Supply chain companies fear grant reductions over loan status

Events support companies yet to receive their Culture Recovery Fund grants have slammed the delays and a lack of communication from funders as "unacceptable".

Round two CRF grants are meant to cover costs for the three months from April, but two weeks out from the end of that period, many businesses in the live events supply chain are still awaiting payment.

Some fear they will never get it, or that awards will be reduced, amid questions from Arts Council England (ACE) about their receipt of Government-backed bank loans and whether they consider the CRF grant a "subsidy".

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A person with close knowledge of the issue said: "People are really worried that, in good faith, they have declared a loan and that some of the expenditure they asked for might be reduced."

This has caused planning difficulties for companies, some of which have needed to borrow more to stay afloat.

"As per the terms and conditions, we started with limited cashflow but we have exhausted that and now we need the money," one events company director told ArtsProfessional.

DCMS could not say at this time whether it would extend the funding use period beyond June to compensate for the delay, or whether having received a Coronavirus Business Interruption Loan would lead to a reduced award.

In emails, ACE told grantees it is discussing the "status" of these loans with DCMS. While neither funder responded to questions about how many supply chain companies are yet to be paid, lobby group #WeMakeEvents estimates more than 100 are affected.

'Disgraceful' process

Consultants helping these companies navigate the confusion said they have been horrified.

"I have never known such a disgraceful, shameful way of dealing with people whose lives are really on the edge," one consultant with significant experience of ACE funding schemes said.

"Very astute and entrepreneurial companies are now being held to ransom over money that they were offered."

The consultants say organisations' experience has varied, with some receiving their whole award while others face seemingly endless delays.

One company awaiting payment was asked to provide a diversity plan (ACE says this was only required for those with poor diversity ratings), while another said it received its rejection only to find ACE had used financial information that didn't belong to them.

One company was quickly paid after writing a letter of complaint to Culture Secretary Oliver Dowden.

"The whole process has been badly managed, and there appears to have been little if any strategic discussion with DCMS prior to the rollout and subsequent awards," the consultants said.

Most supply chain companies wrongly believed they were ineligible for the first round of the Culture Recovery Fund, and ACE was at pains to invite them to apply for the second one.

But a second consultant said the process has not been designed with their needs in mind.

Unlike the commercial businesses, a charity client had not received any letters asking about its emergency bank loan.

"It seems there's one rule for the commercial firms and another for everyone else."

Subsidy control

ACE said questions around subsidy status are not to blame for the delay in delivery, but hasn't said what is.

The funder said it recognised that new post-Brexit subsidy control rules "may be difficult for organisations to understand and that some organisations may have wrongly declared the award as subsidy," inadvertently triggering an assessment of its legality.

"For this reason, an email was sent asking organisations to review the information they provided and to resubmit their declaration."

But as for-profit businesses, many of the supply chain grantees are first-time public funding applicants and have struggled to understand the "torturous" process.

"It's new territory for us but we have ticked all the boxes and done everything they have asked of us," another company director said.

"Now we're into week 10 of a 12-week spending plan and we haven't got any money. It's not so much the lack of money – it's the constant threats that it might not happen."

Consultants said companies have been "hindered by bureaucracy and a lack of direct contact with anyone who can provide advice and support". 

They have only been able to contact ACE via email: "[This] more often than not refers them back to previous guidelines which are unclear and the very reason they are contacting ACE for information."

Sword of Damocles

One company director was recently asked by ACE how he spent a grant he is yet to receive: "I haven't had a penny."

The lack of communication has been "a Sword of Damocles," preventing progress towards recovery.

Confused by the subsidy question he emailed ACE four times throughout April seeking clarification but received no response. Running up against the deadline to accept the grant, he declared it as a subsidy, causing further confusion.

He has since been asked to share details of how he spent his business interruption loan and what he plans to do with any remaining funds.

But without any idea when he will receive his CRF grant, he has been reluctant to use any of his reserves.

"If we had known from the outset… we would have a different strategy for transition and survival."