Summary: The Council was not at fault for deciding not to pay Mr X a COVID-19 business grant under round 1 of its Additional Restrictions Grant scheme.

The complaint

1. Mr X complained the Council wrongly refused his application for a COVID-19 business grant under its Additional Restrictions scheme, round 1, in February 2021. The refusal added to the financial impact of 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 Mr X and the Council; and
• relevant Government guidance, as set out below.
7. Mr 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

Additional Restrictions Grant

8. In October 2020 the Government introduced the Additional Restrictions Grant (ARG) to support businesses impacted by COVID-19 restrictions. Initially this scheme was for council areas where Tier 3 restrictions were in place. This was extended to all council areas for the period of the second national lockdown (5 November to 2 December 2020) and was later extended again to cover the third national lockdown (5 January to 31 March 2021)
9. The Guidance said councils could decide which businesses to target and how much funding to provide. It encouraged councils to develop discretionary grant schemes to help those businesses which – while not legally required to close – were nonetheless severely impacted by COVID-19 restrictions. The Guidance said this could include, for example, businesses that supplied the retail, hospitality, and leisure sectors, or businesses in the events sectors. It also said councils could choose to help businesses outside the business rates system, which were effectively forced to close by restrictions, such as market traders.
10. It said when taking decisions about the amount of the grant, councils may have wanted to take into account the level of fixed costs faced by the business, the number of employees, whether they were able to trade online and the consequent scale of COVID-19 losses.

This Council’s scheme

11. The Council agreed its scheme on 16 November 2020.
12. In round 1 it decided to pay grants to:
• rateable businesses who supply the retail, hospitality and leisure sector and were severely affected by restrictions; or
• businesses in the retail, hospitality and leisure sector not on the ratings list but with fixed costs such as business rent.
13. It set out the amount of the grant, which depended on the rateable value of the business premises. Where the business had no rateable value but incurred rent payments it would receive the same level of grant as a business premises with a rateable value of £15,000 or less.
14. Its Delegated Decision record said the scheme was in line with Government Guidance and had been agreed with Tees Valley Local Authorities (a group of neighbouring councils).
15. On 6 January 2021, the Council agreed a second phase of the scheme because it had not spent all the funding allocated and considered it was feasible to widen the scheme to support certain other businesses. In round 2 it paid grants to those businesses covered by round 1 and also:
• rateable businesses and businesses with fixed business rent that supplied an industry forced to close and severely affected by restrictions;
• businesses required to close and not on the business rating list that have fixed business rent; and
• rateable businesses and businesses with fixed business rent, not forced to close but which could evidence severe impact on income due to national or local restrictions.
16. The rules to decide the amount of funding were not changed from those in round 1 (as explained in paragraph 13 above).

Principles of good administrative practice

17. The Ombudsman publishes a guidance document setting out the standards we expect from bodies in jurisdiction. In May 2020 we issued an addendum in response to the COVID-19 pandemic; “Good Administrative Practice during the response to Covid-19”. 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

18. Mr X runs a consultancy business. He applied for a grant in round 2. He did not pay business rent as his business was home based but he set out the fixed costs the business had and provided evidence of some of these. The Council agreed the application and paid him £1,401 for the relevant period, which was in line with the scheme.
19. Mr X queried why he had only been paid a grant for the second period. He referred the Council’s website, which said:

Please note: If you did not apply for the Additional Restrictions Grant in round 1, we will process your round 2 application to include a backdated payment if we deem your business as one that met the criteria for that period of time.

20. The Council said it only made one payment because his business did not meet the criteria for round 1. It explained it had different eligibility criteria for rounds 1 and 2, and that round 2 was open to some businesses that did not meet the criteria for round 1.
21. Mr X said if his business was good enough for round 2, it should qualify for round 1 because the impact of both national lockdowns was identical.
22. The Council reviewed its decision. It upheld its original decision. It explained which businesses it had supported in round 1. It said once those businesses had been supported, it was able to widen the criteria in round 2. It explained why the business was not eligible for round 1.
23. Mr X remained unhappy and complained. In its complaint response the Council explained the difference in eligibility criteria for rounds 1 and 2. It said it was satisfied its team had interpreted the scheme correctly and the business was not eligible for round 1.
24. Mr X complained to us. He said:
• he had been excluded from the Council’s earlier discretionary scheme because his business was home based so he was not on the business rating list. (He made a separate complaint to us about that scheme);
• he was unhappy that round 1 of the ARG scheme also excluded home based businesses. In his view there was no justification for this, since his turnover was affected in the same way for both lockdowns and he had ongoing fixed costs throughout;
• other councils had paid grants to such businesses under their ARG schemes, which meant whether a home based business benefitted from support depended on where the applicant lived;
• as a result of the lack of support, he had been forced to sell his home to reduce overheads.
25. In response to my enquiries, the Council said it had a limited amount of funding that was to cover the period to March 2021 to deal with restrictions in place throughout that time. It therefore prioritised support on a needs basis and continued to review it, taking into account changing restrictions and the level of funding remaining. The Council also provided records of its Delegated Decision to show how it agreed its scheme at round 1 and round 2.

My findings

26. Councils had discretion to develop their own ARG schemes, though they should have regard to Government Guidance. I cannot say this Council’s scheme was wrong, just because Mr X disagrees with it or because other councils had different policies. Rather I must consider whether the Council followed a proper decision making process when deciding its scheme.
27. The Council’s records show it designed its scheme with appropriate regard to Government Guidance. This meant in round 1 it prioritised businesses that supplied sectors forced to close, and those businesses not on the business rating list that were forced to close, were severely affected by the restrictions, and had fixed business costs such as rent.
28. The Delegated Decision for round 1 does not show why it limited its scheme for businesses not in its rating list to retail, hospitality and leisure businesses (that is, businesses forced to close), although the scheme was broadly in line with Government Guidance.
29. The Delegated Decision for round 2 set out how much of the allocated funding it had spent and stated it was therefore feasible to widen the scheme to support additional businesses. It did not explain its reasons for expanding the scheme to the categories of business it decided on.
30. While the Guidance did give the Council wide discretion in designing its scheme, our Guidance on Good Administrative Practice makes it clear we expect councils to have a clear rational for their decisions and keep a contemporaneous record of this. However, I have also taken into account the specific circumstances of this case. Councils had to devise a scheme at rapid pace while their services faced unprecedented demand due to the COVID-19 pandemic. The Council’s records show it was aware of and considered the Government guidance, although it didn’t explain its reasons for prioritising specific businesses and not others. So, while its records were not as comprehensive as we would usually expect, in the given context I consider this does not amount to fault.
31. In relation to Mr X’s application, the Council decided this in line with its published scheme and I have not found fault in the way it considered his application. It accepted his application in round 2 and paid a grant. Its scheme said it would backdate a payment to round 1 only where the business met the criteria for the earlier period. Mr X’s business did not meet the criteria for round 1 because in that period a business that was not on the business ratings list had to be in the retail, hospitality and leisure sector and forced to close to be eligible.

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Final decision

32. I have completed my investigation. I have not made a finding of fault.

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Investigator's decision on behalf of the Ombudsman