Summary: Mrs X complains the Council refused her a business grant and rates relief, causing her business increased financial loss. We find no fault in the Council’s decision making process.

The complaint

1. Mrs X complains the Council’s refused a business grant and rates relief, causing her business increased financial loss. She considers the Council applied its policy incorrectly and inconsistently.

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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. 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. I spoke to Mrs X and I reviewed documents provided by Ms X and the Council. I gave Ms X and the Council the chance to comment on a draft of this decision and I considered any comments provided.

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What I found

Grant Funding Schemes

6. 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

7. Businesses which, on 11 March 2020, received Small Business Rates Relief (“SBRR”) may be eligible for a Small Business grant of £10,000. Eligibility for SBRR is subject to various conditions. Of relevance to this case, the property’s rateable value must be less than £15,000.

Retail, Hospitality and Leisure Grant (“RHL” Grant)

8. Businesses which, on 11 March 2020, would have been eligible for the Expanded Retail Discount may be eligible for a RHL grant between £10,000 and £25,000.

Expanded Retail Discount

9. The Government extended business rates relief to retail, hospitality and leisure sectors under the Expanded Retail Discount (the “Discount”). It published Guidance for councils; “Business Rates, Expanded Retail Discount 2020/21: Coronavirus Response Local Authority Guidance” (April 2020). This says each council will adopt its own scheme and decide whether to grant the Discount, having regard to the guidance.
10. Of relevance to this case, properties that are wholly or mainly used as shops will benefit. A “shop” is a premises used to sell goods to visiting members of the public.
11. The guidance lists the types of shops included, however says this is a guide only and it is for councils to decide if a business is broadly similar in nature to those listed and so eligible.
12. The guidance also lists the types of businesses not included but repeats this is a guide only and it is for a council to decide if a business is broadly similar in nature to those listed. Of relevance to this case, this includes businesses that are not reasonably accessible to visiting members of the public.

Council Expanded Retail Discount policy

13. The Council has provided a copy of the addendum to its Rate Relief Policy 2020. It added this following the introduction of the grant schemes. This says it will award rates relief and discounts in line with the Government guidance of April 2020.

Discretionary grants

14. In May 2020 the Government introduced further support for businesses, including a discretionary grant fund. In May 2020 it published “Local Authorities Discretionary Grants Fund- guidance for local authorities”.
15. Councils can give a discretionary grant of £25,000, £10,000 or any sum under £10,000 to businesses which cannot access other grant funding (other than the Job Retention Scheme). The value of the payment is at the council’s discretion.
16. The funding is aimed at:
• small and micro business,
• business with relatively high fixed property costs,
• ones that have suffered a significant fall in income due to COVID-19 and
• ones which occupy a property with a rateable value of under £51,000.
17. It considers the following types of business should be a priority for funding but this is a guide only. Councils should decide themselves if a business is similar and, if so, whether it should be eligible for grants. Those businesses were:
• Small businesses in shared offices or other flexible workspaces
• Regular market traders with fixed building costs, such as rent, who do not have their own business rates assessment
• Bed & Breakfasts which pay Council Tax instead of business rates
• Certain charity properties
18. In taking decisions on the appropriate level of grant, councils may want to take into account:
• the level of fixed costs faced by the business
• the number of employees
• whether businesses have had to close completely and cannot trade online and
• the consequent scale of impact of COVID-19 losses.
19. Councils should set out their discretionary grant scheme on their website, providing clear guidance on which types of business are prioritised, and how it will decide on the level of grant.

Council discretionary grant policy

20. The Council has provided a copy of its discretionary grant policy. This shows it intended to support small or micro businesses in the following sectors:
• Bed & Breakfasts which pay Council Tax instead of business rates;
• Certain charity properties; and
• Hotels and pubs with a rateable value over £51K
21. And then these further sectors if funds remained:
• Tenants of multiple occupancy properties
• Regular market traders
22. The Council has detailed its reasons for providing support to each of these sectors, with reference to the Government guidance and local priorities. It has also set out how it will decide on the level of grant payable.

