Summary: Mr X complains the Council wrongly refused him a business grant and delayed issuing its decision. We find fault in the Council’s decision making process. We recommend it provides Mr X an apology and payment for uncertainty. Further that it remakes its decision and takes action to prevent recurrence.

The complaint

1. Mr X complains the Council wrongly refused him a business grant and delayed providing its decision outcome. He says this caused him stress and resulted in him closing his business and selling it at a loss. It also meant he missed the deadline to apply of a discretionary grant.

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The Ombudsman’s role and powers

2. We investigate complaints about ‘maladministration’ and ‘service failure’. In this statement, I have used the word fault to refer to these. We must also consider whether any fault has had an adverse impact on the person making the complaint. I refer to this as ‘injustice’. If there has been fault which has caused an injustice, we may suggest a remedy. (Local Government Act 1974, sections 26(1) and 26A(1), as amended)
3. 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. This complaint involves events that occurred during the COVID-19 pandemic. The Government introduced a range of new and frequently updated rules and guidance during this time. We can consider whether the council followed the relevant legislation, guidance and our published “Good Administrative Practice during the response to COVID-19”.
5. 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

6. I spoke to Mr X and I reviewed documents provided by Mr X and the Council.
7. I gave Mr X and the Council an opportunity to comment on my draft decision. I considered their comments before making a final decision.

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What I found

Grant Funding Schemes

8. In response to the COVID-19 pandemic the Government introduced two grant schemes to support businesses. The Department for Business, Energy and Industrial Strategy published guidance for councils on how to apply these: “Grant Funding Schemes” (March 2020).

Small Business Grant

9. Businesses which, on 11 March 2020, received Small Business Rates Relief (“SBRR”) were eligible for a Small Business Grant (“SB Grant”) of £10,000.
10. Eligibility for SBRR is subject to s43 of the Local Government Finance Act 1988. This says the rate applies to occupied businesses.

Retail, Hospitality and Leisure Grant

11. Businesses which, on 11 March 2020, would have been eligible for the Expanded Retail Discount were eligible for a Retail Hospitality and Leisure Grant (“RHL Grant”) of up to £25,000.
12. In April 2020 the Government published guidance for councils on how to apply the Discount; “Business Rates, Expanded Retail Discount 2020/21: Coronavirus Response Local Authority Guidance”.
13. This makes clear the Expanded Retail Discount (“ERD”) applies to occupied businesses wholly or mainly being used for retail, hospitality or leisure purposes, reasonably accessible to visiting members of the public.
14. If a business had to close temporarily during the pandemic it would still be eligible.

Empty property relief

15. Gov.uk says you do not have to pay business rates on empty buildings for three months. After this time, most businesses must pay full business rates. However, some properties can get extended empty property relief:
• Industrial premises (for example warehouses) are exempt for a further three months
• listed buildings - until they’re reoccupied
• buildings with a rateable value under £2,900 - until they’re reoccupied
• properties owned by charities - only if the property’s next use will be mostly for charitable purposes
• community amateur sports clubs buildings - only if the next use will be mostly as a sports club.

Discretionary grant

16. In response to the COVID-19 pandemic the Government introduced further support for businesses, including a discretionary grant fund.
17. Councils could give a discretionary grant of £25,000, £10,000 or any sum under £10,000 to businesses which could not access other grant funding (other than the Job Retention Scheme). The value of the payment was at the council’s discretion.
18. The Council opened a discretionary grant scheme in June 2020 and this closed in August 2020.

Principles of good administrative practice

19. In 2018 the Ombudsman published a guidance document setting out the standards we expect from bodies in jurisdiction “Principles of Good Administrative Practice”. We issued an addendum in response to the COVID-19 pandemic; “Good Administrative Practice during the response to Covid-19”. This shows we expected similar standards from councils, even during crisis working. The following points are relevant in this case.
• The basis on which decisions are made and resources allocated, even under emergency conditions, should be open and transparent.
• Decision reasons should be clear, evidence based and where necessary explained in the particular context and circumstances of that decision.

