Summary: Mr X complained about the failure to provide a timely decision on his application for a discretionary grant. The Council failed to provide a decision explaining why the Phase Two application was refused. The Council also failed to used its general discretion to consider Mr X’s circumstances. This put Mr X to avoidable frustration and time and trouble in pursing the matter.

The complaint

1. Mr X complains about the Council’s action in respect of his application for a discretionary grant. In particular he complains the Council did not inform him of the decision in a timely manner meaning he lost the opportunity to challenge the decision.
2. Mr X says he has suffered financial difficulties and the failure to pay a discretionary grant made this worse.

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The Ombudsman’s role and powers

3. 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)
4. 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)
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. As part of the investigation, I have:
• considered the complaint and the documents provided by the complainant;
• made enquiries of the Council and considered the comments and documents the Council provided;
• interviewed a council officer about the case;
• discussed the issues with the complainant;
• sent my draft decision to both the Council and the complainant and taken account of their comments in reaching my final decision.

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What I found

COVID-19 discretionary grants

7. In May 2020, the Government introduced a discretionary grant scheme aimed at businesses ineligible for the earlier schemes. To support the introduction of this scheme the Government published guidance contained in: “Local Authorities Discretionary Grants Fund- guidance for local authorities”.
8. Under the scheme, councils could award a discretionary grant of £25,000, £10,000 or any sum under £10,000 to businesses which could not access other grant funding (other than the Job Retention Scheme). The Council had discretion over the amount of payment in each case.
9. The guidance said the discretionary grants were aimed at:
• small and micro businesses;
• businesses with relatively high fixed property costs;
• ones that had suffered a significant fall in income due to COVID-19; and
• ones that occupied a property with a rateable value of under £51,000.
10. The Government said as a guide, the following types of business should be a priority for funding:
• small businesses in shared offices or other flexible workspaces that did not have their own rating assessment;
• regular market traders with fixed building costs, such as rent, who do not have their own business rates assessment;
• bed and breakfasts which pay council tax instead of business rates; and
• charity properties in receipt of charitable business rates relief which would otherwise have been eligible for Small Business Rates Relief or Rural Rate Relief.
11. In taking decisions on the appropriate level of grant, the guidance said councils may want to take account of:
• the level of fixed costs faced by the business;
• the number of employees;
• whether businesses had to close completely and could not trade online; and
• the consequent scale of impact of COVID-19 losses.
12. The guidance said councils should publish details of their discretionary grant scheme on their website. It said this should include clear guidance on which types of business they would prioritise and how they would decide on the level of grant.

Council policy

13. The Council has provided a copy of its policy for the allocation of Discretionary Business Grants. This says the Council will award grants in line with the Government guidance. It stated that self-employed individuals that work primarily from home and do not have additional ongoing fixed building-related costs outside of their residential property costs will not be eligible for funding. Applications were invited from eligible businesses in two phases.
14. Phase One stated the following eligibility criteria:

• Small businesses in shared offices or other flexible workspaces. Examples could include units in industrial parks, science parks and incubators which do not have their own business rates assessment;
• Regular market traders with fixed building costs, such as rent, who do not have their own business rates assessment;
• Bed & Breakfasts which pay Council Tax instead of business rates;
• Charity properties in receipt of charitable business rates relief which would otherwise have been eligible for Small Business Rates Relief
• The Business must be a private enterprise trading as self-employed/sole trader, partnership or Limited Company.
• The Business must have been trading on the 11th March 2020.
• The Business must be able to demonstrate that it has suffered a fall in income of 20% or more due to Covid-19 crisis.
• The Business must have fixed ongoing property costs (which is greater than 50% of their income).
• The Business must be a small and micro businesses, as defined in Section 33 Part 2 of the Small Business, Enterprise and Employment Act 2015 and the Companies Act 2006.
• The Business must have fewer than 50 employees.
• The Business must have a principal trading address within the London Borough of Enfield administrative area.

