Covid-19 grants rule change dubbed 'risky'

25 Mar 21

Covid-19 grants for businesses risk being wasted after the government “moved the goalposts” for funding, a Section 151 officer has told PF.

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The warning comes after the Department for Business, Energy and Industrial Strategy issued new guidance earlier this month, stating councils will only be eligible for new Additional Restrictions Grants if they have already distributed 100% of their allocation so far.

Authorities have until the end of June to prove they have “spent or made a validated attempt to spend” it all, despite previously being told that money was to last until March 2022.

“Many local authorities used some of the money in the second lockdown, and some in the current lockdown, but most kept some back to use later to support the recovery,” the S151 officer, who wanted to remain anonymous, said.

“I suspect most local authorities have used some of the ARG as a discretionary pot, but a lot have kept some back, because they are designing start-up schemes or other grants for the recovery.”

The ARG was introduced at the end of October, after the second national lockdown was announced, to help councils support businesses through the restrictions.

A further £500m of funding was announced on 5 January, and £425m more in the Budget in March.

But councils did not find out about the condition attached to the latest funding until this month.

The Section 151 officer, who works at an English district council, raised fears that authorities are effectively being pushed to spend money quickly, a situation that could have bad outcomes across the country.

“Some of the roads we’re getting pushed down encourages you to lower your standards a little bit, because the main object is getting the money out quicker,” the senior finance officer said.

“I don’t want to forego hundreds of thousands of pounds that could go into the local economy.”

The officer said this was typical of the government’s attitude to grants distributed by councils, accusing it of “moving the goalposts as time has gone on”, particularly on post-payment assurance, which the government introduced after first encouraging authorities to get the money out to businesses as quickly as possible.

“Over the past year [local government] has rolled its sleeves up – we have cracked on and done everything we have been asked to do,” the officer said.

“Why are we playing this game of snakes and ladders?”

Resources are a “huge” stumbling block to distributing the grants, according to the officer, with many staff having been redeployed from other areas of the council.

“I honestly feel like grants are going to become like test and trace further down the line,” she said.

“Maybe the National Audit Office will look at them and find they didn’t make much difference, or that there was a high rate of fraud.

“I think local authorities would become the scapegoat in that situation.”

A BEIS spokesperson said: “Local authorities will have had seven months to allocate funds intended to support businesses that need it most. We have issued Local Authorities with clear guidance and have worked tirelessly to support them.”

This story was updated at 2.15pm on Friday 26 March to include comment from BEIS

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