Summary: Mrs X complained about the way the Council dealt with her application for the Additional Restrictions Grant and that the decision only to pay it to businesses with a loss of 50% or more has ignored her hardship. The Council did give incorrect and conflicting reasons for refusing the application. However, it carried out a review using the information provided by Mrs X and on applying the correct eligibility criteria, determined she was not entitled to the grant.

The complaint

1. Mrs X complains about the way the Council dealt with an application for the Additional Restrictions Grant and says its decision to only pay it to businesses with a loss of 50% or more has ignored her hardship.

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The Ombudsman’s role and powers

2. 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)
3. 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”.
4. 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

5. 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 invited their comments.

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What I found

Additional Restrictions Grant Fund

6. 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 (ARG).
7. 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.

Council’s Scheme

8. The Council produced its own guidance for applications to its ARG scheme. It said the grant was aimed at businesses without a business rates account number that do not trade from a domestic address. It prioritised the leisure and hospitality sectors and said businesses must have been forced to close and must demonstrate they had been severely impacted.
9. The guidance explained what it meant by severely impacted saying the business must provide evidence to demonstrate a substantial loss of 50% or more in income as a result of the Covid-19 situation. The guidance said this would be demonstrated by the submission of filed accounts for previous years and management accounts/bank statements for the current period.

Key facts

10. Mrs X is a hairdresser and so was unable to work during lockdown periods. On 22 January 2021, Mrs X applied for the ARG. She contacted the Council again on 24 February saying she had not had any response to her application.
11. The Council responded on 25 February saying it did not fully understand her query as it had paid her several grants. It said it had paid Mrs X £10,000 on 6 April 2020; £1,334 on 24 November 2020; £6,239 on 24 January 2021 and £2,96 on 28 February.
12. Mrs X replied saying the grants received were in respect of the salon business. She said she had applied for the ARG under a different business name. She said she took no money out of the salon and that she paid chair rent and that all her takings from clients were paid to her own business. The Council replied saying that as she was a director of the salon company and the current ratepayer, it would not be making any further payments under any other scheme.
13. Mrs X wrote again to the Council explaining that she was a director of the salon business and also the director of her own business. She said she wanted to make an application for the ARG in respect of her own business and she had seen nothing to suggest she could not do this. The Council responded saying it had reviewed her submission and it was not minded to pay the ARG. It said it was not the intention or spirit of the scheme to allow the same director to benefit more than once on the same property.
14. Mrs X replied saying she had not benefitted from any previous payments. She said the money had been spent on keeping the salon afloat. She said she was applying for the ARG for her personal hairdressing company which was completely separate from the salon. She said her business was registered with HMRC and paid over £6,000 a year in tax. She asked the Council to provide evidence to show a director could not claim for two separate businesses.
15. The Council then responded to Mrs X saying it was prepared to review her ARG application but would like to see a copy of her 2019/2020 accounts and any statement or mini accounts and corresponding bank statements showing her trading activity for the year 2020/2021. It said it needed this information to confirm her business has been severely affected.
16. Mrs X submitted information to the Council consisting of her accounts for the year ending 29 February 2020 and 12 months of bank statements from February 2020. The Council wrote to Mrs X on 19 March saying it had reviewed her income and expenditure based on the accounts and bank statements provided and it had decided she was not entitled to the ARG. It said the information provided showed a reduction of 37% in income which it did not consider a significant enough reduction to qualify.
17. Mrs X contacted the Council querying the decision. She said she was not aware of any grants which are based on losses compared to the previous year. She said that as a hairdresser she had been able to work in between lockdowns. She asked for evidence of what percentage was considered a significant loss.
18. After receiving details of the Council’s policy, Mrs X wrote again saying the decision did not make sense as she knew of several hairdressers that had received this grant and all had suffered due to being mandated to close. Mrs X indicated she would take the matter further as she felt she had been treated unfairly.

Analysis

19. Mrs X is the director of two businesses. One business owns a hairdressing premises and the other relates to her own trade as a hairdresser. This complaint relates to an application for the ARG in respect of the second business.
20. The Council initially declined Mrs X’s application for the ARG for her hairdressing business on the basis it had paid her several other grants. When Mrs X explained she was applying in a different business name, the Council then said it was not in the spirit of the ARG scheme to make a payment to a director that had already received payments for the same property. The Council then agreed to review Mrs X’s application and considered her accounts and bank statements. It then took the view Mrs X was not eligible because she had not demonstrated a reduction of income of more than 50%.
21. While I appreciate Mrs X’s circumstances are unusual because she is the director of two businesses, I consider the Council was at fault for initially refusing to consider Mrs X’s ARG application. I do not find Mrs X suffered an injustice because the Council reviewed its decision and then provided a full explanation of why she was not entitled. I am satisfied that eventually the Council properly considered the information provided by Mrs X regarding her income for 2019/20 and then compared this with the information she provided about her income for the year 2020/21. The Council calculated that her loss of income was 37% and so declined her ARG application because it did not meet the criteria of severely impacted.
22. I appreciate Mrs X is dissatisfied with the outcome. However, the Council clearly set out its eligibility criteria for the ARG stating amongst other things, the business must show it was severely impacted. It set this as a reduction in income of 50% or more. The information submitted by Mrs X does not show a 50% reduction and I note Mrs X is not arguing this is the case. She told me that to reduce the impact of the lockdown on her income she worked long hours in the periods when hairdressers could operate. She considers it is unfair to penalise her for working hard.
23. The Ombudsman’s role is to review the Council’s adherence to procedure in making decisions. Where a council has followed the correct process, considered all relevant information and given clear reasons for its decision, we cannot criticise it. We do not make decisions on behalf of the council or provide a route of appeal against their decisions. We cannot uphold a complaint simply because a person disagrees with it. While there was fault in its initial consideration of Mrs X’s application, the Council carried out a review applying the published eligibility criteria. The government wanted councils to support those severely impacted and the Council chose to do this by awarding the grant to businesses that could demonstrated a 50% loss of income. The Council had the discretion to come up with its own policy and I find no fault in how it did that. The Council refused the grant in line with its published policy and so while I acknowledge Mrs X’s frustration and disappointment, I cannot say there was fault in the process leading to the decision to decline her application.

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Final decision

24. I will now complete my investigation.

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Investigator's decision on behalf of the Ombudsman