Summary: Ms X complained the Council wrongly refused her business a COVID-19 business grant, causing financial difficulties. There is no fault in how the Council determined Ms X’s application.

The complaint

1. Ms X complains the Council wrongly refused her business a COVID-19 business grant, causing financial difficulties.

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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. 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

4. As part of the investigation, I have:
• considered the complaint and the documents provided by the complainant;
• 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

Additional Restrictions Grant (“ARG”)

5. In October 2020 the Government introduced the ARG to support businesses impacted by the COVID-19 pandemic. It issued guidance to councils.
6. The Government encouraged councils to support certain business sectors but made clear they could issue grants at their discretion, based on local economic needs.
7. The Government also suggested factors for councils to consider when deciding the level of the grant.
8. All businesses that were trading and met other eligibility criteria could apply to receive funding. Businesses in administration, insolvent or subject to a striking-off notice, were ineligible.

The Council’s ARG scheme

9. The Council decided there would be two separate grant strands – one for businesses with a rateable value and one for businesses without a rateable value.
10. For businesses without a rateable value the Council set out the following eligibility criteria:

• Open and trading up to the date that the restrictions that severely impacted the business came into force;
• Has fixed business related costs that are unavoidable and need to be paid, given the impact of additional local restrictions or widespread national restrictions;
• Has been severely impacted or closed as a consequence of the additional restrictions imposed;
• Is a medium, small or micro business according to the Companies Act of 2006.

Key facts

11. Ms X runs a business from her home address. Ms X says her business was significantly affected as a result of COVID-19 restrictions. In April 2021, Ms X submitted an application for the ARG. On the application form she indicated the business had a turnover of £19,000 and fixed costs of £15,000, broken down as £3,000 for insurance, £1,000 for utilities, £1,000 for phone contracts and £10,000 other. Ms X said she was continuing to pay these costs during lockdown. Ms X attached a letter from HMRC and three bank statements with the application form.
12. A council officer telephoned Ms X on 6 April to request further evidence in support of the application. Ms X hand delivered the documents to the Town Hall. The documents included a bank collection letter, a council tax bill, utilities collection letters and a HMRC final notice letter. The officer called Ms X again to confirm receipt of the documents and to explain the information provided may not be sufficient as most of it related to domestic rather than business costs.
13. In May 2021, Ms X sent further information in support of her application which included an invoice dated 5 May 2021 for a stock purchase, a bank statement and a mobile phone bill.
14. On 11 May the Council emailed Ms X with a number of queries relating to her fixed business costs and income and requesting supporting evidence. It asked for invoices for stock purchased from October 2020; evidence of sales; evidence of insurance payments and details of what the £10,000 other fixed costs related to. The Council acknowledged it was requesting a lot of information and explained a grant could not be paid without it.
15. Ms X responded the same day. She did not attach any supporting evidence and stated “we won’t be giving out any more of our information as we have provided sufficient for a decision to be made. The other fixed costs are actually £14,500 that’s the overdrawn balance on the account. We don’t have insurance this must have been a mistake.”
16. The Council emailed Ms X on 14 May with its decision on her ARG application. It said that based on the information she had provided, she did not qualify for the grant because she had not demonstrated the business had been financially severely impacted by lockdown restrictions. The email said Ms X had three days to appeal if she considered there had been a manifest error in this decision.
17. Ms X responded the same day saying she would like to appeal the decision and also make an official complaint. She said she did not think the Council had taken into account that she had been severely impacted. Ms X did not provide any further evidence in support of her appeal.
18. The Council determined Ms X’s appeal and emailed her on 28 May. Her appeal was rejected on the basis that she had not provided evidence the business had been actively trading during the relevant period of restrictions and because no clear evidence had been provided to show the business had been severely impacted by COVID-19 restrictions or that she had ongoing, fixed business costs. The email said that it would look again at Ms X’s application if she was able to supply any further evidence by 4 June. It said that in order to demonstrate severe impact she would need to provide evidence of the business income in 2019 or early 2020 to compare against the situation from October 2020 to April 2021.
19. The Council responded to Ms X’s formal complaint on 10 June. It confirmed the decision to refuse the ARG application saying Ms X did not meet the eligibility criteria. In response to her complaint about the time taken to assess her application it said it had dealt with her application as quickly as possible and considered it had received the same attention as all other applications. Ms X had also complained that her business had not received the support it needed. It said the evidence showed the Council tried to clarify matters and help her to provide the evidence to prove eligibility. It also noted it had provided information about other organisations that could offer her support.
20. The Council considered Ms X’s complaint at stage two of its procedure and wrote to her on 11 August. It said it had reviewed the case and was satisfied the stage one response provided a clear explanation of the Council’s decision and that the complaint had been dealt with appropriately.

Analysis

21. Ms X is complaining about the Council’s decision to refuse her application for the ARG. She wants the Council to use its discretion to award the grant due to the financial difficulties caused to her business. She is also requesting compensation for the mental distress caused.
22. The ARG is a discretionary scheme. The information provided shows the Council properly considered what would be appropriate criteria for the scheme. It has provided a copy of the individual cabinet member and officer delegated decision report dated 9 December 2020. This sets out the eligibility criteria as well as the Council’s approach on how it would determine when awards would be paid. The report also set out the financial implications and risks to the Council as well as an Equality Impact Assessment.
23. In respect of the eligibility criteria for the ARG, I am satisfied the Council properly considered what criteria it would set as well as meeting the eligibility requirements set by the government. I find no fault in how the Council determined the eligibility criteria for the ARG.
24. I have also considered how the Council dealt with Ms X’s application. It is not the Ombudsman’s role to reconsider her application and replace the decision made by the Council but rather to look at the administrative process the Council followed when considering Ms X’s ARG application.
25. The Council was clear it required evidence in support of all applications. In Ms X’s case, after its initial assessment, it contacted Ms X with specific questions about the information she had provided and made requests for specific evidence. Ms X did not provide any further evidence in response to this request and was clear that she did not intend to provide any more. The Council then moved to a decision based on the information it held. It also set out the rights of appeal. I find no fault in respect of how it made its initial decision.
26. Ms X did not provide any new information in respect of her appeal but the Council again explained why it was not paying the ARG. I note that in this decision, the Council used the phrase “actively trading”. The eligibility criteria does not use the word “actively” and so it could be argued by using this word the Council held Ms X to a higher test. However, as the Council also referred to other criteria that had not been met, including the failure to show the business had fixed business related costs and that it had been severely impacted as a consequence of restrictions, I do not consider the decision would have been any different. After making the appeal, the Council gave Ms X another opportunity to provide evidence and said it would reconsider the decision. There is nothing to suggest Ms X did this.
27. I find no fault in how the Council considered Ms X’s ARG application and appeal. It considered the information she provided, gave her further opportunities to provide the required supporting evidence and provided information about the type of evidence it required. While I appreciate Ms X is distressed that she was not awarded the ARG, this was not because of fault by the Council in respect of the grant decision making process.
28. Ms X has also complained about the time taken to deal with her application. Ms X applied at the beginning of April and the Council made the decision to refuse the grant on 14 May. In this time, the Council was in contact with Ms X seeking further evidence and giving her the opportunity to provide it. While it may have taken longer than Ms X would have liked; and acknowledging the stress Ms X was experiencing due to her financial difficulties, I am not persuaded the time taken to determine the application amounts to fault.

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Final decision

29. 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