On 1 May 2020, the Government announced the Local Authority Discretionary

Grants Fund, and on 13 May 2020 published guidance for local authorities, which

was revised on 22 May to include the self-employed.

The discretionary fund is intended to support businesses (incorporated and sole

traders) and charities.

This discretionary grant fund is the subject of this local policy.

2. The Local Authority Discretionary Grants Fund

On 1 May 2020, the Government announced the Local Authority Discretionary

Grants Fund, which is a cash limited fund for each council area. On 13 May 2020,

the Government published guidance for local authorities. This was revised on 22

May to include the self-employed. The guidance may be updated again. The link is

below.

https://www.gov.uk/government/publications/coronavirus-covid-19-guidance-on-

business-support-grant-funding

This additional fund is aimed at small businesses and charities who were not eligible

for the Small Business Grant Fund or the Retail, Hospitality and Leisure Grant Fund.

The grants are not repayable.

The fund for Leicester is being managed by Leicester City Council, which is

responsible for delivering grants to eligible businesses and charities (referred to

collectively as businesses). The Council must follow the guidance set by the

Government. The Council has authority to make these payments Section 1 of the

Localism Act 2011.

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Local authorities are required to set out the scope of their discretionary grant scheme

on their website, providing clear guidance on which types of business are being

prioritised, as well as the rationale for the level of grant to be provided (either

£25,000, £10,000 or less than £10,000, as prescribed by the Government). This

policy meets this requirement.

The Government intends that this grant scheme widens access to support to

businesses who are struggling to survive due to the Corona virus shutdown but are

unable to access other grant funding. Local authorities are asked to make payments

as quickly as possible to support struggling businesses. Leicester City Council will

make every effort to start payments as soon as is feasible.

Due to the very compressed timescales to meet these expectations of the

Government and businesses, it is not feasible to consult given the imperative to

distribute monies urgently, and also because the bulk of the eligibility and award

criteria are determined by central rather than local government. The Council has

taken a lessons learnt approach through the delivery of the Small Business Grant

Fund and the Retail, Hospitality and Leisure Grant Fund (and for round 2, the

experience of round 1).

Potential applicants are asked to note that:

The Government and the Council expects businesses to also take advantage

of other Government support schemes, in particular supporting pay costs

through the furlough and self-employment schemes.

If a business is eligible for a grant under the Small Business Grant Fund or

the Retail, Hospitality and Leisure Grant Fund for other properties, it will not

be eligible for a discretionary grant. This is to enable the maximum number of

businesses to benefit overall.

This grant scheme is per business, not per hereditament (property).

Businesses with more than one property within Leicester City will only be

eligible for one discretionary grant from Leicester City Council.

Grants will be paid into the bank account usually used for business purposes.

Grants are not repayable.

Grants under this scheme will be subject to tax in line with the applicant’s tax

arrangements. For businesses, the Government advises this is only where

there is an overall profit once this award is included.

Grants awarded under this discretionary scheme will not generally affect the

Council’s business ratings list or any rates charges payable by the recipient.

Notwithstanding this, any applicant who should in fact be added to the rates

list will be, which may result in a rates bill. This may also result in a grant

being claimable from the Small Business Grant Fund or the Retail, Leisure

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and Hospitality Grant Fund, rather than this discretionary fund. Such grants

are of fixed value of £10,000 or £25,000 and are likely to be higher than a

discretionary grant. The Council will inform applicants if this is the case.

In a small number of cases, grants may be awarded to businesses due to pay

business rates or council tax in 2020/21. If allowed by the Government, the

Council will offset the 2020/21 charges (but not any arrears) from any grant

award.

3. Total funding available

The Government has set each council’s funding allocation as 5% of the expected

spending on the Small Business Grant Fund and the Retail, Hospitality and Leisure

Grant Fund.

Leicester City Council’s allocation is £3.5m. This can be adjusted upwards if the

number of businesses supported under those funds proves to be higher. It will not

however be reduced or be adjusted to reflect actual demand for the discretionary

fund.

The limits to funding available for this scheme require local authorities to clearly

prioritise which types of businesses will receive funding, and how much they will

receive. The Government states it will be at the local authority’s discretion as to

which types of business are most relevant to their local economy. There will be no

penalty for local authorities because of their use of discretion to prioritise some

business types.

