Small and micro-businesses, market traders and charities across the country are at risk of collapsing due to a drastic change in the “top up grant” scheme, according to the Liberal Democrats.
The severe change in funding for businesses affected during the COVID-19 crisis will leave councils out of pocket and unable to provide previously-promised support, the party has warned.
In Manchester, original discussions with the Department for Business, Energy and Industrial Strategy (BEIS), estimated that between £18m ($22.5m) and £22m would be made available for businesses survival from the top up grant.
However, BEIS have now confirmed that just £5.4m will be made available.
This means nearly 1,500 small and micro-businesses in Manchester alone will be excluded from any relief. The businesses now identified as at-risk are in areas vital for the city’s economy including digital, creative, health and bioscience, independent retail and hospitality.
An additional 405 charities, needed to provide services to some of the city’s most vulnerable residents, as well as 30 regular market traders also now face no financial support.
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To fund all these organisations, Manchester City Council would need a budget of £22m. It will get just £5.4m, meaning only grants of up to £5,000 will be made available instead of up to £25,000.
John Leech, Liberal Democrat spokesperson for the north, said: “The government is not prepared to support the tens of thousands of vital small and micro-businesses, charities and market traders across the country, so they are deliberately shifting responsibility onto local councils.
“Put simply: by not providing enough funding to local councils to cover these businesses properly, the government is knowingly kickstarting the collapse of tens of thousands of businesses, charities and the livelihoods of even more.
“It is a deeply cynical and unfair move from the government.”