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Manchester City Council (20 009 591)

Category : Benefits and tax > COVID-19

Decision : Upheld

Decision date : 02 Jun 2021

The Ombudsman's final decision:

Summary: Mr X complained the Council awarded a Retail, Hospitality and Leisure Grant and then cancelled it and demanded repayment. The Council’s failure to show it gave consideration to Mr X’s circumstances when deciding to recover the grant is fault. The Council will now reconsider this decision.

The complaint

  1. Mr X complained the Council awarded a Retail, Hospitality and Leisure Grant (RHLG) and then cancelled it and demanded repayment.
  2. Mr X says the Council has not explained the reasons for this change of position and that repayment will cause his business to fold.

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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

Business grants

  1. 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).
  2. Businesses which, on 11 March 2020, received Small Business Rates Relief (“SBRR”) were eligible for a Small Business Grant of £10,000.
  3. Businesses which, on 11 March 2020, would have received the Expanded Retail Discount, were eligible for a Retail, Hospitality and Leisure Grant (“RHL Grant”) of up to £25,000.
  4. Government guidance for Local Authorities on the RHL Grant schemes stated it will not accept deliberate manipulation and fraud - and any business caught falsifying their records to gain additional grant money will face prosecution and any funding issued will be subject to claw back, as may any grants paid in error.

Expanded Retail Discount (the “Discount”)

  1. In April 2020 MHCLG published “Business Rates, Expanded Retail Discount 2020/21: Coronavirus Response Local Authority Guidance”. This guidance stated that properties benefiting from the discount would be hereditaments that are wholly or mainly being used as shops for the sale of goods to visiting members of the public. The guidance listed florists as a type of shop that could benefit from the discount.

Key facts

  1. Mr X completed an application for the RHL Grant on 9 July 2020. On that application Mr X described the business as a florist warehouse. The signed form included a declaration saying Mr X understood that if he received a grant he was not entitled to, it would be recovered.
  2. Mr X applied for the discount on 1 September 2020. On this form Mr X described the business as a florist. The Council says this description of the nature of the business was taken at face value and the discount was applied. On 14 September the Council sent a bill to Mr X showing no liability for non-domestic rates for the period 1 April 2020 to 31 March 2021. The following day the RHL grant application was approved and payment made to Mr X.
  3. On 29 September a senior council officer reviewed the above decisions and removed the discount on the basis the use of the property did not meet the criteria. As the discount was no longer payable, the Council also determined the RHL Grant had been made in error and emailed Mr X requesting the grant be repaid.
  4. Mr X formally complained to the Council on 1 October. He asked the Council for a breakdown of all the processes which led to the initial acceptance of his application for it then to be cancelled 10 days later. Mr X said this change in decision would completely ruin his business.
  5. The Council response dated 15 October included a chronology of actions taken. While the Council said the use of the property did not meet the criteria for the discount it did not provide any further explanation of why.
  6. Mr X contacted the Council again on 19 October saying the response did not answer his questions and he remained dissatisfied. Mr X said he previously raised the issue of his neighbour being denied the grant and that he felt this was connected to the decision to cancel his discount and grant. Mr X also raised issues about the terms of his lease with the Council and said he wanted someone to visit to properly calculate the business rates.
  7. The Council provided a further complaint response on 25 November. It said that after receiving applications from similar businesses in the area, doubt was cast on its original decision and so it was appropriate to reconsider it. It said that although Mr X’s business is open to the public to come in and purchase flowers, this did not satisfy the guidance which states that to benefit from the discount, a property must be wholly or mainly used as a shop. The Council said the information it held, including comments made by Mr X, indicated the premises are mainly used to supply weddings and events rather than to sell directly to the public. The Council apologised for the reversal of the grant decision and provided information about other discretionary grant schemes that were being developed and advised him to visit the Council’s website the following week.
  8. Mr X made further representations to the Council. It explained he had exhausted the Council’s complaints process and said he would need to proceed to the Local Government Ombudsman.


  1. The information provided shows there was fault in this case. The Council awarded Mr X the discount and the RHL Grant but then cancelled the discount and asked Mr X to repay the grant. The Council has explained that it did not check the eligibility of the business before awarding the discount and the grant. Further information subsequently came to its attention that required it to reconsider its decision and the awards made to Mr X. After reviewing the case, the Council was satisfied Mr X’s business was not wholly or mainly retail and so was not entitled to the discount or the grant. It was the original decision to award the discount and grant without checking eligibility that amounts to fault in this case.
  2. I am satisfied the Council has now explained why it changed its decision regarding entitlement to the discount and grant. On Mr X’s application for the RHL Grant he describes his business as a “florist warehouse”. The Council acknowledges the premises are open to the public for the purchase of flowers and other products but is not persuaded this is the main business function. The Council has provided details of how it reached this view and the evidence considered. I am satisfied the Council properly considered the evidence and then used its professional judgement to decide the business is not wholly or mainly retail. While I understand Mr X disagrees with this decision, I find no fault in the process followed to reach this view and so I cannot criticise the Council’s decision.
  3. Mr X says the decision to cancel the discount and recover the grant will ruin his business. He says that as it was the Council’s fault, it should not seek to recover the money. I do not consider Mr X deliberately sought to misrepresent his business or defraud the Council. Mr X did describe his business as a florist warehouse on the grant application form.
  4. Government guidance states that a Council may claw back any monies paid in error. The guidance does not say the Council must claw it back. As the Council has discretion on whether to seek repayment of the grant, it must ensure it does not fetter its discretion and must consider each case on its merits. I have not seen any evidence to show the Council considered Mr X’s individual circumstances before deciding to recover the grant. This is fault.
  5. The Council’s initial response to Mr X’s complaint did not include any details specific to his case and just said his claim did not meet the criteria for a grant. I consider a more detailed explanation would have helped Mr X understand why the Council was seeking repayment. The money had been transferred to Mr X and while there was only 10 days between the time the payment was made and the Council asking for repayment, this was a shock for Mr X and required him to rethink his plans for his business. The failure to give a proper explanation was fault and caused Mr X distress and put him to avoidable time and trouble seeking an explanation of why the discount and grant were cancelled.

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Agreed action

  1. To remedy the injustice caused to Mr X as a result of the fault in this case the Council, within one month of my final decision, will:
  • Review its decision to recover the grant and use its discretion to decide if all or part of it should be recovered from Mr X. When reaching this decision it should take account of what caused the grant to be wrongly awarded, Mr X’s individual circumstances, the impact on him of recovering the grant and whether Mr X missed the opportunity to apply for other grants; and
  • pay Mr X £250 to recognise the distress caused.

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Final decision

  1. I have completed my investigation with a finding of fault for the reasons explained in this statement. The Council has agreed to implement the actions I have recommended. These appropriately remedy any injustice caused by fault.

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Investigator's decision on behalf of the Ombudsman

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