Covid: Scotland's councils 'sitting on £30m unspent' business support

The local authority discretionary fund was announced by the Scottish Government in November as a pot of cash for businesses that fell through the cracks of other government schemes.

The funding, intended to "mitigate the short-term financial challenges" of the pandemic was extended in January to a total of £120 million across all councils.

Cosla, the organisation that represents Scottish councils, pointed to the pressures local authorities have been under to hand out money on behalf of the Government and described the commitment of officials as “nothing short of a herculean effort”.

Aberdeen Council has handed out £2.8 million through the scheme but is yet to part with £3 million of lifeline financial help, while Highlands Council has only handed out half of the £7 million it was allocated.

Shetland Island Council has only handed out one third of the grant is received to pass onto businesses. Similarly in the Western Isles, £434,000 of £747,000 had been handed out, as of the end of April.

READ MORE: Private sector could give out stuttering business grants

Council bosses in Glasgow, where businesses have faced tougher restrictions than any other part of the country, has handed out £14.5 million to traders, but is still sitting on £317,000 of unspent cash.

As of the end of April, Edinburgh City Council had only paid out £10.5 million of the £12.9 million it was allocated from the Scottish Government while council bosses in Dundee had paid out £2.1 million of the £2.4 million total.

Council bosses in North Lanarkshire still have £267,000 remaining despite having awarded £5.4 million to eligible businesses.

But some councils including Borders and Fife have handed out all funds they have been allocated.

Ms Forbes has warned that councils “are still sitting on unspent money”, stressing she would "encourage them to use that funding for businesses that need support”.

She added: “Since the start of the pandemic we have delivered more than £3.6 billion in support to businesses across Scotland.

Finance and Economy Secretary Kate Forbes

“Our £120 million local authority discretionary fund empowers local authorities to direct financial support to businesses in their areas. The use of this funding is entirely at the discretion of local authorities based on the specific needs of their local economies."

“Last week I announced up to £12 million additional funding for the 14 local authorities that are remaining in Level 2 to support businesses, including those in the soft play and hospitality sectors that are affected by ongoing restrictions.”

But the Scottish Conservatives have criticised the SNP for the speed in which funding has made its way to businesses.

The party has also warned that too much pressure has been put on already-stretched local authorities to hand out the funding.

Conservative local government spokesperson Miles Briggs (Image: PA)

Tory local government spokesperson, Miles Briggs, said: “Throughout the pandemic, the SNP have been far too slow to get out vital funding out the door to struggling businesses.

“They have also failed to give our councils the resources they require to ensure those who need money receive it as quickly as possible.”

He added: “Funding schemes have been too complex and confusing for business owners and local authorities to understand.

“SNP ministers should stop passing the buck onto local authorities that are already over-stretched in trying to support communities and put further measures in place to guarantee this funding is fully paid out as a matter of urgency.”

Business leader have warned that traders receiving money they are entitled to quickly can determine whether a company is able to keep hold of workers.

Liz Cameron, chief executive of the Scottish Chambers of Commerce, said: “Businesses need lifeline financial support to be released quickly to where it is needed most.

“For many, this funding can be the difference between survival and permanent closure, the difference between being able to keep staff or having to let them go.

READ MORE: Fewer than one in five applicants get self-isolation grants in some areas

“With businesses and livelihoods on the line, all discretionary funding must be allocated to eligible businesses as quickly as possible.”

She added: “Where necessary, local authorities should also look at other mechanisms to ensure that funding delivery is as seamless as possible, including revising criteria to expand the number of eligible businesses.

“Whilst supplementary funding to local authorities to facilitate additional discretionary fund payments is welcome, businesses also need a longer-term commitment from government to provide financial support to help them recover from the impact of the pandemic.”

Andrew McRae, the Federation of Small Business’s Scotland policy chair, added: “The support delivered by government at all levels has been vitally important in keeping many businesses afloat over the last year and a half.

“But as we look toward the possibility of either longer term national restrictions, or short-term local measures, we must understand what cash is available to support firms.

"If we’re finally out of the woods, we need to look at the financial resources we have to power the recovery.

“From the information available, it looks like various grant support schemes have been underspent, including the council-led discretionary funds.

"We also know that different approaches in relation to this distribution of this funding have been adopted across the country.

“As we saw in Glasgow, the councils with the biggest reserves may not be the ones that face the biggest challenges. Further, the administration and design of these funds have often been far from perfect.

READ MORE: Financial sustainability of Scots councils 'at risk' without funding rethink, warns audit body

"Therefore as we head into the summer, ministers in Edinburgh as well as councils, need to ensure they’re prepared for the next stage in this crisis.”

A Cosla spokesperson, said: “Councils have been delivering grants to businesses since April 2020 to support them through the Covid-19 pandemic, they have delivered over £1.7 billion to date, in what must be one of the largest ever programmes of public sector business support and grant funding.

“Councils have done an exceptional job in getting this level of funding out to businesses, even more so considering that they have done it on top of administering the other national business grant schemes, this has been nothing short of a herculean effort by local government.”