Summary: Mr X complained the Council’s delay in dealing with his application for a Retail, Hospitality and Leisure Grant meant he missed the opportunity to apply for a discretionary grant. There is no evidence to suggest any action by the Council prevented Mr X from applying for the discretionary grant.

The complaint

1. Mr X complains the Council’s delay in dealing with his application for a Retail, Hospitality and Leisure Grant meant he missed the opportunity to apply for a discretionary grant.
2. Mr X says his business has suffered financially because it did not receive a grant.

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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. 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”.
5. 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

6. As part of the investigation, I have:
• considered the complaint and the documents provided by the complainant;
• made enquiries of the Council and considered the comments and documents the Council provided;
• discussed the issues with the complainant;
• sent my draft decision to both the Council and the complainant and taken account of their comments in reaching my final decision.

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What I found

Grant Funding Schemes

7. 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).
8. Businesses which, on 11 March 2020, received Small Business Rates Relief (SBRR) could be eligible for a Small Business Grant (SBG) of £10,000. Eligibility for SBRR is subject to s43 of the Local Government Finance Act 1988. This says the rate applies to occupied businesses.
9. Businesses which, on 11 March 2020, would have received the Expanded Retail Discount were eligible for a Retail, Hospitality and Leisure Grant (RHLG) of up to £25,000. The Expanded Retail Discount applied to occupied businesses that are mainly used for retail, hospitality or leisure. The scheme specifically excluded medical services.
10. Funding was payable to the person recorded as the ratepayer in respect of the business on 11 March 2020. However, where a council had reason to believe the information they held about the ratepayer on the 11 March was inaccurate they could withhold or recover the grant and take reasonable steps to identify the correct ratepayer.

Valuation Office Agency (VOA)

11. The Valuation Office Agency (VOA) provides valuations and property advice to support taxation and benefits to the government and local authorities in England, Scotland and Wales. It compiles and maintains lists detailing the rateable value of 1.9 million commercial properties for business rates.
12. You can request changes to property or valuation details if you think they are wrong. An occupier can contact the VOA and request it to split a current rating into separate listings each with its own rateable assessment.

COVID-19 discretionary grants

13. In May 2020, the Government introduced a discretionary grant scheme aimed at businesses ineligible for the earlier schemes. To support the introduction of this scheme the Government published guidance contained in: “Local Authorities Discretionary Grants Fund- guidance for local authorities”.
14. 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). The Council had discretion over the amount of payment in each case.
15. The guidance said the discretionary grants were aimed at:
• small and micro businesses;
• businesses with relatively high fixed property costs;
• ones that had suffered a significant fall in income due to COVID-19; and
• ones that occupied a property with a rateable value of under £51,000.
16. 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 that did not have their own rating 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
• charity properties in receipt of charitable business rates relief which would otherwise have been eligible for Small Business Rates Relief or Rural Rate Relief.
17. In taking decisions on the appropriate level of grant, the guidance said councils may want to take account of:
• the level of fixed costs faced by the business;
• the number of employees;
• whether businesses had to close completely and could not trade online; and
• the consequent scale of impact of COVID-19 losses.
18. The guidance said councils should publish details of their discretionary grant scheme on their website. It said this should include clear guidance on which types of business they would prioritise and how they would decide on the level of grant.

Council scheme

19. The Council has provided a copy of its Discretionary Grant Scheme. This says the Council will award discretionary grants in line with the published Government guidelines using the four priority business sectors outlined above.

