Summary: Mr B complains the Council has not supported his business with any grant funding following the outbreak of the COVID-19 pandemic. We do not uphold the complaint, finding the Council could reasonably decide Mr B’s business did not qualify for support.

The complaint

1. I have called the complainant ‘Mr B’. He owns a gym. He complains the Council has not supported his business with any grant funding following the outbreak of the COVID-19 pandemic. Mr B considers the Council has failed to apply the law or government guidance correctly and it has not responded to his questions about specific legislation relating to the eligibility criteria for the grant. He has also queried why the Council treated his enquiries as a complaint.
2. Mr B says the Council’s failure to respond to his concerns has caused him unnecessary stress, anxiety and frustration. Mr B wants the Council to acknowledge its error in his case and to confirm his company meets the requirements for a grant.

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The Ombudsman’s role and powers

3. We investigate complaints of injustice caused by ‘maladministration’ and ‘service failure’. I have used the word ‘fault’ to refer to these. We cannot question whether a council’s decision is right or wrong simply because the complainant disagrees with it. We must consider whether there was fault in the way the decision was reached. (Local Government Act 1974, section 34(3), as amended)
4. If we are satisfied with a council’s actions or proposed actions, we can complete our investigation and issue a decision statement. (Local Government Act 1974, section 30(1B) and 34H(i), as amended)

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How I considered this complaint

5. Before issuing this decision statement I considered:

• Mr B’s written complaint to the Ombudsman and information gathered by a colleague who spoke to Mr B by telephone.
• Correspondence sent by Mr B to the Council and its replies sent via its corporate complaints procedure.
• Relevant law and guidance as referred to in the text below.
• Any comments made by Mr B and the Council in response to a draft decision statement setting out my thinking about the complaint.

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What I found

Relevant Law & Guidance

Retail, Hospitality and Leisure Grants

6. In March 2020, in response to the COVID-19 pandemic, the government created schemes for councils to pay grants to small businesses. Relevant to this complaint it created grants specifically for retail, hospitality and leisure businesses (RHL grants). For eligible businesses with a rateable value of between £15,000 and less than £51,000 a year the grant was £25,000.
7. To be eligible to receive a RHL grant the business had be first eligible for the Expanded Retail Discount Scheme (ERDS) for business rates “had that scheme been in force” on 11 March 2020. The ERDS scheme expanded the circumstances where a local authority could give discretionary relief from paying non-domestic rates under Section 47 of the Local Government Finance Act 1988.
8. The government published guidance in support of the ERDS and RHL grants. The ERDS guidance says the scheme applies to “occupied retail, leisure and hospitality properties” (paragraph 5 – Ministry of Housing, Communities & Local Government - Business Rates: Expanded Retail Discount 2020/21: Coronavirus Response – Local Authority Guidance May 2020).
9. The guidance contains a list of business premises which are used for leisure facilities. This includes gyms (paragraph 12).
10. The guidance says to decide if a business premise qualifies for the relief, the Council should consider if it is “wholly or mainly being used” for retail, hospitality or leisure. It describes this as a “test on use rather than occupation”. The guidance says that where a business has closed temporarily following government advice on COVID-19 it “should be treated as occupied for the purposes of this relief” (paragraph 14)

Local Authority Discretionary Grants

11. In May 2020 the government gave local authorities funding for further discretionary grants to businesses.
12. It published further guidance which says these grants cannot be paid to businesses that were not trading on 11 March 2020. (Department for Business, Energy and Industrial Strategy: Local Authority Discretionary Grants Fund – guidance for local authorities, paragraph 31)

