Summary: Mr B complains the Council refused his business hardship relief from non-domestic rates. He also complains at delay in it making that decision. We uphold the complaint. We find fault in the decision taken and for poor customer service including delay. This has caused Mr B uncertainty and put him to unnecessary time and trouble. The Council has agreed action to remedy this injustice, which we set out at the end of this statement.

The complaint

1. I have called the complainant ‘Mr B’. He complains the Council refused his business hardship relief from non-domestic rates. He also complains at delay in it making that decision.
2. Mr B says the Council’s actions caused distress at what was already a difficult time for his business because of the impact of COVID-19. He says he was also put to unnecessary time and trouble in his contacts with the Council.

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The Ombudsman’s role and powers

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. 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. 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. Before issuing this statement I considered:

• Mr B’s written complaint and any supporting information he provided;
• information provided by the Council in response to our enquiries;
• relevant law and policy as set out in the text below.

7. Mr B and the Council also had an opportunity to comment on draft findings before we issued this final decision.

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What I found

Relevant Legal Considerations

8. Section 49 of the Local Government Finance Act 1998 gives local authorities the discretion to reduce or remit up to 100% of the non-domestic rates (or business rates) due on a property.
9. The law says an authority can do this where:

• the ratepayer would sustain hardship if the authority did not do so; and
• it is reasonable for the authority to do so having regard to the interests of persons liable to pay council tax set by it.

Government grants payable to businesses impacted by COVID-19

10. In March 2020, in response to the COVID-19 pandemic, the government created schemes for councils to pay grants to small businesses. Relevant to this complaint it created the Small Business Grant Fund (SBGF). It published guidance about this scheme on 24 March 2020.
11. To be eligible to receive a payment from the SBGF the business had to first be eligible for the Small Business Rate Relief (SBRR) scheme on 11 March 2020. For eligible businesses, the grant was £10,000.
12. On 2 May 2020, the Government announced it would introduce a fund to pay further business grants, for those businesses who were not eligible for the SBGF (or another grant scheme to support retail, hospitality and leisure businesses – RHL grants). It published guidance about that scheme on 13 May 2020.
13. 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 paid in each case.

Council policy on discretionary rate relief

14. The Council publishes a “Hardship Rate Relief Policy & Procedure”. This pre-dates the COVID-19 pandemic.
15. In Section 3 of the policy the Council sets out three objectives which underpin its approach to claims for rate relief. Its policy aims to:

• “Provide financial assistance by way of rate relief to organisations, who for exceptional reasons cannot meet their Non-Domestic Rates liability.
• Ensure that when considering Hardship Rate Relief the best interests of the Council Tax Payers are taken into account.
• Support the vulnerable organisations and people within the community”.

16. Section 4 of the policy then provides more detail on how the Council will assess individual requests for relief. It says:

• “Exceptional circumstances will have to be demonstrated by the organisation and the person making the application.
• The impact on the community in the area that surrounds the premises will be taken into account such as when employment will be affected by the company going out of business or a reduction in local services which would have negative effects on the population.
• When interpreting the “interests of its Council Tax payers” […] this may go further than direct financial interests. For example, where a company going out of business would worsen the employment prospects in the area, or the amenities of an area might be reduced by, for instance, the only provider of a service in that area.
• An example of what may constitute hardship includes where a business has been affected by severe loss of trade, due to external factors such as natural disasters.”

17. The policy explains that those requesting relief will have to provide evidence to show they have lost trade.
18. The policy does not explain how the Council will process requests for relief. For example, who in the Council will make that decision. Nor does it set any timescale for how long it will take to process requests. The policy also does not explain if there is any right to a review of a decision if the person or business applying for relief disagrees with the outcome of their request.

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.

Key Facts & Chronology

20. Mr B’s business provides services to a specific industry sector. In March 2020 it had office premises in the Council’s area, employing around 10 people. The industry sector forming the business client base was impacted by the pandemic. In March 2020 Mr B anticipated that as a result his business would have “little to no work” for the next six months.
21. Consequently, on 19 March 2020 Mr B applied to the Council for hardship rate relief. He explained on his application how COVID-19 would impact on his business. He set out his monthly expenses in wages, rent and other costs.
22. Mr B’s business could not obtain a small business grant. This was because the rateable value of the offices it rented was slightly over the limit (£15000) for which it could claim SBRR.
23. On 28 March 2020 Mr B provided evidence in support of his application. This included:

• company accounts to the financial year ending March 2019 showing the company traded at a loss at that time;
• a profit and loss statement for the financial year up to the end of February 2020 showing the business had now moved into profit;
• statements of outstanding liabilities and income due into the business;
• bank statements for the previous 12 months.

