Large hospitality firms to benefit from increase in state aid cap to £10.9m

04 March 2021 by
Large hospitality firms to benefit from increase in state aid cap to £10.9m

The state aid cap on government grants has been raised to £10.9m, meaning larger hospitality groups will be able to access more support.

Business minster Paul Scully, whose remit includes restaurants and pubs, announced the move on Twitter today (4 March).

He 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."

Kate Nicholls, chief executive of UKHospitality, said: " 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. This increase must be communicated to local authorities urgently to ensure that funds are paid out. Government could go further and explore uncapped grants in respect to Covid-19 in line with EU subsidy rules."

The cap is a hangover from the UK's participation in the European Union state aid scheme, which regulated the subsidies governments could provide to companies.

The limit was previously set at £3.5m for individual firms and meant large groups like Greene King, which has more than 3,000 pubs, were unable to claim sufficient grants.

The EU has raised the cap further but the UK has lagged behind in developing its own legislation after Brexit.

After reopening grants of up to £18,000 for hospitality venues were announced in the Budget yesterday UKHospitality and the British Beer & Pub Association (BBPA) warned it was crucial the cap be lifted to allow more businesses to benefit.

The grants are based on the value of a property. Premises with a rateable value of £15,000 or under will be entitled to £8,000; those with a rateable value between £15,000 and £51,000 will be allowed £12,000; and £18,000 will be made available to properties with a rateable value of £51,000 or over.

Greene King chief executive Nick Mackenzie warned the support would make "little difference" if the group was unable to access it due to state aid rules.

Nicholls added that the government now "urgently" needed to look at the £2m cap on business rates relief.

She said: "The business secretary has rightly recognised that these companies are significant employers and that 230,000 people's jobs were potentially at risk if this emergency funding has not been provided.

"Government must now look urgently at the arbitrary £2m cap imposed on business rates relief in Wednesday's Budget. This will see many mid-sized businesses facing full rates bills in July, just days after reopening. This limit on support for hard-pressed hospitality businesses is deeply damaging and could threaten the survival of jobs and businesses in the sector, as mid-sized companies are forced to prioritise paying tax over paying wages.

"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."

Though the hospitality industry welcomed relief measures in the Budget it prompted calls for longer-term reform of issues such as business rates and alcohol duty.

Photo: Shutterstock

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