Summary: We shall not investigate this complaint about the Council refusing to pay business grants. The evidence suggests the Council was not at fault.

The complaint

1. Mrs X complains the Council refused to give COVID-19-related business grants to her businesses. She states this compounded the businesses’ financial difficulties from the impact of the government’s COVID-19 restrictions.

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The Ombudsman’s role and powers

2. 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”.
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’. We provide a free service but must use public money carefully. We may decide not to start or continue with an investigation if we believe it is unlikely we would find fault. (Local Government Act 1974, section 24A(6), as amended)

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How I considered this complaint

4. I considered the information Mrs X provided, copies of correspondence that the Council provided and information on the Valuation Office Agency’s website. I shared my draft decision with Mrs X and considered her comments on it.

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What I found

The business grant schemes

5. In March 2020, the government created schemes for councils to pay grants to small businesses. This was because the Covid-19 restrictions affected so many of those businesses. A business’ right to a grant depends on its being on the business rating list on 11 March 2020 and meeting certain other criteria.
6. Government guidance states later changes to the rating list, even if changes are backdated to 11 March 2020, do not entitle a business to a grant. A council can only make an exception if, on 11 March 2020, it was already ‘factually clear’ to the Council that the rating list was inaccurate for a particular address or business.
7. The Valuation Office Agency (VOA), not the Council, compiles and makes changes to the rating list and decides if a business is liable for business rates and, if so, its rateable value.

Mrs X’s applications for business grants

8. The rating list previously listed several properties as together forming a single hereditament (business premises). Shortly before 11 March 2020, the properties were sold separately. Mrs X bought two of them to run as separate businesses from the rest of the hereditament. Several months after 11 March 2020, the VOA altered the rating list, removing the previous listing and giving separate listings to Mrs X’s properties.
9. The Council refused Mrs X’s applications for COVID-19-related business grants for her businesses. Those grants would have been £10,000 each. Instead the Council gave discretionary grants of £5,000 per business. Mrs x argues she should have received the larger grants.
10. The Council could only award a small business grant if:
1. On 11 March 2020, the business was on the rating list and met the other criteria, or
2. On 11 March 2020 the Council was ‘factually clear’ the rating list was inaccurate for this address. The point here is not whether the rating list was inaccurate on 11 March 2020 but whether, on 11 March 2020, the Council knew the rating list was inaccurate.
11. On point a), on 11 March 2020 the properties did not have their own entries on the rating list. So the Council could not award a grant on that basis. As I have explained, the rating list’s subsequent change, with the change being backdated to before 11 March 2020, did not make the properties eligible for a grant.
12. On point b), Mrs X argues the properties’ previous owners emailed the VOA and the Council between November 2019 and February 2020 with information about the premises being split. I have considered those emails:
1. The previous owner emailed the VOA about something else and added, ‘Also the rates will need to be split, as we are in the process of exiting from running [the business]. (This can be dealt with at a later date)’.

This email only indicated a plan to divide the properties in the future. It did not show anything had yet changed that might make the rating list inaccurate. The VOA will only alter the rating list if a relevant change has already happened. Also, this email was to the VOA, so it did not mean the Council knew anything.

2. The VOA replied, ‘When you decide to split the business and vacate [main address] please notify the local council who will then initiate the correct procedure to split the rating assessment.’ That reinforced the point that no change affecting the rating list had yet happened. Again, the Council did not see that email at the time.
3. The previous owner emailed the Council’s business rates section:

‘Please note that I will be exiting this business sometime from the middle of January and there will be new owners. We will be in contact again when I have an actual exit date.’

That just described a future plan. It did not say anything had happened yet and it did not mention any intention to split the properties into different ownerships and businesses. So this email gave the Council no reason to think anything that would require a change to the rating list was being contemplated, let alone that any such change had happened.

4. The previous owner later emailed the Council’s business rates section saying they would send legal documentation showing they no longer ran the business. That in itself simply showed the Council that the previous owner might no longer be liable for the business rates. It did not give the Council reason to believe the properties had been split into separate ownership and separate businesses.
4. Therefore I do not consider those emails meant the Council should have been ‘factually clear’ by 11 March that the rating list was wrong to have the various properties under one listing. Nor have I seen any other evidence that the previous owner, or Mrs X, or anyone else told the Council by 11 March 2020 that the properties had been split. So I see no fault in the Council refusing to give Mrs X business grants.

Mrs X’s response to my draft decision

14. Responding to a draft of this decision, Mrs X suggested her properties only did not each receive a £10,000 small business grant because their ownership changed shortly before 11 March 2020. However, that is not the reason. They did not receive those grants because on 11 March 2020 they were not separately listed on the rating list in their own right, nor did the Council know then that the rating list was wrong. Unless either of those points had changed by 11 March, the properties would not have been eligible, regardless of whether or when the ownership changed.
15. Mrs X points out the properties were previously on the rating list, albeit as part of a different rating list entry. However, that is an argument against their eligibility for small business grants. On 11 March 2020, the rating list entry was for one hereditament covering several properties. That is not the same as the properties Mrs X owns having their own separate rating list entries, which was needed for grant eligibility and did not happen until after 11 March 2020.
16. I note Mrs X bought the properties shortly before 11 March 2020 and she says circumstances outside her control, including the COVID-19 situation, affected how quickly matters progressed thereafter. While I sympathise, the government’s guidance to councils was clear that eligibility for small business grants depended on the rating list position at 11 March 2020. The Council could not ignore that.
17. Mrs X reiterates the previous owner told the VOA some months before 11 March 2020 that the rating assessment ‘will need to be split’ in future as the owner was going to leave the business. However, as I explained above:
• The VOA will only alter the rating list when a change has actually happened. This email did not mean any change had yet happened.
• The government guidance is that the Council can only make an exception and pay a £10,000 grant if the Council knew on 11 March 2020 that the rating list was wrong. The email Mrs X cites was not to the Council, nor did it suggest any change had yet happened that made the rating list incorrect.
18. Mrs X cites government guidance that changes to the rating list after 11 March 2020 will not affect grant eligibility. However, that guidance is an argument against her businesses getting £10,000 grants. I am aware of the guidance, which I cited it in paragraph 6 above. It means grant eligibility is based on the rating list at 11 March 2020 and later changes, even if backdated to before that date, are ignored. On 11 March 2020, the rating list did not give Mrs X’s two properties their own rating list entries, so they were not eligible for small business grants. The subsequent changes to the rating list, backdated to before 11 March 2020, did create separate entries for Mrs X’s properties, but the government guidance means those changes did not make the properties eligible for grants.
19. Mrs X showed me another email, in which the properties’ previous owner told the Council before 11 March that he had exited his lease. The response here is as for the similar point at paragraph 12 d) above. The email simply showed the sender might no longer be responsible for business rates. It did not show that the rating list had changed in terms of the hereditament being split.
20. I appreciate the situation is very difficult for Mrs X. However, I have not seen evidence suggesting the Council was at fault for not giving her small business grants.

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Final decision

21. We shall not investigate this complaint. This is because any investigation is unlikely to find fault by the Council.

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Investigator's decision on behalf of the Ombudsman