Summary: Ms J complained her business could not receive support from a discretionary grant scheme set up to support businesses impacted by COVID-19. We do not uphold the complaint, finding no fault in the Council’s decision that Ms J’s business was not eligible for support.

The complaint

1. I have called the complainant ‘Ms J’. She complains her business was not eligible to apply for a grant from its local authority discretionary grant fund in June 2020. This was a fund designed to support businesses impacted by COVID-19.
2. Ms J argues this was unfair as her business made no income during the first national lockdown in 2020. She therefore did not receive financial support at a time when she needed it.

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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. 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. Before issuing this decision statement I considered:

• Ms J’s written complaint to the Ombudsman and any supporting information she provided, including that gathered in a telephone conversation with her;
• information provided by the Council in response to written enquiries;
• relevant law, national guidance and local policy as referred to in the text below.

7. Ms J and the Council saw a draft of this decision statement and were invited to comment on it. I took account of any comments made before issuing this final decision.

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What I found

Relevant Law & Guidance

COVID-19 discretionary grants

8. In May 2020, the Government introduced discretionary grant schemes administered by local authorities. It published guidance contained in: “Local Authorities Discretionary Grants Fund - guidance for local authorities”.
9. 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 and Self-Employed Income Support scheme). The Council had discretion over the amount of payment in each case.
10. The guidance said discretionary grants were aimed at:
• small and micro business;
• businesses with relatively high fixed property costs;
• businesses that had suffered a significant fall in income due to COVID-19; and
• businesses that occupied a property with a rateable value of under £51,000.
11. The Government said as a guide, the following types of business should be a priority for funding:
• small businesses in shared offices or other flexible workspaces;
• regular market traders with fixed building costs, such as rent, who do not have their own business rates assessment;
• Bed and Breakfasts which pay council tax instead of business rates; and
• certain charity properties.
12. The guidance said councils should publish details of their discretionary grant scheme on their website. This should include clear guidance on which types of business they would prioritise and how they would decide on the level of grant.

The Council’s discretionary grant scheme

13. The Council adopted a discretionary grant scheme and referred to these as ‘local economy business grants’. The Council said it would aim to target support at the types of business the Government wished to support (see paragraph 10 above) and in those sectors of the economy considered national priorities (see paragraph 11). The Council also said it would aim to support park cafés as part of its commitment to support green spaces within the Borough.
14. The Council’s Head of Renewal drafted the local policy. In doing so, they consulted with:

• the COVID-19 Local Economy Officer Group made up of senior officers across several different council services;
• a Business Support Task Force set up by the Council to support businesses through the immediate COVID-19 crisis and to help plan for recovery. The Task Force contained two representatives from the Council and five representatives from local business groups;
• the Council’s Executive, Resources and Contracts Policy Development and Scrutiny Committee, made up of elected Councillors.

15. The drafts of the policy said the Council anticipated more demand for the discretionary grants than the funds available. The Council therefore set criteria businesses would have to meet in order to qualify. The Council said these reflected national guidance as well as setting some criteria specific to local circumstances. Relevant to this complaint the scheme included criteria that businesses must have had:

• “ongoing and fixed property related costs”; and
• suffered a fall in income of 50% or more; this would be shown through comparison of bank accounts in April and May 2020 with the same months in 2019; this was apart from businesses trading less than 12 months which could show a comparison based on February 2020 trading.

16. The Council produced guidance for applicants, which explained how businesses would need to show they had fixed property costs. The Council said such costs “can relate to your home if you can demonstrate that part of your home is used for business purposes”. For applicants working from home, it asked them to provide a mortgage statement.

Principles of Good Administrative Practice

17. 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.