4. Who will benefit from the discretionary scheme?

The Government suggests that local authorities may wish to consider collaborating

as they design their discretionary schemes to ensure consistency where they are

working across a functional economic area. This is notably the Leicester and

Leicestershire Local Enterprise Partnership (LLEP) area. Councils are also

encouraged to ensure alignment and reduce duplication with any other local

discretionary business grants that may have been established. The councils within

the LLEP area are mindful of this suggestion, however the extent to which this can

be achieved in practice is limited by the significant time constraints, local priorities

and the funding available to each council.

An inevitable consequence of this funding allocation methodology is that the funding

available for individual businesses and charities will vary from council to council.

There is no direct correlation between the 5% funding allocation and the number and

needs of eligible businesses for the discretionary scheme in each council area.

Therefore, similar businesses in different council areas across Leicestershire (and

indeed further afield) may be subject to different prioritisation and grant amounts,

with varying timescales for application and award.

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As set out by the Government, these discretionary grants are primarily and predominantly aimed at:

Small and micro businesses, as defined in Section 33 Part 2 of the Small Business, Enterprise and Employment Act 2015 and the Companies Act 2006. (see definitions table at the end of the section)

Businesses with relatively high ongoing fixed property-related costs

Businesses which can demonstrate that they have suffered a significant fall in income due to the COVID-19 crisis

Businesses which occupy property, or part of a property, with a rateable value or annual rent or annual mortgage payments below £51,000.

Section 5 of this policy details who cannot benefit from this scheme.

Leicester’s scheme will be delivered through two application rounds. This will enable

the Council to manage the process more effectively and deliver the grants more

quickly, ensure that the overall funding limit is not breached and respond to additonal

priorities and policy developments that may emerge.

To apply for a grant, businesses and charities will have relatively high on-going fixed

property costs and be able demonstrate that they have suffered a significant fall in

income due to the COVID-19 crisis. The Council considers ‘significant’ to mean an

income reduction of at least 40% month on month due to the Coronavirus. This will

primarily be evidenced by bank statements.

4.1 and 4.2 - National priorities and local additonal priorities

National priorities and local additonal priorities in the first round– was 4.1 and 4.2 in

the first iteration of the policy, now moved to Appendix 1.

National priorities and local additional priorities in the second round – see Appendix

2.

Additional local priorities in the third round – See Appendix 3.

4.3 Predominant use

Where applicable, to qualify for the grant the relevant property must be wholly or

mainly used for the above qualifying purposes. This is a test of use rather than

occupation. Businesses in properties which are occupied but not wholly or mainly

used for one or more of the above qualifying purposes will not be eligible for a grant.

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Definitions – small and micro businesses

To be a small business, under the Companies Act 2006, a business must satisfy two or more of

the following requirements in a year:

Turnover: Not more than £10.2 million

Balance sheet total: Not more than £5.1 million

Number of employees: a headcount of staff of less than 50

To be a micro business, under the Companies Act 2006, a business must satisfy two or more of

the following requirements:

Turnover: Not more than £632,000

Balance sheet total: Not more than £316,000

Number of employees: a headcount of staff of not more than 10 https://www.gov.uk/government/publications/coronavirus-covid-19-guidance-on-business-support-grant-funding

5. Who CANNOT benefit from the discretionary scheme?

Businesses eligible for certain other support schemes as prescribed by the Government cannot benefit from this discretionary scheme, including the:

Small Business Grant Fund (£10,000 grant)

Retail, Hospitality and Leisure Grant (£10,000 or £25,000 grant)

Both of these remain open for claims to the Council from eligible ratepayers.

Fisheries Response Fund

Domestic Seafood Supply Scheme

Zoos Support Fund

Dairy Hardship Fund All of the above four are administered nationally and are expected to have minimal take-up in Leicester.

The Government has also prescribed that these businesses are not eligible:

Businesses that were not trading on 11 March 2020; and

Companies in administration, insolvent or subject to a striking-off notice. [Added with round 2]: Businesses which received discretionary funding in round 1 are not eligible to receive funding in round 2, even for different premises.

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6. Application process and timescale

The Government recognises that local authorities need to run an application process, as at least some of the potential beneficiaries are highly unlikely to be known directly by the local authorities. Also, the Council must manage the process in a fair and equitable manner and within the limited funding available. The Council invites applications on-line via its website. [Updated with round 2 and 3]: The Council is running the scheme in two rounds.

The first round ran from 3 June to 29 June (extended from 22 June). The criteria are set out at Appendix 1.

The second round will run from 31 July to 14 August. The criteria are set out at Appendix 2.

The third round will run from 31 July to 14 August. The criteria are set out at

Appendix 3.

