Summary: Mrs X complained the Council delayed in classifying her business as a supply chain business causing her to lose out on COVID-19 grant funding, in particular the business support package for the January 2021 lockdown. The Council did not unduly delay and was not at fault in its decision making on any grant scheme.

The complaint

1. Mrs X complained the Council delayed in classifying her business as a supply chain business causing her to lose out on COVID-19 funding, in particular the business support package for the January lockdown.
2. Mrs X says the delay and lack of funding caused distress and financial difficulties.

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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. 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. 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;
• 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

Local Restrictions Support Grant (closed)

7. From 5 November to 2 December 2020 the government introduced this grant to provide support to businesses mandated to close following the imposition of national restrictions. Funding was made by Local Authorities on a 28-day payment cycle for as long as the national restrictions applied.
8. Businesses must have been trading the day before national restrictions came into force to be eligible to receive funding under this scheme. A business was considered to be trading if it was engaged in business activity. The guidance said this should be interpreted as carrying on a trade or profession, or buying and selling goods or services in order to generate turnover.
9. The Council also introduced a discretionary grant scheme to help businesses which were not legally forced to close but were severely impacted by the restrictions. This included businesses which wholly or exclusively supplied the retail, hospitality and leisure sectors or businesses in the events sector.

Local Restrictions Support Grant (open)

10. From 2 December 2020 the government introduced this grant for businesses that were not legally required to close but were severely impacted by Tier 2 or Tier 3 restrictions. While primarily aimed at the hospitality, leisure, hotel and bed and breakfast businesses, local authorities had discretion to determine the precise eligibility criteria for these grants.
11. The scheme also provided support to supply chain businesses severely impacted because they wholly or exclusively supplied businesses in the hospitality, accommodation or leisure sectors.

Additional Restrictions Grant Fund

12. On 31 October 2020 the government announced that national restrictions would be reintroduced. Enhanced business support settlements that had previously been provided to areas entering Tier 3 restrictions were extended and formalised into the Additional Restrictions Grant.
13. The ARG funding is a discretionary scheme that aims to support businesses severely impacted by coronavirus restrictions. All businesses that are trading and meet other eligibility criteria may apply to receive funding under this scheme. Government guidance said applications are required under this scheme for new applicants.

Closed Businesses Lockdown Package

14. This payment is made in addition to the LRSG (closed) scheme payment. It is a one off payment for businesses required to close from 5 January 2021 due to the introduction of national restrictions.

Key facts

15. Mrs X runs a shop that sells celebration cakes, particularly wedding cakes. She says the COVID-19 restriction on weddings and other celebrations significantly affected her business. However, the shop was not mandated to close because it sold food and so was considered to be “essential retail” which could remain open. Mrs X says she was particularly affected by the local tier restrictions and the second and third lockdowns.
16. Mrs X applied to the Council for business grants. The Council response in February 2021 set out Mrs X’s eligibility for the different grants as explained below.

Local Restrictions Support Grant (closed)

17. The Council explained this scheme was for businesses mandated to close during the period of national lockdown restrictions. It said food businesses were not instructed to close and could remain open. The Council said as the main concern of Mrs X’s business is supplying speciality celebration cakes, it was not mandated to close and so she was not eligible for a payment from this scheme.

Local Restrictions Support Grant (open)

18. The Council explained this scheme was set up to provide financial support to businesses linked to the hospitality, hotel, bed and breakfast and leisure sectors that remained open but were severely affected by the tiered local restrictions. It said as Mrs X’s business was classed as a food business which supplies speciality celebration cakes, she did not meet the criteria for an award from this scheme.

Business support package for January lockdown

19. The Council explained this scheme provided a one-off top up grant for all businesses mandated to close during the national restrictions. It said that because Mrs X’s business was not mandated to close she was not entitled to a payment from this scheme.

Additional Restrictions Grant

20. The Council said that as Mrs X’s business did not meet the criteria for an award from the LRSG schemes, it had awarded her an ARG. It paid an initial amount of £934 in regard to the downturn in custom faced by her business and because the rateable value of her business was under £15,000. It also explained it would make a further payment of £3,000 shortly and she did not need to make a further application.
21. Mrs X was unhappy with the Council’s response and believed she should have received the LRSG and so complained to the Council. In March, the Council said that while it was sympathetic to her trading circumstances, a qualifying condition for the LRSG scheme is that the business should be wholly or exclusively supplying businesses in the hospitality, accommodation and leisure sectors which had been mandated to close. It said as her business sells celebration cakes for occasions such as weddings, it considered the business to be retail trade with the public and so did not meet the supply chain criteria. It said that if she remained dissatisfied she could complain to the Ombudsman.
22. Mrs X made a complaint to the Ombudsman in March 2021. In response to our initial enquiries, the Council explained it had carried out a review of the decision on the LRSG. It said while its previous decision was not incorrect, it considered Mrs X’s business could be classified as a supply chain business and therefore be paid the LRSG. It said this meant it would pay an additional £3117.14 and it considered she had received all the grants she was eligible for.

Analysis

23. Since Mrs X made her complaint to the Ombudsman, the Council reviewed its decision regarding the LRSG and decided Mrs X’s business was eligible for this grant as a supply chain business. I therefore do not need to consider this part of her complaint further.
24. Mrs X complains about the time taken for the Council to reach this decision. I am not persuaded the time taken amounts to fault. It seems to me the decision about whether Mrs X’s business could be considered a supply chain business was a finely balanced one. Mrs X had a shop premises which customers could visit and she sold directly to the public. However, as the main strand of her business was wedding cakes and these events were not taking place, Mrs X’s business was severely impacted.
25. I cannot say the original decision to refuse the LRSG on the basis Mrs X’s business did not wholly or exclusively supply the relevant sectors was wrong. I welcome the fact the Council reviewed this decision and used its discretion to change the decision. It took the Council two months to change its view and pay the additional grant which I do not consider amounts to delay.
26. Mrs X also complains she was not awarded the business support package for the January lockdown. The information provided shows this was a one-off payment to businesses mandated to close. Mrs X’s business was considered essential retail and so was not mandated to close. I find no fault in the decision not to award this grant.
27. There was no fault in the Council’s decision not to award business support package for the January lockdown. I am not persuaded the decision to consider Mrs X’s business a supply chain business affects this decision.

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Final decision

28. I will now complete my investigation as there is no evidence of fault causing a significant injustice in this case.

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Investigator's decision on behalf of the Ombudsman