What happened

20. The Council has provided:
• evidence it issued business rates bills to Mr X dating from 2015 to 2020 showing he was exempt from paying business rates due to the low rateable value of the property. The bills show the Rateable Value (RV) charge for the period and then say “Exemption: Low Rateable Value” with the RV charge deducted.
• inspection reports dated 2015 and 2016 recording the property as empty, with only some rubbish inside, but not in use.
• letters sent to Mr X in 2017 and 2018 confirming the property received a full exemption from business rates as it was empty and had a rateable value below £2600. And seeking he confirm if the property was still empty.
• confirmation from Mr X or his representative in 2017 and 2018 that the property was still empty.
• account notes that show it received no contact from Mr X to say the property was no longer empty, that it was reoccupied or that he had started trading from it until April 2020.
21. On 9 April 2020 Mr X applied for a RHL Grant, enclosing a copy of a bank statement in support.
22. He chased the Council’s response and then on 9 May applied for a SB Grant.
23. On 20 May the Council replied to Mr X refusing a grant. This was because his property attracted a low rateable value and was classed as empty. However, if he disagreed he could request a review.
24. Mr X’s MP then wrote to the Council to say Mr X had been working from the property for a number of years and queried if any other grant was available.
25. The Council replied to say its records showed Mr X’s property had been empty since 2010 and each year it sent him a bill to that effect, showing it was exempt from business rates. It last heard from Mr X in October 2018 when he confirmed the property was still empty. It had checked and could see it did not send a review letter in 2019. However, an image taken from Google maps dated April 2019 showed there was no trading from the property at that date. If Mr X could now evidence he was trading before 11 March 2020 and had to close due to the pandemic, it would re-assess his eligibility for a grant. It suggested this could be evidence of:
• Utility bills showing usage in line with that of an occupied property. One from around the date of his re-occupation and a more recent one before 11 March.
• Supplier invoices between January 2020 and 11 March 2020.
• Customer receipts, till rolls etc between January and 11 March 2020.
• A recent bank statement showing evidence of transactions that would indicate trading is taking place.
26. The Council confirmed it had received one bank statement but this appeared to relate to domestic payments such as mortgage, home insurance and charity donations rather than any specific business transactions.
27. The Council said Mr X would not be entitled to any other grant unless he could evidence he was trading and had to close due to the pandemic.
28. On 1 June Mr X’s MP sent the Council an extract from an insurance policy on the property.
29. On the same day the Council explained this was insufficient evidence as Mr X could have insurance whether the business was open or closed. It needed to see documents that proved the premises were in use as at 11 March.
30. Mr X then complained to the Ombudsman that the Council had refused a grant. We asked the Council to consider this complaint through its complaints process.
31. The Council provided its stage 1 response on 29 July 2020. In summary it said:
• The business should be open and trading on 11 March.
• Records showed it had not been trading since 1998.
• Records showed it was empty since 2010 and it had issued bills to this effect each year.
• In October 2018 Mr X said the property was still empty.
• It did not send a review letter in 2019 but an April 2019 Google image suggested he was not trading then.
• It had asked for evidence of trading before 11 March and that he had to close due to the outbreak.
• It had explained why the insurance document was inadequate.
• It had not received any evidence of trading in order to pay the grant.
• It noted the Government was closing the schemes on 28 August and there would be no payments after that date.
• He could ask for a review.
32. On 21 August Mr X’s MP sent the Council further evidence including utility bills, invoices and trading records. He explained Mr X lived at the trading property and did not have separate utility bills for the business or a separate bank account for the business.
33. On 28 August the Council responded, refusing the grant. It said:
• Mr X had not met criteria for a SB Grant.
• There was no evidence of trading to the public on 11 March.
• A business must be trading wholly or mainly to the public. Wholly meaning 100% of the time or mainly 50% of the time.
• The information provided appeared to show only two customers had used the services.
• Mr X appeared to be living in the same property as he trades from.
• Mr X’s VAT bill is less than £500 (approx £2500 in annual sales).
• It would not class hand-written book-keeping notes as proof of trading.
• Mr X’s bank statement showed the same details as the invoice which could confirm trading. However, the information provided showed next to no business activity.
• To qualify for a grant Mr X had to evidence he was in rateable occupation of the commercial part of the premises as of 11 March 2020.
