Summary: Mr X complained about the Council’s decision not to award business rates relief and a business grant to his businesses. The Ombudsman did not find the Council was at fault and it was entitled to refuse Mr X’s grant applications.

The complaint

1. Mr X complained about the Council’s decision not to award business rates relief and a business grant to his businesses.
2. Mr X said the Council’s decision was based on its incorrect calculation about the use of his properties. He said the whole of both his properties are used to provide a tourism and leisure service to the public.
3. Mr X suffered financial hardship because of the COVID-19 pandemic and is unhappy the Council did not offer him any help.

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The Ombudsman’s role and powers

4. 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)
5. 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)
6. 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)
7. 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”.

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How I considered this complaint

8. As part of the investigation, I have considered the following:
• The complaint and the documents provided by the complainant.
• Documents provided by the Council.
• Small Business Grant Fund and Retail, Hospitality and Leisure Grant Fund: Guidance for Local Authorities (published 24 March 2020. Updated 7 August 2020).
• Expanded Retail Discount 2020/21: Coronavirus Response – Local Authority Guidance (2 April 2020).
• The Council’s Expanded Retail Discount, Nursery Discount, and Business Grants Policy.
9. Mr and the Council had an opportunity to comment on my draft decision. I considered any comments received before making a final decision.

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What I found

The Valuation Office Agency

10. The Valuation Office Agency (VOA) gives valuations and property advice to councils when they make benefits and tax decisions. It also keeps a list of the rateable value of commercial properties for business rates purposes. This is known as the rating list.

Retail, Hospitality and Leisure Grant

11. In March 2020, in response to the COVID-19 pandemic, the government set up schemes for councils to pay grants to small businesses. One of those schemes was the Retail, Hospitality and Leisure Grant Fund, which paid eligible businesses a grant of up to £25,000.
12. To be eligible for a Retail, Hospitality and Leisure (RHL) grant a business had to also be eligible for a business rates discount under the Expanded Retail Discount (ERD) scheme.

Expanded Retail Discount

13. Councils were already providing discounted business rates to some eligible businesses. In response to the COVID-19 pandemic, the Government decided to increase the discount to 100% and extend it to include the leisure and hospitality sectors.
14. The Government said it was up to local councils to create their own schemes and decide when to grant relief to businesses.
15. To guide councils in how they set up their schemes, the Government created an eligibility criterion and a list of business types it expected to benefit. The list includes shops, cafes and restaurants, cinemas and music venues, leisure centres and gyms, and hotels and guest accommodation. It also includes travel agents. The Government said the property must be accessible to visiting members of the public and must be wholly or mainly used for its qualifying purpose.
16. The Government said the list of businesses is not exhaustive. Councils should decide for themselves whether a business not listed is similar and therefore eligible for relief.

What happened

17. I have summarised below some of the key events leading to Mr X’s complaint. This is not intended to be a detailed account of what took place.
18. Mr X emailed the Council on 7 April 2020. He said he needed to apply for business rates relief for his two business properties. He said his income reduced to nil because of the COVID-19 pandemic.
19. Mr X applied for the RHL grant for his first business (Business A) on 16 April. He then applied for the RHL grant for his second business (Business B) on 24 April.
20. The Council emailed Mr X about his application for Business B on 29 April. It said Business B was not eligible for the RHL grant because it was not entitled to the ERD. It said there was no evidence Business B’s premises are wholly or mainly used by visiting members of the public.
21. Mr X replied the same day to appeal against the Council’s decision. He said Business B is a travel agency providing coach holidays. He said the gates of the main property are open 9am to 5pm for people to book a holiday or day trip. He gave examples of other councils who had given grants to coach operators.
22. The Council contacted Mr X on 30 April to ask him for more information about his application for Business A. It said the premises is not classed as a retail premises on the business ratings list and does not appear to be open to the public.
23. Mr X said Business A is also a travel agency. He provided a site plan and pictures of the public areas customers can access.
24. A Council officer visited the premises of Business A and Business B on 27 May to assess the site and see which areas the public can visit.
25. The Council wrote to Mr X on 1 June 2020 with its decision about his RHL grant applications for Business A and Business B. It said it considered Mr X’s evidence and carried out a site visit but decided his businesses are not eligible for a grant.
26. The Council explained that to receive the RHL grant, a business must be eligible for the ERD.
27. The Council said the ERD scheme is available where business premises are wholly or mainly used for a qualifying purpose, for example as a shop, for leisure, or as a hotel. It said this is a test of use rather than occupation. It said the Government’s list of eligible businesses includes travel agents, which is how Mr X described his businesses.
28. Following its inspection of Mr X’s premises, the Council said it calculated only about 30% is accessible to visiting members of the public. That was made up of about 24% for the office space and the rest for the customer car park. It said the remaining 70% was workshops, storage, and coach parking where members of the public did not visit.
29. The Council said there was no right of appeal, but Mr X could complain to the Ombudsman if he disagreed with the decision.
30. Mr X made a formal complaint to the Council about its decision on 14 June. He accused the Council of showing bias against him. He said he had proven that his businesses meet the criteria.
31. The Council’s Chief Operating Officer (COO) responded to Mr X’s complaint on 26 June. He said officers were justified in their calculation about the use of Mr X’s business premises. It said the site should wholly or mainly be used for qualifying purposes but use of Mr X’s premises was only about 30%, which does not meet the threshold of 50% or more.
32. The COO said the details Mr X gave about other coach businesses in other council areas who received the grant were not part of the Council’s consideration of his applications. He said if Mr X’s businesses had met the criteria he would have received the grant, but they did not. He said there was no evidence of bias as officers engaged with him, considered his evidence, and explained their decisions.
33. Mr X emailed the Council’s COO on 29 June. He said the Council had still not explained its calculations about the use of his premises. He said coaches are made to carry the public. They take up a lot of space and he has a large number of them. He said holidays and day trips are wholly and primarily for direct public use. He said he cannot sell coach holidays without keeping and maintaining coaches. He said only a small portion of his site, used for storage, driver areas, and office parking, is not for public use. He calculated 80 to 90% of his premises is for public use. He said the areas taken up by his coaches should be included in the Council’s calculations.
34. Mr X brought his complaint to the Ombudsman on 12 February 2021.

