Sector bodies urge government to aid UK charity shops

State aid restrictions have stopped some charities applying for a share of the £12.3bn Covid-19 Business Grants fund for all their shops

Two sector membership bodies are calling for the removal of state aid restrictions on the retail grant scheme for charity retailers to help secure the future of UK charity shops. 

The call by the Charity Tax Group and the Charity Retail Association follows an announcement by the government that £1.3bn of funding for the Covid-19 Business Grants remains unspent.

In response to the coronavirus pandemic, the government announced 100 per cent business rates relief for retailers and grant funding for certain small businesses and eligible properties in the retail (including charity shops), leisure and hospitality industries in England, with grants of up to £25,000 available per property.

The Retail Hospitality and Leisure Grant Fund closed to new applications on 28 August. Across the various grant schemes, slightly more than £11bn has been paid out to 897,590 business properties, from a total of £12.3bn made available.

CTG and CRA said that while the benefit of the business grants had been significant, the application of state aid limited the funding. In practice, this meant that charities with retail chains had been limited to applications for approximately 30 shops, despite many running more than that. 

The CRA estimates that charity shops have lost more than £285m in customer sales during the pandemic. 

With a coalition of charity retailers, the CTG and the CRA have engaged in extensive discussions with ministers and officials from the Department for Business, Energy and Industrial Strategy to request a relaxation of the state aid rules to allow charities to claim grants for every shop.

The membership bodies described the discussions as positive, but with the application process now closed, they are calling on ministers to make an urgent decision, so that charities can have certainty over their future financial position and plan ahead in a challenging operating environment.

Robin Osterley, chief executive of the CRA, said the existing government support had been crucial in helping charity shops to reopen and enable customer sales to bounce back to about 70 per cent of pre-lockdown sales. 

But he said: “The unique nature of charity shops means that they do not compete across international borders, which we believe gives ministers the scope to determine that state aid rules do not apply to charity retailers.”

In addition, the Expanded Retail Discount (100 per cent business rates relief) applies until the end of March 2021. 

To support the recovery of charity retail on the high street, CTG and CRA are also calling on the government to consider extending this relief into 2021/22.

Richard Bray, vice-chairman of the CTG, said: “Charity shops contribute so much to the local communities in which they operate. 

“Government support can help ensure that they continue to do this in spite the harsh financial climate caused by Covid-19. But a decision is needed now, before there is damage that cannot be reversed.”

Topics:
Finance

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