Summary: Ms E complained about the Council’s reconsideration of a decision to refuse her business a discretionary grant under a scheme set up to support businesses impacted by COVID-19. We do not find fault with the Council’s decision.

The complaint

1. I have called the complainant, ‘Ms E’. She complains about the Council’s reconsideration of a decision to refuse her business a discretionary grant under a scheme set up to support businesses impacted by COVID-19.
2. Ms E says as a result of the refusal she suffered increased stress meeting business rent and other costs.

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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)

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How I considered this complaint

6. Before issuing this decision statement I considered:

• Ms E’s written complaint to the Ombudsman and any supporting information she provided, including that gathered in a telephone conversation with her;
• an earlier decision issued in response to a previous complaint made by Ms E; information gathered during that investigation and a copy of the Council’s revised decision at the crux of this complaint;
• relevant law, national guidance and local policy as referred to in the text below.

7. I also gave Ms E and the Council a chance to comment on a draft decision statement. I took account of any comments made before finalising this statement and completing my investigation.

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What I found

Relevant Law and Guidance

Small Business Grant Fund

8. In March 2020, in response to the COVID-19 pandemic, the government created schemes for councils to pay grants to small businesses. Relevant to this complaint it created the Small Business Grant Fund (SBGF).
9. To be eligible to receive a payment from the SBGF the business had to first be eligible for the Small Business Rate Relief scheme on 11 March 2020. For eligible businesses the grant was £10,000.
10. Government guidance said that any changes to the rating list after 11 March 2020 “including changes which have been backdated […] should be ignored for the purposes of eligibility”. And that “local authorities are not required to adjust, pay or recover grants where the rating list is subsequently amended retrospectively to 11 March 2020”. The guidance suggested an exception should only be made in cases of ‘manifest error’, where the Council knew the rating list to be wrong on 11 March. The rating list is maintained by the Valuation Office Agency.

COVID-19 discretionary grants

11. In May 2020, the Government introduced a further discretionary grant scheme. It also published guidance contained in: “Local Authorities Discretionary Grants Fund - guidance for local authorities”. It said discretionary grants were “aimed at small and micro businesses who were not eligible” for the earlier grant schemes, including funding from the SBGF.
12. Under the scheme, councils could award a discretionary grant of £25,000, £10,000 or any sum under £10,000 to businesses which could not access other grant funding (other than the Job Retention Scheme and Self-Employed Income Support Scheme). The Council had discretion over the amount of payment in each case.
13. The guidance said the discretionary grants were aimed at:
• small and micro businesses;
• businesses with relatively high fixed property costs;
• ones that had suffered a significant fall in income due to COVID-19; and
• ones that occupied a property with a rateable value of under £51,000.
14. The Government said as a guide, the following types of business should be a priority for funding:
• small businesses in shared offices or other flexible workspaces; examples could include units in industrial parks, science parks and incubators which do not have their own business rates assessment;
• regular market traders with fixed building costs, such as rent, who do not have their own business rates assessment;
• bed and breakfast businesses which pay council tax instead of business rates; and
• certain charity properties.
15. The guidance said the list at paragraph 14 “is not intended to be exhaustive but is intended as a guide for local authorities as to the type of business the government considers should be a priority for the scheme. Authorities should determine for themselves whether particular situations not listed are broadly similar in nature to those above and, if so, whether they should be eligible for grants from the discretionary scheme”.
16. The guidance said councils should publish details of their discretionary grant scheme on their website. This should include clear guidance on which types of business they would prioritise and how they would decide on the level of grant.

The Council’s discretionary grant scheme

17. The Council published its scheme online. Of relevance to this complaint I note the following:

• the introduction to the policy said “this additional fund is aimed at small businesses who were not eligible for the Small Business Grant Fund or the Retail, Leisure and Hospitality Fund. The fund is intended to help cover fixed costs faced by businesses, where they can demonstrate that they cannot meet these”;
• section 2 of the policy began by referring to the suggested national priority businesses described in paragraph 14. The Council’s policy said it would prioritise these businesses;
• it then set out eligibility criteria in line with government advice quoted at paragraph 13. The Council said “in order to be considered eligible for assistance, in addition to being one of the prioritised business types listed above, the business must also meet all of the following criteria: (emphasis as per original)
1. Businesses with ongoing fixed building-related costs; and
2. Businesses which can demonstrate that they have suffered a significant fall in income specifically due to the COVID-19 crisis; and.
3. Businesses that were actively trading on 11 March 2020.”
• Section 2 continued saying eligible businesses must also be small or micro-businesses and provided a definition of these also contained in government guidance;
• section 3 of the policy explained which businesses were not eligible to apply for the scheme. These included businesses which had received funding from the SBGF;
• section 4 of the policy headed ‘funding levels’ said the Council would “make grant awards to those business types outlined above” so long as they fell into one of three tiers of need. All would have to demonstrate a loss of income arising from COVID-19 of more than 50%. What tier they went in would depend on either the business rateable value or annual rent or mortgage costs. The Council would then allocate awards dependent on which tier the business was in;
• section 9 of the policy explained the Council would offer a review where a business expressed dissatisfaction with its decision

