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A UK government plan put in place to help small businesses handle the disruption and paperwork associated with Brexit has awarded just a third of its total funding amid complaints that its complexity had discouraged companies from applying.
The ministers launched the SME support fund for Brexit in February to support small exporters who were struggling to cope with the additional costs of selling their products outside the EU single market, which Britain abandoned on January 1.
The government offered up to £ 2,000 for each company to pay for practical import and export support, such as dealing with new customs, rules of origin and VAT rules. A total fund worth £ 20 million was made available to help up to 10,000 small businesses.
But grants have only been offered to 4,376 companies worth around £ 6.8 million, according to official data, with complaints about their complexity and ease of access for small businesses without specialist business experience. A total of 5,414 companies applied.
The figures, which were revealed by Labor MP Hilary Benn at a parliamentary question, show that, on average, companies that applied only received £ 1,555 instead of the maximum available amount of £ 2,000.
Benn, who is co-chair of the UK Business and Trade Commission, a group of MPs and business leaders from various parties, said the government’s support plan seemed “more of an obstacle course, discouraging applications by making that SMEs go through too many obstacles for a very small return ”.
He added: “We have heard first-hand testimonies from companies that continue to face serious difficulties since leaving the EU. If the government really wants to support them, they must run another round of bidding with a streamlined 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 companies ‘seize the new opportunities available to a fully independent global trading UK’, has been overseen by PwC.
Best for Britain, which acts as the secretariat of the UK Business and Trade Commission, said there were 600,000 exporting SMEs in the UK that could benefit from the scheme.
Applications for the plan closed last month. Benn has written to the government urging ministers to increase support for businesses by expanding the fund.
Craig Beaumont, head of external affairs for the Federation of Small Businesses, said that small businesses had a difficult time applying in the first round “because it was not an easy-to-use, small-business-friendly website, rather it was an application of reused customs brokers that it was confusing to navigate without knowledge ”.
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The FSB is also requesting a simplified second round of the fund. “Fundamentally, it makes sense to be outside of HMRC as that undermined the fact that the grant was available for things outside of the customs like training and technology,” Beaumont said. The money can be used for training and professional advice.
Naomi Smith, Managing Director of Best for Britain, said: “After a hasty deal with the EU, which had little parliamentary oversight, SMEs face overwhelming costs, burdensome bureaucracy and broken supply lines. Without real action by the government, small businesses run the risk of falling through the holes in this deal and falling into the abyss. “
HM Revenue & Customs said it had worked hard to encourage small businesses to complete applications. It has encouraged groups such as the FSB and the British Chambers of Commerce to publicize the fund with their members, he added.
“For those who applied but were not eligible, we continue to provide support through regular communications, webinars and orientation,” HMRC said.
With applications still being processed by PwC, the fund managers, the number could still increase.