Pendle Borough Council (20 005 151)

Category : Benefits and tax > COVID-19

Decision : Not upheld

Decision date : 09 Mar 2021

The Ombudsman's final decision:

Summary: Mr H complains the Council refused his business a discretionary grant under a scheme to support businesses impacted by COVID-19. We do not uphold the complaint as we find no fault in the Council’s decision.

The complaint

  1. I have called the complainant ‘Mr H’. He complains the Council refused his business a discretionary grant, under a scheme to support businesses impacted by COVID-19.
  2. Mr H says as a result he has lost a source of support for his business which has suffered a 50% loss of trade because of the pandemic.

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The Ombudsman’s role and powers

  1. We investigate complaints of injustice caused by ‘maladministration’ and ‘service failure’. I have used the word ‘fault’ to refer to these. 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)
  2. 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”.
  3. 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

  1. Before issuing this decision statement I considered:
  • Mr H’s written complaint to the Ombudsman and any supporting information he provided.
  • Information provided by the Council in response to written enquiries.
  • Relevant law, national guidance and local policy as referred to in the text below.
  1. I also sent both Mr H and the Council a draft decision statement setting out my proposed findings and invited their comments. I took account of any comments made before completing my investigation.

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What I found

COVID-19 discretionary grants

  1. In May 2020, the Government introduced a scheme to provide discretionary grants for businesses impacted by COVID-19. Local councils would receive funding and administer the grants. The government published accompanying guidance contained in: “Local Authorities Discretionary Grants Fund- guidance for local authorities”. It said discretionary grants were “aimed at small and micro businesses who were not eligible” for earlier grant schemes it had set up in March 2020.
  2. Under the scheme, councils could award 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 and Self-Employed Income Support Scheme). The Council had discretion over the amount of payment in each case.
  3. The guidance said the discretionary grants were aimed at:
    • small and micro businesses;
    • businesses with relatively high fixed property costs;
    • businesses that had suffered a significant fall in income due to COVID-19; and
    • businesses that occupied a property with a rateable value of under £51,000.
  4. The Government said as a guide, the following types of business should be a priority for funding:
    • small businesses in shared offices or other flexible workspaces; examples could include units in industrial parks, science parks and incubators which do not have their own business rates assessment;
    • regular market traders with fixed building costs, such as rent, who do not have their own business rates assessment;
    • Bed and Breakfasts which pay Council Tax instead of business rates; and
    • certain charity properties.
  5. The guidance said councils would need to “run some form of application process” to enable them “to undertake proportionate pre-payment checks”. It also said they should publish details of their discretionary grant scheme on their website. This should include clear guidance on which types of business they would prioritise and how they would decide on the level of grant.

The Council’s discretionary grant scheme

  1. The Council published its discretionary grant scheme which quoted the Government guidance I set out above. It said it wanted to support businesses with “relatively high ongoing fixed building-related costs”. It said businesses applying to the scheme would need to demonstrate those costs through supporting evidence.
  2. The Council said it wanted to support those business types identified as a priority in the national guidance (see paragraph 11) and they would have priority for funding from the scheme. But it would accept applications from all local businesses meeting the national criteria (see paragraphs 9 and 10).
  3. The Council said that it would offer a right of review to any business dissatisfied with its decision on their entitlement to a grant (i.e. to refuse an award or unhappy at the amount of the award). It said a business could also use its complaint procedure if it had “any other complaint” about the scheme.

