The Ombudsman's final decision:
Summary: Mr H complains the Council has refused his business financial support through a series of grant schemes designed to help businesses impacted by COVID-19. We do not uphold the complaint, finding no fault in the decisions taken by the Council.
- I have called the complainant ‘Mr H’. He complains the Council has refused his business financial support through a series of grant schemes designed to help businesses impacted by COVID-19. Mr H says this has added to the financial hardship caused by the impact of the pandemic.
The Ombudsman’s role and powers
- 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)
- 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)
How I considered this complaint
- Before issuing this decision statement I considered:
- Mr H’s written complaint to this office and any supporting information he provided, including that in telephone conversations with this office.
- Correspondence exchanged between Mr H and the Council about the matters which are the subject of his complaint.
- Relevant law and guidance as discussed in the statement below.
- I also gave Mr H and the Council an opportunity to comment on my proposed findings in a draft decision statement. I took account of any comments received before completing my investigation.
What I found
Summary of COVID-19 grant schemes and local Council policy
- In March 2020, 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).
- Of relevance to this complaint the Government set up a grant scheme to support Retail, Hospitality and Leisure businesses which I will refer to as RHL grants. To qualify for a RHL grant a business had to be in receipt in turn of the ‘expanded retail discount’.
- Government guidance said this relief would apply to “occupied retail, leisure and hospitality properties”.
- In May 2020, the Government introduced a further discretionary grant scheme aimed at businesses ineligible for the earlier schemes. 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 or Self-Employed Income Support Scheme). The Council had discretion over the amount of payment in each case.
- Government guidance said that “only businesses which were trading on 11 March 2020 are eligible for this scheme”. The Council also stated this in its local policy and that to receive a grant it would require proof a business traded on that day.
- In November 2020, the Government launched the “Additional Restrictions Grant” (ARG) scheme to be administered by local councils. The first phase of the ARG scheme covered the period 5 November to 2 December 2020. These grants were designed to support businesses either mandated to close or severely affected by COVID-19 restrictions. To qualify for a grant, a business “must have been trading the day prior to widespread national restrictions or local Covid alert level 3 restrictions” being introduced. The Council set up a scheme which allowed businesses from various sectors to apply. However, it did not extend to food businesses selling direct to the public such as restaurants or take-aways.
- In January 2021 a further phase of the ARG scheme was introduced. The Council set up a scheme to pay grants to businesses required to close because of COVID-19 restrictions that did not have a non-domestic rating assessment and fell within one of several business sectors. Also, to qualify for a payment under this phase of the scheme, the business must have been trading the day before local or national restrictions were introduced.
Valuation Office Agency
- Business rates (also known as national non-domestic rates) is a local tax on business premises. The Valuation Office Agency (VOA) keeps the business rating list and decides if a property should be rated. The VOA also decides the rateable value of the premises, and the date each premises should enter and leave the list. The local authority then collects business rates, calculated on the rateable value of the relevant premises.
- Business rates are not charged on empty buildings for a minimum of three months. Business rates are always charged on buildings that are considered occupied. Case law has established four key tests for occupation including that actual use of the building or land takes place that is beneficial to the occupier.
Chronology & Key Facts
- The following chronology includes only key events relevant to this complaint. It does not cover the details of all correspondence between Mr H and the Council
The application for a RHL grant
- In February 2020 Mr H took on the lease of an empty commercial property in the Council’s area with the intention of converting it into a restaurant and take-away. He set up a limited company for this purpose. The limited company gave the business premises as its registered address.
- On 6 March 2020, the Council inspected the building and took photographs that show the building was empty. There is no sign of any building works to convert the property having begun although I understand Mr H had fitted new windows and a door to the premises. He had also undertaken some building works to the rear of the property.
- On 24 March 2020 Mr H enquired to the Council about receiving a RHL grant. The Council directed him to an online application form which Mr H duly completed. The Council says that in a telephone call on 30 March Mr H said the business was ready to trade. It says it asked him to confirm this in writing, which Mr H did not do. However, he did send emails chasing his application. The Council made further enquiries with Mr H and in April 2020 he told it that his business would be ready to trade as soon as lockdown measures were lifted.
