Summary: Mr X complained the Council refused a COVID-19 discretionary grant but paid grants to other business in similar circumstances to his. The Council was not at fault for refusing a grant to Mr X. It was at fault for a lack of clarity in its published information about its scheme and for paying grants to other businesses that did not meet the scheme criteria. It should apologise to Mr X and pay him £150 for the time and trouble caused. It should also consider remedying the injustice caused to those paid in error, whose grants are being recovered.

The complaint

1. Mr X complained about the Council’s refusal of a discretionary grant, on the ground he had not applied for a small business grant by 28 June 2020. He said this date was not in the information published on the Council’s website.
2. He further complained the Council had discriminated against him because he later discovered it had paid discretionary grants to other businesses who did not meet the deadline.
3. Mr X said the lack of support added to the financial hardship he suffered as a result of the COVID-19 pandemic. In addition, he said the excuses the Council made when he complained caused additional stress.

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The Ombudsman’s role and powers

4. 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)
5. 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)
6. 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”.
7. We may investigate matters coming to our attention during an investigation, if we consider that a member of the public who has not complained may have suffered an injustice as a result. (Local Government Act 1974, section 26D and 34E, as amended)

8. 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

9. I considered:
• the information provided by Mr X and discussed the complaint with him;
• the information provided by the Council;
• relevant law and guidance, as set out below; and
• our guidance on remedies.
10. 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

Grant funding schemes

11. 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

12. Businesses which, on 11 March 2020, received Small Business Rates Relief (“SBRR”) may be eligible for a payment of £10,000.
13. Eligibility for SBRR is subject to section 43 of the Local Government Finance Act 1988. This says the rate applies to occupied businesses. The premises must be listed on the business ratings list.

Local Authority Discretionary Grants

14. In May 2020 the government published “Local Authorities Discretionary Grants Fund - guidance for local authorities”, which allowed councils to pay discretionary grants to local businesses.
15. The funding was 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.
16. The guidance gave councils wide discretion to design their schemes to meet local needs. Councils were required to set out the scope of their discretionary schemes on their website, providing clear guidance on which types of business are prioritised, and how they will decide the level of grant. This was to ensure clarity for businesses that may wish to apply.

This Council’s discretionary scheme

17. The Council set up its scheme in line with Government guidance in terms of which businesses it would prioritise. Applications for the first phase of the scheme had to be made in a four week period between 1 and 28 June 2020.
18. In late June 2020, the Council noted that not all the funds had been allocated and considered how the scheme should be extended. On 2 July 2020 it decided to extend the scheme to those businesses that had already applied for a small business grant (SBG) by 28 June 2020 but were unsuccessful. I have seen evidence of its reasons for deciding this, which I will discuss below. This change to the scheme applied from 3 July 2020. There was a further change to the scheme on 27 August 2020, which was not relevant to the complaint under investigation.

Principles of good administrative practice

19. The Ombudsman publishes a guidance document setting out the standards we expect from bodies in jurisdiction. We issued an addendum in response to the COVID-19 pandemic; “Good Administrative Practice during the response to Covid-19”. The following points are relevant in this case.
• Basic record keeping is vital during crisis working. There should always be a clear audit trail of how and why decisions were made.
• The basis on which decisions are made and resources allocated, even under emergency conditions, should be open and transparent.
• Decision reasons should be clear, evidence based and where necessary explained in the particular context and circumstances of that decision.
• If you use new or revised policies and processes this should not lead to arbitrary decisions and actions. Ensure you have a clear framework for fair and consistent decision making and operational delivery.

What happened

20. Mr X applied for a small business grant (SBG) on 30 July 2020. The Council wrote to him on 18 August 2020 refusing the grant. This was because his business did not occupy business premises and was not eligible for SBRR.
21. On 19 August 2020, Mr X applied for a discretionary grant. The Council wrote to him on 20 August refusing to award the grant. This was because Mr X had not applied for a SBG by 28 June 2020 and therefore he did not meet the criteria for phase 2 of its scheme.
22. Mr X asked for an appeal. He said the website had only said the second phase was open to applicants who had been unsuccessful in securing a SBG. It did not mention a deadline for making the SBG application.
23. The Council reviewed the decision. It upheld the original decision for the same reasons. It said the discretionary scheme reopened on 3 July 2020 but only for businesses who had applied for a SBG by 28 June 2020.
24. Mr X complained he had been treated unfairly because the deadline was not mentioned in the scheme information on the Council’s website when he applied.
25. The Council explained the discretionary scheme was open to those businesses who had applied for a SBG but their application had been refused. However, some businesses had not been informed of the refusal in time to apply for a discretionary grant by 28 June. Therefore, the Council reopened the scheme in early July 2020 only for those businesses who had applied for a SBG by 28 June but had not had a refusal decision by then. It said all applications were assessed against this policy. It acknowledged the wording on its website “could have been more explicit, with regard to the date”. It said it had amended the information on its website and apologised for any misunderstanding.
26. Mr X was unhappy with the response and submitted a freedom of information request. This revealed the Council had paid grants to ten businesses which had applied after the closing date of 28 June.
27. In early October 2020, the Council responded at stage 2 of its complaints process. It said Mr X was not eligible for a discretionary grant because both the grant applications were after 28 June 2020. It acknowledged it had made ten payments in error, totalling £67,000 and it was recovering those grants. It said it had refused a further 82 applications on the same basis that it had refused a grant to Mr X.
28. In response to my enquiries, the Council explained its reason for requiring applicants to have applied for a SBG by 28 June 2020. This was to assist those businesses whose SBG refusal came too late for them to apply to the discretionary scheme. It also provided a report prepared for its Statutory Officers Group (the body deciding the terms of its scheme) to show the options considered for extending the scheme and why this was the preferred choice.
29. The Council said it had a short timescale for processing large numbers of payments at a time when most of its officers were working from home in line with Government guidance. It said it had taken the following action to reduce the risk of errors in its decision-making happening again in future:
• Simplified its application process;
• Reduced the number of officers involved in considering applications; and
• Automated elements of the process, including a front end portal for the online application process.

