Summary: Mr X complains the Council refused him a business grant, causing financial difficulties. We find fault in the Council’s decision making process causing uncertainty. We recommend the Council provide an apology and review its decision.

The complaint

1. Mr X complains the Council refused him a small business grant contrary to Government guidance, causing his business financial difficulties.

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The Ombudsman’s role and powers

2. 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)
3. 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. I spoke to Mr X and I reviewed documents provided by Mr X and the Council.
7. I gave Mr X and the Council the opportunity to comment on a draft of this decision. I considered any comments before making a final decision.

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What I found

Business grants

8. 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).
9. Businesses which, on 11 March 2020, received Small Business Rates Relief (“SBRR”) were eligible for a Small Business Grant of £10,000.
10. Businesses, which on 11 March 2020 would have received the Expanded Retail Discount were eligible for a Retail, Hospitality and Leisure Grant.
11. Funding was payable to the person recorded as the ratepayer in respect of the business on 11 March 2020. However, where a council had reason to believe the information they held about the ratepayer on 11 March was inaccurate, they could withhold or recover the grant and take reasonable steps to identify the correct ratepayer.
12. Landlords and management agents are urged to support local government in quickly identifying the correct ratepayer.

Liability for business rates

13. The Local Government Finance Act 1988 (LGFA 1988) identifies three categories of ratepayer:
• occupiers
• owners, and
• persons named in central rating lists.
14. Case law says the four conditions of rateable occupation are:
• actual occupational possession
• exclusive occupation or possession
• occupation or possession which is of some value or benefit to the occupier/possessor
• occupation or possession which has a sufficient quality of permanence.
15. The case law on rates liability is highly technical. It is for a council to decide who is the correct liable ratepayer. However, the Ombudsman can consider if a council has followed a proper decision making process.

Principles of good administrative practice

16. In 2018 the Ombudsman published a guidance document setting out the standards we expect from bodies in jurisdiction “Principles of Good Administrative Practice”. We issued an addendum in response to the COVID-19 pandemic; “Good Administrative Practice during the response to Covid-19”. This shows we expected similar standards from councils, 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.

What happened

17. The Council says it holds records showing Company A is both the occupier and ratepayer of Property A. It says Company A has been the ratepayer for many years and it had no reason to question this.
18. On 11 March 2020 the Council continued to record Company A as the occupier and ratepayer.
19. The Council has provided copies of correspondence exchanged with Mr X and/or his legal representatives, referred below. For ease I have only referred to Mr X.
20. In June 2020 Mr X applied for a business grant. He enclosed a copy of his registered title to show he owned the leasehold of Property A. He also enclosed a copy of a rent renewal agreement to show he paid rent to Company A.
21. In August the Council told Mr X it was unaware his business occupied the property and he did not pay business rates. It asked for proof of rent payments to evidence occupation and queried why he had not told the Council of his occupation previously.
22. On 1 September Mr X resent the Council a complaint letter as the Council said it had not previously received this. The letter explained he paid rent and rates to the landlord, therefore he was the ratepayer and entitled to a grant.
23. In response the Council said Mr X did not have a business rates account and was not the named ratepayer. Therefore, he did not qualify for a grant. However, if the landlord could confirm he was sole occupier and should be listed as the liable ratepayer it would set up an account in his name and bill him accordingly. The application process for the grant scheme had closed but it would consider extenuating circumstances. However, it would need to resolve the issue with the landlord first.
24. Mr X complained the Government guidance said landlords should work with councils to quickly identify the correct ratepayer. And another tenant of the same building had already received a grant under the scheme.
25. The Council confirmed it had not given a grant to any business that did not have a business rates account in its own name. If Mr X was aware of any error he should provide details so it could investigate and reclaim any monies paid out in error. The Government had announced the discretionary scheme to support those in shared offices who did not have their own business rates account.
26. On 8 November Mr X complained again. He said other councils gave grants to those in serviced offices without their own business rates account. He was not in a shared office, but his rent includes business rates. The Council could contact his landlord to verify occupancy. He was the correct ratepayer and due a grant.
27. On 27 November the Council explained his lease confirmed a rent rates inclusive deal and the landlord had not advised he should be named as the liable party. It suggested Mr X contact and discuss the situation with his landlord. As previously advised, Mr X was not the named liable party at the property and did not have a Business Rates account. So, he did not qualify for the grant scheme.
28. Mr X chased a response to his complaint on 9 December.
29. The Council responded on 22 December. It explained the business rates team had responded previously and had nothing further to add but should still have responded to his complaint. It apologised for this. It again explained that Mr X was not the named ratepayer and did not have a business rates account so did not qualify for a grant.
30. I have not seen anything to suggest Mr X or his landlord provided the Council with further information to show Mr X was the sole occupier or that the landlord agreed for Mr X to be listed at the ratepayer.
31. In comments on a draft of this decision Mr X repeated that landlords should work with councils to identify the correct ratepayer. He suggested the Ombudsman could check the business and occupancy with the landlord/managing agent. Due to non payment of this first grant, his business was unable to apply for other grants.
32. In its comments the Council accepted the findings and recommendations of the draft decision.

Findings

33. It is not the role of the Ombudsman to reach its own decision on whether Mr X is entitled to a grant. Rather my role is to investigate whether the Council reached its own decision properly. That is, whether it took account of relevant information, law and policy in reaching its decision. I cannot question the Council’s decision where it has followed a proper decision making process.
34. Mr X was not the recorded ratepayer at Property A on 11 March 2020. I have not seen any evidence to suggest the Council had reason to believe its records may be incorrect at that time.
35. However, in June 2020 Mr X told the Council his business occupied Property A, it should be named as the ratepayer and it was entitled to a grant. He provided evidence he held a lease on the property and a rent renewal agreement to evidence occupation.
36. The Council asked Mr X for further information to establish if he was in rateable occupation. I find no fault in it doing so. Mr X says the Council could have gathered this information itself, however it was under no obligation to do so.
37. Mr X did not provide the information the Council requested. However, the Council did not then issue a clear evidence based decision as to whether he was in rateable occupation. I have not seen any evidence it considered the four conditions referred at paragraph 14 above. Rather, in its November response, it referred to irrelevant information. Mr X may pay rent inclusive of rates yet still be in rateable occupation and; it was not for his landlord to decide who should be liable for rates, it was for the Council. I therefore find fault in the Council’s decision making.
38. The Council refused Mr X a grant as he was not the recorded ratepayer. However, I have not seen evidence it properly decided whether Mr X should be recorded as the ratepayer. And the outcome of its decision on this may impact its decision on the grant. I cannot say the Council should pay Mr X a grant, but it should remedy his uncertainty by reviewing its decision.

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Agreed action

39. To remedy the injustice set out above I recommend the Council carry out the following actions:
40. Within one month of the date of my decision:
• Provide Mr X with a written apology.
• Consider who is liable for rates at Property A and write to Mr X setting out its decision and reasons with reference to relevant law and policy. Further, explain whether this affects its decision on grant eligibility and why.
41. Within three months of the date of my decision:
• Provide training/guidance to relevant staff to ensure they provide clear evidence based decisions in line with the Ombudsman’s guidance on good administrative practice.
42. The Council has accepted my recommendations.

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Final decision

43. I find fault in the Council’s decision making causing Mr X uncertainty. The Council has accepted my recommendations and I have completed my investigation.

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Investigator's decision on behalf of the Ombudsman