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SLTA News And Updates 9th June

SLTA News and Updates 9th June

Finance Minister, Kate Forbes, announces the end of Small Business Grant and Retail, Hospitality and Leisure Schemes. Financial Conduct Authority test case of the validity of business interruption claims.

Finance Minister, Kate Forbes, announces the end of Small Business Grant and Retail, Hospitality and Leisure Schemes and more support for small businesses.

The Finance Minister, Kate Forbes, has confirmed that the Small Business Grant and Retail, Hospitality and Leisure Grant schemes will close for new applications on 10th July.  The latest figures up to 2 June show that £824.541 million has been distributed to 72,622 businesses across Scotland through the schemes, but that new applications have slowed in recent weeks. Originally these schemes were open for application until the 31st March 2021.

Finance Secretary Kate Forbes said:-

“Our comprehensive package of business support is now worth more than £2.3 billion. Our programme is kept under constant review, and we are always looking for ways to extend eligibility to help more businesses. That is precisely what we are doing today.

New applications for the Small Business and Retail, Hospitality and Leisure Grant schemes have slowed in recent weeks as large numbers of businesses have already applied. We are committed to ensuring every penny we receive from the UK Government for business support – and more – will be passed to businesses. It is essential that we do not allow funds to sit for too long in schemes that are attracting few applications, so we have decided to bring these to a close next month. That will mean that any remaining money can be re-routed to help businesses in other ways, as we have already started to do for the Pivotal Enterprise Resilience Fund.”

The Cabinet Secretary for Finance also announced further support for small businesses which share properties, but do not pay business rates.   Such business are now eligible to apply for grants up to £10,000 to help with the impact of COVID-19.

This prompted the following response from the SLTA:-

“Dear Cabinet Secretary,

The SLTA refers to your recent announcement that small businesses which share properties, but do not pay business rates, are now eligible to apply for grants to help with the impact of COVID-19.

The fact that you now have allowed people sharing office spaces etc, where many do NOT pay any rates at all, to apply for grant aid is yet further evidence that you are continually ignoring the pleas for support from those with a rateable value of over £51,000 in the Tourism and Hospitality sector.

Every day we now see more and more businesses in this sector closing their doors, facing bankruptcy, or entering into redundancy consultation phases within their business to allow them to fight for survival.   This recent development only shows that the Scottish Government is turning its back on the very businesses who pay more than their fair share into a system that is already unfair and a disproportionate burden to this sector.

The Association also notes within your announcement that the closing date for applications for the initial grants will now close on the 10th of July as it is ‘essential that we do not allow funds to sit for too long in schemes that are attracting few applications, so we have decided to bring these to a close next month. That will mean that any remaining money can be re-routed to help businesses in other ways, as we have already started to do for the Pivotal Enterprise Resilience Fund.’ Perhaps now Cabinet Secretary you might just do more to focus on helping all those businesses who have still had no support from the Scottish Government.  There are of course the Hardship and Pivotal Schemes in place, but their introduction was too late in coming for many.  We appreciate that these schemes can approve grants of more than £25,000, but our research shows that, as of last week, only 14% of applicants have been successful with their applications for these grants, the rest either having failed or still waiting to hear.

The above shows that this is not the way forward to support this forgotten sector.   We do not wish to hear the repeated remark, that the “UK Government hasn’t given anything for those over £51,000 RV”. The fact remains that the Scottish Government has the discretion to distribute available grant funding as it sees fit, and so far, it has not seen fit to support those businesses in the over £51,000 RV Hospitality and Tourism sector. These businesses need to be rescued now.

On the matter of the announced closing date for grants, the SLTA seeks your clarification on a particular scenario.What is the situation if a business has a rates appeal against their rateable value already in place before the 17th March 2020 and this appeal then adjusts the rateable value to an amount below the £51,000 threshold, but not heard before or confirmed before 10th July?

Can you please confirm that, as the appeal claim was already live before the 17th of March, there will be an allowance for those businesses affected to still be able to apply for a grant after the 10th July cut-off date, and before the 31st March original deadline?

We look forward to your reply at your earliest convenience.

Yours sincerely
Stephen Montgomery

SLTA President.

Financial Conduct Authority – test case of the validity of business interruption claims.

The Financial Conduct Authority recently provided an update on the progress of its court action on business interruption insurance policies.

In a statement the FCA said:-

“Since the FCA made its last announcement on 1 May, we have approached 56 insurers and reviewed over 500 relevant policies from 40 insurers. We have identified a sample of 17 policy wordings that capture the majority of the key issues that could be in dispute.

Christopher Woolard, Interim Chief Executive at the FCA said:

‘The court action we are taking is aimed at providing clarity and certainty for everyone involved in these BI disputes, policyholder and insurer alike. We feel it is also the quickest route to this clarity and by covering multiple policies and insurers, it will also be of most use across the market. The identification of a representative sample of policies and the agreement of insurers who underwrite them to participate in these proceedings is a major step forward in progressing the matter to court.’

The outcome we are seeking.

We want to achieve clarity for all concerned in an unprecedented situation. To do this, we are taking a representative sample of cases to court. The FCA will put forward policyholders’ arguments to their best advantage in the public interest. The FCA has retained the services of Colin Edelman QC, Leigh-Ann Mulcahy QC, Richard Coleman QC and Herbert Smith Freehills to assist it in the case.

Our view remains that most SME insurance policies are focused on property damage (and only have basic cover for BI as a consequence of property damage) so, at least in the majority of cases, insurers are not obliged to pay out in relation to the coronavirus pandemic. This case is focused on the remainder of policies that could be argued to include cover.

Policyholders should not assume that simple inclusion of their policy wording in this case will mean their policies are responsive. We are seeking a judgment that will help policyholders and insurers have a much clearer view of which business interruption policies respond to the pandemic, and those that don’t. Therefore, the court may well decide a number of these policies respond to the pandemic and others do not.

We have asked the following insurers to assist us by participating in the High Court test case:

Arch Insurance (UK) Limited

Argenta Syndicate Management Limited

Ecclesiastical Insurance Office plc

Hiscox Insurance Company Limited

MS Amlin Underwriting Limited

QBE UK Ltd

Royal & Sun Alliance Insurance plc

Zurich Insurance plc

These insurers have entered into a framework agreement with us governing the process and timetable for the test case which should take place at the end of July.

How this will affect insurers who are not participating directly in the test case?

Given the representative nature of the policies and wordings we have selected, we expect the test case to provide guidance for the interpretation of many other BI policies that are not in the representative sample.

This means that other insurers will also be affected by the test case and its conclusions. In early July, we expect to publish a comprehensive list of other insurers and many other BI policies in the market that we expect the test case to affect, based on firm submissions.”

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