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The small business grant in Scotland — paying the price of success?

The price of success differs in Scotland from the rest of the United Kingdom — at least for now …

The Scottish Government obviously has a number of challenges to address during the coronavirus pandemic — but this week saw another rear its head, this time from the business community.

A group of organisations, including those from the retail, leisure and hospitality sectors, launched a legal challenge against the fairness of the Scottish Government’s COVID-19 business grant scheme.

This group has applied to the court for a review, by a panel of judges, of the way the Scottish Government administers the scheme.

What are the differences?

As part of Westminster’s economic support, a grant award of £25,000 is available to businesses in England for each of their premises.

As a devolved matter, the Scottish Government committed to providing Scottish businesses with the same level of support. Despite this, when the business grant scheme was announced here it provided only £25,000 for each business, rather than for each of an organisation’s premises.

The disparity was clear: a business owner in Scotland with five premises would receive £25,000 whereas a business in England with the same number would receive £125,000.

The business community mounted huge pressure on the government for the same level of support as counterparts in England. Fortunately, ministers listened, at least to a certain extent.

The latest

Now the scheme in Scotland allows businesses to claim 75% of the grant for each of their premises.

This, according to many, does not go far enough in addressing the unfairness in support compared with the rest of the UK. According to those challenging the Scottish Government this amounts to a “black hole of up to £600million” for employers north of the border.

Owners are also challenging the rateable value threshold for Scotland, which limits the number of companies eligible for the grant.

The concern is that many UK businesses may not recover from being forced to close their doors during the lockdown. And of course, the argument is that businesses here are feeling that even more keenly because of the disparity in economic support provided through the grant scheme.

This may not only mean the end of a number of well-established and successful businesses, but could also signal widespread unemployment.

The challenge

The legal challenge began this week and a petition was submitted digitally to the Court of Session in Edinburgh.

The next stage is for a hearing to take place to determine if judicial permission will be granted for the challenge to continue.

Given the urgency, a request has been made for this decision to be made sooner than the weeks it may otherwise have taken under normal circumstances.

For many Scottish businesses the outcome of this challenge will be eagerly awaited, and is likely to have a bearing on their survival.

Victoria Leslie

Partner Victoria heads up the litigation department in our Inverness office. She acts for commercial, public and private clients in litigation disputes including breach of contract, recovery of payment and property, professional negligence claims, property and partnership disputes.

Posted, 29 April 2020 by Victoria Leslie
Categories: Commercial property | Coronavirus | Coronavirus and corporate | Corporate | Insights | Litigation