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A UK government scheme set up to help small businesses handle the disruption and paperwork associated with Brexit has awarded just a third of its total funds amid complaints that its complexity had discouraged companies from applying.
Ministers launched the SME Brexit support fund in February to support small exporters that were struggling to cope with the extra costs from selling their goods outside the EU single market, which Britain left on January 1.
The government offered up to £2,000 for every business to pay for practical support for importing and exporting, such as dealing with new customs, rules of origin, and VAT rules. An overall pot worth £20m was available to help up to 10,000 small companies.
But only 4,376 companies have been offered grants of about £6.8m, according to official data, with complaints over its complexity and ease of access for small businesses without specialist trade experience. A total of 5,414 companies applied.
The figures, which were revealed by Labour MP Hilary Benn in a parliamentary question, show that on average businesses who applied only received £1,555 rather than the £2,000 maximum amount available.
Benn, who is co-chair of the UK Trade and Business Commission, a cross-party group of MPs and business leaders, said the government’s support scheme seemed “more of an obstacle course, which discourages applications by making SMEs jump through too many hoops for a very small return”.
He added: “We have heard first hand testimony from businesses continuing to face serious hardships since leaving the EU. If the government really wants to support them, they must hold another round of bidding with a simplified application process and more substantial grants.”
The administration of the fund, which was launched by cabinet office minister Michael Gove as a way to help businesses “seize new opportunities available to a fully independent global trading United Kingdom”, has been overseen by PwC.
Best for Britain, which acts as the secretariat for the UK Trade and Business Commission, said there were 600,000 exporting SMEs in the UK that could benefit from the scheme.
Applications for the scheme closed last month. Benn has written to the government to urge ministers to increase support for businesses by expanding the fund.
Craig Beaumont, chief of external affairs at the Federation of Small Businesses, said small firms struggled to apply in the first round “because it was not a small business friendly, easy-to-use website — it was instead a repurposed customs intermediaries application which was confusing to navigate without knowledge”.
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The FSB is also calling on a second, streamlined round of the fund. “Crucially, it makes sense to be outside of HMRC, as that undermined the fact the grant was available for things outside of customs like training and tech,” said Beaumont. The money can be used for training and professional advice.
Naomi Smith, chief executive of Best for Britain, said: “After a rushed deal with the EU, which had scant parliamentary oversight, SMEs are facing crippling costs, burdensome bureaucracy and disrupted supply lines. Without real action by government, small businesses risk falling through the holes in this deal and into the abyss.”
HM Revenue & Customs said it had worked extensively to encourage small companies to complete applications. It had encouraged groups such as the FSB and British Chambers of Commerce to advertise the fund with their members, he added.
“For those who applied but were not eligible, we are continuing to provide support through regular communication, webinars and guidance,” HMRC said.
With applications still being processed by PwC, the administrators of the fund, the number could still rise further.