Summary: Mr C complained a retail business he represents did not receive a Retail, Hospitality and Leisure Grant. We uphold this complaint, finding the Council made a flawed decision to refuse the grant. This caused uncertainty. The Council accepts these findings and will reconsider its decision as part of a series of actions agreed to remedy this injustice, set out in detail at the end of this statement.

The complaint

1. Mr C complains on behalf of a retail business. He complains the Council did not award the business a grant under a scheme set up by Government in March 2020 to help retail businesses cope with the impact of COVID-19.
2. Mr C says as a result the business missed out on a source of financial support, needed because of the impact of the pandemic.

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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. 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)
5. 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”.
6. 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

7. Before issuing this decision I considered:

• Mr C’s written complaint to the Ombudsman and any supporting information he provided, including that gathered in a telephone conversation with him;
• information provided by the Council in response to written enquiries.
• relevant law and government guidance as referred to in the text below.

8. I also gave Mr C and the Council an opportunity to comment on a draft of this decision statement. I took account of their comments on the draft before finalising this decision statement and completing my investigation.

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What I found

Grant schemes to support businesses impacted by COVID-19

9. In March 2020, in response to the COVID-19 pandemic, the government created two grant schemes for small businesses, administered by local authorities. One of these was the Retail, Hospitality and Leisure (RHL) grant scheme. The scheme closed in September 2020.
10. To be eligible to receive a RHL grant the business had to be first eligible for the Expanded Retail Discount (ERD) scheme for business rates “had that scheme been in force” on 11 March 2020. Eligible businesses with a rateable value of between £15,000 and £51,000 would receive a grant of £25,000. The business Mr C represents operates in a sector that qualified for the ERD scheme.
11. Government guidance said the grant was payable to the ratepayer. It considered what the Council should do if advised of changes to the rating list which is a list of all rateable property and land maintained by the Valuation Office Agency (VOA). The guidance said:

• Any changes to the rating list (…) after 11 March 2020 including changes which have been backdated to this date should be ignored for the purposes of eligibility.
• Local authorities are not required to adjust, pay or recover grants where the rating list is subsequently amended retrospectively to 11 March 2020.
• In cases where it was factually clear to the Local Authority on 11 March 2020 that the rating list was inaccurate on that date, Local Authorities may withhold the grant and/or award the grant based on their view of who would have been entitled to the grant had the list been accurate.
• This is entirely at the discretion of the Local Authority and only intended to prevent manifest errors”. (see Grant Funding Schemes – Small Business Grant Fund and Retail, Hospitality & Leisure Grant Fund Guidance –paragraphs 40 to 43).

Key facts

12. Mr C represents a retail business trading as a limited company from a shop in the Council’s area. The business is one of a series of linked companies operating under the same trading name. The overarching business has other outlets in the Council’s area.
13. The company entered a lease agreement for the shop on 14 February 2020. The shop was newly built, forming part of a new mixed use residential and commercial development. In October 2019 the Council gave each shop a designated address and post code.
14. In mid-February 2020 a Council inspector visited the site. He found only one of the shops open at that time. This was not the shop run by the company Mr C represents.
15. In mid-April 2020 an employee of the business sent the Council an email to its generic business rates email address. It asked for a business rates account number so the company could claim a RHL grant. The company received no reply.
16. Next, the managing director of the company (‘Mr D’) contacted the Council in May 2020. He said the company had begun trading from the unit on 14 February before closing on 23 March when the Government announced the first national lockdown. He said he had completed a ‘new occupier’ form on the Council website one week after taking over the property. He had spoken to the Council that day by telephone and been told there was no trace of this. He had been told the Council’s IT system did not recognise the property address or postcode.
17. Mr D received no immediate reply to his email. In July 2020 he was in contact with a third party representing all the traders using the new shops in the development; none of whom had received a grant. They in turn entered correspondence with an elected Councillor and an officer administering the grant scheme. Mr D was copied into various emails in July/early August including:

• one where the Council said it would pay a grant to the business it had noted was open in February 2020 at the time of its inspection. The Council said it could not pay a RHL grant to any other business as it had no record of those businesses contacting it before 11 March 2020 to say they were open;
• an exchange the Council had with another trader in one of the new shops which had opened in early March. In this the Council indicated it would pay a grant to that business so long as the VOA brought the shop into the rating list by the end of the month (when the Council expected the grant scheme to close). That email said such a payment may not “follow the guidance to the letter” but it had discretion and wanted “to facilitate grant payments” subject to proof of trading on 11 March. It accepted in that case the business was trading on that date.