Key facts

13. Mr B runs a gym. It has a rateable value of between £15000 and £50000. In April 2019 it suffered a flood. The Council treated the business premises as unoccupied from that date.
14. On 11 March 2020, the premises remained unoccupied. Mr B had contractors on site refurbishing the business following the flood damage. The contractors were delayed in completing refurbishment because of the impact of COVID-19.
15. At the end of March 2020 Mr B applied for a RHL grant. The Council refused his application. Mr B asked for clarification of the reasons for the decision pointing to sections of the Local Government Finance Act 1988 he considered relevant. The Council treated this correspondence as a complaint.
16. In May 2020, the Council wrote to Mr B under Stage One of its corporate complaint procedure. It explained that Mr B’s business did not qualify for a RHL grant because it was not eligible for the ERDS. The Council cited paragraph 14 of the ERDS guidance for its decision (see paragraph 10 above). It said on 11 March 2020 the gym was not being used for a “qualifying purpose” as it was not open to the public. It had closed for reasons other than the COVID-19 pandemic.
17. The Council said it had further considered if it could give a discretionary grant to the business. It decided it could not as the gym was not trading on 11 March 2020 citing paragraph 31 of the discretionary grant guidance (see paragraph 12 above).
18. Mr B wrote back to the Council. In June 2020 it provided a further reply under Stage 2 of its complaint procedure. The Council clarified that it did not dispute Mr B’s business premises was a gym. But that it could not award a grant because on 11 March 2020 it was not used as a gym because it was not trading.

My findings

19. I consider the Council could properly find Mr B’s business did not qualify for a RHL grant as it did not qualify for the ERDS. However, I think the Council has potentially caused unnecessary confusion with its reference to the test of ‘use’ set out in the guidance accompanying the ERDS. I consider paragraph 14 of the RHL guidance designed to help councils decide if business premises fit one of the descriptions of premises with a retail, hospitality or leisure use. It is saying the test is whether the premises are used wholly or mainly for one of those purposes as opposed to a different purpose. In this case there is no suggestion that Mr B has ever used his business premises for any purpose other than as a gym and exclusively so.
20. However, in this case I do not consider I need to explore this point in more detail. Because paragraph 5 of the guidance clearly states the ERDS scheme only applies to premises that are “occupied” for the purpose of non-domestic rates. Mr B’s premises had not been occupied for the purpose of non-domestic rates since April 2019 because of the flooding event. They remained unoccupied on 11 March 2020 while the refurbishment works continued.
21. So, while I consider the Council could have explained more clearly to Mr B why his business did not qualify for a RHL grant, there was no fault in its decision to refuse him.
22. I also consider the Council could reasonably decline Mr B’s business a discretionary grant as it was not trading on 11 March 2020. The government has provided no additional guidance to authorities on how to interpret if a business traded on 11 March 2020. I understand why Mr B disagrees with this judgment and considers his business still traded on 11 March. He had not dissolved the business and intended to re-open once refurbishment completed. His business continued to incur expenses. But I can also understand why the Council takes a different view as on 11 March Mr B’s gym remained empty and unoccupied while undergoing refurbishment.
23. I explained above that my role is not to find fault with the Council because the complainant disagrees with it. I could only find fault in the Council’s decision if it was reached with fault. So, while I understand Mr B’s disagreement with the Council that is not grounds for me to uphold his complaint. I am satisfied the Council came to a reasoned decision that Mr B’s business was not trading on 11 March 2020. There was no fault therefore in its refusal of a discretionary grant.
24. Finally, I note some dissatisfaction from Mr B in how his correspondence has been dealt with. I find no fault in the Council treating his enquiries about potential entitlement to a grant as a complaint. Because it was clear in those enquiries that Mr B was dissatisfied with its decision to refuse a grant and wanted to question that. I note the Council did not respond directly to Mr B’s queries about the potential relevance of certain other sections of the Local Government Finance Act 1988 (in particular Section 48). But I am satisfied it did not need to as the relevant considerations for which businesses could receive a grant are as I have set out above.

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Final decision

25. For reasons explained above I have completed my investigation satisfied with the Council’s actions. It has not acted with fault in refusing Mr B a grant to support his business.

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Investigator's decision on behalf of the Ombudsman