The Charity Tax Group (CTG) and Charity Retail Association (CRA) are calling for the removal of state aid restrictions on the retail grant scheme for charity retailers to help secure the future of charity shops in the UK. This call follows the announcement that £1.32 billion of funding for the COVID-19 Business Grants remains unspent.
In response to COVID-19, the UK Government announced 100% business rates relief for retailers and grant funding for certain small businesses and eligible properties in the retail (including charity shops), leisure and hospitality sector in England, with grants of up to £25k available per property.
The Retail Hospitality and Leisure Grant Fund (RHGLF) closed to new applications on 28 August 2020. As of 30 August, £11.01 billion has been paid out to 897,590 business properties, across the various grant schemes.
While the benefit of the business grants have been significant, the application of state aid limits to the funding means that in practice charities with retail chains have been limited to applications for approximately 30 shop, despite many running many more than that. This is despite all shops facing ongoing running costs and facing extended periods of closure and staggered re-openings. The Charity Retail Association estimate that charity shops lost over £285 million in customers sales during the time they were required to close.
A coalition of leading charity retailers, with the support of CTG and CRA, have engaged in extensive discussions with BEIS Ministers and officials to request a relaxation of the state aid rules to allow charities to claim grants for every shop. Importantly, the Government had originally allocated £12.33 billion for these grant schemes, meaning that £1.32 billion of funding remains, so any change in policy would not result in additional unbudgeted costs.
Discussions with the UK Government have been positive, but with the application process having now closed, CTG and CRA are calling on Ministers to make an urgent decision, so that charities can have certainty over their future financial position and plan ahead in what continues to be a challenging operating environment.
Robin Osterley, Chief Executive of the Charity Retail Association commented:
“The Government’s support for the retail sector has been widely welcomed with the Job Retention Scheme, 100% business rates relief for retailers and the retail grant scheme all helping charity shops to reopen and enabling customer sales to bounce back to around 70% of pre lockdown sales. Charity shops play a unique role on the High Street and continue to be impacted by lower sales due to the pandemic which is why we are again urging Ministers to remove state aid restrictions preventing larger charity retailers receiving retail grants for more than around 30 shops. The unique nature of charity shops means that they do not compete across international borders which we believe gives Ministers the scope to determine that state aid rules do not apply to charity retailers.”
Richard Bray, Vice Chairman of the Charity Tax Group commented:
“Charity shops contribute so much to the local communities in which they operate. Government support can help ensure that they continue to do this in spite of the harsh financial climate caused by COVID-19. But a decision is needed now before there is damage that cannot be reversed.”
The Expanded Retail Discount (100% business rates relief) applies until the end of March 2021. To support the recovery of charity retail on the high street, CTG and CRA are also calling on the Government to consider extending this relief into 2021/22.