- On 29 April 2020 the Council decided Mr H was not eligible to receive a RHL grant. It said that on 11 March 2020 his business premises were empty and so were not occupied for the purposes of the business rates scheme. His business could not therefore receive a RHL grant as these were only payable to those businesses which occupied premises and were therefore entitled to the expanded retail discount.
- Mr H challenged this decision, saying his business was occupying the premises on 11 March. The Council sent Mr H a second email on 30 April (from a more senior officer) which confirmed its view that his business was not eligible for a RHL grant. It said:
- it accepted Mr H had incorporated his company on 7 January 2020;
- it recognised the company used the business premises as its registered office;
- but the premises were not occupied and recorded on the rating list as empty while undergoing renovations;
- it accepted Mr H had an “intention to trade” but had not opened his business on 11 March 2020. The business had an “intention to occupy” but this was not enough to say the premises were occupied;
- it had carried out a further inspection before reaching this view.
- The Council also took advice from the Institute of Revenues, Rating and Valuation (IRRV) a professional body for those working in this field. It confirmed the Council’s view that Mr H was not in occupation of his business premises on 11 March.
- On 4 May 2020 Mr H said he wanted to appeal the Council’s decision. It told him that its reply on 30 March was its final response. The Council says that at this time its policy was not to refer dissatisfied applicants to its complaints procedure, although it later changed its approach.
The application for a discretionary grant
- In early June 2020 the Council has a record of Mr H asking about its discretionary grant scheme. It is not clear that it replied.
- However, the Council says Mr H began to complete a discretionary grant application later that month. But he did not complete it.
The applications for Additional Restriction Grants
- In November 2020 Mr H made an enquiry to see if he would be eligible for an ARG. The Council said that it could not say as details of its scheme had not been published. It advised Mr H to check its website for details.
- At the end of the month Mr H applied under the criteria that he was a ‘supply chain’ business. On the form Mr H then described his business as a new restaurant and takeaway business.
- The Council refused the application in early December. It said his was not a supply chain business and explained these were businesses “wholly or mainly involved in providing goods and services to businesses undertaking the provision of food, beverage, hospitality, events or leisure”. It also said the scheme was only available for businesses which were “open and trading” on 4 November 2020. It understood Mr H’s business had not opened.
- I note the Council inspected the business premises externally again on 2 and 10 November 2020. The premises now had paper on the windows, but the inspection officer said they appeared to still be empty on the inside. Photographs taken by the Council confirm this.
- At the end of November 2020, the Valuation Office Agency removed the premises from the rating list.
- In February 2021, the Council again inspected the premises. On this occasion it recorded there were people on site carrying out renovations.
- Around the same time Mr H made another application for an ARG grant. This time he applied as a business mandated to close with no business premises and offering in person services. Mr H now described his business as providing outdoor catering, shop fitting services and business development as well as a restaurant and take-away. Mr H said he had used office space inside the building since February 2020.
- The Council refused the grant because Mr H had business premises which had not opened, he did not offer in person services and therefore did not meet the eligibility criteria for this scheme.
- In response to a further query from Mr H the Council confirmed this decision.
- At the end of March 2021, the VOA brought the business premises back on to the rating list effective from that date. They are now listed as a ‘restaurant and premises’.
Mr H’s complaints
- In October 2020 Mr H complained that his business was refused an RHL grant and his request for a discretionary grant had been ignored. The Council logged this complaint around a week later after Mr H also contacted the Council Leader. In his correspondence Mr H referred to having mental health illness and the distress caused by receiving no financial support.
- In mid-November 2020, the Council replied to the complaint. It said that it had not paid Mr H a RHL grant because to receive one a business “must have been open to visiting members of the public”. It said Mr H’s business had never been open to the public. It also said Mr H had not completed a discretionary grant application. The Council expressed sympathy for Mr H’s mental health illness but said it could not pay a grant where a business did not qualify.
- In his response Mr H said that he believed the Council could treat his business as a special case. That it could pay a grant using discretionary powers.
