Summary: Mr X complains the Council wrongly refused him a small business grant, causing financial difficulties for his business. We find no fault in the Council’s decision to refuse a grant but we find fault in its communications with Mr X. We recommend it provide an apology, time and trouble payment and take steps to prevent recurrence.

The complaint

1. Mr X complains the Council wrongly refused him a small business grant, causing financial difficulties for his business.

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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 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. The law says we cannot normally investigate a complaint unless we are satisfied the council knows about the complaint and has had an opportunity to investigate and reply. However, we may decide to investigate if we consider it would be unreasonable to notify the council of the complaint and give it an opportunity to investigate and reply (Local Government Act 1974, section 26(5))
5. We provide a free service, but must use public money carefully. We may decide not to start or continue with an investigation if we believe the fault has not caused injustice to the person who complained. (Local Government Act 1974, section 24A(6), as amended)
6. 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”.
7. 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

8. I spoke to Mr X and I reviewed documents provided by Mr X and the Council.
9. I gave Mr X and the Council an opportunity to comment on my draft decision and I considered any comments before making a final decision.

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What I found

VOA

10. The Valuation Office Agency (VOA) provides valuations and property advice to support taxation and benefits to the government and local authorities in England, Scotland and Wales. It compiles and maintains lists detailing the rateable value of 1.9 million commercial properties for business rates.

Grant Funding Schemes

11. 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).
12. Businesses which, on 11 March 2020, received Small Business Rates Relief (“SBRR”) were eligible for a Small Business Grant of £10,000.
13. Funding was payable to the person recorded as the ratepayer on 11 March 2020. However, where a council had reason to believe the information it held about the ratepayer on 11 March was inaccurate, it could withhold or recover the grant and take reasonable steps to identify the correct ratepayer.
14. A council had to ignore any changes to the VOA rating list after 11 March, including backdated changes. However, where it was factually clear to a council on 11 March that the rating list was inaccurate on that date, it could withhold the grant and/or award the grant based on their view of who would have been entitled to the grant had the list been accurate.

Principles of good administrative practice

15. In 2018 the Ombudsman published a guidance document setting out the standards we expect from bodies in jurisdiction “Principles of Good Administrative Practice”. 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 expected similar standards from councils, even during crisis working. The following points are relevant in this case.
• Basic record keeping is vital during crisis working. There should always be a clear audit trail of how and why decisions were made.
• 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

16. Mr X and the Council have provided copies of correspondence exchanged that I have referred to below. I note Mr X was in communication with one team regarding the grant while another team considered whether to amend the Council’s record of the ratepayer.
17. Property A was on the VOA rating list as one unit.
18. On 11 March 2020 the Council recorded Company A as the occupier and ratepayer at Property A.
19. In March 2020 Mr X, as a director of Company A, applied for and received a small business grant from the Council.
20. The Council says it had no knowledge the VOA rating list was factually inaccurate on 11 March. It says it only had details of Company A as occupier and had not been told the unit needed to be split.
21. In April 2020 Mr X told the Council his business, Company B, had occupied and taken on a lease of part of Property A from November 2019. He sought to register for SBRR and he applied for a small business grant for Company B.
22. The Council asked Mr X for a copy of his lease and proof of rental payments, so that it could consider amending its records.
23. Mr X provided a copy of his lease.
24. On 17 May the Council refused Mr X’s request for a grant. However, I have not seen this letter and the Council cannot locate or provide a copy. It says the relevant staff member has since left.
25. Mr X asked the Council to review its decision on the grant. He said he had provided a copy of a lease to another officer for consideration.
26. The Council told Mr X he had not provided evidence of rental payments. Once it was satisfied his business occupied Property A it could give further advice on reassessing the premises as separate entries.
27. Mr X then told the Council he did not pay any rent during the first six months.
28. On 8 June the Council responded to Mr X’s review request. It explained it refused a grant as he was not the ratepayer on 11 March. The Government guidance said it should decide based on the VOA rating list as at 11 March. It could now ask the VOA to amend its rating list. However, this would not affect its decision on his grant eligibility. It referred to the Government guidance which said it did not have to pay grants where the rating list was changed after 11 March.
29. Mr X told the Council he had provided all the documents requested. He felt it should use its discretion to pay him the grant as the records were incorrect.
30. An internal email shows the Council did not intend to respond further to Mr X regarding the business grant, as it had nothing to add.
31. In response to Mr X’s statement that he had not paid rent, the Council asked Mr X for evidence of his first rental payment and copies of utility bills. It would then review its records.
32. On 27 June the Council sent Mr X a letter to say he did not qualify for a grant. Its reason for refusal was lack of information provided to help it determine the application.
33. In early July Mr X provided evidence of rental payments. Upon receipt the Council inspected Property A. The Council’s inspection report of 17 July shows it found Property A occupied by multiple businesses. It intended to issue a report to the VOA asking it split the property.
34. On 28 July Mr X asked the Council to review its decision on the grant. He said he had received emails from many officers and the grant had been refused without any real reason. He said the officer who inspected his business said this would help with the grant application but he had not heard further.
35. An internal email dated 29 July shows the Council’s further consideration of the matter. The Council noted Mr X had received a grant for one business at Property A. He had then sought a grant for two further businesses at the same property. These were refused as these businesses were not on the rating list. Mr X asked to split the unit after 11 March 2020. It had since inspected the property and it would ask the VOA to split the unit and backdate the change.
36. On 2 August Mr X complained the Council had now also refused a discretionary grant. He wanted it to investigate and award the small business grant.
37. On 22 September Mr X complained the Council had not responded to his complaint and it had denied a grant without a valid reason.
38. On 13 October the Council told Mr X it was satisfied it had decided correctly. It found its officer had properly considered his application, taking into account the Government guidance and had provided clear reasons for refusal in their letter of 15 July.
39. When I spoke to Mr X he said the Council paid grants to other businesses in similar circumstances. And he was unhappy the same officer who refused his grant dealt with his review and complaint.
40. In response to enquiries the Council provided a chronology of contacts with Mr X and copies of documents exchanged. However, the chronology does not refer to a letter sent on 15 July and the Council has not provided a copy.
41. In response to my draft decision the Council was able to locate a draft copy of a decision letter dated 13 May 2020. But it remained unable to find the decision issued to Mr X on 17 May.

