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Coronavirus: Business support grants were postcode lottery

Birmingham City Council only processed 5% of business support grant claims within the first month. Credit: Getty.
Birmingham City Council only processed 5% of business support grant claims within the first month. Photo: Getty

Thousands of small businesses across England faced waits of 21 working days to get their hands on vital government support at the beginning of lockdown.

The distribution of the £10,000 ($12,500) small business rate relief grant was a postcode lottery across the country, reveals a Moneywise investigation.

Some councils were able to pay firms within 24 hours while others took more than a month, leaving businesses on the brink of collapse.

A freedom of information (FOI) request to 328 councils in England revealed that by 17 April, a month after the government announced the rescue package, Birmingham City Council had only processed 5% of claims.

By comparison 20% of councils that responded to the FOI had paid the grant within one day of receiving a valid application, including Lancaster City Council and Rushmoor Borough Council.

A further 73% of claims were paid within two to 10 days, and 7% took between 13 and 21 working days to pay out.

A spokesperson for Birmingham City Council said there slow response rate was due to only holding bank details of 5% of eligible businesses. By mid-June the council had paid 84% of projected eligible claims including the retail, hospitality and leisure grants - some £18.8m.

READ MORE: Government announces £155m tax break on PPE

Councils took varying amounts of time to get organised and contact local businesses.

East Riding of Yorkshire Council were quick off the mark, sending out letters to eligible businesses on 18 March - the day after the government announcement.

But North Devon District Council did not send out emails and letters to businesses until 9 April, almost three weeks later.

Local government expert Tor Clark, who is an associate professor at The University of Leicester, told Moneywise: "The findings reflect the different sizes and organisational set-up of councils, and their preparedness for the crisis.

"I think there is an assumption among the general public that all councils are the same and work in the same way. But while all councils have the same statutory responsibilities, how they are run is always an entirely local decision.

“Different councils have vastly differing scales - Birmingham City Council covers hundreds of thousands of people, but other councils will just cover tens of thousands."