Chronology of key facts

  1. Mr H runs a business providing services to other businesses. He completed an application to apply for a discretionary grant. On his form Mr H said his business rented premises from a landlord I will call ‘Mr J’. He said he paid rent of £875 a month and paid this in cash. He said the business had four employees. The business operates as a limited company and Mr H provided the company reference number. With his form Mr H attached accounts for the year ending May 2020. He also attached a document marked as a lease, although the Council says this was blank.
  2. The Council refused Mr H’s application. It said that he had not provided evidence of property costs. It also said that it had checked records at Companies House and the company was late in filing a return.
  3. Mr H got back in touch with the Council. He said because of the pandemic Companies House had allowed an extension of time for the company to file its return and this followed soon afterwards. He also sent the Council two company bank statements and a utility bill addressed to the company but in the name of Mr J. The utility bill also went to Mr J’s home address.
  4. In reply the Council noted the business had now filed its return at Companies House. It said it had only checked those records as they “can sometimes be an indicator regarding a company and may lead to a company being struck off for non-compliance”. But the Council said Mr H had still not provided a copy of any lease or tenancy agreement or proof it was liable to pay rent. It also pointed out the utility bill was not in Mr H’s name or sent to the business address.
  5. Mr H then replied and said he wanted to complain. He said: “we have no [rental/lease] agreement in place but if required and absolutely necessary I can request from landlord”. He also said the business paid cash to Mr J for rent. He said the utility bill went to a different address as “sometimes people use different postal address for different reasons”.
  6. The Council treated Mr H’s complaint as a request for a review. It took around a month to respond and only after Mr H twice chased it for a reply. When it replied the Council said it considered it had dealt with Mr H’s application correctly. But it would “look again at the decision if you wish to supply sufficient additional information in support”. It said that information “must be additional and relevant and of sufficient weight to justify a change of decision”.
  7. Mr H replied the same day saying he had “provided all information as far as I can remember”. The Council then asked Mr H to provide a copy of his grant application. Mr H did not do this stating he had provided all information needed. Around three weeks passed and then Mr H chased the Council to reply. It repeated that it considered it had decided his application correctly. It signposted Mr H to this office if he remained dissatisfied with its decision.

Findings

  1. The Council’s decision to refuse a discretionary grant to Mr H’s business relied initially on two reasons. First, the Council appears to have had some doubts about the information on Mr H’s application form; cross-checking that information with Companies House records. I am satisfied this is not a matter I need consider in this investigation as the Council later recognised Mr H had brought the company filing history up to date.
  2. This complaint therefore hinges on the second reason the Council refused the business a grant, which was that Mr H did not provide evidence to show his business had property costs.
  3. I find the Council set out clearly in its policy the need for businesses to provide evidence of such costs. It also made this clear in the application form. I consider this was a proportionate measure for the Council to take in line with the government guidance which asked it to prioritise businesses with high property costs. I recognise the Council placed an expectation that businesses could provide a tenancy or lease agreement. I would have a concern if the Council had closed its mind to considering other potential evidence of a rental liability.
  4. But that concern does not arise here. Because in this case I cannot see Mr H provided any alternative evidence of his business having a liability to pay rent. I accept Mr H’s business may not have any lease or rental agreement (although his application did suggest he had attached a lease). In which case, the onus was on Mr H to therefore provide some alternative proof. This he did not do. There are no receipts for his rent payments said to be made in cash. There are no transactions on the bank records that match the sum Mr H declared on the application form as a rent payment. There is no confirmation in the company accounts the business pays rent. And the utility bill was in the name of Mr H’s landlord.
  5. I find no fault therefore in the Council’s view that Mr H has not provided satisfactory evidence that his business has high property costs. It follows that I find no fault in the Council’s decision to refuse the business a grant. I find it reached that decision properly having taken account of the evidence Mr H provided and did not take any irrelevant information into account.
  6. I am also satisfied the Council gave Mr H enough time to provide such evidence. It reviewed its decision to refuse a grant in line with its policy. But before that it also appears to have invited Mr H to provide evidence of the business rental liability. And after it had reviewed its decision, it gave Mr H a third opportunity to provide evidence of rental liability.
  7. I recognise that some of the Council’s communications may have fallen short of best practice. Mr H had to chase a reply to his emails on occasion. The Council may also have clarified sooner when it was treating Mr H’s communications as a review and when it was treating those communications as a complaint. I am also unclear why as part of its consideration of Mr H’s complaint it asked him to supply a copy of his application form.
  8. All of this will have caused some avoidable frustration to Mr H. But I am not satisfied that it has disadvantaged him. Because the net result was that Mr H had more time and more opportunities to provide the information missing from his application form. I therefore find no fault causing injustice in the Council’s complaint handling.

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Final decision

  1. For reasons set out above I do not uphold this complaint. I find no evidence the Council acted with fault when it refused Mr H a discretionary grant for his business.

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Investigator's decision on behalf of the Ombudsman

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