Summary: Mr X complained the Council did not properly consider all information he provided in support of an application for a discretionary grant. He says his business has lost out financially. We find the Council did consider all the information provided and then used its judgement to decide the business had not demonstrated a 30% loss due to COVID-19. This is not fault.

The complaint

1. Mr X complained the Council did not properly consider all information he provided in support of an application for a discretionary business grant.
2. Mr X says his business has lost out financially because he was not given the same opportunity as other businesses to explain his finances.

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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. 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

5. 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

COVID-19 discretionary grants

6. In May 2020, the Government introduced a 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”.
7. 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). The Council had discretion over the amount of payment in each case.
8. The guidance said the discretionary grants were aimed at:
• small and micro businesses;
• businesses with relatively high fixed property costs;
• ones that had suffered a significant fall in income due to COVID-19; and
• ones that occupied a property with a rateable value of under £51,000.
9. 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.
10. 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.
11. 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.

The Council’s discretionary grant scheme

12. The Leader of the Council agreed the guidance which formed the basis of the Council’s scheme and the Borough Solicitor advised on the content and the process of approval.
13. The Council’s scheme was published on 14 May 2020. It mirrored the government guidance and included a requirement to demonstrate a 50% drop in income. This requirement was revised on 19 June to 30% to extend support to a wider group of businesses.

Key facts

14. Mr X made an application for a discretionary grant on 4 August 2020. Mr X sent in details of VAT returns which he considered showed a drop in sales. He said his sales dropped from £147,424 in the first quarter of 2019/20 to £84,212.69 in the same quarter of 2020/21. Mr X said this showed the turnover decreased by 43% from 1 April to 30 June 2020.
15. The Council wrote to Mr X on 2 September saying his application for a discretionary grant had been unsuccessful because he had not demonstrated at least a 30% drop in income due to COVID-19. The letter did not give any right of review or appeal. Mr X did however request a reconsideration of the refusal and provided further information to the Council including bank statements.
16. The Council responded on 10 September. The Council explained its approach to determining loss during the lockdown period was to review the income into the business from December 2019 through to June 2020. It said it had taken this approach with all applications to ensure consistency. It said in reviewing Mr X’s bank statements, the average income for the period December 2019 to March 2020 was £35,684 and the average income for April and May 2020 was £74,244. It also noted the total income received in each of these months is higher than the fours months prior to the lockdown period.
17. Mr X made a formal complaint to the Council on 18 November. He said through no fault of his own he had no business rates account which prevented him getting a Small Business Grant. He also provided details of another company located in the same building which received a discretionary grant. Mr X said that the other business had been given the opportunity to provide more information which is unfair as he was not given the same opportunity. Mr X said he had provided details of VAT returns but this information was totally disregarded. Mr X felt he should have been given the opportunity to explain his bank statements and the payments shown on them.
18. The Council responded on 1 December 2020. It provided information about the process for properties to be added to the valuation list for business rates. It said that until Mr X applied for a discretionary business grant neither it nor the Valuation Office was aware that Mr X’s business was operating within the borough from the address stated. It said that the property for his business had not been included on the Valuation List until after 11 March 2020 and so was not entitled to the Small Business Grant. It noted that Mr X’s business was included on the valuation list in November 2020 with liability from 1 September 2019.
19. In respect of the discretionary grant, it said each application was dealt with on a case by case basis. It explained that if information was received with the application that enabled it to ascertain a business’ eligibility then it was actioned. If there was insufficient information it would request further information from the business. It explained the other business mentioned by Mr X was asked for further information because the nature of the business meant it could not ascertain the income from the bank statements alone.
20. The Council explained the balance sheets Mr X provided illustrated a loss of equity of 14% but did not show a decrease in income as the balance sheet only went up to March 2020. The Council therefore requested bank statements. These showed an increase in income during the lockdown period compared to the three months before lockdown. It said according to the bank statements, Mr X’s business received a total of £318,618 gross income for the months of April to July comparted to £142,736 for the period December to March.
21. The Council said that after the initial decision in September 2020, it did carry out a review as requested by Mr X. The decision did not change because Mr X did not demonstrate a loss of income during the lockdown period.
22. Dissatisfied with this decision, Mr X complained to the Ombudsman.

Analysis

23. Mr X complains the Council did not properly consider all the information he provided in support of an application for a discretionary business grant. Mr X says that his VAT returns are a more accurate measure of the state of his business during lockdown than his bank accounts. He says the income received is often for work done in an earlier period because payments can be delayed.
24. The Council agreed a discretionary grant scheme which largely followed government guidance. It decided that loss of income would be the determining factor and at the time Mr X applied, he was required to show a 30% drop in income due to COVID-19.
25. The Council says that it needed to have a simple way of assessing losses in order to get the money to businesses quickly. It said it was not feasible to ask for business accounts due to the timing of the scheme and businesses would not be able to access them. It says that not all businesses are VAT registered but most have bank accounts. It explained that bank details were required for payment verification purposes and the required government checks. It says this methodology enabled payments to be made for the majority of qualifying businesses.
26. Mr X says much of his income is for work completed before the impact of COVID-19 and feels the Council has not accounted for this. The Council says it was clearly not its aim to exclude businesses from the discretionary grant scheme on the basis of late payments for work completed. It says while VAT returns may demonstrate a loss in income, this does not confirm the loss was due to COVID-19. The Council takes the view the bank statements illustrating the income received from December 2019 to June 2020 reflected the impact COVID-19 has on businesses. For Mr X, this showed more money was received into the business bank account during the pandemic.
27. The Ombudsman is concerned with administrative process and its adherence to procedure when making decisions. Where a council has followed the correct process, considered all relevant information, and given clear reasons for its decision, we generally cannot criticise it. We do not make decisions on behalf of councils, or provide a route of appeal against their decisions. We cannot uphold a complaint simply because a person disagrees with a council’s decision.
28. I am satisfied the Council has considered all the information provided by Mr X about the impact of COVID-19 on this business. The Council has explained why it has given more weight to the bank accounts than the VAT returns and this is a view it is entitled to take. I appreciate Mr X disagrees with the Council’s decision but as I have not found any fault in the process followed by the Council to consider the application for a discretionary grant, I cannot criticise the decision reached.
29. In response to my enquiries, the Council provided details of a new discretionary scheme called the Additional Restrictions Grant. Mr X has now received a grant of £10,000 under this new scheme.

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Final decision

30. I will now complete my investigation as there is no fault in how the Council determined Mr X’s application for a discretionary grant.

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Investigator's decision on behalf of the Ombudsman