What happened

23. The Council refused Mrs X a Small Business grant because her business had a rateable value above £15,000 and so was ineligible for SBRR. The Small Business Grant was only available to those in receipt of SBRR.
24. The Council refused Mrs X a RHL grant because her business was classified as a workshop. This type of business was ineligible for the Discount and so was also ineligible for the RHL grant. It explained workshops would not normally fit the definition of retail. In order to qualify as a retail business the property must be wholly or mainly used for the sale of goods/provision of services to visiting members of the public. If Mrs X felt her business met that definition it would look at the claim again.
25. Mrs X and the Council continued to correspond. Mrs X explained her business was not a workshop. The premises was open daily selling goods to other businesses and the general public. She provided photo and video evidence in support, in addition to evidence from her accountant that 25% of sales were to members of the public. She queried why four similar businesses received grants.
26. The Council said Mrs X was not entitled to a Small Business grant because the rateable value of her business exceeded £15,000. And she was not entitled to a RHL grant because her business was not wholly or mainly used as a shop, given only 25% of sales were to visiting members of the public. Other businesses had received grants as they had a rateable value under £15,000 or because their business was wholly or mainly used as a shop.
27. Mrs X and the Council continued to correspond. Mrs X found a news article dated 18 June 2020 which said: “The Government yesterday published a revised FAQ clarifying that suppliers to the retail, hospitality and leisure sectors who have lost demand can be awarded discretionary grants of up to £25,000”.
28. Mrs X applied for a discretionary grant. An automated response explained the Council was only inviting applications from certain sectors, with reference to its published discretionary grant policy.
29. The Council then told Mrs X it had not received any further guidance from the Government and confirmed she was ineligible for any grant.
30. In a letter of 28 June to Mrs X’s MP, the Treasury department outlined all the support available. I note it did not refer to any additional support for those in the supply chain.
31. When I spoke to Mrs X she said there was one business next to her own, with exactly the same set up, yet it had received a grant while she had not. Further, that the Government had told councils to use their discretionary grant funds to support businesses in the supply chain, like her own, yet the Council had not done so.
32. In response to enquiries the Council said whether the neighbouring business had received a grant and gave reasons for its decision. I cannot give further detail for confidentiality reasons.

Findings

33. The Council told Mrs X she did not qualify for a Small Business grant because her property had a rateable value above £15,000. The Council’s decision was in line with Government guidance. I do not find fault.
34. A business must be eligible for the Expanded Retail Discount to be eligible for the RHL Grant. The Government gave councils discretion to set up their own scheme for the Discount. In this case the Council’s policy was to decide in line with the Government guidance. This says the Discount is available to premises used wholly or mainly as shops, selling goods to visiting members of the public. The Council noted only 25% of Mrs X’s business was selling goods to the public and so considered it was not wholly or mainly used as a shop. The Council’s decision was in line with its policy and Government guidance. I do not find fault.
35. It is for the Council to decide if a business is wholly or mainly used as a shop and so eligible for a grant. However, it should be consistent in its decision making. Mrs X felt the Council decided differently for a neighbouring business. However, having reviewed the Council’s decision and reasons, I am satisfied its decision was consistent and in line with its policy and Government guidance. I therefore find no fault.
36. The Government guidance makes clear councils had discretion which businesses to support with their discretionary grant fund. I have not seen any Government publication which says councils must provide grants to businesses in the supply chain. And having considered the reference in the media, I find this is only saying councils can support those in the supply chain, not that they must.
37. The Council’s discretionary grant policy explained which businesses it would support and why. The Council appears to have exercised its discretion properly, taking into account the Government guidance and providing clear reasons for its decision making. I note Mrs X’s business was not eligible for support under the Council’s policy, however I find no fault in the Council’s decision making process.

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Final decision

38. I have completed my investigation. I find no evidence of fault in the Council’s decision making on either a grant or rates relief for Mrs X.

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Investigator's decision on behalf of the Ombudsman