Charity shops missing out on funding due to 'EU state aid confusion'

Charities are missing out on vital grants to help their retail operations during lockdown due to confusion over state aid following Brexit, according to sector groups.

The Charity Retail Association and Charity Tax Group have delivered the warning as charities are unable to unlock further funding to help mitigate the closure of their shops during the Covid-19 health crisis.

They say the problem centres around the UK government continuing to apply EU state aid rules despite the UK no longer being bound by them. This is being compounded by confusion among councils which means that even eligible high street businesses are struggling to access grants, they add.

A range of business grants have been announced for High Street stores that have been required to close amid lockdown. For a medium sized shop this is worth £6,000 as a one off sum plus £2,000 for every 28 days they are required to stay closed.

But the UK government is applying EU rules from last year, even though they have been amended in Europe to make them more generous. Businesses in the UK are therefore limited to €1 million in lockdown grants plus an additional €3 million subject to a range of conditions. However, in the EU these limits have since been increased to €1.8 million and €10 million respectively.

“There is no reason why the UK government cannot deliver greater support to the UK high street,” say the two charity sector groups.

“As many as half of the UK’s charity shops are unable to access vital lockdown grants due to the inexplicable application of EU state aid limits which the EU itself no longer applies,” said Charity Retail Association chief executive Robin Osterley.

“This is an issue that needs urgent attention if the UK Chancellor is going to fulfil his commitment to do “whatever it takes” to support the country through this crisis.

Richard Bray, acting chair of the Charity Tax Group added: “All High Street charity shops are in need of support. Lockdown grants are a perfect opportunity for the Chancellor to recognise this. It would be a tragedy if dithering over EU state aid rules that no longer apply to us should scupper access to what will be a lifeline for many charities.”

Earlier this year it emerged that charity retail sales slumped by a quarter during the start of the latest lockdown, at the end of 2020.

A promising start to the last quarter of the year was “snuffed” out by lockdown restrictions, the research found.