Summary: Mr X complains about the Council’s handling of his complaints about its discretionary grant policy, resulting in his suffering financial loss, stress, time and trouble. We find fault in the Council’s complaint handling putting Mr X to time and trouble. We recommend the Council apologises to Mr X, addresses any remaining queries, makes a time and trouble payment and provides training to staff to prevent recurrence.

The complaint

1. Mr X complains about the Council’s handling of his complaints about its discretionary grant policy. He says it denied him the right to seek support from councillors to change its policy in his favour, causing him financial loss, stress, time and trouble.

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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 Mr X and I reviewed documents provided by Mr X and the Council. I gave Mr X and the Council the opportunity to comment on a draft of this decision and I considered the 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”. This says councils should make payments as quickly as possible to support struggling businesses. It anticipates the first payments under the scheme will be received by businesses by early June.
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 businesses.
• business with relatively high fixed property costs.
• ones that have suffered a significant fall in income due to COVID-19.
• ones which occupy a property, or part of a property, with a rateable value or mortgage payments of under £51,000.
9. 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.
• 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; 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 are prioritised, and how it will decide on the level of grant.

Council discretionary grant policy

12. The Council has provided a copy of its policy dated 3 June 2020.
13. This sets out eligibility criteria as follows:
• The scheme is aimed at small or micro businesses.
• Businesses which occupy commercial premises with fixed property-related costs of at least £3,000 per annum and a rateable value or annual rent /commercial mortgage payments below £51,000.
• Businesses which can demonstrate that they have suffered a significant fall in income due to the COVID-19 crisis.
• Businesses that were trading on 11 March 2020.
• Businesses that have trading income of £20,000 per annum or higher.
• Businesses must be based in North Tyneside and employing at least one full time member of staff (this can include owners, partners and directors).
• Only one grant will be paid per business.
14. The first phase will include:
• Small businesses in shared offices or other workspaces which do not have their own business rates assessment;
• Regular market traders attending markets on at least 4 days per week with fixed building costs, who do not have their own business rates assessment;
• Bed & Breakfasts which pay Council Tax instead of business rates;
• Certain charity properties; and
• Manufacturing businesses working on products for the NHS Supply Chain directly linked to COVID-19 which are unable to access NHS Supplier Relief funds.
15. The policy sets out the level of grant available based on the type of business. It also sets out the evidence the Council needs to assess eligibility.
16. The Council will aim to provide an outcome within three weeks of a completed application.

Council complaints policy

17. The Council publishes its complaints policy on its website. This says the complaints procedure does not apply to complaints about policy. It will respond to complaints about policy at stage 1 only.
18. Stage 1, local resolution. It will respond in 15 working days or it will give an explanation and target date if it is likely to take longer.
19. Stage 2. A senior manager reviews, attempts to resolve and respond within 15 working days or it will give an explanation and target date if it is likely to take longer. At this stage the principle is that a manager will not have been significantly involved in the matter so far and will have sufficient authority to examine and attempt to resolve a complaint. New issues will prompt registration of a new complaint, which will start at Stage 1. Stage 2 should be used as another opportunity to resolve a complaint. It should not be used to simply defend the answer given at Stage 1.
20. Escalation to stage three is at the discretion of the Senior Complaints Officer.
21. Stage 3. Referral of the complaint for consideration and a final decision by Appeals and Complaints Committee.
22. Once a complaint has exhausted the Corporate Complaints procedure the complainant can refer their complaint to the Ombudsman for consideration.

