Summary: Mr X complained the Council delayed paying him a COVID-19 business grant and wrongly refused other COVID-19 business grants, which added to the financial difficulties the business suffered as a result of the pandemic. The Council was at fault for a delay in reconsidering one of the grants after Mr X appealed and for not addressing the additional information Mr X provided at that stage. This caused Mr X injustice, for which the Council should apologise.

The complaint

1. Mr X complained the Council delayed in paying a small business grant. He also complained it wrongly refused a COVID-19 Local Restrictions Support Grant and failed to respond to his complaint about this. The lack of grant support added to the financial difficulties caused by the COVID-19 pandemic.

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The Ombudsman’s role and powers

2. We investigate complaints about ‘maladministration’ and ‘service failure’. In this statement, I have used the word fault to refer to these. 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)
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 considered:
• the information Mr X and the Council provided; and
• relevant law and guidance, as set out below.
7. Mr X and the Council had an opportunity to comment on my draft decision and I considered the comments received before making a final decision.

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What I found

Relevant law and guidance

COVID-19 Small Business Grant

8. In response to the COVID-19 pandemic the Government introduced two grant schemes to support businesses. The Department for Business, Energy and Industrial Strategy published guidance for councils on how to apply these: “Grant Funding Schemes” (March 2020).
9. Businesses which, on 11 March 2020, received Small Business Rates Relief (SBRR) were able to apply for a payment of £10,000.
10. Eligibility for SBBR was subject to section 43 of the Local Government Finance Act 1988. This said the rate applied to occupied businesses.
11. The Guidance said councils should ignore changes to the rating list after 11 March 2020, even if back-dated, unless they were factually aware on that date the rating list was inaccurate. In those cases, a council could withhold the grant and/or award the grant based on its view of who would have been entitled to the grant had the list been accurate.
12. Where the council had reason to believe the information it held about the ratepayer on 11 March was inaccurate it could withhold or recover the grant and take reasonable steps to identify the correct ratepayer.

Local Restrictions Support Grant (LRSG)

13. The Government provided support to businesses affected by restrictions from 8 September to 4 November 2020. When it announced the second national lockdown it issued an Addendum to the LRSG to cover the period from 5 November to 2 December 2020. This was later extended to cover the third national lockdown from 5 January to 31 March 2021.
14. Eligible businesses were those required to close in line with Government restrictions. The Health Protection (Coronavirus, Restrictions) (England) (No. 4) Regulations 2020 sets out which businesses had to close by law. This included non-essential retail, leisure, personal care, sports facilities and hospitality businesses.

Restart grant

15. Support was provided to support specific types of business, including non essential retail businesses, to enable them to reopen safely after restrictions were lifted following the third national lockdown. To be eligible, the business must:
• be the liable ratepayer on 1 April 2021;
• be engaged in offering in-person services in the relevant sectors; and
• trading (engaged in business activity) on 1 April 2021.
16. The Guidance set out the types of businesses that could be considered non-essential retail. It also listed types of business that were excluded from the scheme, which were generally those permitted to remain open during the national lockdowns and includes business operating in office buildings.

Additional Restrictions Grant – Severe Impact (ARGSI)

17. The Government also provided discretionary funding for councils to support businesses that were required to close or had been severely impacted by the second national lockdown.
18. The Guidance, issued on 4 November 2020, said councils could decide how much funding to provide to businesses and which businesses to target. Councils could use the funding to support businesses that were important to their local economy.
19. The Guidance also said:

“In taking decisions on the appropriate level of grant, [councils] may want to take into account the level of fixed costs faced by a business in question, the number of employees, whether they are unable to trade online and the consequent scale of coronavirus losses”.

20. This Council’s discretionary scheme was decided in line with Government Guidance. To be eligible, the business must:
• Be trading in Kirklees;
• Have been open and trading as usual before the restrictions;
• Have been legally required to close or have been significantly impacted by local restrictions from 5 November 2020. Businesses not forced to close will be required to provide evidence demonstrating a significant turnover/sale as a result of stricter social distancing being implemented;
• Be operating in one of more of the following sectors:
1. independent non-essential retail;
2. leisure;
3. hospitality;
4. visitor accommodation;
5. personal care and close contact services;
6. retail, hospitality, leisure supply chain;
7. entertainment and tourism (including events and supply chain businesses); and
8. community facilities/centres, including faith-based venues.