• It had still not received sufficient information to verify a business was being run from the shop on this date. And it had concerns about his council tax arrears.
• It repeated it would want to see to evidence trading, including utility bills and supplier invoices.
34. On 10 September Mr X’s MP responded to the Council. In summary he said:
• The invoices already provided evidenced several customers. He queried why the number of customers was relevant to proof of trading.
• Many people ran businesses from their homes. He queried where this was contrary to the rules.
• He queried why the Council would penalise Mr X for a VAT bill just £2.00 shy of £500.
• Mr X had provided his records of trading, yet these were not a requisite of the application.
• There was business activity. Further Mr X had explained most business went through Paypal which would not show on his bank statement.
• He had already provided utility bills from around March 2020.
• He had already provided supplier invoices for the period.
• Mr X did not have a manual system of receipts but has evidence provided plus the VAT return.
35. The Council responded on 16 September, repeating its refusal. It said:
• Rates relief only applied to properties open and trading.
• Its records showed the property was shut and rate bills reflected this.
• An April 2019 Google image showed the property was shut.
• It carried out an external inspection on 14 September 2020 showing the property in the same state of disrepair as it was in April 2019 with no change to contents and no evidence of use.
• It concluded the business was not open on 11 March.
36. When I spoke to Mr X he said he used the ground floor of the property for business storage as it was still damp from a leak but he continued to use the business premises upstairs. He explained if the Council contacted him to ask about the property he would say it was empty because the Council had still not remedied a leak. However, the property was not empty, he continued to trade from it. He did not believe he benefited from empty rates relief, rather the property attracted SBRR.
37. In response to my query as to why the Council required a business to be “trading” to be eligible for SBRR rather than “occupied” as stated in the guidance, the Council said:
• The measures announced by the Government were to support those businesses trading and affected by the pandemic.
• Industry experts and rhetoric at the time suggested the grants were for businesses operating and then forced to close.
• To prevent fraud, where applicants were not registered for rates or where a property was recorded as empty, it asked applicants for proof of occupation and/or trading depending on the business.
• The guidance said a property must be occupied to receive SBRR whereas all the evidence pointed to Mr X’s property being empty.
• The property benefits from “an empty ‘Low RV’ exemption” which Mr X has never disputed. Neither SBRR nor the ERD apply to empty properties.
• Its records showed the premises to be out of commercial use since 1998 and photographic evidence supported this. Therefore, it believed it acted correctly and properly in asking for documentary evidence that Mr X was running a business. Nothing that he provided led the Council to believe he was occupying the property for commercial use.
• Since the grant schemes were introduced its work had increased ten fold yet it had no extra resources. This meant it could not always deal with matters in the timely manner.
38. In comments on a draft of this decision Mr X:
• Provided information about previous dealings with the Council. He suggested this evidenced the Council had an agenda against him and was biased.
• Provided further information about and photos of the property.
• Provided copies of correspondence to show both he and his MP chased the Council for a response to his grant application and later his complaint.
• Said he never told the Council the property was empty. He always understood the rates exemption was due to the low RV, not because the property was thought to be empty.
• Sought help on a new complaint regarding a planning issue.
• Said the Council did not give him chance to provide evidence to challenge its decision.
• Disputed the Council’s records were accurate.
39. In its comments on a draft of this decision the Council said, in summary:
• Mr X is not eligible for a grant as the property is empty.
• It carried out an investigation and considered new photos. It considers these show the property has been empty for many years.
• Mr X is using the property to store “rubbish” which is a personal use and so not he is not eligible for a grant.
• Most of the evidence of trading provided by Mr X related to another property.
• It cannot reconsider its decision.
• It cannot offer a discretionary grant as the date for applications has closed.
• It had already explained why it would not award an SB Grant and the officer who sent the decision on 28 August was aware of the difference in the two grant schemes. They must have been reiterating that Mr X did not qualify for the retail grant either, unless he provided evidence of trading occupation. It appreciates this was not very clearly laid out in the email, but the overarching response was that there was no entitlement to rates SBRR or Retail Relief therefore no entitlement to a Business Support Grant.
• It offered further explanation and reasons for the information referred and relied on its 28 August decision letter.