The Council’s website will set out the information required from applicants. This will be the minimum reasonably required to establish eligibility, to enable a fair and equitable assessment of grant entitlement and value, and to prevent fraudulent applications and grant payments. In essence, applicants will need to clearly state and evidence all of:

Compliance with the scheme eligibility requirements, including being a small or micro business and having been trading at 11 March 2020. A copy of the accounts most recently filed at Companies House or with the Charity Commission will be required.

A significant fall in income due to the COVID-19 crisis – a fall of at least 40%

month on month approaching and during the crisis will need to be evidenced.

Where possible this should be evidenced by bank statements. However, if

cashflows are usually irregular or delayed, then the business may submit

other evidence such as management accounts and/or a financial statement

signed by the company accountant or auditor.

Relatively high ongoing fixed property-related costs – principally rent,

mortgage, business rates. Note, pay costs are not evidence for this scheme.

Identification of the business or charity to which the application relates – company number, charity number, VAT number.

Business rates or council tax account reference, where applicable.

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Evidence that the bank account into which any grant will be paid properly relates to the business, charity, etc. – a copy of a recent bank statement showing business transactions will be required. This is required even where the applicant already receives other payments from the Council, or pays business rates by direct debit.

Identification of the person making the application – passport, driving licence.

The Council will aim to individually assess and validate applications as they are received and may request further information and validation. The pre-payment checks will include confirming eligibility and that by accepting payments the would-be recipients confirm they are in compliance with State Aid rules. The Council’s website / application form will require applicants to confirm acceptance of various compliance statements. Payments will start as soon as possible. Detail of grant amounts is given in Appendices 1 and 2. The Council will undertake written post payment assurance around compliance, in particular State Aid. There will be no automatic right of appeal against a decision not to award a grant, or against the value of any grant. However, the Council may at its discretion reconsider any refusal or grant value if there is clear evidence that a significantly wrong decision may have been made. The only further recourse available to applicants is a judicial review, which is the means by which the decisions of the Council under discretionary powers may be challenged. 7. How the value of grants will be calculated – See Appendices 1, 2 and 3 8. Managing the risk of fraud The Council and the Government will not accept deliberate manipulation and fraud. Any business or person caught falsifying their records to gain a grant award will face prosecution and any funding issued will be subject to clawback, as may any grants paid in error. The Government’s grants management and counter fraud functions will provide local authorities with access to a digital assurance tool. This tool will also assist the Council with pre and post payments assurance, including identification of high-risk payments. There will also be joint working across councils and government departments in preventing fraud. 9. Policy review

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This policy has been written in line with Government guidance. It will be subject to dynamic review as local and national circumstances dictate and in line with future clarifications and changes that may be announced by the Government. It has been updated as the second funding round has been developed. The principal changes relate to updated dates and timelines, together with the addition of the round 2 details at Appendix 2. Finance Division Leicester City Council 11 August 2020

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APPENDIX 1 – APPLICATION ROUND 1

EXTRACTS FROM THE FIRST PUBLISHED POLICY

NOTE: THIS ROUND CLOSED ON 29 JUNE 2020

The first application round will be open to the following:

4.1 National priorities

In the first round, Leicester City Council will prioritise the following types of businesses for grants, as requested nationally by the Government:

Small businesses in certain shared offices or other flexible workspaces which do not have their own business rates assessment and consequently no rates bill from the Council. For this current application round, these are primarily the Belgrave Business Centre, Leicester Business Centre and the DMU Innovation Centre.

Note that more shared or tenanted spaces may be included in a future application round, but such businesses should not apply at this time.

Market traders that trade most of the week at Leicester and Beaumont Leys markets, who do not have their own business rates assessment. The grant will relate to the number of days trading.

Bed & Breakfast businesses regularly providing bed & breakfast accommodation that pay council tax instead of business rates.

Note that rated premises are eligible under the Small Business Grant Fund and the Retail, Hospitality and Leisure Grant Fund. For clarity, rooms and premises available through Airbnb and similar channels are not eligible.

Charities occupying properties used wholly or mainly for charitable purposes, with their own rating assessment, in receipt of charitable rate relief of 80% - 100%, and which would otherwise have received Small Business Rates Relief and therefore a Small Business Grant. In essence, charities occupying property with a rateable value of less than £15,000, except those which are eligible for a Retail, Hospitality and Leisure grant. Charities occupying premises with a higher rateable value may be considered in a future round.