24. During April and May Mr B sent at least three emails chasing an update on his application. These also referred to him telephoning for an update.
25. At the end of May 2020, the Council sent a holding reply to Mr B. It said it was finalising details of its discretionary grant scheme to support businesses impacted by COVID-19. It offered Mr B a three month payment holiday on paying non-domestic rates “if this will help”. Mr B replied saying that he needed clarity on financial support available as he was concerned about whether the business could continue to trade solvently.
26. When Mr B subsequently complained (see below), the Council said the officer who sent him the email at the end of May 2020 had made a mistake when writing to him. It said the officer believed Mr B’s email chasing a reply to his request for rates relief was one chasing information about the discretionary grant scheme.
27. During summer 2020 Mr B’s business applied successfully for a discretionary grant from the Council’s scheme. It received two payments of £5000 each.
28. But by August 2020 Mr B had still not heard about the request for hardship rates relief and chased again. The Council asked him to re-send his application and when he did so, Mr B next received an email which explained why his business could not receive funding from the SBGF or a RHL grant. Mr B replied saying he was chasing his request for hardship rate relief and said the Council “may have got confused”.
29. On 4 September 2020, the Council acknowledged Mr B’s hardship rate relief application remained outstanding and said it would now consider it. It said the delay in processing the request was because officers wanted “to assess hardship claims in the light of other sources of support we are able to give businesses”.
30. On 14 September 2020, the Council replied to Mr B’s request for hardship rate relief. It apologised for the delay in processing his request. It then went on to reject it. The Council gave two reasons for its decision. First, that as a new company Mr B’s business might reasonably be expected not to be making a profit. Second, that Mr B had received support from the discretionary grant scheme. The reply noted the Council policy for rate relief requests had “no appeal provisions within it”.
31. On receiving this reply Mr B therefore made a complaint which the Council acknowledged and replied to before the end of the month. In his complaint Mr B highlighted the delay in receiving a decision and dissatisfaction with the refusal of relief. In its reply the Council:

• accepted it had delayed in responding to Mr B’s request for hardship relief and said: “the increased workload and the prioritisation of the administration of the grants has unfortunately led to delays in other areas of the service”. However, it recognised its delay was still ‘unacceptable’;
• quoted extracts from its hardship rate relief policy quoted at paragraph 15 above. It supported the reasoning provided on 14 September that it was “not unreasonable” the business would not make a profit, being “reasonably new”, although it recognised the business was in profit in February 2020;
• explained its understanding of the service provided by the business;
• said closure of the business would not have a significant impact on the community surrounding its premises or on employment prospects in the area;
• that because there were separate sources of financial help for businesses impacted by COVID-19, consideration of the impact of the pandemic did not “fall within the scope of the scheme”.

32. Mr B escalated his complaint. He said:

• the application for hardship rate relief was separate to the Council’s discretionary grant scheme and should be considered as such;
• that he had made the application for relief before the discretionary grant scheme existed and so this was not an excuse for the delay in deciding his application;
• that the Council had made a series of assumptions about the nature of his business and closure would impact on the community as his employees lived in the area;
• that the Council’s actions had now led him to give notice on his business premises.

33. Mr B received no immediate acknowledgement or reply. But after he chased a reply in mid-October the Council provided a final response to his complaint. This said:

• it again said there was unacceptable delay in deciding Mr B’s application for rate relief. It apologised again for this;
• its hardship rate relief policy did not allow it to consider the impact of COVID-19 on businesses. So while it was not unreasonable to mention the discretionary grant awards in rejecting Mr B’s application these were also “not relevant” to its decision to refuse;
• it said it was unclear previously the business employed local people. But it still considered any loss of jobs would not have “significant impact” on the community. It also noted the business had been making a profit at the end of February 2020;
• the business did not support “vulnerable organisations and people within the community”;
• that relief was not in the wider interests of council tax payers.

Findings

34. I begin my analysis of the Council’s actions in this case by considering the content of its policy on requests for discretionary rate relief. I find it reasonable the Council should want to set out the primary objectives of its policy and then offer guidance to officers on how to consider requests in detail. I also find it reasonable the objectives should begin by reflecting the two tests set out in law to qualify for relief. First that a business must demonstrate financial hardship and second that any relief must be in the wider interests of council tax payers in the District.
35. However, the third objective adds a level of confusion. It appears poorly worded in its reference to “vulnerable organisations”. I presume it intends to refer to organisations who support vulnerable people. But the terms are not defined. It is also unclear if providing such support is an essential qualification for the Council’s relief or something which might lend an application greater priority. However, as I note the Council only introduced consideration of this third objective on its third consideration of Mr B’s application, I assume it is not essential to the success or failure of an application. It is therefore a factor which might lend an application more weight.
36. When it comes to the more detailed guidance on assessing applications the policy appears clear that a business must have experienced the impact of an exceptional event causing financial hardship. Officers must then also consider the wider impact of any hardship experienced by the business on the District. This can be interpreted widely. To include not only any jobs at risk in the business but the impact on other businesses and employment opportunities. Or to take account if the business is the only one providing a particular service in the area.
37. I note the policy is silent on what account officers might take of other sources of financial help to a business. I recognise the Council wrote the policy before the COVID-19 pandemic. However, it refers to natural disasters. In doing so, it makes no reference to how officers should consider if a business has insurance to claim against the consequence of a natural disaster. Something I consider maybe relevant to a decision on whether to grant relief.
38. The policy also does not contain some basic explanation of procedure. For example, who will decide such applications and by when. And what happens when someone who applies for relief is dissatisfied with the outcome of their request.
39. Council policy could be clearer therefore, both in its statement of objectives, in explaining how officers should assess if a request meets those objectives and in setting out procedures. But I consider it does provide for some basic questions that officers should ask when considering an application for relief:

• Is this a business that cannot pay its non-domestic rates bill because of financial hardship?
• Has it been put in that position for exceptional reasons?
• Will relief be in the wider interests of the District?

