Summary: The Council was at fault for a delay in paying a Small Business grant to Mrs X. This added to the financial difficulties caused by the COVID-19 pandemic and put her to the time and trouble of pursuing the Council. It should apologise and pay her £300 for the injustice caused. It was not at fault for refusing other COVID-19 business grants nor for the level of grant paid under its Additional Restrictions – Severe Impact scheme.

The complaint

1. Mrs X complained the Council delayed paying her business a Small Business grant and wrongly refused several other grants. She also complained about the low level of Additional Restrictions grant awarded. She said the Council’s failings added to the financial difficulties caused by the COVID-19 pandemic and related restrictions.

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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 considered:
• the information provided by Mrs X and the Council;
• relevant law and guidance, as set out below; and
• our guidance on remedies.
7. Mrs X and the Council had an opportunity to comment on my draft decision and I considered their comments before making a final decision.

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What I found

Background

Small Business Grant

8. In response to the COVID-19 pandemic the Government introduced two grant schemes to support businesses, one of which was the Small Business Grant Scheme.
9. The Department for Business, Energy and Industrial Strategy published guidance for councils on how to apply these: “Grant Funding Schemes” (March 2020).
10. Businesses which, on 11 March 2020, received Small Business Rates Relief (“SBRR”) were able to apply for a payment of £10,000.
11. Eligibility for SBRR is subject to s43 of the Local Government Finance Act 1988. This said the rate applied to occupied businesses.
12. Grants were payable to the person recorded as the ratepayer in respect of the business on 11 March 2020. The Guidance said for properties on the ratings list at 11 March 2020, councils had discretion to decide who was the correct ratepayer to benefit from the grant. For properties not on the rating list, council discretion was limited to cases where it was factually clear that the ratings list was inaccurate on 11 March 2020.

Local Restrictions Support Grant (LRSG)

13. The Government issued Guidance for councils on supporting businesses in areas where there were local restrictions. On 4 November 2020 this was extended to support for businesses required to close during the second national lockdown from 5 November to 2 December 2020. It was later extended to cover the third national lockdown from 5 January to 31 March 2021.
14. The scheme specified the amount of the grant, as follows:
• premises with a rateable value of less than £15,000 would receive £1,344 for each period of four weeks of closure;
• premises with a rateable value of more than £15,000 but less than £51,000 would receive £2,000 for each period of four weeks of closure;
• premises with a rateable value of more than £51,000 would receive £3,000 for each period of four weeks of closure.

Additional Restrictions Grant – Severe Impact (ARGSI)

15. In late October, the Government announced discretionary funding for businesses that were required to close or had been severely impacted by the second national lockdown between 5 November to 2 December 2020.
16. The Guidance, issued on 4 November 2020, said councils could decide how much funding to provide to businesses and which businesses to support. This “could include – for example – businesses which supply the retail, hospitality, and leisure sectors, or businesses in the events sector”. Councils could use the funding to support businesses that were important to its local economy.
17. The Guidance also said:

“In taking decisions on the appropriate level of grant, [councils] may want to take into account the level of fixed costs faced by a business in question, the number of employees, whether they are unable to trade online and the consequent scale of coronavirus losses”.

18. The Council decided to “test the market” by introducing an Expression of Interest (EOI) phase for this grant. Businesses had two weeks in which to register an interest. This information was used to decide which businesses should benefit from the scheme. It decided to prioritise business that supplied the retail, hospitality and leisure (RHL) sector, and the core hospitality sector. Retail businesses – both essential and non essential – were excluded as they could benefit from other schemes.
19. The Council defined “severely impacted” as businesses that had suffered a significant “loss of income” due to the second national lockdown. Eligibility would be determined by an assessment of the severity of the impact on the applicant’s business income on a case by case basis.
20. The Council used a tiered system with maximum awards for each tier to ensure fairness. It used the scales set out by the Government for the LRSG as guidance when determining the maximum grant for each tier. The maximum grant for a business with an annual turnover of less than £250,000 was £1,500.
21. The actual amount awarded would be relative to the scale of the individual applicant’s loss of income. Income was defined as profit for self-employed applicants and as profit after costs (not gross sales) for all other businesses. All applicants were required to provide evidence of actual or estimated “year on year” loss of income.
22. Applicants had one week (from 22 to 29 January 2021) to submit their applications.