Findings

42. On 11 March 2020 the VOA had a record of one unit at Property A, and the Council had record of one ratepayer, Company A.
43. Government guidance made clear the Council should decide based on the VOA rating list on 11 March 2020 unless it knew on that date the list was inaccurate. The Council denies it had any knowledge the list was inaccurate on 11 March and I have not seen any evidence that suggests otherwise.
44. The Council refused Mr X a grant for Company B as it did not have an entry on the rating list on 11 March 2020. I am satisfied the Council decided in line with the Government guidance. I therefore find no fault. The Council communicated this decision and its reasons to Mr X on 8 June 2020.
45. However, I find the Council’s further communications with Mr X were inadequate as:
• it gave a different reason for refusing the grant on 27 June 2020 without a clear explanation.
• from early July 2020 onwards it did not update Mr X of its consideration of the evidence he provided.
• from 28 July to 13 October it did not respond to Mr X’s request for a further review.
46. The lack of transparency and the delay amounts to fault. This caused Mr X uncertainty and put him to time and trouble in the complaints process.
47. I recognise the Council was under considerable pressure during the pandemic however I consider an 11 week delay significant. And, even during crisis working, we expect councils to give clear reasons for their decisions and actions.
48. We expect councils to keep records of their decisions, however the Council cannot provide a copy of its decision issued on 17 May 2020. This is fault.
49. In the absence of this document I cannot say if the same officer refused a grant in May and then upheld this decision in June. However, a different officer reviewed the matter in October 2020 and the decision remained the same. I therefore find any fault in having the same person decide in both May and June did not cause Mr X significant injustice.
50. The Council has not yet had opportunity to investigate Mr X’s concerns about its awards for other businesses. And this would not affect its decision for Company B, where I have found no fault. I will therefore not investigate Mr X’s complaints about the Council’s decisions for others, as these complaints are premature and it is unlikely I would find fault causing him injustice.

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Agreed action

51. To remedy the injustice identified above I recommend the Council carry out the following actions:
52. Within one month of the date of my decision:
• Provide Mr X with a written apology;
• Pay Mr X £100 for time and trouble.
53. Within three months of the date of this decision:
• Share the Ombudsman’s guidance on good administrative practice with staff and remind staff of the need for transparency in decision making and to keep records of decisions.
54. The Council has accepted my recommendations.

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Final decision

55. I find no fault in the Council’s decision to refuse Mr X a grant but I find fault in its communications, causing injustice. The Council has accepted my recommendations and I have completed my investigation.

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Investigator's decision on behalf of the Ombudsman