40. To these may reasonably be added the fourth question of is there an alternative source of funding to offering relief?
41. When I consider the Council’s responses to Mr B’s requests against this analysis I find it has not applied itself systematically to these questions.
42. First, it has provided no clear statement at any time about whether it accepts Mr B’s business cannot pay its non-domestic rates bill despite him providing evidence intended to demonstrate this. I note the Council’s comments on whether Mr B’s business might be expected to be loss-making. But I cannot see this is a relevant statement when considering if the business can meet its rates liability or not. Especially as the Council knows that in fact Mr B’s business was not loss making at the point COVID-19 struck.
43. Second, the Council has taken an inconsistent line on whether it should take account of COVID-19 as an exceptional event impacting on the business. I consider it wrong for the Council to assert that its policy would not allow for the consideration of COVID-19 as grounds for granting relief. First, because the policy contains no statement to that effect. But also because it is self-evident that COVID-19 was an “external factor” which has had an unforeseen impact on many businesses. The Council has therefore excluded consideration of a relevant factor when reviewing its decision on refusing Mr B’s business relief.
44. Third, I find the Council has given more consideration to the question of whether relief would be in the wider interests of council tax payers in the District. But its statements on this matter have only followed an incorrect or muddled approach to the questions around affordability and the relevance of COVID-19 discussed above. I am not therefore inclined to think the Council’s consideration of this question in isolation is sufficient.
45. Fourth, I think it reasonable the Council could introduce the existence of other financial support for businesses impacted by exceptional events in deciding whether to grant rate relief. While I take Mr B’s point that he applied for relief several weeks before discretionary grants existed, I do not consider the Council could ignore their existence at the point it made its decision. However, I do not consider the presence of the grants alone (or any other financial support the business may have received) would negate an application for relief. Because the Council still needed to consider the request against the other tests set out in law and policy to decide if relief should apply.
46. It flows from what I have said above that I do not consider the Council has made an administratively sound decision on Mr B’s relief application. I consider this has caused injustice in the form of uncertainty. As Mr B cannot be satisfied that an administratively sound decision would necessarily have come to the same conclusion to reject his application.
47. Before I set out proposals to remedy that injustice I have also considered some wider customer service issues raised by Mr B’s complaint. It is common ground that Mr B’s application for relief took too long to determine. The Council recognises this and has apologised more than once for the delay. But I do not consider it has fully considered the impact of the delay on Mr B who made numerous, reasonable attempts to chase a reply to his request over several months.
48. I accept the Council was setting up new grant schemes and operating in unprecedented circumstances. However, at no point did it take the simple step of contacting Mr B to explain it was delaying consideration of relief requests to await the outcome of grant applications. And twice it confused Mr B’s request for relief as one for a grant application. All of this, added to the delay, has caused further injustice to Mr B in the form of unnecessary time and trouble.
49. I also consider there was some unnecessary confusion in how the Council approached Mr B’s dissatisfaction with its refusal of his relief request. The policy provides no right of appeal. But the answers to Mr B’s complaint read as if they are decisions reviewing the merits of the refusal of relief. They read as an appeal decision therefore and not as a review of the process followed by the Council. I do not think any confusion here adds to Mr B’s injustice. But I note the point as it is relevant to the action agreed by the Council set out below.

Agreed action

50. The Council accepts the findings set out above. It has agreed that to remedy the injustice set out at paragraphs 46 and 48 above. Within 20 working days of this decision the Council will:
1. apologise to Mr B accepting the findings of this investigation;
2. pay Mr B a financial remedy of £500; this is made up of a payment of £250 for the uncertainty created by the poor handling of his rate relief application and £250 for his time and trouble;
3. make a fresh decision on Mr B’s application for rate relief taking account of the analysis set out above.
51. The Council has also agreed that within three months of this decision, or as soon as reasonably practicable thereafter, it will complete a review of its discretionary rate relief policy and will share the outcome of that review with us. The review will take account of my analysis above and as a minimum, will:

• clarify what is meant by the third objective in the current policy where it refers to “vulnerable organisations”;
• provide advice to officers on what account, if any, should be given to alternative sources of financial support when assessing a claim for relief;
• provide clear advice on the procedure to be followed and timescales for assessing a relief request;
• provide a statement on what happens if the ratepayer is dissatisfied with the outcome of their relief request.

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Final decision

52. For reasons set out above I uphold this complaint finding fault by the Council causing injustice to Mr B. The Council accepts this finding and has agreed action I consider will provide a fair remedy for that injustice. So, I am satisfied I can now complete my investigation.

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Investigator's decision on behalf of the Ombudsman