Summary: Mr X complained the Council refused to assist his business, which suffered financial hardship as a result of the COVID-19 pandemic. The Council was at fault for giving incorrect advice about its discretionary grant scheme and for failing to respond to an enquiry about the business rates hardship fund. It should apologise. It was not at fault for refusing a small business grant or rates relief.

The complaint

1. Mr X complained about the Council’s refusal to assist his business with business rates hardship relief or a grant when his business was closed in line with government advice during the COVID-19 pandemic.
2. He says his business suffered financial hardship and may not be able to continue trading as a result.

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The Ombudsman’s role and powers

3. 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)
4. 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)
5. We investigate complaints about councils and certain other bodies. Where an individual, organisation or private company is providing services on behalf of a council, we can investigate complaints about the actions of these providers. (Local Government Act 1974, section 25(7), as amended)
6. The Council uses a contractor to provide services relating to business rates and COVID-19 related business grants. Where a contractor carries out work on behalf of a council, the council remains responsible for those services and the actions of the contractor providing them. For simplicity I have referred to the Council throughout, although the actions up to the stage 2 complaint were taken by its contractor, and I have made recommendations to the Council.
7. 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

8. I considered:
• the information provided by Mr X and the Council;
• relevant law and guidance, as set out below; and
• our guidance on remedies.
9. Mr X and the Council had an opportunity to comment on my draft decision and I considered their comments before making a final decision.

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What I found

Relevant law and guidance

Business rates

10. Non-domestic rates, also known as business rates, is the local tax on business premises. It is calculated based on the rateable value of the property, which is decided by the Valuation Office Agency (VOA). There are various schemes for relief. For example, where the property is empty, or where the property owner is prevented by law from occupying the premises.

Business rates hardship relief

11. The government website, Gov.uk, says councils can assist a business with business rates if both of the following are satisfied:
• the business would be in financial difficulties without it; and
• giving hardship relief is in the interests of local people.

COVID-19 related business grants

12. In response to the coronavirus 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).
13. Businesses which, on 11 March 2020, received Small Business Rates Relief (“SBRR”) may be eligible for a payment of £10,000 from the Small Business Grant Fund (SBG).
14. Businesses which, on 11 March 2020, received the Expanded Retail Discount may be eligible for a grant between £10,000 and £25,000 from the Retail, Hospitality and Leisure Grant Fund (RHLG).

Discretionary grants

15. In May 2020 the Government gave councils funding for further discretionary grants to businesses. It published guidance for councils on awarding discretionary grants, which said councils could award grants of up to £25,000 at their discretion to any business which cannot access other grant funding (other than the Job Retention Scheme). The guidance set out certain priorities for support and suggested factors councils may want to take into account but gave councils the power to adapt the scheme to local needs.
16. 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.
17. This Council called its discretionary scheme “The Local Economy Hardship Fund”. It prioritised local businesses based on Government guidance and an analysis of the impact of the pandemic on small businesses in its area. It divided the fund into four funds:
• Independent hospitality fund
• Arts and culture at risk fund
• Charitable organisations fund; and
• Shared offices and workspaces fund.

