Summary: Mr X complained about the Council’s refusal to grant the Expanded Retail Discount and that it is demanding payment of the business rates in full when he has explained the business is experiencing significant financial difficulties. There is no evidence of fault in the Council’s decision not to award the Expanded Retail Discount. However, the Council was at fault for not providing Mr X with details of its hardship rate relief policy.

The complaint

1. Mr X complains about the Council’s refusal to grant the Expanded Retail Discount (ERD) and that it is demanding payment of the business rates in full when he has explained the business is experiencing significant financial difficulties.

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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 taken account of their comments in reaching my final decision.

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What I found

Expanded Retail Discount (ERD)

6. In April 2020 the government published “Business Rates, Expanded Retail Discount 2020/21: Coronavirus Response Local Authority Guidance”.
7. The ERD was available to premises wholly or mainly used for retail, hospitality or leisure.
8. The guidance listed the types of businesses that were eligible. However, it was for councils to decide if a business was broadly similar in nature to those listed and so eligible.
9. The guidance said the premises must be used for the provision of services to visiting members of the public and listed dry cleaners and launderettes as eligible.
10. The guidance stated that premises not reasonably accessible to visiting members of the public were not eligible.

Additional Restrictions Grant Fund (ARG)

11. On 31 October 2020 the government announced that national restrictions would be reintroduced. 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.

Hardship Relief for non domestic rates

12. Section 49 of the Local Government Finance Act 1988 gives the Council a discretionary power to reduce or remit the amount of business rates payment of the grounds of hardship. To qualify the ratepayer must demonstrate that hardship would be sustained if the relief is not awarded and that it is in the interests of local council tax payers.
13. The Council’s own policy sets out the factors that will be taken into account when considering applications which includes whether the business is likely to survive; the amount of local employment the business provides; whether the business has taken action to improve its position or sought assistance from other sources and whether an improvement plan is in place and the likelihood the business will survive.
14. The policy also states that relief will only be awarded in respect of the financial year in which the application is made.

Key facts

15. In March 2020, Mr X’s company contacted the Council asking if the business would be eligible for the ERD. The Council responded saying the business did not appear to fall into the categories given in the government guidance. It said the ERD applied to the leisure industry and the guidance did not mention businesses that support the leisure industry.
16. On 27 April Mr X emailed the Council. He provided more information about the business in Cheltenham. He said that the business carried out laundry services for customers in the retail, hospitality and leisure industry mainly hotels and restaurants. He explained the majority of the business closed on 24 March due to the decline in demand for customers. He said that although the premises is listed as a factory premises, he believed it fell into the dry cleaners and launderettes category which is within the retail industry. He said he felt there was no real different in nature between his business and his direct customers who are in the retail, hospitality and leisure industry. He said that another laundry site had been granted the ERD. He said with no income it was proving impossible to meet the business rate payments even if spread over 12 instalments.
17. The Council responded saying that as the premises are not easily accessible and visited by members of the public, the ERD could not be awarded and the business rates charges remain due.
18. Mr X contacted the Council again arguing his business should be awarded the ERD. On 17 May the Council emailed Mr X saying that it was acting as an agent of the Department of Business Energy and Industrial Strategy (BEIS) in administering the grant payments. It said it had contacted BEIS to seek further advice on this matter. It told the Council the grants are about the use of the property, not the intention of the business. It said a launderette would only be considered eligible if it was open to members of the public and not if it is a launderette which is used to provide services to hotels and other businesses. It said this is why a high street launderette or dry cleaner would be eligible for help and his business was not.
19. Mr X continued to correspond with the Council about eligibility for the ERD and why he considered the guidance was unfair. In his emails he put forward arguments about why he felt the ERD should be awarded. However, there is nothing to suggest Mr X provided any evidence to show the Council’s interpretation of the business was incorrect or that it was in fact accessible to visiting members of the public.
20. On 8 September the Council, in response to an email from Mr X said while it appreciated how difficult things were for the business, it could not award the ERD to non qualifying businesses. The Council said that in a previous email Mr X stated the government guidance failed to recognise the commercial laundry industry and so his interpretation of the guidance was the same as the Council’s. It noted Mr X had received payments “in good faith” from other local authorities and said they were not permitted to do this. The Council said it could not compound the error made by other authorities.
21. On 18 September the Council notified Mr X’s business that due to non payment of the business rates it had cancelled the right to pay by instalments and the full amount was now due. It wrote again to Mr X on 30 November advising it had launched a discretionary grant scheme and it believed Mr X’s business may be eligible. It provided a link to the online application form and said the closing date was 9 December 2020. There is no evidence to suggest Mr X applied for this discretionary grant.
22. In March 2021 the Council issued a summons in respect of the unpaid business rates. Mr X indicated he wished to attend the court hearing and so this was arranged for 24 April when Mr X spoke to the Court on the telephone. The Court issued a liability order.
23. In March 2021, the Council sent Mr X a business rates bill for the year 2021/22. Mr X is currently making monthly payments in respect of this bill.
24. Mr X made a formal complaint to the Council in April 2021 about the refusal to award the ERD and not answering his queries before issuing a summons. The Council replied on 28 April. It summarised the qualifying criteria for the ERD and said that his business did not qualify because it was a laundry business providing services to other businesses. It said Mr X had previously confirmed it did not provide access to visiting members of the public and so as the premises are not being used wholly or mainly to provide services to visiting members of the public the business did not qualify for the ERD.
25. The Council said it had reviewed previous correspondence and was satisfied it had answered all his points and queries. The response also noted the Council had encouraged Mr X to apply for the Additional Restrictions Grant but that he chose not to because the amounts awarded were relatively small. The Council said the scheme was closed but a new round of grants would open shortly and urged him to check the website for more details.
26. On 11 May Mr X asked the Council to consider his complaint at stage two of its complaints’ procedure. Mr X questioned the interpretation of the guidance and raised examples of other businesses questioning if they had qualified for the ERD. Mr X said the government guidance said it should take account of mixed uses and said that while members of the public could not access the machines directly they do access the service directly. He said the view that the business was not providing services directly to the public from the premises was false.
27. The Council responded on 24 May. It said it could not comment on other businesses’ eligibility and that the outcome would not be relevant to his case. It again explained the guidance said the premises must be wholly or mainly used to provide goods or services to visiting members of the public and that businesses not reasonably accessible to visiting members of the public were excluded. It said this is why a high street dry cleaners or launderette would be eligible. It said the information he previously provided stated the business is a commercial laundry providing services to the retail, hospitality and leisure sector.
28. The Council went on to say the guidance did not specifically exclude a commercial laundry but did state that goods or services need to be provided directly to visiting members of the public at the premises. It said it appreciated that members of the public will use or benefit from the linen the business launders but that to qualify they needed to visit the premises and use the services. It acknowledged the business supported the retail, hospitality and leisure sector and had been significantly impacted. It said the ARG had been targeted as businesses supporting that sector and was surprised he had not made an application.