What happened

21. Mr X runs an accident claims business. The business operates from a unit in a building owned by another company Mr X operates. The units in the building were all separately rated by the VOA. In early 2020 Mr X decided to split each of the units in the building into 2 or 3 smaller units and asked the VOA to amend the rating list.
22. On 11 March 2020 the premises the accident claims business rented was not on the VOA rating list. This was because it was renting part of one of the units that Mr X had recently split. The Council confirmed it was not aware the rating list was inaccurate on 11 March 2020. On 16 June 2020, the VOA notified the Council of the change, which was back-dated to 2 January 2020.
23. Mr X asked the Council to record his business as the liable ratepayer on 26 May 2020. Also on 26 May Mr X sent a completed form for small business rates relief (SBRR) and applied for a small business grant.
24. In support, Mr X provided a copy of the lease, which began on 2 January 2020, for a term of 3 years. The lease included an initial five months rent-free period so the first payment of rent was not due until 2 June 2020. He also provided a utility bill dated 23 May 2020 for £48 for telephone and broadband services, and two invoices for vehicle parts dated 4 March and 17 April 2020. At that stage the premises were not on the rating list.
25. The VOA notified the Council of changes to the rating list on 16 June 2020, following which the Council created a business rates account for the premises. Also on 16 June 2020, the Council set up the new premises on its system and sent Mr X a business rates bill to show the new account and information about SBRR. Mr X resubmitted his application for a small business grant on 18 June 2020 and provided a further SBRR form on 22 June 2020. The Council applied SBRR, back-dated to 2 January 2020.
26. The Council said the grant payment was authorised but then a query arose about the bank account Mr X asked it to make payment to. In line with its usual process, the case was referred to the Council’s fraud team to complete fraud checks. This led to a delay in processing the grant payment and payment was not made until mid August.

Local Restrictions Support Grant

27. Mr X applied for a Local Restrictions Support Grant (LRSG) on 28 November 2020. The Council refused the grant. Its decision letter, dated 9 December 2020, said:
• it understood the business dealt with accident claims, including providing replacement vehicles for clients whilst the claim was being considered;
• Government Guidance said vehicle hire companies were allowed to remain open;
• the business could deal with claims without having to meet clients face-to-face and therefore could remain open; and
• the grant was only for businesses forced to close due to national restrictions during the second national lockdown.
28. Mr X challenged the decision on 29 December 2020. He said:
• the business had to vet the claim to ensure the client was not at fault;
• the credit hire agreement had to be signed at the business premises, otherwise he could not recover charges from third party insurance;
• the business needed to carry out various checks, including a DVLA licence check, and take copies of relevant paperwork;
• most of the clients did not speak English;
• the business could not complete these steps without face-to-face contact, which took between two to four hours. This could not be done during the national lockdown.
29. On 16 January, Mr X contacted the Council again. He said he had not had a response to his letter and asked it to treat this email as a complaint.
30. The Council’s reconsideration team wrote to Mr X on 26 February. It said that as the business was not required to close, its original decision still stood. It said if the business was severely impacted by the pandemic, it could consider awarding a discretionary grant, based on the information Mr X had already provided.
31. Mr X made a formal complaint on 31 March 2021. He said the Council:
• should not reject applications without asking about the business model;
• had wrongly stated the business was not required to close;
• had ignored his letter dated 29 December 2020;
• did not understand the Government Guidance; and
• had a personal issue with Mr X that affected its decision-making.
32. The Council responded by sending a further copy of its email dated 26 February 2021.
33. On 10 April Mr X complained he had not had a response to his application for a Restart grant. The Council replied on 15 April. It said he had been refused an LRSG because the business was not forced to close, and therefore it was not eligible for a restart grant.
34. Mr X asked if this was the Council’s final response and on 22 April 2021, the Council confirmed it had nothing further to add. It initially refused the LRSG as the business did not meet the criteria. It had reconsidered the decision and written to Mr X to explain why it upheld the original decision.
35. In response to my enquiries, the Council said:
• it considered the reasons Mr X said face to face contact was needed but felt they could be carried out remotely or by post. Ultimately the business did not fall into any of the categories which were required to close;
• it accepted there was a delay in responding to Mr X when he challenged its LRSG decision, which it said was due to the volume of work resulting from various grant schemes and frequent changes to Government Guidance. It apologised to Mr X for the delay.
36. In May 2021, a separate team considered whether the business was eligible for an ARG discretionary grant following the refusal of the LRSG. The Council record indicates it decided the business did not fall into one of the eligible sectors set out at paragraph 20 above. It wrote to Mr X on 13 May 2021 to explain its decision.

