Companies caught in local lockdowns in England will be allowed to claim up to £1,500 per property every three weeks under rules announced by the Treasury on Wednesday.
Under the scheme, companies can apply for the extra funding if they have been required to close due to local Covid-19 restrictions. The funding is not available for companies caught out by national restrictions, such as the ban on nightclubs reopening.
Larger companies, determined by the rateable value of the premises or the size of their rent or mortgage, will receive £1,500 every three weeks while smaller companies will receive £1,000.
Steve Barclay, chief secretary to the Treasury, said the grants would give businesses a “safety net” while temporarily closed.
Alok Sharma, business secretary, said: “No business should be punished for doing the right thing, which is why today’s package will offer additional breathing space for businesses that have had to temporarily close to control the virus.”
The payments, which will be distributed by local authorities, are in addition to extra payments for people on low incomes who have been required to self-isolate in areas of high infection — which are currently being trialled in Blackburn with Darwen, Pendle and Oldham.
The new funding applies only to England, where lockdowns have been imposed on Manchester, Oldham, Pendle, Leicester and parts of Blackburn with Darwen. There are also tighter restrictions in place in Bolton, while Leeds and Middlesbrough are on the government’s “areas of concern” watchlist.
The initiative does not apply to Wales and Scotland where new lockdowns have been imposed in Caerphilly, Glasgow City, East Renfrewshire and West Dunbartonshire.
Business groups welcomed the money for small businesses in particular, following widespread criticism of the management of local lockdowns in Leicester and parts of the North that left businesses struggling to survive a second enforced closure. Businesses did receive money in Leicester but only after the lockdown started.
Craig Beaumont, head of policy at the Federation of Small Businesses, said small businesses would be happy to know that they had some financial support going into new lockdowns, with more expected imminently.
“When you have lost all your income then this could be a lifeline,” he said.
However, business leaders said companies would need further help once the furlough scheme comes to an end in October.
Annie Gascoyne, CBI director of economic policy, said: “New direct cash grants will certainly help small businesses if their area falls under new restrictions to protect public health. But the impact of Covid-19 is still hurting businesses, so the government will need to look at more targeted support in the autumn.”
Adam Marshall, director-general of the British Chambers of Commerce, said businesses needed more money to survive local lockdowns. “Businesses forced to close through no fault of their own will welcome any new grant support, but for most this will not be enough to offset the resulting cash crunch. Ministers should increase the amount on offer to ensure businesses and jobs are protected, and extend coverage to more firms that are hard-hit but not forced to close,” he said.