My findings

30. I cannot question whether the Council’s decision is right or wrong simply because Mr X disagrees with it. I must consider whether there was fault in the way the decision was reached.

Small business grant

31. Grants were payable to businesses that were eligible for SBRR. To be eligible the business had to be occupying business premises that were on the ratings list on 11 March 2020.
32. Mr X was not occupying business premises. Therefore, he was not eligible for SBRR and, as a consequence of that, he was not eligible for a SBG. There was no fault in the way the Council considered this.

Discretionary grant

33. The Council had discretion to decide its discretionary scheme, including the extension to the scheme it agreed on 2 July 2020. There is no evidence of fault in the way it decided this.
34. However, as the Council acknowledged, the information on its website about the extension did not explain there was a requirement for the unsuccessful SBG application to be made before 28 June 2020. This was fault. This means the published information about the scheme did not provide sufficient clarity for businesses considering an application.
35. This caused an injustice to Mr X because he was put to the time and trouble of making a grant application which he may not have made had he known about the SBG deadline. He also suffered avoidable disappointment. It also caused an injustice to others who made an application in similar circumstances and were refused on the same grounds.
36. The Council followed its scheme when it refused Mr X’s application, so its refusal was not fault.
37. The Council acknowledged it did not follow its scheme when awarding a grant to 10 other businesses and that was fault. Whilst I understand Mr X may feel it was unfair that other businesses benefitted who were not eligible but this does not cause him an injustice because the Council should have followed its scheme, which it did in his case, and grants paid in error can be recovered.
38. The Council has confirmed it is now recovering the sums paid in error to those businesses. This has potentially caused an injustice to those businesses, 9 of whom were not aware of the error until late January 2021, as they are now need being asked to repay sums of between £2,500 and £10,000. Repaying these sums could cause them financial difficulty. The Council said it had not had formal complaints from any of those businesses about this at the time it replied to my enquiries although none of them had repaid the grant.
39. The Council amended the information on its website as soon as it became aware it was not sufficiently clear. It has also taken other action to reduce the risk of errors when making grant decisions. Although this action may not prevent any mistakes being made, I am satisfied the Council has taken reasonable steps to address the issues this complaint raised. I also note the Council has an appeal process to reconsider decisions, which should help it to identify problems with the decision-making process where grants are refused. Therefore, no further recommendations are needed to prevent recurrence of the faults identified.

Complaints handling

40. Mr X said he felt the Council made excuses when responding to his concerns and this caused additional stress. I am satisfied the Council responded appropriately to the issues he raised through the complaints process.
41. Although Mr X thought the Council was adding additional barriers when it changed the information on its website after he made his complaint, I am satisfied it made the changes so that the published information properly reflected the scheme that was agreed.

Agreed action

42. The Council will, within one month of the date of the final decision, apologise to Mr X and pay him £150 to reflect the time and trouble and disappointment caused as a result of the lack of clarity in the published information about its discretionary scheme.
43. The Council will, within three months of the date of the final decision:
• Consider what, if any, injustice was caused to the other 10 businesses whose grants were paid in error, which it is now recovering;
• Take appropriate action to remedy any injustice in line with our guidance on remedies; and
• Signpost them to the Ombudsman if they are unhappy with any remedy offered.
44. If the Council receives complaints from other businesses whose applications were rejected on the same basis as it refused Mr X’s application, it should consider remedying any injustice they have suffered in line with our guidance on remedies and signpost them to the Ombudsman if they remain unhappy.

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Final decision

45. I have completed my investigation. I have found fault leading to personal injustice, and I have recommended action to remedy that injustice.

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Investigator's decision on behalf of the Ombudsman