Restart Grant

23. This support was announced as part of the Budget on 3 March 2021. Funding was available to councils from 1 April 2021 to support businesses in reopening safely as COVID-19 restrictions were lifted following the third national lockdown.
24. The Restart Grant: Guidance for Local Authorities said grants were only payable to businesses that had been forced to close. The Guidance provided a list of businesses that fell into scope for each sector but this list was not exhaustive. Councils were required to use their local knowledge, as well as the definitions and criteria set out in the Guidance to assist them to decide whether a business was eligible for this scheme.

What happened

Small business grant

25. Mrs X operates a business that supplies the retail trade and events, such as weddings. She rented a business unit from November 2018. She applied for a small business grant in early April 2020.
26. The Council refused the grant on 21 April 2020 on the grounds that Mrs X was not listed as the ratepayer for the unit on 11 March 2020 and was therefore not eligible for a grant. It said:
• It had no reason to believe the information it held was not correct as at 11 March 2020; and
• Therefore, the business was not eligible for a grant.
27. Mrs X was unhappy with the decision. There were further communications between her and the Council, in which Mrs X provided evidence of occupation at 11 March 2020 and said her landlord had been in touch with it.in October 2018. The Council did not change its decision and Mrs X then complained. In its stage 1 complaint response in early July, the Council said:
• When it had inspected the property in June 2018, the unit was empty.
• A third party had told it in March 2019 that the unit was empty.
• Although Ms X said she had provided an email from her landlord, the Council could not find a record it had received this.
• Since it had no reason to believe the information it held was incorrect as at 11 March, Mrs X was not eligible for a grant.
28. Mrs X asked the Council to reconsider her complaint and it responded at stage 2 of its complaints process in early August. It said:
• It had now located the landlord’s email dated October 2018. This did not provide information about the unit Mrs X occupied and it accepted it had failed to follow this up.
• Its original decision was based on information it held about the ratepayer at the time but this would now be reviewed in light of the information that had since come to light.
29. The Council said that in between the two complaint responses it visited the unit, which it had not been able to do before due to COVID-19 restrictions. It noted the unit had no signage indicating retail use. Further enquiries suggested the unit was rarely in use and not used as retail premises.
30. The Council reviewed its decision and agreed to pay the grant. The total grant was £10,000 but since it had paid Mrs X a £2,500 discretionary grant in early July, it paid her a further £7,500 in mid August. Mrs X was not entitled to receive a discretionary grant and a small business grant.

My findings – Small Business Grant

31. Where the businesses premises were on the ratings list, the Council had discretion to decide who was the correct ratepayer to receive the grant. It was not limited by what its records said on 11 March 2020 nor did it have to establish it knew the records were inaccurate at that date.
32. Therefore, when Mrs X provided evidence her business was occupying the premises at 11 March 2020, it could have paid her a grant. It failed to do so, and this was fault. It later accepted that she was the correct ratepayer and paid the balance of the grant on 11 August 2020. Since Mrs X was not entitled to grants from both schemes, it was appropriate for the Council to pay £10,000 in total.
33. The delay in paying the full amount the business was entitled to caused financial difficulty for Mrs X and put her to the time and trouble of pursuing the matter with the Council. It is unclear exactly when the Council had all the information it needed to decide Mrs X was the correct ratepayer. Having reviewed the communications, I find on balance the Council had sufficient information to decide this by 1 June 2020. Therefore, the delay in making payment amounts to two and a half months, at a time when the Council was aware from its communications with Mrs X that she was struggling.
34. In response to my enquiries, the Council accepted it delayed in paying the grant and offered to pay Mrs X £150 for her time and trouble. Taking into account all the circumstances, I consider this is not sufficient to remedy the injustice caused, including the impact of the delay in receiving the funds, and will recommend a payment of £300.

