Summary: Mr X complains about the Council’s refusal to award a grant to his business and its poor communication, causing financial and personal stress. We find fault in the Council’s decision making and complaint handling. We recommend the Council apologises to Mr X, pays an amount for uncertainty, time and trouble and acts to prevent recurrence.

The complaint

1. Mr X complains the Council did not provide a grant to support his business during the COVID-19 pandemic and was poor in its communications, causing financial and personal stress.

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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 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)
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. I spoke to Mr X and I reviewed documents provided by Mr X and the Council.
7. I gave Mr X and the Council the opportunity to comment on a draft of this decision and I considered any comments provided.

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What I found

Grant Funding Schemes

8. In response to the COVID-19 pandemic the Government introduced two grant schemes to support businesses. In March 2020 the Department for Business, Energy and Industrial Strategy published guidance for councils on how to apply these: “Grant Funding Schemes”.
9. Businesses eligible for Small Business Rates Relief on 11 March 2020 could apply for a Small Business Grant of £10,000.
10. Businesses that would have been eligible for the Expanded Retail Discount (further rates relief) on 11 March 2020 could apply for a Retail, Hospitality and Leisure Grant (RHL Grant) between £10,000 and £25,000.

Discretionary grants

11. The Government introduced further support for businesses during the COVID-19 pandemic, including a discretionary grant fund.
12. In May 2020 it published “Local Authorities Discretionary Grants Fund- guidance for local authorities”. This said councils could give 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 value of the payment was at the council’s discretion.
13. The funding was aimed at:
• small and micro businesses.
• businesses with relatively high fixed property costs.
• businesses that suffered a significant fall in income due to COVID-19.
• businesses which occupied a property, or part of a property, with a rateable value or mortgage payments of under £51,000.
14. It considered the following types of business should be a priority for funding but this was a guide only. Councils were to decide themselves if a business was similar and, if so, whether it should be eligible for grants. These businesses were:
• small businesses in shared offices or other flexible workspaces, who did not have their own business rates assessment.
• regular market traders with fixed building costs, such as rent, who did not have their own business rates assessment.
• bed and breakfasts which paid Council Tax instead of business rates.
• charity properties, which received charitable rates relief.
15. In taking decisions on the appropriate level of grant, it suggested councils may want to take into account:
• 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.
16. Only businesses which were trading on 11 March 2020 were eligible for this scheme.
17. Councils were to set out their discretionary grant scheme on their website, providing clear guidance on which types of business were prioritised, and how they would decide on the level of grant.

Council’s discretionary grant policy

18. The Council published its Discretionary Grant Policy 27 May 2020 on its website. This referred to the Government guidance outlining who the funding was aimed at and who the Government considered a priority for funding. It explained local intelligence told the Council the number of eligible businesses would outstrip the funding. Therefore, the Council would use its discretion as to which type of businesses were most relevant to its local economy.
19. The first round of applications opened until 7 June 2020 for two groups:
• non-ratepaying businesses which covered the Government’s four priority groups.
• rate paying businesses most relevant to the local economy.
20. Given the significance of the visitor economy, this was where the first round focused.
21. Businesses had to show a significant fall in income and relatively high ongoing fixed property-related costs.
22. Only businesses which were trading on 11 March 2020 were eligible for this scheme.
23. The policy also set out how the Council would decide on the level of grant.
24. Any discretionary award outside of the policy had to be approved in writing by the Section 151 Officer in consultation with the Cabinet member for finance.
25. The Council reopened the scheme for a second round of applications from 26 June until 19 July 2020. The criteria for applications remained unchanged.