Key facts

20. Mr X contacted the Council in April 2020. He said he ran a business in London but did not pay business rates directly to the Council but to the owners of the building. He asked for details of how to apply for COVID-19 business grants.
21. The Council replied on 30 April explaining that medical services were amongst the list of businesses not eligible. Mr X replied on 29 July saying that he runs a hybrid company and that he had paid his dues to the leaseholders for the past few years. He said retail sales had taken the biggest hit and asked for help to rebuild the business. The Council replied saying that companies providing medical services did not qualify for the grant and that the criteria had been set by central government.
22. Mr X wrote again to the Council on 1 August. He explained that he was not applying as a medical services company as this was only a portion of the services provided. He explained he was applying for the RHLG as he sold medical products, skin care essentials and PPE. He also said he provided spa services. Mr X considered that he was eligible as he was providing retail services.
23. The Council responded on 4 August saying it had reviewed Mr X’s website and that it appeared he may be entitled to the RHLG. It said for the expanded retail discount and RHLG to be issued, he must have a business rates account. It therefore asked him to say which part of the building he occupied as there were five different rateable assessments for the building. It said once he identified which rateable assessment he occupied it would generate an account in his name and issue bills. He would then be able to apply for the discount and the potential grant.
24. Mr X replied the same day. He said he occupied the ground floor rear part of the building but that he had never had to create a business rates account as he paid all charges in his rent to the building owners. He said this meant he would not benefit from any discount on the business rates. He said he had no issue with opening an account now.
25. On 6 August the Council again emailed Mr X. It said it had received conflicting information about the premises and so an inspector would visit the premises to confirm the correct liability. The Council also asked Mr X to provide a copy of his lease to assist the inspection.
26. An inspector visited the premises on 25 August 2020. The inspector noted “the premises are dentists which do not qualify for retail relief”. The inspector tried to contact the ratepayers to arrange a visit to establish liability but could not contact them by phone. A final visit was carried out on 16 October when the inspector stated “visited 16.10.20 doctors practice with small room at back with cabinet of skin creams etc sold by mail order, no obvious access to public to walk in, room locked, not advertised outside”.
27. Mr X contacted the Council on 7 September seeking an update. The Council explained the matter was still with the inspector and it would update him when the inspector’s report was received.
28. Mr X emailed again on 23 September. He said the delay was causing financial problems and the business would not survive without the grant. Mr X contacted the Council again on 7 October.
29. The Council replied saying it had reviewed the case and that Mr X was not eligible for the expanded rate discount or the RHLG because he was sub-leasing part of the property on an inclusive basis from the ratepayer. It said as he was not registered for business rates he was not eligible for the grant scheme.
30. Mr X made a formal complaint to the Council on 8 October. He complained the Council initially informed him he was not eligible because he was a medical business. He says the Council then said he was eligible as he provided retail and spa services. He says he then waited for a visit to inspect the premises. He complained he could not now apply for the discretionary grant as that scheme was now closed. He says that if he had been told he was not eligible he would have applied for the discretionary grant but he was not guided to this by the Council.
31. The Council replied on 15 October. It explained the qualifying criteria for the different grant schemes and explained why Mr X was not eligible. It explained that he could have applied for the discretionary grant as he did not have a business rates account. It said it did not contact companies directly who may have been eligible but said the discretionary grant scheme was openly published on its website. It said it had over 1400 applications but was only able to make 492 awards. It said it had reviewed Mr X’s circumstances and that he would not have been awarded a discretionary grant. The Council provided details of the support available to businesses and encouraged him to explore his eligibility for these alternative methods of support.
32. Mr X said he wanted to escalate the complaint to stage two of the complaints’ procedure. He said there were tenants in the same building who pay the same rent and were awarded the discretionary grant but did not provide any further details of this for the Council to consider.
33. The Council sent a holding reply. It explained there would be a delay in its response but it would update the situation if unable to reply in full by 31 January 2021. The Council emailed Mr X again on 1 February saying it was working at reduced capacity and so would update him by 15 February.
34. The Council provided the stage two response on 26 February. It explained that when Mr X first contacted the Council in April 2020, the grants available were ratepayer grants. It said the officer dealing with the application understood his business to be medical due to its location and name. It also explained that he was not a registered business ratepayer which was an integral part of the criteria set by the government.
35. It explained that when the Council contacted Mr X on 30 April it was not aware of the discretionary fund. It says when the discretionary scheme opened it did not directly contact businesses but advertised it on its website. The discretionary scheme was open for applications from 27 May to 19 June. Mr X next contacted the Council on 29 July and so there was no opportunity for the Council to inform Mr X of the discretionary scheme.

Analysis

36. The information provided shows that Mr X was not the ratepayer at his business premises. Mr X sub-leased part of the premises and paid an inclusive rent payment. It was open to Mr X to ask the VOA to assess the part of the building he used as a separate listing with the aim of becoming the ratepayer. There is nothing to suggest Mr X took this action.
37. As Mr X was not the ratepayer, I find no fault in the Council’s decision to refuse the RHLG. I note the Council initially thought Mr X’s business was just medical and based on the information provided I can understand why it took this view. It did then reconsider the situation regarding his business activities and so I am not persuaded Mr X was significantly detrimentally affected as a result.
38. Mr X also complains he lost the opportunity to apply for the discretionary grant scheme due to the time taken by the Council to make a decision regarding the RHLG. I am not persuaded this is the case. Applications for the discretionary grant scheme were open between 27 May and 19 June. The last communication to Mr X from the Council before this scheme opened was on 30 April when it said his business was not eligible. It was not until 4 August that the Council reconsidered and told Mr X he may be eligible for the RHLG. Therefore, I am not persuaded that any action by the Council prevented Mr X from applying for the discretionary grant and so I find no fault.

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Final decision

39. I will now complete my investigation as there is no evidence of fault causing a significant injustice in this case.

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Investigator's decision on behalf of the Ombudsman