Leeds City Council is to launch a second funding round after a mistake left hauliers ineligible for grants to help them update their fleets before the city’s clean air zone (CAZ) launches next year.

Hauliers based in or operating within Leeds were invited to apply for grants of up to £16,000 to upgrade or retrofit their vehicles in March this year.

The application deadline was 15 April.

However last week Leeds City Council’s Clean Air team wrote to hauliers who had applied to say that they are “ineligible for funding approval in this round of grant funding”.

It states: “Please note that the legal stipulations regarding state aid for companies is extremely complex.

“Where a company operates road freight transport for hire or reward it is not lawfully permitted to provide state aid under the de minimis provision for the purchase of new vehicles.”

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One haulier told motortransport.co.uk: “In March I was told I was eligible for a grant. I spent a considerable amount of time going to meetings to find out about the scheme and filling in the application forms and now I’ve been told I am not eligible. It beggars belief.”

Another haulier expressed frustration at the delay.

He said: “I have five Euro-5 trucks going into Leeds every day.

“That is £600,000 of kit I need to replace and it will take six months from the time I order them to when they get built and the letter does not even give a date as to when this second funding round will start.”

In an email sent to hauliers the council's Clean Air team said: "Prior to launching the competition process the State Aid legal advice received didn’t highlight the specific restriction regarding issuing funds to Road freight Transport for Hire or Reward operators.

"During the evaluation process the council identified the legal constraint related to State Aid that that prevented the lawful issue of funds.

“Had the council disregarded this advice and issued funds unlawfully the liability would sit with the businesses receiving the funding, as such the funds would be subject to clawback risk.

"The council has sought further legal advice to identify a way to support the Road Freight Transport for Hire or Reward operators that will be state aid compliant and as a result is able to run a second funding process.

"We appreciate that operators have invested resource in completing applications for grant funding, with this in mind we have aligned the new competition as far as possible with the previous round, so resubmitting application forms and associated evidence will require less effort.

"There is c£8m funding available for operators in the second round - this scheme will be launched in the near future via the Yortender system. We will issue comms via all the usual channels as soon as the scheme is open for applications."

Leeds City Council announced this week the second funding round will open on 1 August with funding of around £16m available.

Asked to clarify the total amount available to hauliers in the second round, a spokeswoman said: "In the first funding round we provisionally approved £2.27m. This takes the budget down to c£9m.

"We have ringfenced £1.2m for a third funding competition later in the year. This leaves circa £8.9m available for the Round 2 funding competition."

Leeds CAZ was due to launch in January next year but delays to the development of a vehicle checker tool saw the council push the deadline back, with no firm date fixed as yet.

The CAZ, which covers more than half of the city, will affect older HGVs, coaches, buses, taxis and private hire vehicles. Cars and LCVs are excluded from the rules. Pre-Euro 6 HGVs will be charged £50 a day to enter the zone.