Question to the Department for Business, Energy and Industrial Strategy:

To ask the Secretary of State for Business, Energy and Industrial Strategy, whether he has held discussions with his EU counterparts on the Government’s decision to prevent companies in CVA from benefitting from the coronavirus small business grants schemes; and for what reasons that decision was made in relation state aid rules.

There are a number of Coronavirus small business grant schemes available, including Small Business grants and Retail and Hospitality and Leisure grants. These grant schemes are intended to support companies struggling as a consequence of Coronavirus, to allow them to re-open on the other side of the lockdown. The guidance on these grants therefore excludes from eligibility businesses which were in liquidation or dissolved as of 11 March.

Although the UK has left the EU, under the terms of the Withdrawal Agreement, the EU State aid rules continue to apply in the UK until the end of the Transition Period. A Company Voluntary Arrangement (CVA) is a type of insolvency procedure. Small Business grants are paid under the existing State aid de minimis rules and can be given notwithstanding a CVA.

Retail Hospitality and Leisure grants are provided under the UK Covid-19 Temporary Framework. Businesses receiving this grant must confirm they were not an Undertaking in Difficulty on 31 December 2019. Under the Temporary Framework, if the business became an undertaking in difficulty after 31 December 2019 it can still receive aid under the Temporary Framework.

As companies in CVA are not prevented from receiving Small Business grants, the Government has not discussed this issue with the European Commission.