Summary: Mr X complained the Council wrongly refused his applications for Local Restriction Support Grants (LRSG) on the basis his business is not holiday accommodation. There is no evidence of fault in the decision to refuse the LRSG (closed) but the Council has not provided clear reasons for refusing the LRSG (open) which is fault. The Council will apologise, now consider Mr X’s eligibility for the LRSG (open) and make a payment to recognise his distress and time and trouble pursuing this matter.

The complaint

1. Mr X complained the Council wrongly refused his applications for the Local Restrictions Support Grants on the basis his business is not holiday accommodation.
2. Mr X says he has suffered 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. 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;
• 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

Grant schemes

7. The Government introduced various grant schemes to support businesses affected by the COVID-19 pandemic. These had varying eligibility criteria and closing dates. However, in each case the council was to make payment to the recorded ratepayer.

Local Restrictions Support Grant (open)

8. 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.

Local Restrictions Support Grant (closed)

9. 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.
10. 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.

Closure of holiday accommodation

11. The Health Protection (Coronavirus, Restrictions)(All Tiers)(England) set out the situation regarding the closure of holiday accommodation as follows:

• a person responsible for carrying on a business consisting of the provision of holiday accommodation situated in the Tier 4 area, whether in a hotel, hostel, bed and breakfast accommodation, holiday apartment, home, cottage or bungalow, campsite, caravan park or boarding house, canal boat or any other vessel, must cease to carry on that business.
• A person referred to above may continue to carry on their business and keep any premises used in that business open to provide accommodation for any person who needs accommodation for the purposes of their work or to provide voluntary or charitable services.

Key facts

12. Mr X’s business involves the provision of serviced accommodation. Mr X says he applied for COVID-19 business grants when the area moved into Tier 2 and Tier 3 restrictions. Mr X says his business was required to close because social distancing rules meant only members of the same household or support bubbles could meet indoors. He said the property has shared facilities and so it had to close.
13. The Council refused Mr X’s application for the LRSG (closed) because it considered his business operated in a sector which was able to trade during the time the Borough spent in Tiers 3 and 4, and the November national lockdown, even though trade may have been reduced. It also said that he did not operate in one of the sectors identified for support for the LRSG (open).
14. Mr X made a formal complaint to the Council in January 2021. He explained he operated a holiday let in the hospitality sector and so was required to close. He said he felt the decision to refuse his application was incorrect. He said that for Tier 2 and Tier 3 un-serviced accommodation was not mandated to close but he operates serviced accommodation. He said due to the restrictions the business was not able to operate as it had no way of ensuring social distancing rules were adhered to in the accommodation. He said his business could face fines of up to £10,000 if it failed to comply with the restrictions and so he stopped all operations.
15. The Council provided a stage one complaint response on 19 March 2021. It said that it felt the decision made, while difficult, was the correct one. It said the key consideration was whether a business was mandated to close. It took the view Mr X’s business was not mandated to close although it accepted that in observing the COVID-19 restrictions around social distancing, this made it difficult to operate his business. It said the Council would be audited by the Government and so it was crucial it did not deviate from the guidance and award grants unliterally. The Council also said that Mr X would be able to apply for the Additional Restrictions Grant when this was available.
16. Mr X asked the Council to escalate his complaint to stage two of its complaints procedure. He said the Council had not handled it correctly on two counts: failure under the Localism Act 2011 to appoint an Independent Person and it had not adhered to the published timescales.
17. The Council responded on 22 April. The Council explained that under its corporate complaints an independent panel are used if a complaint progresses to stage three. The Council also acknowledged its online complaint facility was not working when he submitted his stage one complaint. It accepted the response was outside the 20 working day period and it apologised.
18. The Council said it had reviewed the relevant documents and correspondence in respect of his complaint about the refusal of the COVID-19 business grant. It quoted the relevant government guidance and said the Council took the view Mr X’s business was not holiday accommodation, which was mandated to close, but was let for the purposes of people needing to reside in the area for work purposes. It said it therefore qualified as an exemption under the COVID-19 restrictions and so was not mandated to close. It said it was sympathetic to Mr X’s situation and encouraged him to apply for the Additional Restrictions Grant.
19. Mr X asked for his complaint to go to stage three. He said his property is a holiday let advertised through AirBnb and Booking.com and online travel agencies. He said that the accommodation had been provided to groups of workers for short periods of time. He said the property is serviced accommodation and social distancing restrictions meant the premises could not operate. Mr X quoted the government guidance he considered was relevant to show his eligibility.
20. The Council organised a Stage Three independent review panel for 10 September and invited Mr X to attend. It also invited him to submit any relevant documents prior to the panel hearing. The Council wrote to Mr X on 20 September with the findings of the review panel. It upheld his complaint about delays in relation to the grant application and complaint process. It did not uphold his complaint about the refusal of the LRSG (closed). It found the evidence showed the bulk of bookings were contractor originated and so he was not mandated to close. It found the Council did not maladminister the grant.
21. As part of the review panel, Mr X raised the issue of his eligibility for the LRSG (open). The Council noted Mr X had not previously raised this as a complaint but the panel asked the presenting officer to look into this outside of the hearing and report back to the panel. The review panel findings mentioned this saying the officer indicated Mr X did not qualify for the LRSG (open) because it was not considered holiday accommodation. It said whether the business was able to open or if it was mandated to be closed was not relevant in relation to either grant.