- In its next response the Council pointed out that Mr H would not have qualified for a discretionary grant, even if he had completed his application as his business was not trading in June 2020.
- Mr H pressed the Council to further investigate his complaint. The Council said it would only consider his complaint at Stage 2 of its complaint procedure if Mr H provided evidence of fault in how it had handled his complaint. In December 2020, the Council wrote to Mr H saying it did not find he had done this. So, it declined to investigate further.
- Mr H contacted the Council again. He said that he should have been entitled to previous grants as he was using the business premises for office purposes. The Council replied saying that if Mr H changed the use of the premises to an office it would still not entitle him to a grant. This was because he had not applied at the time for a grant citing use of the premises as an office. Next, Mr H told the Council he would contact the VOA and ask it to bring the premises back on to the rating list.
- I recognise that Mr H has found his business plans hampered by the onset of COVID-19. I understand this put a strain on his mental health. I also recognise he would want to access grant schemes set up by Government to support businesses impacted by the pandemic. But I am satisfied on the facts of this case that Mr H’s business was not eligible to receive support from any of the grant schemes he had applied to up to February 2021.
- Mr H’s business could not receive a RHL grant because, as the Council has explained, he was not occupying his business premises on 11 March 2020. ‘Occupation’ has a specific meaning in rating law. It is not enough that a business tenant may have taken on the lease to the premises or even begun work to fit out premises to trade in the future. In this case the Council, based on its inspection believed the premises to be empty on 11 March and I have seen nothing that would lead me to question that. As I explained in paragraph 2 our role is not to question the merits of a decision taken by the Council that we consider is properly made. I consider this a decision properly made as the Council took account of all relevant evidence before deciding the property was empty.
- Mr H’s business could not receive a discretionary grant because in the first instance he did not complete an application form. But even if he had, he could not have received one as it was a condition of the scheme that it would only support businesses trading on 11 March 2020. This was a condition set by Government when giving funding to councils to set up discretionary grant schemes. The scheme was not therefore open to businesses who had not begun trading because of COVID-19.
- Mr H’s business could not receive support from the ARG schemes he applied to, for the reasons given by the Council. Mr H’s business is not a supply chain business nor one based from home providing in person services.
- In comments to me Mr H has suggested the Council’s terms for ARG schemes may have been too narrow. That it could have used its discretion to offer the grants to more businesses, including those in circumstances such as his own. While I am not unsympathetic to the point, I note it was a condition of the funding given by Government for ARG schemes, that grants go to businesses trading at the time any national or relevant local restrictions came into force. So, I do not consider it was open to the Council to draw up an ARG scheme with wider eligibility criteria as he suggests. Consequently, there is no fault in the Council not having the ability to make a discretionary payment to Mr H as he suggests.
- I note that over recent months Mr H has said that some use of the premises was taking place from February 2020, as it has an office. I do not find Mr H has provided any evidence of this, although I am willing to accept this is the case. However, even if such evidence was now provided I do not find it would assist Mr H’s case. He would not have been eligible to receive any of these grants on the basis some limited clerical or administrative work took place from the premises in advance of fitting them out for trade as a restaurant or take away. So, I find no fault in the Council’s consideration of this matter either.
- I have also considered if there has been any fault in the customer service provided by the Council to Mr H. I have noted the Council appears to have failed to answer queries Mr H made about its discretionary grant scheme in May. I also find that some of the replies to complaints have offered slightly different reasons for the refusal of a RHL grant. They also implied a business trading in June 2020 might have received a discretionary grant when this is not what Government guidance or Council policy said (the key date being 11 March 2020).
- However, I do not consider this level of service, even if not always meeting best practice justifies a finding of fault. Because I consider the Council has given Mr H enough explanation to understand why his business could not receive grants from the various schemes he applied to. I am satisfied overall the Council has made its best efforts to respond to Mr H, explain its decisions and the limits of its discretion (up to February 2021) to support businesses impacted by the pandemic.
- For reasons set out above I do not uphold this complaint. I have therefore completed my investigation satisfied with how the Council has responded to Mr H’s complaint.
Investigator's decision on behalf of the Ombudsman