What happened

18. In March 2020, Mr X had to close his business in line with government advice in response to the COVID-19 pandemic. I understand his business was closed for over four months.
19. Mr X applied for a COVID-19 related business grant. In late April 2020 Mr X contacted the Council to ask about the outcome of his application. He said the business was struggling and he needed the grant to cover the business rates.
20. On 12 May 2020 the Council told him he was not eligible for a small business grant (SBG) because his business premises did not qualify for small business rate relief (SBRR). He was also not eligible for a Retail, Leisure and Hospitality Grant (RLHG) because the business did not meet the criteria for extended retail rates relief. This was because his business was not one of retail, hospitality or leisure.
21. On 22 May 2020 Mr X asked about the “recently announced top-up grant” that was “under full discretion of the council”. The Council responded on 26 May 2020 to say it would shortly be publishing details of its discretionary scheme. Its email set out the types of business it would be prioritising:
• Small businesses in shared offices and other flexible workspaces;
• Regular market traders who do not have their own business rates assessment;
• Bed and Breakfasts which may pay Council Tax instead of business rates: and
• Charity properties in receipt of charitable business rates relief which would otherwise be eligible for Small Business Rates Relief or Rural Rate Relief”.
22. Mr X said he was keen to apply for the “top-up grant” and explained he was previously told his business was not eligible for SBRR. On 1 June the Council replied that its local economy hardship fund was only for “those premises that fall under the category the [sic] Retail, Leisure and Hospitality”. In its response to my enquiries, the Council accepted this advice was incorrect. The 1 June email also included a link to information about its discretionary scheme.
23. Mr X complained. He:
• Said he was unhappy the Council did not value his business as much as a pub or retail shop;
• Referred to being told in February that “there was no money at that stage implying my application would be pointless”;
• Said his business was still closed in line with government advice and was close to bankruptcy;
• Referred to a lack of help from either the hardship fund or help with business rates.
24. The Council responded:
• the business was not eligible for SBRR or retail rates relief and therefore did not qualify for the SBG or RHLG;
• its local economy hardship fund was aimed at small businesses with ongoing fixed property related cost. It provided a link to information about its scheme on it’s website;
• COVID-19 did not amount to a local disruption for business rates purposes and such claims would not be decided by the Council;
• it had legal advice to confirm the business did not qualify for an exemption due to “prohibition by law” because it was not closed as a result of a prohibition order;
• the business did not qualify for empty rates relief because the property was not vacant, with all fixtures and fittings removed.
25. Mr X was not happy with the response and asked the Council to reconsider it at stage 2 of the complaints process. At stage 2, the Council set out the history of Mr X’s communications and its responses. It said Mr X did not qualify for a grant based on the criteria the Government had set, which it has to follow, and that it had given him accurate information about business rates and no reduction was applicable.
26. In response to my enquiries, the Council provided a report to show how it had considered which businesses to prioritise for a discretionary grant, including detailed reasons for prioritising them, based on government guidance and a review of the impact of COVID-19 on businesses in its area. The report acknowledged the Council could not help all businesses. It decided to limit the number of businesses supported rather than make grants of smaller amounts to more businesses, which would not make a material difference to their chances of survival.

My findings

27. Mr X’s business did not qualify for SBRR or the Expanded Retail Discount and therefore was not eligible for a grant under the Small Business Grant Fund nor the Retail, Hospitality and Leisure Grant Fund. There is no evidence of fault in the way the Council considered this.
28. Mr X asked about the discretionary fund in early June 2020. The Council accepts it initially gave incorrect advice that the fund was only available for retail, leisure and hospitality businesses. This was fault.
29. Although the email did include a link to information about the discretionary fund, the advice in the body of the email misled Mr X, who thought his business was not eligible for a discretionary grant, which led him to make a formal complaint. Therefore, Mr X missed the opportunity to apply for a discretionary grant.
30. I have considered whether he would have been successful if he had made an application but have concluded that, on a balance of probabilities, the Council would have refused a grant because Mr X’s business did not fall into any of the categories of business the Council’s scheme was prioritising. Therefore, I consider an apology is sufficient remedy for the injustice suffered.
31. The government gave councils a wide discretion to design discretionary grant schemes to meet local needs. I have also considered whether there was fault in the way the Council decided which businesses to prioritise. Based on the report seen, I am satisfied there was no fault in the way the Council considered this, because it took into account government guidance and the economic impact of COVID-19 on businesses in its area.
32. Mr X also asked about a reduction in business rates. The Council explained that Mr X did not qualify for business rates relief as set out at paragraph 24 above. There is no evidence of fault in the way it considered this. Mr X’s reference to advice in February did not relate to support for businesses as a result of the COVID-19 pandemic and is therefore not relevant to the complaint under investigation. The Council did not respond to his specific request about business rates hardship relief. This was fault. This caused Mr X frustration and uncertainty about whether the Council could assist his business.
33. When we told the Council about this omission, it agreed to consider whether Mr X was eligible. It wrote to him to request relevant information, which Mr X provided, and wrote again in November 2020 refusing that assistance and explaining its reasons. I have not investigated how the Council considered this because this happened after Mr X complained to us. Further, I am not aware Mr X has complained to the Council about this and given it an opportunity to respond.

Agreed action

34. The Council will, within one month of the date of the final decision, apologise to Mr X for the frustration and uncertainty caused by the inaccurate advice given in response to his enquiry about a discretionary grant, and for its delay in responding to his request for business rates hardship relief.

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Final decision

35. I have completed my investigation. I have found fault causing personal injustice. I have recommended action to remedy the injustice.

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Investigator's decision on behalf of the Ombudsman