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East Hertfordshire District Council (20 008 157)

Category : Benefits and tax > COVID-19

Decision : Upheld

Decision date : 09 Jun 2021

The Ombudsman's final decision:

Summary: Mr X complains the Council wrongly refused him a business grant, causing increased business risk. We find no fault in the Council’s decision making process but we find fault in its communications with Mr X. We recommend the Council provide an apology and payment for time and trouble.

The complaint

  1. Mr X complains the Council refused him a business grant based on its incorrect view that his business was not operating. He has missed out on funding, putting his business at risk.

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The Ombudsman’s role and powers

  1. 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)
  2. 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)
  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. I spoke to Mr X and I considered his complaint. I reviewed documents provided by Mr X and the council.
  2. I gave Mr X and the Council an opportunity to comment on a draft of this decision. I considered any comments before making a final decision.

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What I found

Grant Funding Schemes

  1. 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).
  2. Funding was payable to the person recorded as the ratepayer on 11 March 2020. However, where a council had reason to believe the information held about the ratepayer on 11 March was inaccurate they could withhold or recover the grant and take reasonable steps to identify the correct ratepayer.
  3. Businesses which, on 11 March 2020, were eligible for Small Business Rates Relief (“SBRR”) were eligible for a Small Business Grant (SB Grant) of £10,000.
  4. Businesses which, on 11 March 2020, would have been eligible for the Expanded Retail Discount (retail rates relief), were eligible for a Retail, Hospitality and Leisure Grant (RHL Grant) of up to £25,000. This was available to businesses mainly used for retail, hospitality or leisure.

Small Business Rates Relief (SBRR)

  1. You can get small business rate relief if:
    • your property’s rateable value is less than £15,000 and
    • your business only uses one property.
  2. If you get a second property, you will keep getting any existing relief on your main property for 12 months.
  3. You can still get small business rate relief on your main property after this if both the following apply:
    • none of your other properties have a rateable value above £2,899 and
    • the total rateable value of all your properties is less than £20,000 (£28,000 in London)

Expanded Retail Discount (the Discount)

  1. In April 2020 MHCLG published guidance for councils on how to apply the Discount; “Business Rates, Expanded Retail Discount 2020/21: Coronavirus Response Local Authority Guidance.
  2. This explained the Discount was for businesses wholly or mainly used:
    • as shops, restaurants, cafes, drinking establishments, cinemas and live music venues,
    • for assembly and leisure; or
    • as hotels, guest & boarding premises and self-catering accommodation.
  3. Shops, restaurants and cafes were further defined as properties used for the sale of goods, supply of services, or sale of food or drink, to visiting members of the public.
  4. In a similar way to other reliefs this was a test on use rather than occupation. Therefore, businesses which were occupied but not wholly or mainly being used for the qualifying purpose would not qualify for the relief. For the avoidance of doubt, businesses that closed temporarily due to the Government’s advice on COVID-19 were treated as occupied for the purposes of this relief.

Principles of good administrative practice

  1. In 2018 the Ombudsman published a guidance document setting out the standards we expect from bodies in jurisdiction “Principles of Good Administrative Practice”. We issued an addendum in response to the COVID-19 pandemic; “Good Administrative Practice during the response to Covid-19”. This shows we expected similar standards from councils even during crisis working. The following points are relevant in this case.
    • 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.