My findings

37. We are not an appeal body and it is not our role to say whether the Council’s decisions were correct. If there is no fault in the Council’s decision-making process, we cannot comment on the decisions reached.

Small business grant

38. The premises Mr X’s business rents was not on the rating list on 11 March 2020. Government Guidance said councils should ignore changes to the rating list after that date, even where back-dated to a date before 11 March 2020, except where councils were factually aware on 11 March 2020 that the rating list was incorrect. The Council confirmed it was not aware the rating list was incorrect on 11 March 2020 and therefore it was entitled to ignore the changes the VOA notified it about in June 2020.
39. Government guidance did not specifically deal with the situation where units in a building are separately rated but are later split. However, in my view the Council could consider paying a grant if it was satisfied that:
• the business was the ratepayer;
• the premises were occupied by the business and entitled to SBRR; and
• SBRR should be back-dated to 11 March 2020 (or earlier).
40. In this case, the Council accepted Mr X’s business was the liable ratepayer, applied SBRR and sent him a business rates bill on 18 June 2020 confirming this.
41. The VOA only brought the premises onto the rating list in June 2020. Therefore the Council could not consider paying a grant before then. Although there was some delay in it paying the grant after that, this was due to the need for checks by the fraud team in line with the Council’s usual process. These were to ensure the proper payment of grants and the delay was not sufficient to warrant me making a finding of fault.

Local Restrictions Support Grant (Addendum) (LRSG)

42. Mr X applied for a grant during the second national lockdown. The Council refused this because his business was not one of those required by law to close. The Government decided which businesses should close and the Council had no discretion over this. Since it was not forced to close, it was not eligible for a grant from this scheme.
43. The Council’s reconsideration team reviewed the decision and upheld it on the same grounds. The Council said it considered Mr X’s comments about the way the business operated but was not satisfied it could not operate remotely. There was no fault in the way the Council considered this. However, it should have explained how it had considered the additional information Mr X provided and its reasons for deciding the business had not met the criteria for the grant. It failed to do so, which was fault. This meant Mr X was uncertain about how it had considered his evidence at the appeal stage and the Council has agreed to apologise for this. The Council accepted there was a delay in reconsidering the decision.

Restart grant

44. The Council decided that because Mr X’s business was not required to close, it was not eligible for a Restart grant to help it to reopen safely. There are situations where a business not forced to close may be eligible for a Restart grant. However, Mr X’s business operates from an office building, which was specifically excluded, and is similar in nature to other businesses listed as excluded from the definition of non-essential retail, such as vehicle hire businesses. Therefore, it was open for the Council to say the business was not eligible for a Restart grant on those grounds.
45. It would have been good practice for the Council to explain in more detail why it considered Mr X’s business was not eligible for this grant but I do not consider this is sufficient to amount to fault and did not affect the outcome.

Discretionary grant

46. The Council considered whether Mr X’s business was eligible for a grant from its ARG discretionary scheme but decided it was not operating in one of the eligible sectors. There was no fault in the way it considered this and its decision was in line with its published scheme.

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Agreed action

47. The Council will, within one month of the date of the final decision, apologise to Mr X for its delay in reconsidering his application for the Local Restrictions Support Grant and the uncertainty caused by its failure to address the additional information he provided when it reconsidered his application.

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Final decision

48. I have completed my investigation. I have found fault causing personal injustice and have recommended action to remedy that injustice.

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Investigator's decision on behalf of the Ombudsman