Covid relief fund was nothing but a postcode lottery

The government’s recently published allocation report on the distribution of the £1.5bn Covid-19 Additional Relief Fund (CARF) illustrates the total inefficiencies of the system and the disgraceful total postcode lottery it became.

According to latest figures, up to and including September 2022, £1.197bn (or 80%) of the fund had been allocated to businesses, with 230,540 hereditaments (properties) awarded relief across England.

This means 20% of the fund had still not been allocated as of the deadline allocation date of 30 September 2022.  Even with any late awards on the deadline date, which have not been included in the figures announced, the scheme appears to have been vastly under allocated, meaning many needy businesses have missed out.

This revelation is particularly galling when we remember what this scheme was all about. It was announced in March 2021 followed the government’s unprecedented step in announcing that businesses impacted by Covid-19 would not be able to appeal their business rates on grounds of a Material Change of Circumstance (MCC), a move that was lambasted by us and the rest the rating profession at the time. In our opinion, it unfairly put paid to the hopes of hundreds of thousands of businesses who had started the appeals process against their rates bills on the grounds of the impact the pandemic had had on their businesses.

The new £1.5bn relief fund was claimed to be for those businesses affected by Covid-19 outside the retail, hospitality and leisure sectors, and was supposed to be distributed by local authorities to “get cash to affected businesses in the most proportionate and equitable way”.

Unfortunately, the government vastly under-estimated both the size of the problem and the capability of local authorities to pay out in an efficient and consistent way. It gave local authorities no standard guidance for allocation and distribution of the fund and allowed them discretion to allocate funds as they saw fit. Each put in place their own deadline dates and criteria for application. A postcode lottery resulted!

As for the businesses, applications for funds were in most cases difficult and cumbersome and for some came too late to be of any material help. The system was particularly difficult for any business with multiple sites, having to manage multiple schemes each with its own criteria, exclusions, varying evidence and information requests and deadlines, depending on local authority involved. Carnage!

The latest figures reveal that 75 local authorities paid out all of their grant allocations, as of September 2022, but this represents less than 25% (24.3% ) of the 309 local authorities in England!

In terms of individual local authorities, the biggest distributor by far, according to the September 2022 statistics released, was Westminster Council paying out £87.3m to local businesses, 98% of allocation, followed by the City of London, which paid out £57.8m, 90% of allocation, Birmingham at £28.5m (95% of allocation) and Tower Hamlets at £26.4m (100% of allocation).

Although Camden Council paid out £27.7m to businesses, this was only 70% of its grant allocation, and similarly Manchester’s pay out £15.9m was only 66% of its allocation.

Others struggled to award even 10% of their allocation according to the official data. Tandridge council in Surrey for example was allocated £1.7m but had only awarded £12,515 – just 1% of what was available – by the deadline date. And there were also 22 local authorities that still had not paid out anything as of September 2022, only six of which stated their schemes had been approved!

Part of this will no doubt be down to some local authority policies being incredibly complicated and rigid and part maybe due to some ratepayers having to decline due to having received some support under other schemes or subsidy issues, issues that would not have applied had the relief been given under the MCC rules.

But even so these figures highlight the complexities, bureaucracy and delays involved in using this methodology to distribute the fund, creating difficulties for local authorities and ratepayers and those who manage on their behalf.

One can only conclude that it would have been a much different and better picture for businesses if they had been allowed to appeal their rates bills under the MCC rules.

Let’s hope next time the government doesn’t interfere with business rates appeal process with such a disappointing outcome!