Analysis

29. Mr X complains about the Council’s refusal to grant the ERD and that it is demanding payment of the business rates in full when he has explained the business is experiencing significant financial difficulties.
30. The information provided shows that the Council and Mr X have engaged in extensive correspondence about the ERD. The Council has responded in detail to the points raised by Mr X about the nature of his business and the government guidance on ERD. The Council has been clear about its reasons for not awarding ERD and has maintained its position throughout the correspondence.
31. It is not the Ombudsman’s role to take a view on whether Mr X is entitled to the ERD. This is a decision for the Council to make and I am satisfied it has made a decision based on the information provided by Mr X. I sympathise with the position Mr X found himself in when the lockdowns due to the COVID-19 pandemic caused a sharp decline in his business. I can understand that he would do all he could to obtain financial assistance for his business. However, I am not persuaded there is any fault in how the Council considered his eligibility for the ERD. It used its judgement and decided Mr X’s business was not eligible. While Mr X takes a different view from the Council, this is not evidence of fault.
32. In his correspondence with the Council about eligibility for the ERD, Mr X stated many times that his business was experiencing significant financial difficulties and that he could not afford to pay the business rates when income had dropped dramatically. At no point during these exchanges did the Council direct Mr X to the fact he could make an application for non domestic hardship relief. In response to my enquiries the Council said that it did not direct to the hardship relief but did encourage him apply for the ARG.
33. I note that Mr X chose not to apply for the ARG. He says the amount provided was not significant enough and he felt he was entitled to the ERD and so focussed on that issue. I am satisfied Mr X was clear that the business was struggling to pay the rates in 2020/21 and yet the Council never mentioned hardship relief or directed Mr X to its policy. The ARG was not intended to provide rate relief while the hardship relief policy is. Mr X was specifically raising difficulties with paying his business rates and so I take the view the Council was at fault for failing to provide Mr X with details of its hardship relief policy.
34. As the hardship relief is a discretionary power, I cannot say whether Mr X would have been entitled if he had applied. I note the Council says applications can only be made in the financial year for which the rates are payable and so Mr X is now out of time to make an application. However, I consider it is appropriate in this case, for it to now consider a late application from Mr X because its failure to tell him about it before March 2021 meant Mr X lost the opportunity to apply in time.

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Agreed action

35. To remedy the injustice caused to Mr X as a result of the failure to inform him of the hardship relief policy the Council will, within one month of my final decision, take the following action:

• Apologise to Mr X; and
• Provide details of the hardship relief fund and invite Mr X to make an application for the year 2020/21. If Mr X chooses to submit an application, the Council should then consider it in line with its published policy and reduce or remit the rates if granted.

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Final decision

36. 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