Analysis

22. Mr X’s complaint is about the Council’s refusal to pay the LRSG (closed). However, as part of my investigation I have also considered his entitlement to the LRSG (open), noting he did not actually apply for this grant, as this was considered by the review panel,
23. The Council’s reason for refusing Mr X’s application for the LRSG (closed) has been clear and consistent throughout. The Council took the view Mr X’s accommodation was not mandated to close because it was mainly used by contractors and so an exemption applied.
24. I note that in reaching this view Mr X provided details of bookings for the periods January to March 2020 and July to September 2020. This information showed that in both periods, work related bookings accounted for around 58% of income. The Council noted that bookings made through Booking.com did not distinguish whether the bookings were work or leisure related.
25. I am satisfied that the Council has given proper consideration to whether Mr X was entitled to the LRSG (closed). It invited Mr X to submit evidence and questioned Mr X about the business at the review panel. The Council then used its professional judgement to reach the view Mr X’s business was not entitled to the LRSG (closed). While I appreciate Mr X does not agree with the decision made, I have not found any fault in the process followed to reach that decision and so I am unable to criticise it.
26. In respect of the LRSG (open) the Council’s reasons for refusal are less clear. It initially said Mr X was not operating a business in one of the sectors identified for support. However, the review panel decision said the business did not qualify as it was not considered as “holiday accommodation”, and so whether or not the business was able to open or if it was mandated to be closed was not relevant in relation to the grant.
27. When I made enquiries on this complaint, I asked the Council to explain the reason why Mr X was not entitled to the LRSG (open). In response, the Council did not provide any explanation but rather copied details of the government guidance and its out policy for the scheme. The Council’s own guidance stages the LRSG (open) was aimed at business that were not legally required to close but which were severely impacted by the localised restrictions on socialising put in place from October 2020. It noted that each Council had the freedom to determine the precise eligibility criteria for this grant but that government guidance made clear it should be targeted at hospitality, hotel, bed and breakfast and leisure businesses. It went onto say that in its area, businesses were required to be operating in the hospitality, leisure and accommodation sector according to Valuation Office records at the beginning of the period of restrictions (excluding self-contained holiday accommodation which continued to be able to operate during the relevant period).
28. The Council has determined Mr X’s business is in the accommodation sector and specifically that it is not holiday accommodation. Mr X has argued it was difficult to operate his business due to social distancing requirements and the Council seems to acknowledge this in its communications to Mr X. In its response dated 19 March 2021 the Council said “it was accepted that in observing the COVID restrictions around social distancing, households, bubbles etc it did make your business difficult to operate”. In its response dated 22 April 2021 the Council said “I fully appreciate that the Covid restrictions have had a significant impact on the operation of your business, and that it may not have been cost effective to remain open”.
29. It is not the Ombudsman’s role to determine whether Mr X was entitled to the LRSG (open) and this would depend on an assessment of whether the business was severely impacted. However, based on the information provided, I am not persuaded the Council properly considered Mr X’s entitlement to the LRSG (open) or provided clear and cogent reasons explaining why he did not qualify. This is fault and Mr X is remains uncertain as to why he was not entitled to either the LRSG (open) or LRSG (closed).

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Agreed action

30. To remedy the injustice caused to Mr X as a result of the fault identified in this case, the Council, within one month of my final decision, will take the following action:

• Apologise to Mr X for the faults identified and the injustice caused;
• Reconsider Mr X’s entitlement to the LRSG (open) for the relevant period from October 2020. As part of this, it should explain to Mr X what evidence it requires in order to demonstrate his business was severely impacted and invite him to submit this. If the Council finds Mr X would have been entitled to the LRSG (open) it should pay Mr X an amount equivalent to the grant amount that would have been paid, assuming this is greater than amounts it has already paid to him as an Additional Restrictions Grant; and
• Pay Mr X £150 to recognise his frustration and time and trouble in pursuing this complaint.

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Final decision

31. 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