The Cornwall councillor responsible for the economy says that 3,500 businesses could be at risk after the Government made the “devastating” decision to order the council to return money which it hoped to use to provide grants.
Cornwall Council has been distributing grants from the Government to businesses to help them during the coronavirus pandemic and lockdown.
After the initial round of grant funding was announced it was shown that the criteria set by the Government for which businesses could apply had meant that many small businesses and those which are self-employed were unable to apply.
As a result the Government provided £13.5 million of funding which could be given as discretionary grants by the council.
However the council said that there were far more businesses in Cornwall which were eligible for grants than the funding would allow and as a result asked if it could use money which was left over from the other grants to plug the gap.
The council said it would need an extra £27m to help all those which had applied and was hoping the Government would allow it to use the money which had already been provided to the council.
However Tim Dwelly, Cabinet member for economy, said that the Government has asked all councils to pay back any unspent money.
Cllr Dwelly said: “This means that 3,500 applicants won’t get a thing now. We genuinely thought that the Government was going to allow us to do this because it would be crazy politically for them not to.
“The money is already sitting here in Cornwall and is to help businesses which have been affected. We know who they are, where they are and how much they need and we were getting ready to send up to £10,000 to each of them for a total of £27m.
“Instead of that money going to Cornish businesses it is going back to Whitehall – it is devastating.
“Some of Cornwall’s MPs are onside with us and the minister himself was sympathetic. They will be deeply embarrassed that the Conservative Party has become so anti-business in this way. I can’t stress enough how upset people will be.
“We know it will lead to many jobs being lost and now it will lead to businesses closing.
“To the Government it is a relatively small amount of money that has already been sent out and already written off. This will really hit Cornwall hard.
“For me this is a huge kick in the teeth for businesses in Cornwall.”
Cllr Tim Dwelly
Cllr Dwelly said that there had been support from the chamber of commerce, Federation of Small Businesses and Local Enterprise Partnership when it called on the government to be allowed to use the money.
However he said that a small number of Cornwall’s MPs and councillors had not been supportive.
He said: “For the minority of local councillors that undermined our case to get the money out to Cornish businesses by saying that people should have smaller grants allowing the money to go back to Whitehall, they need to look in the mirror.
“We are calling for an urgent rethink on this decision on discretionary grants. We understand the other grants being closed at the end of August but this particular decision on discretionary money being taken back to London from Cornwall is devastating.
“We really hope that even at the eleventh hour ministers will look again that the evidence of demand and need of 3,500 businesses. I would remind them that those businesses have had no other grants at all.”