What happened

  1. The Council has provided a copy of its records, which I refer to below.
  2. The Council inspected Property A in October 2019. It found it closed and the business no longer trading.
  3. In October 2019 the landlord of Property A told the Council he intended to lease the property but the agreement was not finalised.
  4. Mr X says he took over the lease on Property A in November 2019 and started trading immediately.
  5. The Council’s records show it visited Property A again in January 2020 and found the property closed/empty as per the previous visit.
  6. On 11 March 2020 the Council’s records showed the landlord as the ratepayer. The Council has since said it had no reason at that time to believe its record of the ratepayer was incorrect.
  7. On 16 April a third party contacted the Council on behalf of Mr X’s business to set up a business rates account.
  8. The Council’s records show it was due to carry out an inspection visit on 16 April but did not do so due to the COVID-19 restrictions in place.
  9. On 1 May Mr X’s colleague, Ms Y, applied for a business grant. I note the application form does not specify whether this is for a SB Grant or RHL Grant.
  10. Ms Y chased the Council for a response by email on 13 May, 1 June and 17 June.
  11. On 24 June the Council received evidence from a third party that Property A had remained closed since November 2019.
  12. On 25 June the Council carried out an inspection visit at Property A. It reported no signs of trade and that it was closed/empty. It has provided photos taken at the time.
  13. On the same date the Council spoke to Mr X. Its records show he told the Council his business had been open and trading by delivery only since January.
  14. On 25 June the Council told Mr X of its decision to refuse a grant. It explained the Chancellor said a business should be trading and in receipt of rates relief. The business was not trading on 11 March and so was not eligible.
  15. Mr X disputed his business was not trading. He asked the Council for an explanation for its refusal and for its delay in addressing the grant request.
  16. In response, the Council explained it took a long time due to the number of applications and because the rates account was not in the name of the applicant. Its records showed Property A was empty on 11 March and so a grant was not payable.
  17. Mr X insisted the property was not empty. However, due to its size it was not open for the public to walk in. He asked for the Council to explain its reasoning.
  18. The Council explained that on 11 March Property A was showing as empty on its records and due to this it could not pay a grant. The guidelines given by the Government required the grant to be paid in relation to the details held as at 11 March.
  19. Mr X again told the Council Property A was not empty. It had been in use since January 2020.
  20. The Council then further explained that the business had to qualify for the Discount to be eligible for the RHL Grant. Government guidance said this was available to businesses “being used for the sale of food and/or drink to visiting members of the public”. It had visited Property A and found it was not yet open to sell food and drink to visiting members of the public. Therefore, the business was not eligible for the Discount and could not be considered for a RHL Grant.
  21. In response to enquiries the Council could not show where the Chancellor required a business to be trading to qualify for SBRR or the SB Grant. However, it explained the business was not eligible for SBRR as it occupied more than one property and the total rateable value exceeded the limits.
  22. The Council also explained it did not ask Mr X for further evidence to show Property A was not empty on 11 March because, on 25 June 2020 Mr X said the business had been open and trading to deliver food only. Therefore, it was not open to visiting members of the public and there was no evidence to indicate that any use was being made of Property A.

Findings

  1. Having reviewed the documents exchanged, I consider the Council did not clearly communicate to Mr X a decision on his business’ entitlement to a Small Business Grant. Rather, the Council refers to grants in general and then specifically the RHL Grant. This is fault. In response to enquiries the Council further explains why Mr X’s business was not eligible for SBRR. It follows the business would not have been eligible for a Small Business Grant. However, the Council should have provided this information to Mr X so that he had the opportunity to challenge any error.
  2. Mr X had to qualify for the Discount to be eligible for the RHL Grant. And to qualify for the Discount the business had to be wholly or mainly being used for the sale of food or drink to visiting members of the public on 11 March 2020.
  3. The Council had gathered evidence through inspection visits and from a third party that Mr X’s business was empty and was not trading on 11 March. Mr X then told the Council the business was open for deliveries only. The Council considered the information available and concluded the business was not eligible for the Discount as it was not open to visiting members of the public on 11 March. As it was not eligible for the Discount, it was also not eligible for the RHL Grant. I find no fault in the Council’s decision making process.
  4. However, the Council did not give Mr X full reasons for its decision or explain the evidence it relied on at each stage. This was despite Mr X disputing his business was closed and repeatedly seeking an explanation. This is fault. Mr X was put to time and trouble complaining to the Council and then the Ombudsman as a result.

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Agreed action

  1. To remedy the injustice set out above I recommend the Council carry out the following actions:
  2. Within one month of the date of my decision:
    • Provide Mr X with a written apology and;
    • Pay Mr X £100 for time and trouble.
  3. Within three months of the date of my decision:
    • Provide training/guidance to relevant staff to ensure they provide full reasons for decisions with reference to relevant evidence.
  4. The Council has accepted my recommendations.

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Final decision

  1. I find no fault in the Council’s decision making but I find fault in its 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

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