The Ombudsman's final decision:
Summary: Mr Y complains the Council wrongly refused Mrs X a small business grant resulting in her business closure. We find fault in the Council’s decision making process that did not affect the decision outcome but caused uncertainty. We recommend the Council provides an apology to Mrs X and takes steps to prevent recurrence.
- Mr Y complains on behalf of Mrs X that the Council wrongly refused Mrs X a small business grant, resulting in her business closure.
The Ombudsman’s role and powers
- 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)
- 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
- I spoke to Mr Y and I reviewed documents provided by Mr Y and the Council.
- I gave Mr Y and the Council an opportunity to comment on a draft of this decision. I considered their comments before making a final decision.
What I found
Grant Funding Schemes
- 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).
- Businesses which, on 11 March 2020, received Small Business Rates Relief (“SBRR”) were eligible for a Small Business Grant of £10,000. Eligibility for SBRR is subject to s43 of the Local Government Finance Act 1988. This says the rate applies to occupied businesses.
- Funding was payable to the person who according to the council’s records was the ratepayer on 11 March 2020. However, where a council had reason to believe the information they held about the ratepayer on 11 March 2020 was inaccurate, they could withhold or recover the grant and take reasonable steps to identify the correct ratepayer.
Principles of good administrative practice
- In 2018 the Ombudsman published a guidance document setting out the standards we expect from bodies in jurisdiction. In May 2020 we issued an addendum in response to the COVID-19 pandemic; “Good Administrative Practice during the response to Covid-19”. This shows we held councils to similar standards, 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.
- The Council’s records show it recorded a third party as the ratepayer at the relevant property (Property A), on 11 March 2020.
- The Council’s records show the owner of Property A, Mr X, called the Council on 1 May 2020 to ask about grant eligibility. Mr X told the Council the previous tenants had left and Property A was currently empty.
- On 11 May 2020 Mrs X applied for a grant for her business based at Property A. Alongside her application she enclosed utility bills dating from January to March 2020 addressed to Mr X at Property A. She later provided a copy of a lease agreement showing Mr X leased Property A to her business from December 2019. And a bank document showing the business held a bank account registered to Property A in the name of Mr X and Mrs X.
- The Council’s records of 5 June show it had concerns due to the contradictory information provided by Mr X and Mrs X. It therefore decided to ask Mrs X for further proof of occupation.
- On 5 June the Council asked Mrs X to provide:
- proof of rent payments to the Landlord since the tenancy commenced;
- business invoices;
- copies of any insurance policies;
- links to any social media pages and/or websites; and
- any other relevant information.
- Mrs X was not the recorded ratepayer on 11 March 2020.
- On 1 May Mr X said Property A was empty.
- Utility bills were in the name of Mr X.
- The lease agreement showed the landlord was Mr X and the tenant Mrs X.
- Bank account details showed the business was in joint names Mr X and Mrs X.
- On 26 June Mrs X said they could not open the business as planned in February/March 2020.
- Invoices provided as proof of trading had not been paid.
- The photos provided did not show Property A was used for a trading business.
- The identified fault prejudiced the decision outcome.
- The Council did not explain why it needed further information from Mrs X, causing injustice.
- The Council’s requests for evidence were excessive and unnecessary, causing Mrs X injustice.
- The Council has acted unlawfully, seeking to discredit Mrs X.
- The Council has acted with bias, disbelieving this was genuine claim because Mr X was a landlord and transactions were in cash.
- This is a case of discrimination. The Council should compensate Mrs X by paying the grant.
- The Council recorded a third party as the ratepayer of Property A on 11 March 2020. Therefore, in line with Government guidance, no other person was eligible for a grant unless the Council had reason to believe its records were inaccurate. If so, the Council would have discretion to identify the correct ratepayer and award them the grant.
- Upon contact from Mrs X the Council took steps to establish whether she occupied Property A before 11 March 2020 and so was eligible for a grant. However, the Council had to establish the correct ratepayer on 11 March 2020 for the purposes of grant eligibility, not before. The Council also had to consider from what date liability for rates may have changed.
- The Council’s correspondence with Mrs X did not explain its reasoning or consideration of the evidence she provided, until its final response. And, while the Council then set out its consideration of the evidence, it did not relate this back to the key date of 11 March 2020. I therefore consider the Council did not give clear evidence based reasons for its decisions with reference to relevant law. This is fault.
- However, I consider this fault did not affect the decision outcome. This is because it is clear from the Council’s internal contemporaneous records and its response to enquiries, that upon consideration of all the evidence it did not accept Mrs X occupied Property A and was the correct ratepayer as on 11 March 2020. This decision took account of relevant information and is in line with the Government guidance. While I recognise Mr Y disagrees, the Council remains entitled to reach this judgement.
- I note Mr Y is unhappy with the Council’s requests for evidence from Mrs X. However, the documents provided show the Council recorded clear and cogent reasons for requesting further evidence. There is nothing to suggest the Council acted in bad faith or took into account irrelevant information. Rather, the Council was entitled to analyse and weigh up the evidence provided and in doing so, consider whether the relationship between Mr X and Mrs X affected its view of the evidence provided. I do not find fault.
- I find the Council’s lack of clear reasoning in its correspondence with Mrs X caused her uncertainty and led her to pursue a complaint to the Ombudsman. I consider the Council should apologise for this and take action to prevent recurrence of similar fault in future.
- The Ombudsman does not award compensation as a court may do. Rather if we find fault we can recommend the Council take action to remedy injustice arising as a direct result of that fault. I have not seen any evidence to suggest the Council discriminated against Mrs X. And, I do not accept the identified fault affected the decision outcome, for reasons explained above. I found the Council was not clear in correspondence with Mrs X, as it did not explain why it needed further evidence or set out its consideration of the evidence provided until its final response. While I accept this caused Mrs X some uncertainty, I consider an apology is a suitable remedy for this.
- To remedy the injustice set out above I recommend the Council carry out the following actions within one month of the date of this decision:
- Provide Mrs X with a written apology;
- Remind staff of the need to provide reasons for decisions and to ensure these are clear and evidence based.
- I find fault in the Council’s decision making process that did not affect the decision outcome but caused uncertainty. The Council has accepted my recommendations and I have completed my investigation.
Investigator's decision on behalf of the Ombudsman