Summary: Mrs X complained about the Council’s decision to refuse her business grants causing her to struggle financially. We find no fault in the Council’s decision making.

The complaint

1. Mrs X complains about the Council’s decision to refuse her business grants causing her to struggle financially.

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The Ombudsman’s role and powers

2. We can decide whether to start or discontinue an investigation into a complaint within our jurisdiction. (Local Government Act 1974, sections 24A(6) and 34B(8), as amended)
3. 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. I spoke to Mrs X and I reviewed documents provided by Mrs X and the Council.
7. I gave Mrs X and the Council chance to comment on my draft decision. I considered any comments before making a final decision.

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What I found

Additional Restrictions Grant

8. In October 2020 the Government introduced the Additional Restrictions Grant (“ARG”). This was to support businesses severely impacted by COVID-19 restrictions.
9. Information on Gov.uk said councils could decide which businesses to support and how much funding to provide. However, the Government encouraged councils to support:
• businesses from all sectors severely impacted by restrictions but ineligible for the Restart Grant scheme, including those which do not pay business rates.
• businesses from sectors that remain closed or severely impacted by the extended restrictions, even if those businesses have already been in receipt of Restart Grants. This may include the travel and tourism sector, wedding industries, nightclubs, theatres, events industries, wholesalers, English language schools, breweries, freelance and mobile businesses including caterers, events, hair, beauty and wedding related businesses.
10. The Government also published guidance for councils; “Additional Restrictions Grant Guidance for Local Authorities”.
11. This encouraged councils to support businesses from all sectors that may have been severely impacted by restrictions, but were not eligible for the Restart Grant scheme. This could include, but was not limited to, group travel and tour operators, other tourism businesses (including B&Bs and event industry suppliers), wholesalers, English language schools, breweries, freelance and mobile businesses (including caterers, events, hair, beauty and wedding related businesses), wraparound care providers, and other businesses that may have not received other grant funding.
12. The list was not directive nor exhaustive, and councils could continue to issue grants at their discretion, based on local economic needs.
13. In taking decisions on the appropriate level of grant, the Government said councils may want to take into account:
• businesses outside of the business rates system,
• businesses that have not received any other grant support,
• the level of fixed costs of the business,
• the number of employees the business has,
• whether a business could not trade online and the consequent scale of coronavirus losses.

Council’s decision making on its ARG scheme

14. The Council has provided a copy of an executive report prepared ahead of its decision to implement a scheme. This sets out its approach and reasons, with reference to Government guidance.
15. The Council proposed a scheme to respond to the immediate needs of those businesses required to close. This included businesses that had not received grants from other schemes.
16. It aimed to support two groups of businesses significantly impacted by the COVID-19 restrictions:
• Businesses registered for rates and significantly affected by tier 3 and national closures
• Business not registered for rates, with property related costs.
17. Regarding businesses not registered for rates, the Council said eligible businesses included those forced to close, operating from a physical space for which they had property related costs.
18. The Council also listed exclusions. This included those operating from a domestic setting.

Council’s ARG scheme

19. The Council has provided a copy of its published ARG scheme.
20. It supported eligible businesses that:
• had to close but were not registered with a business rates account and had fixed business property related costs, such as rent, a lease or mortgage. For example, a shop or food provider within a wider retail space.
• did not have to close but were severely impacted because they were in the wholesale supply chain of hospitality, accommodation, and leisure sectors. You did not have to have a business rates account to claim this. It would pay grants to:
1. Businesses supplying or hiring goods and services to the hospitality and accommodation industry, such as sound systems, lighting, contract catering for weddings and events, and event management companies
2. Businesses in the wholesale supply chain for beauty and therapeutic services - for example, hairdressing/beauty supplies including tattoos, massage, facials, eyebrows etc.
3. Businesses in the wholesale supply chain for leisure and sports facilities, for example, gym supplies.
21. The Council excluded a business if it operated from domestic settings or did not have fixed property related costs.

The Council’s decision making on its Expanded ARG scheme

22. In January 2021 the Council considered expanding its ARG scheme as it had additional funding. The Council has provided a copy of an executive report prepared ahead of its decision, which sets out its approach and reasons.
23. The Council wanted to support the immediate, presenting need of businesses affected by the pandemic and the wider lockdown issues, and to target some additional funds to areas essential to the city’s economic recovery and success. The main aim was to protect jobs, services, and businesses vital to the Manchester economy.
24. The Council set out the business areas it proposed to support and its reasons.
25. It said it would not make payments where there was a household claim for means tested benefits including Universal Credit (as this would just be classed as earnings by the Department of Work and Pensions).

