Summary: Mr X complained the Council wrongly refused his application for a COVID-19 business grant causing financial difficulties. There is no evidence of fault in how the Council reached the decision to refuse the grant. The Council considered the evidence provided by Mr X and took the view the business was not trading and therefore not eligible.

The complaint

1. Mr X complained the Council wrongly refused his application for a COVID-19 business grant.
2. Mr X says his business has suffered financial difficulties.

Back to top

The Ombudsman’s role and powers

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)

Back to top

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.

Back to top

What I found

7. In March 2020, in response to the COVID-19 pandemic, the Government created schemes for councils to pay grants to small businesses. These included the Small Business Grant Fund (SBGF).
8. To receive funding from the SBGF a business had to be in receipt of small business rate relief (SBRR) (or rural rates relief) on 11 March 2020. Eligible businesses would receive a grant of £10,000.

Additional Restrictions Grant Fund

9. 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.
10. The Government guidance stated that all businesses that are trading and meet other eligibility criteria may apply to receive funding under this scheme. It said that for the purposes of this grant, a business is considered to be trading if it is engaged in business activity and said this should be interpreted as carrying on a trade or profession, or buying and selling goods or services in order to generate turnover. The guidance also provided a list of indicators that a business is trading which included staff on furlough; online trading such as click and collect services; and engaged in business activity such as managing accounts, preparing for re-opening or planning and implementing COVID-safe measures. It said the list of indicators was not exhaustive and Local Authorities must use their discretion to determine if a business is trading.

Key facts

11. Mr X works in the travel industry. He was a shareholder and director of Company A and says he took a more active role when the COVID-19 pandemic started in March 2020 as he had an investment to protect. Company A was awarded the Small Business Grant in May 2020.
12. Mr X set up Company B in 2018. This company was also within the travel industry but was aimed at providing specialist holidays. There was an agreement that Company A would provide the travel element such as flights for Company B’s specialist holidays.
13. Mr X applied for the Additional Restrictions Grant in January 2021. The Council declined the application saying that after careful consideration it was unable to award a discretionary payment to Company B. The Council said it believed Company B was integrally linked to Company A and discretionary payments had already been paid to Company A. The Council said this was its final decision as it was a discretionary scheme with no rights of appeal.
14. Mr X replied saying he did not agree with the Council’s view and that the two companies were totally independent. He provided further information about the relationship between the two companies. The case was referred to a manager who replied on 9 April. He noted that Company B was set up in May 2018 and asked for supporting evidence to show the business had been adversely affected by the COVID-19 pandemic. The Council suggested he provide profit and loss or any form of trading accounts.
15. Mr X replied on 13 April explaining his relationship with the different companies. He said that Company B did not trade up to September 2019 and filed dormant company accounts up to May 2019. Mr X also provided a set of draft accounts for the period to 31 August 2020. Mr X said Company B started to trade in October 2019 and a holding website was created. He explained that in January 2020 he began marketing eight specialist tours and then in March 2020 the possibility of bookings disappeared overnight.
16. The Council emailed again on 16 April. It said it was not convinced the company was actually trading prior to March 2020 as there was only a holding website homepage. The Council said it was satisfied the original decision to decline his ARG application was correct.
17. Mr X emailed the Council on 26 April asking the Council to reconsider its decision to refuse the ARG. Mr X sent further information which he considered showed that Company B had been trading from November 2019. He sent copies of three advertisements placed in a travel magazine in January 2020.
18. The Council replied on 30 April. It said it had reviewed the additional information provided but was satisfied its original decision in relation to the discretionary grant was correct. It maintained the decision to decline Mr X’s application.
19. Dissatisfied with the Council’s decision, Mr X complained to the Ombudsman.

Analysis

20. The information provided shows Mr X made an application for the ARG which the Council considered and refused. The Council said it was refused because Company B was integrally linked to Company A which had already received grants. Mr X presented further information about the relationship between the two companies along with information about its trading activities. The Council considered this further information but did not change its decision regarding the grant.
21. I am satisfied the Council has properly taken account of all the information provided by Mr X. It says the evidence provided by Mr X indicates the business was set up in March 2018 and filed dormant accounts up to 31 May 2019. It says the further information provided by Mr X did not persuade it that Company B had been trading. It says it showed the company had paid management and consultancy fees but no evidence of actual trading as set out in the Government guidance (see paragraph 10 above). It says Mr X has not provided any receipts from customers, trading accounts or cancellation emails sent to customers.
22. The ARG is a discretionary scheme and to be eligible a business must have been trading. The Council has used its professional judgement and discretion to take the view Mr X’s business was not trading and therefore not eligible. I accept that it was Mr X’s intention to trade and that this was curtailed by the COVID-19 pandemic but the Council is seeking evidence of actual trading, e.g. buying and selling not just the intention to do this. I appreciate Mr X does not agree with the Council but a difference of opinion is not evidence of fault. The Ombudsman is concerned with administrative process and does not replace decisions properly reached. While Mr X does not agree with the decision reached, there is no evidence of fault in the process followed to make that decision and so there is no basis for me to criticise the Council.

Back to top

Final decision

23. I will now complete my investigation as there is no evidence of fault in this case.

Back to top

Investigator's decision on behalf of the Ombudsman