18. In early August the Council replied to Mr D’s email of mid-May 2020. Its officer said they “could not locate the [business] address on our system”.
19. In response, Mr D said again he had completed a ‘new occupier’ form when the company took over the lease of the unit. He also enclosed a copy of the business lease agreement; an invoice showing the pouring of a concrete floor at the unit on 15 February; a film recording of the same and customer receipts from 29 February to 6 March 2021.
20. In mid-August 2020 the Council replied to Mr D. It said:

• that it had no trace of the ‘new occupier’ form Mr D described completing; it queried if it was possible for Mr D to have completed such a form as the postcode for the shop would not be recognised;
• that it would treat the shop as being occupied from 29 February 2020 saying the receipts “confirmed” the business as trading from that day;
• but the Council wanted more proof to show the shop continued to trade into March 2020. It asked therefore for further receipts and a bank statement.

21. Mr D replied the following day. He said he had completed the occupation form with the Council and used the nearest known address (i.e. not the actual address of the business). Mr D indicated he may have some difficulty providing further documentary evidence saying the shop had no phone or internet in early March and was recording sales manually via a ledger.
22. Around this time the Council referred the case to one of its Inspectors. They visited the shop and found it trading. On his record, the Inspector said he had also checked the business social media account. While Mr D had said the shop opened in February 2020, the Inspector had found an entry from mid-June 2020 which indicated the shop opening at that time. He implied he had spoken to Mr D about this, as he said Mr D had said the post referred to the shop ‘re-opening’ after lockdown.
23. The Inspector sent a request form to the VOA to put the retail shop on to the rating list with an effective date of 29 February.
24. The VOA entered the property on the rating list in mid-September 2020 backdating the entry to 29 February as requested. It set a rateable value for the shop of between £15,000 and £51,000.
25. In mid-September 2020 the Council wrote back to Mr D and said it wanted more information. It asked him to provide:

• further receipts to show the shop traded from 7 March 2020 onward noting he had provided receipts for the period 29 February to 6 March 2020 only;
• comment on how the business could take credit card payments, shown on the receipts provided previously, if it had no broadband or telephone line;
• utility bills from the end of February 2020 onward;
• a bank statement from March 2020.

26. The email advised Mr D the RHL grant scheme was due to close before the end of the month and so the information provided had to be received by then.
27. On 29 September Mr C, taking over correspondence on behalf of the business from Mr D, sent an email to the Council. He said:

• the company had used a mobile dongle to process payments while waiting for broadband installation at the shop;
• he was enclosing utility bills from 18 March 2020; a bill from a ‘temporary power supplier’ which covered the period 15 February to 18 March 2020; a bank statement for the dates 11-12 March 2020 (he identified which payments originated from the shop in question); a copy of the insurance schedule for the shop and receipts for the period 7 March to 23 March.

28. The Council has no record of receiving this email which Mr C correctly addressed to the officer who had corresponded with the business since August. Nor has it a record of receiving an email Mr C sent on 21 October where he enclosed a copy of the 29 September email and asked the Council for an update. Mr C sent further emails at the end of October (when he said he had received an “out of office” reply to his of 21 October) and in early November 2020 asking the Council to respond.
29. In early December 2020 the Council wrote back to Mr C. It explained it had no record of receiving his emails of 29 September or 21 October 2020. It had no record of any notification from its IT supplier of the 29 September email being received and marked as ‘spam’ (something which happened to one of the later emails Mr C sent chasing a reply). The Council indicated it was still willing to consider paying a grant to the company, but only if the Government agreed to reimburse it for the cost. It also asked Mr C to provide again that information referred to in his email of 29 September.
30. On the same day Mr C sent to the Council the attachments enclosed with his email of 29 September.
31. The Council acknowledged receipt and said it was “satisfied [the company] was trading from the property during March 2020”. It asked for more information about the bank statements to clarify the name on the account. Mr C replied to that email the same day providing further explanation.
32. Mr C heard nothing further. So, in January 2021 he made a complaint about the non-payment of the RHL grant.
33. The complaint was then passed to a senior officer. They replied to Mr C at the beginning of February 2021. The response said the Council would not pay the RHL grant for the following reasons:

