Summary: Mr X complains the Council wrongly refused him a full discretionary grant payment, causing financial loss. We find fault in the Council’s decision making. We recommend it provides Mr X with an apology, a payment for time and trouble and a payment of £9000, for injustice caused by the missed discretionary grant payment.

The complaint

1. Mr X complains the Council acted unfairly in refusing him a full discretionary grant payment. He says he has suffered financially as a result.

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

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What I found

COVID-19 discretionary grants

8. During the COVID-19 pandemic, the Government gave councils funding to provide discretionary grants to businesses. In May 2020 it published guidance for councils to administer these grants.
9. The Government set out some mandatory criteria, including that only businesses trading on 11 March 2020 were eligible. It also set out discretionary guidance. However, it was for councils to adapt their approach to local circumstances, such as providing support for micro-businesses with fixed costs or support for businesses crucial to their local economies.
10. The funding was aimed at:
• small and micro businesses,
• businesses with relatively high fixed property costs,
• businesses that suffered a significant fall in income due to COVID-19 and
• those which occupied a property with a rateable value of under £51,000.
11. The Government asked councils to prioritise four types of businesses:
• small businesses in shared offices or flexible workspaces;
• regular market traders with fixed building costs;
• certain Bed and Breakfasts; and
• certain charity properties.
12. Councils had to set out their discretionary grant scheme on their website, providing clear guidance on which types of business they would prioritise and how they would decide on the level of grant.
13. The Government did not publish any guidance on how to address a change in a business’ circumstances during the operation of a discretionary grant scheme. Such as, what would happen if a business moved out of the council’s area or moving to home based working after applying for a grant.

Council discretionary grant policy

14. The Council has provided a copy of its policy as published on its website on 12 June 2020.
15. This said the Council would support the four priority areas identified by the Government in addition to childcare nurseries. It would not support those operating from a residential premises, expect in the case of Bed and Breakfasts.
16. No other business groups were eligible and only businesses located in its area could apply.
17. A business must have been trading on 11 March 2020 to be eligible.
18. It would cap initial grants at £5000. It would base grant payments on three months’ rent and fixed property costs. If an applicant received a rent holiday from their landlord, it would reduce any grant payment accordingly.
19. The Council did not publish any information about the availability of further payments to businesses it made initial grants to. In practice it later decided to award ‘top up’ payments to those businesses, allocating unspent money from the scheme.

Council decision making

20. In response to enquiries, the Council confirmed it held no contemporaneous records showing how it decided on its discretionary grant policy.
21. It also held no contemporaneous records showing how it decided on the criteria for top up payments, provided under the discretionary grant scheme.

Principles of good administrative practice

22. In 2018 the Ombudsman published a guidance document setting out the standards we expect from bodies in jurisdiction “Principles of Good Administrative Practice”. This included:
• Being open and clear about policies and procedures and ensuring information, and any advice provided, is clear, accurate and complete
• Stating the criteria for decision making and giving reasons for decisions
• Ensuring decisions and actions are proportionate, appropriate and fair
• Having clear and accessible appeal routes
23. 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.
• If you use new or revised policies and processes this should not lead to arbitrary decisions and actions. Ensure you have a clear framework for fair and consistent decision making and operational delivery.