Principles of good administrative practice

26. 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

27. Mr X first contacted the Council seeking a grant to support his business on 19 May 2020. Mr X says that during this phone call the Council told him his business would receive a grant.
28. The Council’s written record of the phone call shows it told Mr X his business was not eligible for either a Small Business Grant or RHL Grant as he did not pay business rates. The Council suggested he keep an eye out on its website for its discretionary grant scheme.
29. Mr X spoke to the Council by phone on 22 May to ask about its discretionary grant scheme. The Council told him it was unlikely his business would qualify.
30. Mr X then emailed the Council asking how to apply for a discretionary grant, having tried its online form and spoken to a Council officer who suggested he email directly.
31. Mr X chased a response by phone on 10 June and the Council told him his business would not qualify for a discretionary grant. Mr X asked the Council to confirm this in writing.
32. On 11 June Mr X complained. In response, on 3 July, the Council wrote to Mr X explaining his business did not qualify for either a Small Business Grant or RHL Grant as he did not pay business rates. It referred to its website for details of its discretionary grant scheme.
33. Mr X contacted the Council again on 20 July as its response was unhelpful. He asked the Council to investigate further.
34. Mr X then made a further complaint on 27 August. He said the Council had delayed responding to or dealing with his request for a grant, resulting in his missing both rounds of discretionary grant funding. His business faced potential business premises related costs in the region of £50,000 and was at risk of receivership.
35. The Council provided a final complaint response on 2 October 2020, with apologies for its delay. It explained this was because staff were focused on dealing with claims. It confirmed its earlier response of 3 July 2020 was accurate. The discretionary scheme was modest in its funding. The Council’s final policy closely reflected the Government guidance, and the only “non-ratepaying” businesses, like his, that could qualify were those four types prioritised by the Government. It had told him to check the discretionary scheme on its website because that set out which businesses were likely to qualify. And, even if he had little chance of qualifying it would have been wrong to say he should not apply, or to fetter its discretion in the application of the policy. At that time there would have been some uncertainty about how much money would ultimately be available, because that was dependent on the final total paid out; a process that continued into late August. The Council noted he did not apply for a discretionary grant and on 27 August said he had experienced problems with the form. However, if he had made a claim it would have been unsuccessful given the strict criteria suggested by the Government guidance and adopted by the Council in its policy.
36. Mr X then contacted the Ombudsman.
37. In response to our enquiries the Council further explained why it prioritised the visitor economy under its discretionary grant scheme. It said it sought to help businesses which had been affected by COVID-19 but were not eligible for other financial support. It focused on the key parts of the local economy which were experiencing significant drops in income, fixed ongoing property costs and that had missed out on financial support. This was therefore the visitor economy businesses which did not qualify for the Small Business Grant Fund or Retail Hospitality and Leisure Grant Fund.
38. The Council explained it reapproved the policy for round two of the discretionary fund on 22 June 2020. There were no changes to the scope of the scheme as during the first round it found no additional sectors of the local economy had missed out on the financial support already announced and that would meet the focus of the Government Grant scheme. Specifically; businesses with relatively high ongoing fixed property-related costs and businesses which could demonstrate a significant fall in income due to the COVID-19 crisis.
39. In regards to exercising its further discretion, the Council explained where it was made aware of local businesses facing financial difficulty but outside the scope of the discretionary scheme, officers from within the grant processing team prepared a request for discretion. This was then given to the S151 officer and Cabinet member for Finance for consideration. The Council provided an example of a request for discretion made in August 2020 where the business’ rateable value was higher than the cut off limit.
40. The Council said if Mr X’s case been submitted for such a review it would have rejected the application. This was because the business had not been operational for years and the new operator was not registered with the relevant regulator. To qualify for these business grants, businesses had to be trading on 11 March 2020. Therefore, Mr X’s application would have been rejected.
41. I note we asked the Council to provide contemporaneous records of its decision making on the discretionary grant scheme on two occasions. However, it did not provide any relevant records, only the explanations referred to above.

Findings

42. The Small Business Grant and RHL Grant were only available to businesses that benefitted from business rates relief. As Mr X’s business was not eligible for rates relief he was not eligible for the corresponding grants. I am satisfied the Council’s decision to refuse Mr X either of these grants was in line with the law and Government guidance. However, I consider it would have been good practice for the Council to provide Mr X with a written decision outcome and the opportunity to ask for a review.
43. The Council’s published information on the first round of its discretionary grant scheme shows it took account of Government guidance in designing its scheme. The Council recognised it did not have enough funds to support all eligible businesses and so limited its scheme to the four types of business prioritised by the Government in addition to supporting rate paying businesses within the visitor economy, due to local need. I am satisfied the Council followed a proper decision making process in this regard.
44. The Council decided to use the same criteria at round two, however there is no rationale for this within the scheme. And the Council was unable to provide records of its decision making upon request. The lack of written records showing why the Council decided to keep the scheme the same amounts to fault. I note the Council provided reasons in response to our enquiries but, information provided many months later does not evidence it followed a proper decision making process at the relevant time.
45. The Council gave itself further discretion within the scheme, but I have not seen any information published or recorded at the time saying when the Council would exercise that discretion or what factors it would take into account. I find the lack of transparency and the lack of written records of the Council’s decision making amounts to fault. In response to our enquiries the Council explained it would exercise discretion if a business faced financial difficulty but did not meet the scheme requirements. The example request appears to support this was the case at the time. However, the Council has also said it would not exercise discretion if a business was not trading on 11 March. But there is no evidence this was a factor for consideration at the time.
46. On 22 May Mr X told the Council he had tried using the online form to apply for a discretionary grant, but he needed help applying. Despite his requests and complaints the Council only referred him back to its website and online form. This was fault. Because of the Council’s fault Mr X was put to time and trouble complaining to the Council and missed the opportunity to apply for a discretionary grant.
47. The Council says Mr X would not have qualified for a discretionary grant as he did not meet the criteria. Further, that it would not have used its discretion to give him a grant as he was not trading on 11 March. However, I have found fault in the Council’s decision making process for round two of its scheme and I have found there are no records that evidence whether the Council would or should have exercised its discretion. I therefore cannot say whether Mr X would have received a discretionary grant had he applied in time. However, the Council’s fault has caused him distress and uncertainty.

Agreed action

48. To remedy the injustice set out above I recommend the Council carry out the following actions:
49. Within one month:
• Provide Mr X with a written apology for the identified failings;
• Pay Mr X £100 for time and trouble;
• Pay Mr X £300 for loss of opportunity, distress and uncertainty.
50. Within three months:
• Provide training/guidance to relevant staff, to ensure they are aware of the need to make evidence based decisions and to keep a contemporaneous written record of decisions and reasons.
51. The Council has accepted my recommendations.

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Final decision

52. I find fault in the Council’s decision making and in is communications with Mr X. The Council has accepted my recommendations and I have completed my investigation.

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Investigator's decision on behalf of the Ombudsman