15. Phase Two, from mid-June, would invite applications from remaining eligible businesses. The policy detailed certain types of businesses that it would prioritise including manufacturers, charities working with young people, independent restaurants, wholesalers and warehouses and motor traders. The criteria from Phase One still had to be met including that the fixed ongoing property costs must be more than 50% of income.
16. The Council decided not to include home based businesses in its criteria.

Key facts

17. Mr X runs a film/TV post-production company. He works from home and says he rented a home larger than his family needed in order to accommodate his business.
18. On 18 June 2020 Mr X applied to the Council for a discretionary grant. Mr X contacted the Council again on 9 July saying he had not heard about his application. He also said he thought he would have had to complete another application for Phase Two but now understood it was just one application. He said therefore he was providing additional information in that email for the Council to consider. He emailed again on 3 August saying he had still not heard about his application for a discretionary grant.
19. The Council emailed Mr X on 20 August about his Discretionary Grant application. It apologised for the delay and said it was not sure why Mr X had not received a rejection email. It confirmed his application could not be considered because his business did not operate from commercial premises. It said the scheme did not allow for home based businesses to apply and that all similar applications were rejected.
20. Mr X emailed the Council on 24 August saying he disagreed with the decision and that his rights of appeal had been removed because the Council did not notify him of the decision in time. He asked the Council to review its decision saying it was urgent for the survival of his business.
21. Mr X emailed again on 22 September saying he had not received a response to his previous email. The Council responded the same day saying he should not have applied under Phase One of the Discretionary Grant Scheme as his application was not considered eligible. It said the Government scheme was only open to businesses in shared space in commercial property. It said it believed he had received a response regarding Phase Two from the team dealing with those applications and stated again the Council’s discretionary scheme was not open to businesses that did not trade from commercial property. It said the schemes were closed and all funds distributed.
22. Mr X made a formal complaint to the Council on 12 October 2020. He complained the Council failed to inform him of the result of his application for Phase One and Phase Two on time. He says the Council never confirmed that it took account of his reasons for requesting the grant. He said if the Council had informed him of the decisions in a timely manner he could have involved his local councillor in challenging the decision.
23. The Council responded on 15 October saying the business grants were paid by the Council on behalf of the Government in accordance with Government guidance. It said a home-based business with no business rate assessment was not included in the Government criteria and so no grant could be paid. It said the Council had no discretion in this matter and that no appeal could be made as Mr X’s application was outside of the scheme.
24. Mr X wrote to the Council again on 17 October saying the Council had not responded to all the points he made. He also quoted the Government guidance saying that local authorities had discretion to make payments of any amount under £10,000. He also highlighted the section of the guidance which said that local authorities should determine for themselves whether businesses should be eligible for the discretionary grants. Mr X argued he should have been included as he was working in a shared space by working from the family home.
25. The Council responded on 22 October saying the discretionary scheme was based on Government guidance and it was not aware of any council including a process for businesses to make representations within the discretionary scheme process. It said this would be time consuming and impractical. It again confirmed there is no statutory appeals process.
26. Mr X asked the Council to escalate the complaint within its own complaints’ process. The Council provided a final response on 22 December. It said that having reviewed the Council records, an email had been due to be sent on 18 June saying his application had not been successful. It said the emails were issued manually by staff in a bulk upload but it appears this did not happen. It offered its apologies for this saying it was an extremely busy and unprecedented time for the team. The Council went on to say that it did not find that Mr X had been financially disadvantaged as a result.
27. In response to Mr X’s complaint that his reasons for requesting the grant had not been taken into consideration, the Council said it was not obliged to consider any points made unless they were relevant to the criteria. It said that while it noted Mr X’s view that home-based workers should have been included in the discretionary scheme, this did not invalidate the scheme or process. The Council also said that it did not consider that any representations made on Mr X’s behalf by a councillor would have changed the outcome. It said it did not find Mr X’s democratic rights had been compromised.