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4.2 Local additional priorities

Taking into account local priorities, the Council is supporting a range of additional

businesses and charities in this first round. These are:

Hospitality businesses directly supporting events by way of catering

services, but not directly serving the public as required to be eligible for a

Retail, Leisure and Hospitality Fund grant. Note food and beverage suppliers

are not eligible to apply in this round.

An example would be a hospitality business that supplies catering services to

events held at clients’ premises, or at premises being used by the client.

Commercial venues predominantly available for private hire by groups

and individuals, but not directly serving the public as required to be eligible

for a Retail, Leisure and Hospitality Fund grant.

An example would be a privately run venue available for weddings and

parties, hired by members only groups/clubs and other pre-booked group

gatherings.

Places of public worship providing separate, defined community

facilities and activities – which being part of a place of public worship for

rating purposes attract charitable rates relief but do not meet the criteria for a

Small Business Grant or the Retail, Hospitality and Leisure Grant Fund. The

area must be physically separate and definable from the space used for

worship. The grant will relate only to the community facilities.

An example would be a temple with two buildings (joined or not), where one is

used for public worship and the other for community facilities and activities.

Childcare providers (nurseries) which are eligible for the Nursery

[business rates] Discount 2020/21 but which are not eligible for a Small

Business Grant – generally where the premises are over the £15,000

rateable value threshold, or the businesses have multiple premises.

The Council recognises that other important business areas are not included in this

application round.

Applications to this first round can be made until 6pm on Monday 22 June 2020. Potential applicants should assume that this window will not be extended, although the Council reserves the right to do so. [Note, this was extended to 29 June 2020, in the light of feedback and the lower than expected number of applications]

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7. How the value of grants will be calculated

The Government expects that payments of under £10,000 may be appropriate in many cases. The Council’s view is that this is indeed appropriate and is necessary to remain within the available funding whilst supporting a range of businesses and charities. The Government states that in taking decisions on the appropriate level of grant, local authorities may want to take into account the level of fixed costs faced by the business in question, the number of employees, whether businesses have had to close completely and are unable to trade online and the consequent scale of impact of COVID-19 losses. The Council has considered this statement. Given a much longer application and assessment timescale, such an approach might be both desirable and feasible. However, given the absolute time imperative to start making grant payments, the Council has concluded that a much simpler approach is required. The Council is also mindful of the set funding of £10,000 or £25,000 available to qualifying ratepayers under the Small Business Grant Fund and the Retail, Hospitality and Leisure Grant Fund. The Council would like to promote at least some equity for businesses and charities receiving funding under the national priorities section of this discretionary fund, whilst recognising affordability constraints and that grants of between £10,000 and £25,000 are not allowed. Therefore, the Council is taking a straightforward approach to determining individual grant levels in this first round. Once eligibility has been confirmed via the process outlined at Section 6, the Council expects to pay grants on the following basis:

Grant category (full descriptions in Section 4)

Grant per business

Small businesses in certain shared offices or other flexible workspaces

£7,000

Regular market traders £400 per day, up to £2,000 maximum

Bed and Breakfasts paying Council Tax £5,000

Charities with own rating assessment and rateable value less than £15,000

£7,000

Hospitality businesses directly supporting events by way of catering services:

- Up to £15,000 Rateable Value - £15,000 and above Rateable Value

£7,000 £10,000

Commercial venues predominantly available for private hire by groups and individuals:

- Up to £15,000 Rateable Value - £15,000 and above Rateable Value

£7,000 £10,000

Places of public worship providing separate, defined community facilities and activities

£7,000

Childcare providers eligible for the Nursery Discount but not eligible for a Small Business Grant

£25,000

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The Council expects these fixed grant levels to enable grant payments of around £2m. Hence, they are believed to be affordable within the £3.5m available funding, with circa £1.5m remaining for a second application round. However, if first round applications are found to be significantly higher than expected, the Council reserves the right to vary these grant levels to ensure that the costs remain within the £3.5m and that funding remains for a second round. Once approved, grants will be paid as soon as possible to the nominated and validated bank account. Applicants should note that the Council will publish a full list of all grants paid from the discretionary grants scheme.

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APPENDIX 2 - APPLICATION ROUND 2

NOTE: THIS ROUND CLOSES ON 14 AUGUST 2020

Following the effective completion of the first application round, the Council expects circa £2.5m to be available for the second round. Some 75% is earmarked for the national priority of small and micro businesses and charities in shared spaces. The following three business types are eligible in this second round.

Small businesses and charities in shared offices and other flexible workspaces: open to businesses and charities occupying shared space in the city, subject to annual rent or mortgage payments being below £51k p.a. (as defined by the Government), plus meeting the income reduction and property cost criteria.