• that the Council only had discretion to award a RHL grant to a business where it had ‘prior knowledge’ on 11 March of occupation but had not yet acted upon it. That was not the case here;
• that the company had not completed an application form to receive a RHL grant. The business knew to do this having completed the application process for other shops in the Council’s area where it had paid grants;
• that the Council had not received information by the end of September 2020 as requested. If the email Mr C sent on 29 September had not been received by the Council, it would have expected Mr C to receive an automated message advising of this and to have followed up his contact straight away;
• that the Council was no longer satisfied the shop traded in March 2020 at all. This was based on a further analysis of the social media account in the business trading name. The Council noted the post indicating the shop opened in mid-June 2020 had been taken down and there was no alternative post to indicate when it opened. There was a photo posted of the shop on 28 February indicating it was still being fitted out and which said the shop would open “soon”. There was another post in late March which had indicated a temporary re-opening of some shops for customers to collect items, but the Council noted this shop was not included in that list.
• that the RHL grant scheme had in any event, now closed. So, there was “nothing we can do” as the Council had no leeway to award a grant based on information received after that time.

34. Mr C escalated his complaint to Stage Two of the Council’s complaint procedure but the Council did not change its position.

Findings

35. I find the business represented by Mr C had no automatic entitlement to a RHL grant on the shop premises at the centre of this complaint. Because on 11 March 2020 the shop was not on the rating list.
36. But the Council had discretion to consider paying a grant if the shop was added to the rating list before the scheme closed. I have considered first therefore how the Council chose to exercise its discretion, focusing on its reply to Mr C’s complaint where it listed five reasons why it refused the business a grant.
37. The first reason it gave was that to make an award was contrary to Government guidance. The key passage in the guidance was that which said the Council could use discretion to pay awards in cases where it was “factually clear” the rating list was incorrect on 11 March.
38. It is not in dispute in this case the Council knew of the existence of the shop used by Mr C’s business on 11 March 2020. Further, that it knew at some point it would be brought into the rating list. But on its last visit to the site in February 2020 it had found that shop and most of its neighbours still empty and waiting for fitting out.
39. It is clear initially the Council did not consider this sufficient. It said it needed some evidence pre-dating 11 March 2020 that it knew a shop had become occupied for it to pay a grant. For example, in the case where its Inspector noted a shop open and trading in February.
40. I take no view on whether the business Mr C represents told the Council it occupied the shop before 11 March 2020. But I note it would have been hampered in doing so as the property address did not exist on the database used by the Council for business rates. So, the business could not have completed a correct ‘new occupier’ form as the Council itself noted.
41. I do not need to pursue the point as the Council went on to change its mind about the approach it should take to these cases. The evidence for this is twofold. First, there is the correspondence the Council had with another trader in the same position as Mr C. It said given the evidence that business had begun occupation and trading by 11 March it would pay the grant so long as the shop was brought into the rating list before the scheme closed.
42. Second, there is the approach it took in this case until September 2020. If the Council wanted to reject a grant on the basis it had no record of the business contacting it before 11 March then it had ample opportunity to do so. But instead, the Council asked the business for information to demonstrate it was trading on 11 March. I find it was taking the same approach therefore as in the case of the other trader referred to above.
43. I presume the Council changed its approach based on the general knowledge it had of the existence of these shops in February 2020; as opposed to having specific knowledge about when each shop became occupied. In my view either approach was defensible given Government guidance was not specific in describing what extent of knowledge the Council needed to decide if the rating list contained a ‘manifest error’ on 11 March 2020. But I consider it was fault for the Council to have indicated it would use discretion subject to proof of trading and then change its position again in February 2021. In taking an inconsistent line it took an arbitrary approach to the disadvantage of this business.
44. I accept the Council could still consider if there were other reasons for refusing the grant and it has advanced four such reasons, which I will address in turn.