Analysis

28. Mr X’s complaint is about the discretionary grant and that he did not receive any payments. The information provided shows there were two phases to the Council’s discretionary grant scheme.
29. Phase One was paid to businesses in shared offices and flexible workspaces. Mr X operates his business from home. The Council has been clear that Mr X was not eligible under Phase One because he does not operate his business from commercial premises. In an email dated 20 August it said “the scheme did not allow for Businesses such as yours to apply that are home Businesses. All such applications were rejected.”
30. I am satisfied the Council made a clear decision that Mr X was not entitled to the discretionary grant under Phase One of its scheme. The decision was delayed. The Council accepts that an email should have been sent on 18 June explaining its decision but was not. While this is fault, I am not persuaded it caused Mr X a significant enough injustice to warrant further action by the Ombudsman.
31. The decision regarding Mr X’s eligibility under Phase Two is less clear. In an email dated 22 September 2020 the Council says “I believe you have had a response regarding Phase Two from the relevant team that dealt with those applications but again the Council’s discretionary scheme was not open to businesses that did not trade from commercial property.”
32. As part of my specific enquiries to the Council, I asked it to provide a copy of its Phase Two decision letter. The Council referred me to the email dated 20 August which I had considered to be the Phase One decision. It should be noted that the emails of 20 August and 22 September were sent by the same officer. It seems to me that he would have used different wording in his email of 22 September if in fact the email of 20 August was the Phase Two decision. It seems more likely he would have referred to his decision and earlier email rather than saying he believed the relevant team had sent a decision. I have not seen any other decision letter which could be considered the Phase Two response. As there is no evidence of another decision letter, I take the view, on balance, that the Council never sent Mr X a Phase Two decision letter. This is fault.
33. As part of my investigation, I interviewed an officer from the Business Rates Department. He said when determining the criteria for the Discretionary Business Grants, the Council took the view that home based businesses would not be included. It said it took this view because government guidance focussed on business premises costs and it would be difficult to work out the extra associated with home based businesses.
34. However, the officer said he believes Mr X is an exception and so consideration should have been given to his circumstances. He explained that Mr X lives in a three bedroom property although his family only requires two bedrooms. The third bedroom is used for his business. Mr X claims housing benefit but does not receive housing benefit to cover the extra cost of the third bedroom. The officer also said that HM Revenue and Customs (HMRC) has recognised the extra room as a business cost. The officer said that in Mr X’s case the extra costs for running his business from home were identifiable.
35. When responding to my initial enquiries, the Council did provide calculations for Mr X’s costs based on the criteria in its discretionary policy that businesses need to demonstrate high ongoing, fixed building/trading premises related costs above 50% of income. It said Mr X’s business income was £12,800 and his costs £3,720 so he did not meet the specified threshold and was not paid the grant. These calculations were carried out specifically to respond to my enquiries and were never shared with Mr X.
36. When interviewed, the officer said he was not sure exactly how the above figures were calculated. He said if the figures are accurate then Mr X would not meet the criteria for the discretionary grant but he accepted the matter could be looked at again. It is possible Mr X has been financially disadvantaged and he has also been put to avoidable distress and time and trouble in pursuing this matter.
37. I consider the Council did not give full and proper consideration to Mr X’s circumstances. While it was not the Council’s intention to include home based businesses within it discretionary policy, it accepts Mr X’s situation was unusual and that it should have used its general discretion to consider whether he was entitled to the grant.

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Agreed action

38. To remedy the injustice caused to Mr X as a result of the Council’s faults in this case it will, within one month of my final decision, take the following action;

• Make a written apology to Mr X;
• Pay him £200 to recognise the frustration caused and for his time and trouble to pursue this matter and
• Carry out a review of Mr X’s entitlement to the discretionary grant and if this redetermination shows he was entitled, pay an amount equivalent to the grant he should have received.

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Final decision

39. I have completed my investigation with a finding of fault for the reasons explained in this statement. The Council has agreed to implement the actions I have recommended. These appropriately remedy any injustice caused by fault.

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Investigator's decision on behalf of the Ombudsman