Response to my enquiries

35. The Council told me it researched businesses likely to qualify for a grant and wrote to them inviting them to apply. Once the Council received an application, it carried out checks to confirm eligibility.
36. It said Mr X did not formally apply for the ERD. As part of Mr X’s RHL grant application, the Council referred to the VOA description of businesses to make the initial decision about ERD. Both Mr X’s coach businesses are described as “workshop and premises” by the VOA. The Council therefore deemed they were ineligible. Mr X gave the Council further evidence, so the Council carried out a site inspection, but it upheld its decision.
37. The Council used figures from the VOA to calculate the percentage of Mr X’s premises accessed by the public.
38. The Council told me it referred to guidance issued by the Government to decide whether Mr X’s businesses met the eligibility criteria for the ERD and the RHL grant. Leisure activities do not take place on Mr X’s sites, so they do not fit the leisure criteria. Part of one of Mr X’s sites could be considered a travel agent or ticket office, but that office area would need to make up the whole or main area of the premises. The Council considers whole or main to mean more than 50% and Mr X’s properties do not meet that criterion.
39. The Council does not dispute Mr X’s coaches are used as part of his business, for leisure purposes. It said that had no bearing on its decision not to give the ERD. That was because the area of his premises used to provide services to visiting members of the public is less than 50%.
40. The Council said it followed government guidance and produced a policy using that guidance. It said it went to great lengths to consider each question and comment from Mr X.

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Analysis

41. Mr X asked the Council for a RHL grant for his businesses. To get the grant, his businesses had to be eligible for the ERD.
42. The criteria for the ERD, set by the Government, requires business property to be wholly or mainly used for the sale of goods to visiting members of the public.
43. The Government gave examples of types of eligible business properties, but that did not include coach holiday sites. It did mention travel agents, however, and it could be argued Mr X’s business property is similar.
44. Mr X also said his businesses offer a leisure and tourism service. The Government guidance does consider leisure business properties. However, that did not include coach businesses, but tourist destinations.
45. What the Government guidance does make clear is that business properties must be wholly or mainly used for a qualifying purpose, for the sale of goods or providing services to visiting members of the public. It is not the nature of the business that is the important factor, but what the business property is used for.
46. When the Council inspected Mr X’s businesses it accepted customers could visit the office areas to book a holiday or trip. However, Mr X’s properties also have workshops and coach storage and parking areas which make up the majority of the sites.
47. The Council said the qualifying use of Mr X’s business properties is only about 30%. It said the main use is maintenance and storage of his coaches.
48. Mr X disagreed with the Council’s calculations. He argued maintenance and storage of his coaches are an essential part of the leisure and tourism service he provides. He said they should be included in the calculations.
49. The Council made its calculations based on its site inspections and using the information about Mr X’s business premises held by the VOA. While I can understand Mr X’s argument, I do not consider the Council was at fault.
50. The Government guidance is clear councils had discretion over how they set up their schemes and how they decided which cases would qualify for the ERD. That included discretion about how councils established the extent of use of business property.
51. I have not seen evidence the Council failed to consider relevant information or that it took irrelevant information into account. It was therefore entitled to reach its decision.
52. The Council followed Government guidance and its own policy in making its decision.
53. While I appreciate Mr X’s frustration at not being awarded the RHL grant, I have not seen evidence of fault by the Council in the way it considered his applications.

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Final decision

54. I have completed my investigation. The Council was not at fault and was entitled to refuse Mr X’s grant applications.

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Investigator's decision on behalf of the Ombudsman