Findings

40. I cannot question whether a council’s decision is right or wrong simply because the complainant disagrees with it. I must consider whether there was any fault in the way the decision was reached. My role is to investigate how the Council reached its own decision. It is not within my remit to consider the information and reach my own decision on whether Mr X is entitled to rates relief or a grant.
41. A property must have been occupied on 11 March 2020 to be eligible for rates relief and a corresponding business grant.
42. The Council held records that Mr X’s property was empty and had a low rateable value. It issued business rates bills which showed he did not have to pay business rates due to the low rateable value. It also sent him correspondence explaining he was exempt from business rates as the property was empty and had a low rateable value. I am therefore satisfied the Council made Mr X aware he benefitted from empty property relief. I have not seen any evidence to suggest Mr X told the Council its records or billing were incorrect, prior to March 2020. Once Mr X did challenge the Council, it gave him the chance to prove occupation. I find no fault by the Council in this respect.
43. I recognise Mr X did not understand that a low rateable value meant the Council considered his property was empty. However, I find that was through no fault of the Council.
44. When Mr X applied for a grant in April 2020, the Council initially refused because its records showed Mr X’s property was empty. I am satisfied the Council reached this decision taking into account the information it held and the Government guidance, which makes clear grants are only available to occupied businesses. I find no fault.
45. The Council gave Mr X the opportunity to challenge its decision (in correspondence of 20 May 2020), however he still did not provide evidence to show the property was occupied and in use. The Council therefore maintained its decision to refuse a grant. I am satisfied the Council took account of relevant information and properly applied the Government guidance in reaching this decision. I therefore find no fault.
46. I note Mr X denies he was given the opportunity to provide evidence to challenge the Council’s decision. However, the Council has provided a copy of the letter sent on 20 May and I am therefore satisfied on balance it sent this. Though I appreciate Mr X may not have received the letter.
47. Mr X applied for a grant in early April and the Council issued its decision in late May. While I recognise Mr X was anxious for a response, I do not consider this timeframe amounts to a delay or fault. Mr X’s MP provided further evidence on 1 June and the Council responded on the same day. Again, there was no delay. I accept the Council’s refusal of a grant in June 2020 may have dissuaded Mr X from applying for a discretionary grant or other schemes, however he still could have done so. I find no fault causing injustice.
48. During the complaint process Mr X’s MP provided evidence seeking to show Mr X did occupy and use the property for his business. Having reviewed the Council’s response I am not satisfied it considered this evidence properly before upholding its decision to refuse a grant. This is because:
• The Council’s response of 28 August appears to confuse the criteria for a SB grant with that of a RHL Grant; it is not clear it applied the correct principles.
• The Council appears to have taken account of irrelevant information. That Mr X lives in part of the property; that Mr X may have council tax arrears and; that the business has a limited number of customers or activity would not, on the face of it, affect his entitlement to rates relief or a grant.
• The Council appears to have ignored relevant information including a utility bill for the period 8 January to 3 April 2020.
• The Council has not provided reasons for rejecting other evidence provided, including utility bills and supplier invoices.
• When Mr X’s MP challenged the Council’s response, it relied on its own evidence that the property was empty and not trading without any reference to Mr X’s evidence that the property was occupied.
49. Given the points above, I find the Council did not provide clear, evidence based reasons for its decision. In the absence on such reasoning, I cannot be satisfied the Council followed a proper decision making process upon receipt of Mr X’s evidence. This is fault. I cannot say what the decision outcome should be, however I consider the Council should remake its decision, taking account of all the information and evidence provided. I consider it should also provide Mr X with an apology and a payment for the distress and uncertainty suffered because of this fault. Further that it should take action to prevent recurrence.
50. In response to the Council’s comments, it is not my role to decide on Mr X’s eligibility for rates relief or a grant and I have not said he is eligible for either. Rather I have found the Council has not evidenced it followed a proper decision making process when deciding his request. It is therefore right that the Council remake its decision and send this to Mr X, showing proper consideration of all relevant information and providing clear evidence based reasons for its decision with reference to relevant law and policy.
51. Even if the Council decides Mr X should have received the grant, I cannot say Mr X had to close his business and sell it at a loss as a direct result of the Council’s fault. This is because there may be many factors that result in a business’ closure and many factors that affect a business’ sale price. I therefore cannot say Mr X suffered further injustice and so cannot consider a further remedy in this regard.
52. In response to a draft of this decision Mr X has evidenced both he and his MP chased the Council for a response to his grant application and then to his complaints. However, while I appreciate the urgency of the situation for Mr X, I consider there was no significant delay by the Council. I do not find fault in this regard.
53. I acknowledge Mr X feels the Council is treating him unfairly and is biased. However, I cannot comment on matters that were not the subject of this complaint or investigation. Insofar as I have investigated the Council’s decision making in this case, I have found fault but I have seen no evidence the Council acted with bias.
54. We cannot normally investigate a complaint unless we are satisfied the council knows about the complaint and has had an opportunity to investigate and reply. Therefore, while I acknowledge Mr X has concerns about a planning issue, he will need to first raise this with the Council. If he remains unhappy after completing its complaints process he may contact the Ombudsman and we will decide whether to investigate. I cannot investigate a new and separable issue at this stage or as part of this investigation.

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Agreed action

55. To remedy the injustice set out above I recommend the Council carry out the following actions:
56. Within one month of the date of my decision:
• Provide Mr X with a written apology.
• Pay Mr X £300 for distress and uncertainty.
• Remake its decision on Mr X’s eligibility for rates relief and a grant, showing consideration of the evidence and applying relevant law and policy. Write to Mr X with its decision and reasons. If it finds Mr X would have been eligible, apply the correct rates relief retrospectively and pay him an amount equivalent to the grant.
57. Within three months of the date of my decision:
• Provide training/guidance to relevant staff to ensure they provide clear evidence based decisions in line with the Ombudsman’s guidance on good administrative practice.
58. The Council has accepted my recommendations.

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Final decision

59. I find fault in the Council’s decision making process on Mr X’s eligibility for a business grant. The Council has accepted my recommendations and I have completed my investigation.

Investigator’s Final decision on behalf of the Ombudsman

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Investigator's decision on behalf of the Ombudsman