What happened

24. Mr X ran a business from a shared office in the Council’s area.
25. From 19 March 2020 Mr X decided to work from home for health and safety reasons, due to the COVID-19 pandemic.
26. Mr X’s lease ended at end of March 2020 and he then started a new lease in a shared office outside of the Council’s area.
27. In June 2020 Mr X applied to the Council for a discretionary grant as he ran a small business in a shared office on 11 March 2020. He enclosed evidence of his rental payments.
28. The Council queried Mr X’s address details.
29. In correspondence of 29 June Mr X explained that on 11 March he was trading from a property in the Council’s area. He moved the business to another council area on 30 March, however he believed his claim should relate to where he traded on 11 March, in line with Government guidance. He said he moved to the new shared office space in April and had already paid a deposit and the first month’s rent. He enclosed evidence to show he paid rent for both properties on 2 March 2020.
30. On 23 July the Council told Mr X his grant application was successful. It confirmed the value of the grant was £555. (I note this was equal to three months’ rent for his property in the Council’s area). It said this was calculated based on the fixed costs relating to his property in the Council area. It could not cover fixed costs for the property located outside of its area.
31. Mr X told the Council he expected a higher sum.
32. The Council explained the initial round of funding was calculated based on fixed property-related costs incurred during the pandemic, for businesses occupying space in its area. It told Mr X that when this round was complete, any remaining funding would be allocated to successful applicants, including him, in the form of a ‘top-up’. It could not confirm the value of this top-up until the remaining applications were processed, which it expected would be in two to three weeks’ time. It warned Mr X, the total value of the grant (including the initial allocation and the top-up) would not be more than £10,000 and was likely to be below this.
33. On 21 August the Council sent Mr X an update regarding his “successful DGF [discretionary grant fund] application”. It explained it would be making top-up payments to successful applicants as it would have surplus funds once it had paid all successful applications. It expected most businesses would ultimately receive a total grant payment (including the initial payment and top-ups) of between £9,000 and £10,000. It expected to complete payments over the next two to three weeks.
34. Mr X chased the Council on 23 September.
35. On 30 September the Council told Mr X it had reviewed his application. It explained it was unable to provide him with a top up because his business had not been in operation in its area from April 2020 onwards. The approved local discretionary scheme required businesses to be operating in its area to be eligible for a grant payment. When it advised businesses that it would be making a top up payment the email did reference that it expected most businesses to receive a top up. It apologised for the delay in confirming this outcome, which was due to the significant number of applications to process and review.
36. Mr X responded to the Council on the same date. He said it had previously told him he would get the top up as a successful grant applicant. He applied to the Council as he traded from there on 11 March. He wanted to appeal.
37. Mr X further complained the Council had made up a new rule. He was working from a property in the Council’s area. During lockdown he started working from home, like most people, and continued to do so. He was successful before and so should be now. He expected the payment and had started building up his business in expectation of this.
38. The Council said the scheme stated businesses had to be operating in its area to be eligible. However, in recognition he had been operating from a business premises for the month after the eligibility date, it made the the initial payment. Businesses operating from a residential premises were also not eligible. It apologised that it included him in the standard emails sent to businesses and for any misunderstanding caused. There was no right to appeal.
39. On 9 October Mr X said he wanted to complain about the Council’s interpretation of the guidelines. There was no explanation of this criteria on its website and its reasons to refuse the top up did not make sense.
40. On 22 December Mr X made a complaint online. He complained there was a lack of transparency regarding its discretionary policy and awards. The Council had twice said he would get the top up payment and it had not given any real reason for refusing this.
41. The Council responded on 13 January. It referred to information on its website. It explained there was no reference to any top up payments at the time it published the scheme as it did not know it would have funds for this. It sent him emails in good faith. It had apologised that it sent these before it discovered, through ongoing post payment assurance checks, that his business had relocated out of Haringey. It did not give him the top up payment because his business relocated out of the borough. Central Government guidance made clear it should use its allocation to support businesses in its area.
42. Mr X complained the Council’s decision making was inconsistent. He was either eligible for both payments or neither. Government guidance was to support as many qualifying businesses situated in Haringey on 11 March 2020. There was no mention of businesses who moved after this date. He requested evidence of its decision making.
43. The Council repeated the business had to be based in its area. It did not honour the full payment as it came to light Mr X had moved out of the area. The approved scheme also set out that businesses operating from a residential premises were not eligible for a grant. In relation to the top up for his business, at the time of writing to him, it was not known that his business was no longer operating from a business premises in Haringey. This made him ineligible for a further payment.
44. Mr X complained to the Ombudsman. He explained the landlord of his new premises had agreed to pause the tenancy on the new property. However, when the Council told him it would pay the grant he agreed with the landlord to restart the tenancy on 14 October. By the time the Council told him it would not make the payment he could not change the start date. He then had to rely on a bounce back loan, obtained in May 2020, to pay for the first few months’ rent.
45. In comments on a draft of this decision the Council said:
• It took decisions in good faith based on the information it had at the time. The published scheme was clear that businesses had to be based in Haringey to be eligible.
• The approved scheme made provision for top up payments in the event of any funding being available once the eligible applications were processed. The top ups were to be made in two stages – to those businesses that had their initial payment capped and then to all eligible applicants on a pro rata basis up to a maximum of £10,000.
• Because of the time taken to process applications and to reassure businesses, it emailed all those who received the initial payment about the top up payments. Unfortunately, this included Mr X.
• The decision to not make a top up payment once it discovered Mr X had moved his business from Haringey was subject to its internal governance and taken after discussion with a cross service team including its Audit service, in line with the Council’s agreed criteria for the grant scheme in place at the start of the process.
• It believes it applied the scheme and decisions consistently and this decision would have been the same if Mr X had not received the email regarding top ups, as it had discovered the business was not operating from business premises in Haringey.

