Summary: Miss X complains about the Council’s decision making on a discretionary grant for her business, resulting in financial loss. We find no fault in the Council’s decision making process.

The complaint

1. Miss X complains about the Council’s decision on a discretionary grant for her business. She says the Council has not followed Government guidance and has failed to exercise any discretion causing her business significant financial loss.

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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 Miss X and I reviewed documents provided by Miss X and the Council. I gave Miss 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

Discretionary grants

6. In response to the COVID-19 pandemic the Government introduced support for businesses, including a discretionary grant fund. In May 2020 it published “Local Authorities Discretionary Grants Fund- guidance for local authorities”.
7. 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.
8. The funding is aimed at:
• small and micro business,
• business with relatively high fixed property costs,
• businesses that have suffered a significant fall in income due to COVID-19 and
• those which occupy a property with a rateable value of under £51,000.
9. The Government 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.
• 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; and
• Certain charity properties.
10. 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.
11. Councils should set out their discretionary grant scheme on their website, providing clear guidance on which types of business it will prioritise and how it will decide on the level of grant.

Council policy

12. The Council set up a discretionary business grant fund to support businesses in four areas:
• Small businesses
• Bed & Breakfasts which pay Council Tax
• Certain charity properties; and
• Certain businesses in the Visitor Economy
13. In order to be able to help as many businesses as possible, it decided to set the maximum grant for businesses outside of the Visitor Economy at £10,000. The maximum grant for businesses within the Visitor Economy was £25,000. However, the Council later updated its scheme to allow small businesses with fixed property costs over £51,000 per year, to access this maximum.
14. The Council set the level of grant on a sliding scale based on the number of full time equivalent employees within a business as follows:
• 1 or less £3500
• 2 to 4 £5000
• 5 to 9 £7500
• 10 to 50 £10,000
• 21 to 50 £25,000 (only available to those in the Visitor Economy or small businesses with fixed property costs over £51,000)
15. I note the Visitor Economy includes leisure, entertainment, personal care, restaurants and hotels.

What happened

16. Miss X applied to the Council’s discretionary grant fund.
17. The Council gave Miss X a grant of £3500 as she had a small business with fixed costs under £51,000 per year and the equivalent of one full time staff member.
18. Miss X complained the Council had not exercised any discretion. If she paid business rates to the Council she would have received a grant of £25,000 under the non-discretionary grant schemes. However, she could not benefit from those as she worked within a gym, which paid the rates. The Council did not take account of her high level of fixed costs or her inability to trade during lockdown.
19. Miss X complained again as she had not received a response. The gym was now closing and she would incur further costs to relocate.
20. The Council told Miss X she had received the maximum grant available under its scheme. It based the grant levels on a sliding scale using the number of employees. It designed it this way to spread as much money to as many businesses as possible. It followed all the mandatory elements of the guidance set by Government. It used its discretion to allocate funding to the Visitor Economy sector which has been severely affected by the pandemic and is at most risk.

Findings

21. The Government issued guidance but gave councils discretion to set up their own schemes.
22. Of relevance to this case, the Government gave councils discretion to decide on the appropriate level of grant. The guidance sets out the factors councils may want to take into account, but it remains up to each council which factors to consider. The guidance says councils should set out a clear policy on the businesses they will prioritise and how they will decide on the level of grant.
23. The Council’s scheme says which businesses it will prioritise and shows how it decides on the level of grant. I note Miss X considers this too rigid an approach however I find the Council has set out a clear policy as required by the Government guidance.
24. The Council decided the level of grant based on employee numbers. It says this was to reach more businesses. I note Miss X considers the Council is wrong to decide based on employee numbers and thinks the Council should have taken account of other factors. However, the Government gave councils discretion what factors to consider and, it said councils may want to consider employee numbers. I am therefore satisfied the Council took relevant information into account and decided in line with its policy and Government guidance.
25. I appreciate Miss X is upset she has not received a greater level of funding and feels the Council has not achieved what the Government intended. However, the Council has followed a proper decision making process and therefore I do not find fault.

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Final decision

26. I have completed my investigation. This I because I find no evidence of fault in the Council’s decision making process in awarding a discretionary grant to Miss X.

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Investigator's decision on behalf of the Ombudsman