Twelve million pounds has been allocated to Hackney Council by the government to support local businesses affected by Covid. However, many Hackney business owners worry they will not qualify, while their colleagues in neighbouring areas remain in the dark.
Local authorities across England and Wales have received funding from central government, as part of the “local restriction grant” initiative at the end of the most recent lockdown. Hackney’s £12m allocation is generous compared to other East London boroughs. Lewisham received £10.7m while Croydon received only £5.86m (although the borough did get more funding in other governmental grants.) Tower Hamlets have not disclosed their funding allocation.
Hackney Council hopes that the grant will help directors of small companies who have previously not been eligible for governmental relief schemes. However, anxiety surrounding eligibility criteria and amount of available funding continues.
Not fat cats
Since the first lockdown in March, directors of small businesses in England and Wales have found themselves excluded from governmental grants and furlough schemes, as they are neither employed nor self-employed and often pay themselves via dividends. The lack of support has left many small businesses in Hackney and across the country struggling to survive.
“When you think of a limited company, you tend to think of a large company that’s turning millions of pounds and of very rich directors,” Jo Stevens from Forgotten Ltd, a grassroots organisation representing company directors, told EastLondonLines. “But in actual fact most of us are very small companies with very small income. Our average income, across all our members is £38,000 a year. We’re not fat cats.”
Stevens estimates that up to two million small business owners have fallen through the cracks of bureaucratic loopholes, leaving them with “virtually no support” during the pandemic.
Rachel Gould, a freelance events and design producer from Hackney, is one such company director. “When lockdown happened in March, all events were obviously cancelled. I only had one major job since then, so my income went down by nearly 70 per cent,” she told ELL.
Despite applying for grants, Gould’s business did not qualify for any support as she works from home, meaning that she does not pay business rates. She was able to furlough herself for two months in April. However, because Gould’s income is variable, the most she could receive from the government was £800 a month, which was not enough to cover her mortgage.
Meanwhile Rachel Lasebikan, the director of Scandinavian Loft, a company specialising in home improvement, has been forced to move away from Hackney – where she was no longer able to afford rent – and relocate with her family to Wales. “All our different sources of income disappeared over night,” she told ELL, explaining that during the pandemic neither she nor her husband were able to work on their respective small companies while also not being eligible for government support.
However, Lasebikan, unlike Gould, was able to receive a £5,000 “discretionary grant” from Hackney Council, as she was renting a desk-space for her company.
Discretionary grants were introduced by the government during the first lockdown, allowing local authorities to fund “small and micro businesses.” According to Guy Nicholson, Hackney Council’s cabinet member for inclusive economy, the borough received £3.5m to distribute. However, those who work from home, like Gould, did not qualify.
Lasebikan said that the grants initiative seemed rushed and unclear – “an afterthought.” Nicholson told ELL that the council itself was taken by surprise when the grants were announced.
“The discretionary business grant was something that no one in local government knew about,” Nicholson said. “And then, what suddenly lands in the inbox, is the proposal for the discretionary business grant scheme.” He added that the council was again surprised when the Chancellor, Rishi Sunak, told local authorities that they will only have four weeks to distribute the money, a month after the grant scheme was announced.
Nicholson is not alone in pinning the blame on the central government. Groups like Forgotten Ltd and Excluded, a similar grassroots organisation, have been petitioning the Chancellor since the first lockdown to offer some relief to small companies. His failure to address the issue in last week’s annual spending review earned him much public criticism.
“Although Rishi Sunak says he wants to help people go back to jobs, to help rebuild the economy, he just does not give us the capacity to do that. It’s shameful, really,” said Lasebikan.
Nicholson said that at least some of the £12m allocated to Hackney Council in the latest grant scheme should be made available to small limited companies like Gould’s and Lasebikan’s.
“The grant is in three parts, the first three parts are very much focused on business rates payers… but the fourth grant is discretionary. That will be launched in the middle of December and that initiative is to be focused on non-business rates payers,” Nicholson said.
If this promise proves true, this will be the first such grant which Gould’s business could qualify for. However, even Nicholson acknowledges the grant is limited. “Central government still set restrictions, as we understand it, on company directors of self trading companies,” he said.
Meanwhile, Lewisham is the only other local council in the EastLondonLines area which explicitly committed to helping small limited companies.
The Hackney grant will also comes late as many small businesses have already been forced to permanently close, due to financial problems. Additionally, some small business owners in Hackney have not been informed about the new funding opportunities.
“I have been in contact with Hackney [council], they told me you just have to keep checking,” said Gould who is worried her business will again not be eligible, due to its lack of premises.