The Council’s Expanded ARG scheme

26. The Council has provided a copy of its published Expanded ARG scheme (“EARG”) scheme. This explains the Council expanded the Additional Restrictions Grant to help businesses whose trade had been significantly affected by the absence of workers, commuters and tourists in the city due to the lockdown restrictions.
27. It designed the scheme to support Manchester businesses that suffered a big drop in trade, but were ineligible for other Government grant schemes.
28. The main scheme supported:
• Businesses in Manchester with Business Rates liability or fixed property costs who were significantly impacted by the downturn in:
1. The daytime or commuter trade (predominantly, although not exclusively in the city centre)
2. The tourism and cultural sectors and the airport supply chain
• Self- employed company directors and sole traders of small businesses without fixed business property related costs in the leisure, entertainment, hospitality and cultural sector.
29. It would not offer support where someone in the household was claiming a means tested benefit, including Universal Credit (this would be classed as earnings by the Department of Work and Pensions.)

Principles of good administrative practice

30. In 2018 the Ombudsman published a guidance document setting out the standards we expect from bodies in jurisdiction “Principles of Good Administrative Practice”. We issued an addendum in response to the COVID-19 pandemic; “Good Administrative Practice during the response to Covid-19”. This shows we expected similar standards from councils, even during crisis working. The following points are relevant in this case.
• The basis on which decisions are made and resources allocated, even under emergency conditions, should be open and transparent.
• Decision reasons should be clear, evidence based and where necessary explained in the particular context and circumstances of that decision.

What happened

31. In February 2021 Mrs X applied for the ARG.
32. The Council refused the ARG because Mrs X did not have any fixed property costs and operated from a domestic setting.
33. Mrs X then applied for the EARG.
34. The Council refused the EARG because Mrs X received Universal Credit and it had designed its scheme to support those not receiving any “Government grant”.
35. In April Mrs X wrote to the Council with reference to information about the ARG taken from Gov.uk and the Council’s website. She believed she met the criteria.
36. The Council told Mrs X it had already given reasons for refusing the ARG and the EARG and upon review its decision remained the same. It explained that under the ARG, only businesses with fixed property costs that did not relate to a domestic setting were eligible. As Mrs X’s business was based from home she did not have such costs and so could not be considered for the grant. Further, she was not eligible for the EARG as she received Universal Credit.
37. In May Mrs X contacted the Council’s Chief Executive maintaining the Council’s decision was wrong.
38. The Council provided a further response. In summary:
• It established the ARG to support businesses with their fixed and ongoing business-related commercial property costs, excluding domestic properties.
• It applied the Government guidance using its local discretion based on the limited funding it had available.
• Having identified that there were some businesses operating from a domestic setting that were not being supported it developed the EARG - Company Director / Sole Trader route.
• Due to limited funds it decided to only support those businesses unable to access any other Government support, including the Self-Employed Income Support Scheme, Coronavirus Job Retention Scheme or Universal Credit.

Findings

39. The Government gave councils wide discretion on which businesses to support under the ARG. I cannot say the Council’s decisions on who to support were right or wrong. Rather, I can consider whether the Council followed a proper decision making process in deciding its schemes. We would expect the Council to have records of its decision making, including clear reasons for its decisions.
40. The Council’s records show it took into account the Government guidance in developing its ARG scheme. It wanted to support businesses forced to close or severely impacted that had not received other Government support. This was in line with the Government’s intention. The Council specified the types of business it considered met that aim, which excluded domestic settings. The Council was entitled to reach such a decision. The Council then published its scheme setting out those businesses it would support and those excluded. I find no fault in how the Council decided on its ARG scheme.
41. The Council refused Mrs X an ARG in line with its published policy because she operated from a domestic setting. I acknowledge Mrs X considers this was contrary to Government guidance however, as explained above, the Government gave councils wide discretion on who to support. The Council decided in line with its policy and so I find no fault in its decision making.
42. The Council’s records show it decided to expand its ARG scheme as it had further funding. It explained it would support those it knew had suffered a big drop in trade. And its records show it intended to support those that did not receive any other Government support. The Council was entitled to reach such a decision. The Council then published its scheme setting out those it would support and those excluded. I find no fault in how the Council decided on its EARG scheme.
43. The Council refused Mrs X an EARG in line with its published policy because she received Universal Credit. The Council decided in line with its policy and so I find no fault in its decision making.

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Final decision

44. I have completed my investigation. I find no fault in the Council’s decision making on Mrs X’s request for a business grant.

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Investigator's decision on behalf of the Ombudsman