Background to this investigation

18. Ms E complained to us in 2020 that the Council had refused her business both a small business grant and a discretionary grant.
19. We noted Ms E had moved into a serviced office in a new build office block on 9 March 2020. Her rental agreement said it included payments of rates. But at that time neither the office building as a whole, nor any part of the building, was on the rating list. We found there was no fault therefore in the Council’s decision that Ms E could not receive a payment from the SBGF. Because on 11 March 2020 the Council had no record of her premises on the rating list and no reason to think its rating list was wrong.
20. However, we considered there was fault in how the Council had considered Ms E’s application for a discretionary grant. First, in its decisions the Council had confused the concepts of eligibility and priority. We considered Ms E’s business was eligible to apply for the scheme as it met the eligibility criteria set out above. The Council had seemingly refused the application because it did not consider Ms E’s business was a priority under the scheme but it had not made this clear.
21. Second, we found the Council had not taken account of all potentially relevant factors in refusing the grant on priority grounds. The Council’s decision relied on a judgment that Ms E’s business did not fit the national priority criteria which it had adopted for its discretionary grant scheme. In particular, that it was not a business working out of “shared offices or other flexible workspaces; examples could include units in industrial parks, science parks and incubators which do not have their own business rates assessment” (see paragraphs 14 and 17 above).
22. In reaching its judgment we found the Council had not considered the guidance which also said it should consider if a business was ‘broadly similar’ in nature to one of the national priority criteria. Further, we found the Council had not considered to what extent both the national and local policy intended Ms E’s business to be caught by the discretionary grant scheme. This was because we noted she had not been eligible for a payment from the SBGF.

The Council’s fresh determination

23. The Council issued a fresh decision on Ms E’s discretionary grant application in April 2021. It again refused her business a grant. The Council said it had considered our decision but found:

• That Ms E had not been working out of a ‘shared office’ or one that was ‘broadly similar’ in nature to a shared office. The Council found Ms E had an arrangement to rent a specific office. She did not have to pre-book space with the office owner and there was no expectation that she had to share space with any other business. There were some shared facilities in the building. For example, kitchen and toilet areas. But this was a common arrangement and not one which led the Council to think Ms E was in shared accommodation “or anything broadly similar”.
• That its discretionary scheme was not set up “to compensate businesses” who missed out on funding from the SBGF. The Council said there was an expectation that businesses occupying premises should let it know when such occupation began. While it understood her reasons for not doing so, relying on an assurance from the building owner her rent included rates, Ms E had not done this. The Council said “we do not believe it was the Government’s intention that those misadvised who did not take steps to establish the correct information from the correct authority should be subsequently compensated by the discretionary grant scheme”. The Council also said that after the SBGF was established it had received contact from many businesses who had “avoided or evaded” being liable for rates previously. While it did not include Ms E’s business in that description it said the discretionary grant scheme was not set up as “compensation” for such businesses.

My findings

24. We cannot criticise a decision taken by the Council where it has followed a correct decision making process, considering all relevant information and given clear reasons for its decision. We do not make decisions on a council’s behalf or provide a route of appeal against their decisions.
25. In this case I find the Council has now provided a clearer reasoning for why it does not consider the office Ms E rented could be considered ‘broadly similar’ to someone renting a shared office. The Council hinges its decision on the fact that Ms E’s rental agreement provided for her to have a self-contained office, not shared with any other business. And that while the office building contained some shared facilities these were not enough, in its opinion, to establish a shared office arrangement or anything similar. I understand Ms E may disagree with this judgment. But I cannot see the Council has ignored anything relevant in making it. So, I cannot fault this part of the decision.
26. On the second point, I do not think it was necessary for the Council to introduce the fate of all applications from businesses who applied for grant support after 11 March 2020, of which it was unaware at the time. I also consider it was a poor choice of wording, to suggest fault on Ms E’s part for not telling it of her occupation of the office on 9 March, when she had relied on assurances from the building owner.
27. However, I consider the underlying point being made by the Council was that there were some businesses who could not qualify for funding from the SBGF because the Council did not know they rented property not yet on the rating list. This would include Ms E’s case, where she took on the rental of an office in a brand new office building. It is an unfortunate situation and not one where I consider anyone likely to be to blame. As neither tenants, building owners, their agents nor the Council could have foreseen the consequence of no-one advising the Council before 11 March the building had become occupied in the days before.
28. While both the national and local guidance referred to supporting businesses who missed out on the SBGF and other grant schemes introduced at the beginning of the pandemic, this was only part of the eligibility criteria for the scheme. It was not a factor in the prioritising of applications. Neither national guidance nor the Council’s local scheme chose to prioritise that cohort of businesses in the unfortunate position as Ms E.
29. The discretionary schemes gave councils scope to set local priorities which could include other priority businesses in addition to those identified as national priorities by government. But the Council chose not to do so. That was its right as this was a discretionary scheme and the decision on what businesses to include as priorities, lay within the scope of that discretion. So, while I consider the Council should have clarified the intent behind its scheme when first corresponding with Ms E, it has now provided more explanation for it. And while I think some of its choice of wording unfortunate, I can find no fault in its exercise of discretion.
30. As part of my investigation, I have also considered if any new evidence has come to light which may lead us to reconsider the Council’s refusal of a small business grant. I note the individual office rented by Ms E has now been brought into the rating list by the VOA, something which had not happened at the time of our earlier decision. But there is no new evidence that would lead me to find the Council knew of a ‘manifest error’ in the rating list on 11 March 2020 that should have led it to consider paying her a grant.

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Final decision

31. For reasons set out above I do not find fault in the Council’s decision. I have therefore completed my investigation satisfied with its actions.

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Investigator's decision on behalf of the Ombudsman