Local Restrictions Support Grant (LRSG)

35. Mrs X applied for an LRSG. The Council refused the grant in mid November 2020. This was because the scheme was for businesses that had to close due to local restrictions. It said Mrs X’s business was allowed to trade and therefore she was not eligible for this scheme.
36. Mrs X made a further complaint and the Council responded in mid December 2020. It repeated the information it gave her in November, which was that she was not eligible because her business was allowed to trade under Government Guidance.
37. Mrs X challenged the decision again. She said a neighbouring council had told her she was eligible because it would class her as a non essential retail business. She said she had been advised by the Citizens Advice Bureau (CAB) that she was eligible because councils could decide themselves which businesses to support. She said that she supplied the retail sector but had no trade because the relevant shops were closed.
38. The Council checked the position. It responded that all retail businesses, whether essential or non essential retail business, were allowed to open under Tier 3 restrictions. Some retail businesses could not sell to the public face-to-face but could sell online or by using a click and collect service. Therefore, its position remained the same. It said the other council may have been referring to the Additional Restrictions scheme.
39. In response to my enquiries, the Council added that:
• Mrs X had described her businesses in applications as supplying the retail and events sectors;
• there was no indication the unit was being used as retail premises when it visited and its enquiries indicated it had not been used for retail;
• the company’s registration at Companies House states the business is a manufacturer and does not mention retail;
• by applying for and receiving a grant from the ARGSI scheme (see below), Mrs X declared the business was not a retail business (which was excluded from this scheme) and was a supply chain business to the retail sector.

My findings – Local Restrictions Support Grant

40. This scheme was available for businesses forced to close due to Government restrictions. Under local restrictions, this depended on the tier for the local area.
41. In her application Mrs X described her business as making items to supply to the retail and events sectors. The Council made appropriate enquiries about the nature of her business. It concluded the business was not a retail business and was not required to close. This decision was one for the Council to make, based on its assessment of the evidence. This meant she was not entitled to a grant from the LRSG scheme.
42. Whilst I acknowledge her business was impacted because she supplied businesses that were required to close, this did not make her eligible for support from this scheme. I have not found fault with the way the Council considered her application.

Additional Restrictions Grant – Severe impact (ARGSI)

43. In mid February 2021, the Council awarded Mrs X’s business a grant of £1,500 for the second national lockdown and a further grant of £1,500 for the third national lockdown. Mrs X queried the low amount and the Council told her it had decided all non-hospitality businesses with an annual turnover under £250,000 would receive the same amount for both lockdown periods. It said its decision was final and there was no appeal.
44. In response to my enquiries, the Council provided records to show how it decided its scheme, including the use of an expressions of interest process (described at paragraph 18), to determine which sectors should benefit. It explained it decided the maximum level of the grant for each tier with reference to the amounts payable under the LRSG scheme, as set out at paragraphs 19 and 20 above. It used the same maximum grant level for the second and third national lockdowns.
45. Although the business accounts provided did not support the level of trading losses she claimed, the Council paid Mrs X the maximum grant for both periods because of its knowledge of the business and the issues she faced.

My findings - Additional Restrictions Grant – Severe Impact

46. The Government gave councils wide discretion in designing this scheme to meet local needs. Therefore, it was up to the Council to decide which businesses would benefit and the amount of grants awarded. Its records show how it decided which businesses to prioritise and there is no fault in the way it did this. Its records also show it used Government approved figures for the LRSG scheme as a guide for awards under the ARGSI as it considered this was fair. It used its discretion to award Mrs X the maximum grant for both periods even though the paperwork submitted did not support this, after taking into account other information it held about the business. It was not at fault.

Business Restart Grant

47. Mrs X applied for a grant on 30 April 2021. The Council refused the grant in mid May 2021. It explained that her business did not fall within the definition of non-essential retail that was required to close, which meant it was not eligible for this scheme.

My findings – Business Restart Grant

48. The Council decided Mrs X’s business was not a retail business and was not required to close when considering her application for the LRSG scheme and I have not found fault in how it decided this. Since the business was not required to close, it was not eligible for the Restart Grant, which was only available to businesses forced to close. The Council was not at fault for refusing this grant.

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Agreed action

49. The Council will, within one month of the date of my final decision:
• apologise to Mrs X for the delay in paying the Small Business grant; and
• pay her £300 for the injustice caused by this delay.

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Final decision

50. I have completed my investigation. I have found fault leading to personal injustice. I have recommended action to remedy that injustice.

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Investigator's decision on behalf of the Ombudsman