45. The first is that the business did not complete an application form. I consider it was fault for the Council to rely on this when it clearly entered prolonged correspondence with the business implying it may pay a grant, without ever asking it to complete a form. If this was a necessity, the Council had plenty of opportunity to explain that. It should not have disadvantaged the business for its own oversight. So, this was an irrelevant factor for the Council to take account of in its decision, given the circumstances of this case. I note that in comments on a draft of this decision the Council now says “this was not a determining factor” in refusing the grant.
46. The second is the business did not provide information before the scheme cut-off date. I find the evidence shows Mr C sent information requested by the Council before the deadline given. I accept the Council did not receive Mr C’s email of 29 September 2020. But he sent it to the address of the officer the business had corresponded with throughout, without difficulty before 29 September. He was not told to use any different email address. Nor did the Council caution not to send attachments or advise a size limit on any email to be sent. The Council has assumed Mr C would receive a message telling him his email of 29 September was not received. But I see no reason why it would put more weight on that than the failure of its IT system to send it a notification of the same message as spam.
47. I also note that in any event the Council gave the business little time to supply further information in September 2020. This meant Mr C would have little time in turn to check its safe receipt before the month end. This was not the fault of the business. The facts set out above show the Council delayed in replying to the initial enquiries it received from the business enquiring about the grant. The Council has explained in comments on the draft decision that it had little time to set up administration for the grant scheme. While at the same time it had to cope with new ways of working from home, resulting from the pandemic. I accept these were considerable challenges and could reasonably account for some delay. But they are not factors which count against the business. The Council should have weighed this factor and the issues set out in paragraph 46 before refusing a grant based on information not being received on time. It did not do this and that was a fault.
48. The third reason the Council has put forward is that it is no longer satisfied the evidence shows the business traded in March. It has based this assessment on an analysis of the business social media account. I accept this is relevant evidence for the Council to take account of. But it could not look at this in isolation. Its decision to refuse the grant also had to take account of the evidence provided which pointed towards the business trading from 29 February. This included various receipts, bank transactions, utility bills and so on; as well supporting explanation from Mr C about how payments were processed and so on. I note the Council has previously said it was satisfied the business began trading on 29 February and during March based on that evidence. But there is no indication the decision refusing the grant took this information into account. Not taking relevant information into account was a further fault.
49. Fourth and finally the Council said it could not pay a grant as the scheme was closed. I consider it would be fault for the Council to rely on that, as it was not Mr C’s fault the Council could not consider the information provided by the business in the time while the scheme remained opened. So, this was an irrelevant factor for the Council to take account of in its decision, given the circumstances of this case.
50. In considering the injustice caused by these faults, it follows from the above the Council should not have rejected the business application for four of the five reasons put forward. However, I am unable to say the Council would not have rejected the application on a closer scrutiny of all the evidence relevant to the question of whether the business traded on 11 March 2020. I consider it is uncertain therefore whether the Council would have reached the same decision in February 2021. We consider this an injustice.
51. I also consider the delays in this case put the business to unnecessary time and trouble.

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Agreed action

52. The Council accepts the findings set out above. It has agreed that to remedy the injustice I have identified it will, within 20 working days of a decision on this complaint:

• apologise to Mr C accepting the findings of this investigation;
• pay the business £200 in recognition of the time and trouble it has been put to;
• review its decision to refuse the business a RHL grant taking account of the findings above and considering all relevant evidence about whether the business occupied the shop and was open for sales on 11 March 2020. The Council should pay the business an amount equivalent to the grant it refused, if it is satisfied the business occupied the shop and was open for sales on 11 March 2020.

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Final decision

53. For reasons set out above I uphold this complaint finding fault by the Council causing injustice to the business Mr C represents. The Council accepts these findings and has agreed action that I consider will remedy that injustice. Consequently, I can now complete my investigation satisfied with its response.

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Investigator's decision on behalf of the Ombudsman