What happened

23. The Council refused Mr X’s request for a discretionary grant.
24. On 30 June 2020 Mr X completed an online complaint to the Council.
25. On 1 July Mr X emailed officers directly, raising the same matters.
26. On 3 July Mr X emailed the Council’s Chief Executive (“CEO”), asking him to respond to the points raised.
27. I have summarised the key points raised by Mr X in the above correspondence as follows:
• The Council refused a grant as he does not operate from commercial premises. He queries where this requirement is in the Government guidance.
• He queries why the Council took so long to decide on his case.
• He considers his business meets the criteria set in the Government guidance.
• He asked how the Council decided to exercise discretion and evidence of this.
• He asked for an independent review.
28. On 7 July a Council officer responded to Mr X further to his correspondence to the CEO. It explained the Government gave it discretion. It had limited funding and adopted a phased approach to ensure it could accommodate grant requests. It outlined the criteria at phase one. It noted this excluded home based businesses such as his, however it had limited resources and could not support every business. It had aligned its approach with other local councils.
29. Mr X said the Council had not addressed all his questions. He worked from client properties and also used a home office.
30. The Council explained to Mr X he had no fixed or ongoing property costs associated with his business and no tenancy in place for any commercial premises. Therefore, he did not meet the relevant criteria for funding.
31. Mr X said the Council had ignored his questions and he was unhappy an officer had responded. He questioned why the Council did not provide an independent review.
32. The Council accepted receipt of Mr X’s complaint of 30 June on 7 July. Mr X was unhappy about this delay. The Council explained the delay was due to it checking if this fell within its complaints process. It apologised for the delay and said it would aim to respond by 22 July.
33. Mr X asked that an independent officer consider his complaint. However, the Council explained at stage 1 it would be an officer close to the complaint, with the most knowledge. The Council suggested if Mr X was unhappy with its complaint response he could lobby local councillors to change the criteria under its policy.
34. On 15 July Mr X made a new online complaint to the Council. He complained the Council had not answered all his questions, did not provide an independent review and delayed recording his complaint for seven days.
35. The Council responded to Mr X’s initial complaint on 23 July. In summary it said:
• The Government guidance said the funding was aimed at businesses with high ongoing fixed property related costs. It also gave councils discretion in how to apply this guidance. Its own policy says this applies to those occupying commercial premises.
• It published its policy on 5 June 2020. This says it needs up to three weeks to provide an outcome to an application. This was to allow it time to individually assess and determine each. It received his application on 5 June and decided on 26 June, within three weeks.
• Government guidance gives it discretion and its criteria reflect the guidance.
• It notes Mr X meets some of its eligibility criteria. But it limits eligibility to businesses occupying commercial premises. It targeted funding at those businesses operating out of commercial premises and most likely to have the highest ongoing fixed property related costs.
• Mr X’s application gave his business address as his home and there was no evidence of any lease or licence to show him occupying commercial premises or having fixed property-related costs.
• Phase one of its scheme applied to the four priority areas set in the Government guidance. Following review at phase two, it again targeted the funding at those businesses operating out of commercial premises and most likely to have the highest ongoing fixed property related costs in line with the Government guidance for the discretionary grant funding.
• It developed its scheme in line with the relevant Government guidance and also the situation within the local economy to ensure it used the limited funding available to support those businesses most affected.
• This was its final response and he could contact the Ombudsman if he remained unhappy.
36. On 27 July Mr X chased a response to his complaint of 15 July.
37. The Council apologised and explained he should have received an acknowledgement. It said it had added this complaint to the previous one.
38. Mr X was unhappy the Council added this to his previous complaint as he considered it separate. Further, the Council had since responded to his previous complaint without addressing the complaint of 15 July. But, as it had now closed the complaint, he would contact the Ombudsman.
39. Mr X made a request under the Freedom of Information Act for the Council to provide a copy of the policy impact assessment and equality impact assessment carried out for its discretionary grant policy.
40. The Council refused to respond to the request, relying on an exemption under the Act. However, in a letter to Mr X’s MP the Council explained it did not carry out these assessments because the broad criteria were set by the Government. It considered the Government guidance and further refined the criteria using its discretion and local knowledge. It notes the Government has confirmed it fulfilled its own public sector equality duty for all elements of its response to COVID-19.
41. In response to enquiries the Council provided a copy of a briefing note dated 14 May 2020. This sets out the Government guidance on discretionary grants. The Council proposed eligible businesses in the first phase would be:
• Small businesses in commercial premises which do not have their own business rates assessment
• Regular market traders
• Bed & Breakfasts
• Certain charity properties
42. All businesses would need to demonstrate need and fixed property costs.
43. It estimated it could support 185 businesses at a cost of £1.4m. This was lower than the fund of £1.65m to allow for an increased number of applications.
44. The grant schemes could be reviewed in June and if resources were available it could launch a second phase of support for home working businesses or larger retail hospitality and leisure businesses or alternatively any other sectors which emerge during the application process.
45. The Council also provided copy of a briefing note dated 9 July 2020. This refers to the Government guidance asking councils to prioritise four types of business. The Council had added an additional business priority area (manufacturing), though this would receive support from a different fund. It noted at phase one it aimed to support those priority areas which also met the other criteria in the Government guidance, that is:
• Small and micro businesses
• Businesses with relatively high ongoing fixed property-related costs
• Businesses which can demonstrate they have suffered a significant fall in income due to the COVID-19 crisis
• Businesses which occupy property, or part of a property, with a rateable value (RV) or annual rent or annual mortgage payments below £51,000.
46. It was due to approve 198 applications at phase one though it had funds for 280. Therefore, it had funds remaining to deliver a second phase of the scheme based on local priorities.
47. It took into account the views of ineligible applicants, the approach of other local authorities, the views of a local business forum and views from other businesses.
48. It set out its consideration on each priority group put forward. In relation to home based workers it recorded: This is the largest group of businesses with an estimated 2,000+ based in North Tyneside. As phase two will be able to support less than 200 businesses the scheme could be overwhelmed. Phase two should still follow Government Guidelines which states that support should be primarily and predominantly aimed at ‘businesses with relatively high ongoing fixed property-related costs’ which would exclude home-based businesses.
49. It proposed phase two was open to all businesses with a Rateable Value (RV) between £15,000 and £51,000. And Retail, Hospitality and Leisure Businesses with a RV between £51,000 and £75,000.
50. In response to my draft decision Mr X referred to correspondence exchanged with a local councillor, Mr Y, as evidence the Council prevented him from lobbying councillors to change its policy. In summary:
• He contacted Mr Y on 26 June 2020. On 2 July Mr X updated Mr Y that he had now raised a complaint to the Council.
• On 3 July Mr Y’s office explained they could not now make enquiries to the Council as the corporate complaint took precedence.
• On 24 July the Council closed Mr X’s complaint. Mr X took this to mean he could no longer lobby councillors for a change in policy.
• On 26 July Mr X told Mr Y he was unhappy with the Council’s final response and wanted to lobby members for a change to Council policy.
• On 5 August Mr Y suggested he contact the Ombudsman.