Findings

46. I cannot question whether a council’s decision is right or wrong simply because the complainant disagrees with it. Rather, I must consider whether there was fault in the way the Council reached its decision.
47. The Government encouraged councils to support four priority areas but gave them discretion to adapt their approach to suit their local economies. The Council’s policy was to support the four areas identified by the Government. In addition, it would support nurseries and, it would exclude any businesses operating from a residential property.
48. While the Council had wide discretion to decide how best to operate its scheme, our Guidance on Good Administrative Practice makes clear we expect councils to have a rationale for their decisions and contemporaneous records of this. The Council has no records to show why it included nurseries and excluded home based businesses. This is poor practice. However, I have also taken into account the specific circumstances of this case. Councils had to devise a scheme at pace while their services faced unprecedented demand due to the COVID-19 pandemic. And the Council’s published policy demonstrates it was aware of and considered the Government guidance. Therefore, while the Council’s records were not to the standard the Ombudsman would usually expect, in the given context I consider this does not amount to fault. I therefore find no fault in how the Council set up its discretionary grant scheme initially.
49. On 11 March 2020 Mr X was trading from a shared office space in the Council’s area. However, at the time he applied for a discretionary grant in June 2020, the lease on that property had ended and he had taken on a new lease on a property outside the Council’s area.
50. Mr X completed the Council’s application form and upon its query explained his business set up. The Council considered the information provided and decided Mr X was eligible for a discretionary grant, which it paid. It explained it would not pay costs for the business he leased outside its area. It made no suggestion that he was ineligible for a grant or that it had made an exception to its policy on a one off basis. It is clear on the documentary evidence that the Council knew from the outset and at the time of this initial grant payment, that Mr X had since taken on a lease on a business outside the Council’s area. However, it found him eligible for the initial grant.
51. I understand the Council was initially unaware it would have funds remaining for any further payments under its scheme. However, once the Council found it had remaining funds, it should have recorded its decision making on how to allocate those funds and published a clear policy setting out its criteria. That the Council has no records of its decision making and no written or published policy setting out the criteria for further payments is fault.
52. In the absence of such records and any written policy, I can only consider the information the Council did provide and how it operated its top up scheme in practice.
53. The Council, in full knowledge of Mr X’s business set up, explained it would make a further top up payment to all those who received the original grant payment, including him. This communication was in direct response to a query raised by Mr X. The Council later sent a standard email confirming payment would be made shortly and that this would likely be between £9000 to £10,000. It was clear no-one would receive more than £10,000 in total.
54. Based on the Council’s written communications and in the absence of any decision making records or written policy to the contrary, I am satisfied the only established criteria for awarding the top up payment was that a person had to have received the first grant payment. Mr X had received the first grant payment, the Council told him he would get the top-up and he therefore expected to get the top up payment. He understandably made business decisions based on the Council’s communication with him.
55. The Council then refused Mr X a top up payment because his business was no longer operating in its area. However, I have seen no evidence this was part of any policy or criteria for the top up payment. Rather, this decision was contrary to the Council’s own communications to Mr X on how it would allocate the top up payment, which was solely based on successfully receiving an initial grant. The Council has suggested it sent Mr X correspondence while unaware of his business location however, the documents show it was aware of his business set up. Further, none of its communications suggested there were circumstances where it would not pay a top up where it had paid the initial grant. I therefore find fault in the Council’s decision making.
56. The Council could have properly decided and published a policy on the top up payments with the requirement a business continued to trade from a commercial property in its area. However, the Council did not do this. Rather it promised Mr X a top up payment in the knowledge that he no longer held a lease on a property in its area. I therefore cannot be satisfied the Council would have excluded Mr X from a top up payment if it had followed a proper decision making process. Rather, I am satisfied the Council confirmed it would give Mr X a top up payment, and then contradicted itself by not doing so. This is fault. To remedy this fault, the Council should make a payment to Mr X of an equivalent sum.
57. I am satisfied Mr X would have made business decisions based on the Council’s communications with him, in anticipation of the grant. However, I cannot say he suffered any further significant injustice as a result. This is because he would have had to restart the tenancy and pay rent at some point and he had taken out a loan before this issue arose.
58. The Council did not respond to Mr X’s correspondence of 9 October and did not resolve this matter through its complaints process, when it could have done. This is fault. Mr X was put to time and trouble as a result.

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Agreed action

59. To remedy the injustice set out above I recommend the Council carry out the following actions.
60. Within one month:
• Provide Mr X with a written apology;
• Pay Mr X £100 for time and trouble; and
• Pay Mr X £9000 to remedy the missed top up payment.
61. Within three months:
• Provide training or guidance to staff to ensure they keep contemporaneous records of decision making and publish relevant policies in future.
62. The Council has accepted my recommendations.

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Final decision

63. I find fault in the Council’s decision making on Mr X’s eligibility for a top up payment under its discretionary grant scheme. The Council has accepted my recommendations and I have completed my investigation.

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Investigator's decision on behalf of the Ombudsman