The potential demand is uncertain, although could be significant. Hence the actual eligible applications will be quantified following the close of the application period. There will be an equal grant for each qualifying business, i.e. the available funding will be divided by number of eligible applications, to arrive at the grant to be awarded to each eligible applicant. This avoids the need for further complex and time-consuming financial assessment. The minimum grant paid to each business will be £2,000 (so as not to fall below the two fixed grant categories in this round) and the maximum will be £7,000. Note, registered childcare providers in shared spaces will be asked to apply on-line in a separate category, purely for administrative and verification purposes. For the avoidance of doubt, homeworkers are not eligible to apply.

Charities with premises with rateable value of £15,000 - £51,000, which are not eligible for a retail, hospitality and leisure grant. These larger premises occupied by charities are not a national priority for discretionary schemes. They may have access to other funding sources (for example, the government has pledged £750m to the sector), being affected to a greater or lesser extent depending on their local circumstances.

Many charities play a key role in the life of the city. Support is considered to be a local priority, so a fixed grant of £2,000 is available to those meeting the income reduction and property cost criteria.

Factories and workshops with rateable value £15,000 - £51,000: These do not benefit from rates relief or a business grant. Locally it is felt that support should be provided, given the importance of the manufacturing and allied sectors to the city’s economy. However, in reality little can be afforded once the majority of funding is earmarked for the national priority of shared spaces. Hence a £2,000 fixed payment is proposed, for those meeting the income reduction and property cost criteria.

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Round 2 - Grant Amounts

Category Earmarked Funding

Grant per business / charity

Shared spaces £1.9m Between £2,000 and £7,000, depending on number of successful applications. Equal amount for each eligible business / charity

Charities, rateable value £15k - £51k

£100k

£2,000 fixed

Factories and workshops, rateable value £15k - £51k

£500k

£2,000 fixed

Total expected available funding

£2.5m

How the earmarked funding will be managed

1. All funds remaining from the first round will be available for the second round. Having effectively completed the first round allocations, the Council expects circa £2.5m to be available.

2. If the £600k earmarked for charities, factories and workshops proves insufficient to meet all eligible applications, the Council will fund the shortfall from its own resources - unless funds remain from the shared spaces allocation having awarded all eligible applicants a £7,000 grant.

3. If the £600k earmarked for charities, factories and workshops is not required in full, the remaining funds will be transferred to shared spaces.

4. If the £1.9m funds earmarked for shared spaces, plus any reallocated funds, exceeds the amount required having awarded all eligible applicants a £7,000 grant, then the Council will consider the most appropriate use.

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APPENDIX 3 - APPLICATION ROUND 3

NOTE: THIS ROUND CLOSES ON 28 AUGUST 2020 Following the effective completion of the first and second application rounds, which generated less eligible applications than provided for, the Council expects circa £1.0m to be available for the third round. The Government has asked councils to close applications by 28 August 2020. All the national priorities have been addressed in rounds 1 and 2, together with some local priorities. As funding remains, two further local priorities can be addressed in round 3.

Properties with a rateable value of £51,000 and above which are in receipt of expanded retail discount. These receive rates relief in 2020/21 but do not qualify for a retail, hospitality and leisure business grant due to the higher rateable value. This includes businesses such as larger restaurants, pubs and shops, opticians and nightclubs.

Properties with a rateable value of up to and including £15,000 which are not in receipt of expanded retail discount or small business rate relief (due to the ratepayer being liable for two or more properties). These do not qualify for rates relief or a small business grant or a retail, hospitality and leisure grant. This includes small industrial units, workshops and smaller shops.

Indicative grant amounts cannot be given, as the funding available is fixed, whereas the number of eligible applications is unknown. However, maximum grant figures have been determined, in line with rounds 1 and 2.

Grant amounts will be determined using a weighting system, which is based on the Government’s arrangements for the Retail, Hospitality and Leisure Grant. This is intended to broadly reflect differences in property costs between properties of various sizes.

Rateable value Weighting Maximum grant per business

Up to and including £15,000

1.0 £7,000

£51,000 and over 4.0 £10,000 *

So a business with over £51,000 rateable value would receive four times the grant of a business with rateable value not exceeding £15,000, subject to a maximum grant of £10,000.

* If funding still remains having allocated the maximum grants, the Council will consider paying grants of £25,000 to the businesses with a rateable value of £51,000 and over and/or ‘topping up’ selected allocations across all rounds. The Government does not allow discretionary grants of between £10,000 and £25,000.