Background & Key facts

18. Ms J is a hairdresser. She runs her business as a limited company. She either works from home, cuts hair in client’s homes or uses a salon chair by arrangement.
19. In Spring 2019 Ms J had a child. She was on maternity leave during April and May 2019.
20. In June 2020 Ms J went to apply for a discretionary grant. She partially completed an application form on two occasions. Ms J did not complete an application as she considered she could not satisfy the requirement to demonstrate fixed property costs as she did not pay business rent or a mortgage.
21. Ms J therefore contacted the Council service administering the grants and asked it to consider her circumstances. Ms J said she needed support as she had lost all income because of the pandemic and consequent lockdown.
22. In reply the Council said Ms J may be eligible if she paid a mortgage on her home. Ms J responded that the mortgage on her home was in her partner’s name.
23. In its next reply the Council said that the discretionary grants were “to support businesses with liabilities related to property”. It said Ms J needed to show she had a responsibility to pay rent or a mortgage. It asked if Ms J had any “formal arrangement” with her partner about how she contributed to their property costs.
24. In her reply, Ms J again explained how the pandemic had reduced her income to zero but that she had no responsibility for fixed property costs.
25. In its next response the Council accepted Ms J was impacted by the pandemic but that it had designed its discretionary grant scheme taking account of the Government guidance and its suggested priorities. It recognised Ms J’s disappointment she “was not eligible” to apply for a discretionary grant.
26. In her next reply Ms J queried if the Council had taken account of all relevant guidance. She explained that as a Company Director she could not access the self-employed income support scheme which the Government had set up. In this email Ms J also queried how the Council had chosen to assess income to qualify for a grant, given that 12 months previously she had not worked for a time. Ms J suggested a fairer measure of income would be to compare income from February 2020.
27. Ms J escalated her concerns about the limitations of the Council scheme as a complaint. In its reply the Council said its discretionary grant scheme had been consulted on as I described in paragraph 14. It confirmed it rejected Ms J’s application because she did not have fixed property costs. The Council said that if Ms J’s claim to the scheme had not been refused for this reason, it would have considered using a different method to calculate the loss of income to her business given Ms J had been on maternity leave in Spring 2019.

Findings

28. This complaint focuses attention on how the Council decided on the priorities of its discretionary grant scheme. Government guidance said the Council was expected to support businesses with ‘relatively high’ fixed property costs up to a ceiling of £51,000. This did not exclude businesses without such costs. But there was no requirement or presumption the Council should support businesses in Ms J’s position that did not have such costs. It was therefore at the discretion of the Council whether to support a wider pool of businesses, including those without ‘relatively high’ fixed property costs when drawing up its scheme.
29. Therefore, the flexibility given by the national policy meant the Council could choose to prioritise businesses with fixed property costs to the exclusion of others without such costs. While the Council has not produced a minute or record which shows it explicitly considered businesses in Ms J’s position, it has provided a rationale for why it chose to apply such priority. First, because this approach was in line with Government guidance which emphasised it wanted councils to support businesses with such costs. Second, because it anticipated more demand for its scheme than supply which meant it had to make such difficult choices.
30. Further, I find the Council undertook a reasonable and meaningful consultation on its scheme, despite the short time it had to do so with Government placing an expectation on councils to put discretionary grant schemes in place quickly. I find the proposed criteria of the scheme, including the emphasis on businesses with fixed property costs was clearly pointed out to all bodies consulted. There is no indication that any of the consultees asked the Council to reconsider to take account of businesses in Ms J’s position. I note where the Council did receive comments on other aspects of the scheme from business representatives it modified the scheme accordingly.
31. For the reasons set out in paragraphs 29 and 30 I do not find fault in how the Council drew up its scheme. This had the effect of excluding Ms J’s business from support. I find the Council could do this even though the pandemic clearly had the impact Ms J describes with her losing all ability to trade during the first national lockdown.
32. I note the point made by Ms J that had she qualified for the scheme she could not demonstrate a loss of income in April and May 2020 compared with the equivalent months in 2019 when she was taking maternity leave. I have a concern the Council’s policy would not appear to have allowed it to make an alternative comparison even though it says in practice it would have considered doing so.
33. But I have not pursued this point, because no injustice is caused to Ms J. The reason why she did not receive a discretionary grant was because she could not satisfy the Council she had fixed property costs.

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Final decision

34. For reasons set out above I do not uphold this complaint as I do not find the Council acted with fault. I have therefore completed my investigation.

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Investigator's decision on behalf of the Ombudsman