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Scarborough Borough Council (20 009 049)

Category : Benefits and tax > COVID-19

Decision : Not upheld

Decision date : 28 May 2021

The Ombudsman's final decision:

Summary: Mr X complained the Council did not operate its discretionary business grants scheme fairly as it awarded grants per vessel even though the scheme states only one grant per business. We do not find fault because the Council decided to award grants per vessel if separate accounts were filed and there is no evidence to show it did not apply this consistently. Mr X only had one commercially operational vessel and so has been awarded the correct amount.

The complaint

  1. Mr X complained the Council did not operate its discretionary business grants scheme fairly. He says that although the scheme states one grant per business, the Council has awarded grants based on the number of operational vessels.
  2. Mr X says the unfairness has caused financial hardship and puts him at a competitive disadvantage.

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The Ombudsman’s role and powers

  1. 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)
  2. 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. As part of the investigation, I have:
    • considered the complaint and the documents provided by the complainant;
    • made enquiries of the Council and considered the comments and documents the Council provided;
    • discussed the issues with the complainant;
    • sent my draft decision to both the Council and the complainant and taken account of their comments in reaching my final decision.

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What I found

  1. In March 2020, in response to the COVID-19 pandemic, the government created schemes for councils to pay grants to small business including the Small Business Grant Fund (SBGF) and the Retail, Hospitality and Leisure Grant Fund (RHLGF).

Discretionary grants

  1. In May 2020, the Government introduced a further discretionary grant scheme aimed at businesses ineligible for the earlier schemes. To support the introduction of this scheme the Government published guidance contained in: “Local Authorities Discretionary Grants Fund- guidance for local authorities”.
  2. 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 of payment in each case.
  3. The guidance said the discretionary grants were aimed at:
    • small and micro businesses;
    • 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 or annual rent or annual mortgage payments of under £51,000.
  4. 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 that did not have their own rating assessment;
    • 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
    • charity properties in receipt of charitable business rates relief which would otherwise have been eligible for Small Business Rates Relief or Rural Rate Relief.
  5. In taking decisions on the appropriate level of grant, the guidance said councils may want to take account of:
    • the level of fixed costs faced by the business;
    • the number of employees;
    • whether businesses had to close completely and could not trade online; and
    • the consequent scale of impact of COVID-19 losses.
  6. The guidance said councils should publish details of their discretionary grant scheme on their website. It said this should include clear guidance on which types of business they would prioritise and how they would decide on the level of grant.

Council’s own discretionary grant scheme

  1. The Council has published its own scheme setting out how it will run the discretionary grant scheme. This scheme states that it will only award a grant to businesses which meet all mandatory criteria set by Government. In addition, it decided that to qualify an applicant must have their sole or main residence in the Borough and be liable for council tax or operate from business premises subject to non-domestic rating.
  2. The scheme also sets out the Council’s own local priorities:

Suppliers to the leisure and hospitality sectors;

Businesses eligible for the Retail, Hospitality or Leisure Scheme grant that were prevented from claiming the grant due to a landlord being liable for business rates and where there is evidence to prove that a tenant operates the business and would have been eligible for the relief had they themselves been the business ratepayer; and

Businesses operating in the tourism sector including the arts, entertainment and recreation.

  1. The scheme stated that only one discretionary grant would be awarded to any business.

Key facts

  1. Mr X operates a charter boat business. This means he is not liable for business rates but pays other fixed costs such as harbour fees. As a result of Mr X not paying business rates he was not eligible for either of the business grants introduced in March 2020. He was, however, eligible to apply for a discretionary grant scheme introduced in May 2020.
  2. Mr X made an application for a discretionary business grant. On his application he said he was planning to make his second boat operational this year to double capacity but the funds put aside for expansion had been diverted to personal spending due to the pandemic. Mr X was awarded a grant of £10,000.
  3. Mr X found out that other charter boat businesses had been paid grants per vessel with one business receiving £30,000. Mr X said this decision put him at a commercial disadvantage. Mr X contacted the Council to seek an additional grant for his second boat. The Council dealt with this through its appeal process.
  4. In July, the officer dealing with Mr X’s grant application, emailed the Harbour Master seeking information about the costs paid by Mr X. The Harbour Master confirmed Mr X paid harbour fees and passenger fees for one commercial passenger vessel and just harbour fees for a second vessel. The Council responded to the Harbour Master saying “that clarifies things. We won’t be giving him a second grant payment if his second vessel is not being used for commercial purposes”.
  5. The Council wrote to Mr X on 6 August giving the appeal decision. The Council explained it had contacted the Harbour Master about the second vessel and as the second vessel was not in operation for a commercial purpose on the qualifying date of 11 March 2020, he was not eligible for the grant.
  6. The letter further explained that if a harbour user was in possession of multiple vessels, each with their own commercial berthing licence, then they would have received additional grants. It said that whilst the Council had been able to apply a certain level of local knowledge and discretion when considering the local businesses which would benefit and would be entitled to the grant, the qualifying date guidance from central government was not something which can be deviated from.
  7. Mr X made further representations to the Council but its decision did not change. It confirmed operators were paid £10,000 grants for each commercial vessel registered as being operable for commercial purposes on the qualifying date. It said the matter was closed and it would not respond to further communication.

Analysis

  1. Mr X says the Council is not operating its discretionary business grants scheme fairly. I am satisfied the Council published a scheme setting out how it would deal with applications for Discretionary Business Grants. The scheme included provision for seeking a review and an appeal. I consider the scheme was properly decided.
  2. Mr X made an application and was awarded £10,000. He confirmed in his grant application that he only had one operational vessel. I am satisfied this decision was correct based on the information provided. The Council then correctly reviewed and then considered the appeal at an appeal board. There is no evidence of fault in the process followed to consider Mr X’s appeal against the refusal of a second grant.
  3. The Council decided that it would pay grants for each vessel that was commercially operational on 11 March 2020. The information provided shows the Council sought further information about Mr X’s second vessel and found as fact that it was not commercially operational on 11 March. When I spoke to Mr X about his complaint, he confirmed this was the case. While it was Mr X’s intention to operate a second vessel in 2020, this did not happen before 11 March.
  4. I am satisfied the Council has applied its scheme consistently and awarded grants per vessel if separate accounts were filed for each vessel. The Council says it took the view payment was being made in respect of separate businesses. The Council has been clear how it operated the scheme in respect of commercial vessels and there is no evidence to suggest it awarded grants to vessels that were not operating commercially on 11 March 2020.
  5. I appreciate Mr X feels the scheme has been unfair as some operators have received multiple grants. However, there is nothing to suggest Mr X did not receive a grant he was entitled to and so I find no fault by the Council.

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Final decision

  1. I will now complete my investigation as there is no evidence of fault causing a significant injustice in this case.

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Investigator's decision on behalf of the Ombudsman

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