Findings

51. In May 2020 the Government asked councils to set up discretionary funding schemes with the expectation payments would be made from early June. The Council set up and published a scheme by 5 June. It started processing applications from 5 June with a view to making payments within three weeks. I consider these timescales do not evidence significant delay or fault.
52. The Government gave councils discretion to prioritise or exclude certain businesses for funding. However, the Council must follow a proper decision making process in exercising that discretion.
53. Having reviewed the Council’s briefing note for phase one of its funding, I am satisfied the Council considered the Government guidance and decided to adopt a policy which mirrored this. However, the Council refined the criteria for small businesses to include only those occupying commercial premises. The Council should have set out written reasons for this but did not do so. I find this amounts to fault. I do not consider this affected the policy or caused injustice, because the Council provided written reasons at phase two which would have equally applied at phase one.
54. Having reviewed the Council’s briefing note for phase two of its funding, I note it considered there were too many home based workers to offer support given the limited resource available. It also assumed they did not have high ongoing costs. It is not clear what evidence the Council relied on in reaching such a firm conclusion on costs. However, I do not consider this point would have changed the Council’s decision in any event, given the identified limits on its funding. The briefing note evidences the Council carefully considered which sectors to support at phase two and gave reasons for its decision. I find no fault causing injustice in its decision making process.
55. I am not aware of any legal requirement for the Council to complete impact assessments before finalising its discretionary grant policy. And the Council has explained why it did not consider it necessary to do so. I find no fault in this regard.
56. The Council refused Mr X a discretionary grant at phase one because he did not occupy commercial premises with fixed costs of at least £3000 per year as required by its policy. I note Mr X disagrees with the Council’s decision. However, the Council took account of the information and evidence provided by Mr X and decided in line with its policy. I find no fault in its decision making.
57. Mr X asked specific questions in his emails of 1 and 3 July which the Council did not address in its response of 7 July. And the Council did not address the complaints raised by Mr X on 15 July. This amounts to fault in the Council’s handling of the complaint. Mr X was put to time and trouble as a result.
58. The Council explained and apologised for its delay in recording Mr X’s complaint seven days late. I am satisfied with the Council’s response in this regard.
59. The Council did not have to provide an independent review at stage 1. An officer with knowledge of the matters raised responded to Mr X in line with the Council’s complaints policy. This is not fault.
60. The Council did not have to treat Mr X’s complaint of 15 July as a new complaint, if it considered it was related to his first complaint. Therefore, I do not find the Council at fault for joining the complaints, (though as above, it should then have addressed this complaint).
61. I consider there is no evidence that shows the Council stopped Mr X from contacting local councillors to lobby for a change in its policy, at any time. I note a councillor, Mr Y, said he could not make enquiries of the Council once Mr X had started the corporate complaints process. However, this does not mean councillors could not consider a policy change or the Council prevented them from doing so. Although Mr X thought the Council should have kept his complaint open while he contacted councillors, this is not part of its complaints procedure. And this did not stop him from contacting a councillor in any event. I note Mr X thought he could not lobby councillors once the Council closed his complaint but he did then contact Mr Y. I note Mr Y did not directly address Mr X’s request to lobby for a change in policy but referred him to the Ombudsman. However, that does not mean councillors were unable to consider a policy change or that the Council’s actions prevented this. I therefore find no fault by the Council.
62. It remains open to Mr X to contact Mr Y again if he wishes. Any concerns about the conduct of Mr Y as a councillor would be a separate matter.

Agreed action

63. To remedy the injustice set out above, I recommend the Council carry out the following actions within one month of the date of my decision:
• Provide Mr X with a written apology for failings in its complaints handling;
• Ask Mr X if he has any outstanding queries (further to his emails of 1 and 3 July and complaint of 15 July) and if so, provide a final written response to these;
• Pay Mr X £100 for time and trouble;
• Provide training or guidance to staff dealing with complaints, including the importance of addressing all points raised at the first opportunity and ensuring a response is provided to any later complaints.
64. The Council has accepted my recommendations.

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Final decision

65. I find the Council at fault in its handling of Mr X’s complaint, causing injustice. The Council has accepted my recommendations and I have completed my investigation.

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Investigator's decision on behalf of the Ombudsman