Summary: Mrs X complained the Council refused her businesses grants, did not address her complaint properly and reported inaccurately on finances. We did not investigate the Council’s reporting as there is a more appropriate body. We found fault in the Council’s communications with Mrs X that did not affect its decision making. We recommended the Council provide Mrs X with an apology and address her outstanding complaints, pay £150 for time and trouble and take action to prevent recurrence.

The complaint

1. Mrs X complains the Council:
• wrongly refused grants to her businesses;
• did not investigate her complaint properly and;
• has not reported accurately on its finances and on grant allocations.
2. Mrs X says she has suffered financial loss and distress.

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What I have investigated

3. I have investigated the Council’s decision to refuse Mrs X business grants and its complaint handling. At the end of this decision I have set out why I have not investigated other matters.

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The Ombudsman’s role and powers

4. 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)
5. 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)
6. 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”.
7. The Ombudsman investigates complaints about ‘maladministration’ and ‘service failure’, which we call ‘fault’. We must also consider whether any fault has had an adverse impact on the person making the complaint, which we call ‘injustice’. We provide a free service, but must use public money carefully. We do not start or may decide not to continue with an investigation if we decide:

• any fault has not caused injustice to the person who complained, or
• any injustice is not significant enough to justify our involvement, or
• there is another body better placed to consider this complaint. #(Local Government Act 1974, section 24A(6))

8. 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

9. I spoke to Mrs X and I reviewed documents provided by Mrs X and the Council.
10. I gave Mrs X and the Council an opportunity to comment on my draft decision. I considered their comments before making a final decision.

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What I found

Valuation Office Agency

11. The Valuation Office Agency (VOA) provides valuations and property advice to support taxation and benefits to the government and local authorities in England, Scotland and Wales. It compiles and maintains lists detailing the rateable value of 1.9 million commercial properties for business rates; the rating list.

Business grants

12. From March 2020 the Government created various grants schemes to support businesses during the COVID-19 pandemic. It issued guidance to councils to help them administer these schemes.

Local Restrictions Support Grants (LRSG)

13. Local Restrictions Support Grants covered various periods from 9 September 2020 to 31 March 2021.
14. Funding was only available to businesses ordered to close under the Health Protection Regulations.
15. Businesses were entitled to one grant per entry on the rating list, payable to the ratepayer.

Local Restrictions Support Grant (Closed)

16. This grant applied from 9 September to 5 November 2020.
17. The Health Protection (Coronavirus, Local COVID-19 Alert Level) (Very High) (England) Regulations 2020 schedule 1 part 2 set out the types of businesses required to close. This did not include hair salons or training centres.

Local Restrictions Support Grants (Closed) Addendum

18. This grant applied from 5 November to 2 December 2020.
19. The Health Protection (Coronavirus, Restrictions) (England) (No. 4) Regulations 2020 in effect on 5 November 2020 set out those businesses ordered to close. This included hair/beauty salons. It did not include training centres.
20. The Council has provided a copy of FAQ issued by the Government on this scheme. This says: Q. What about businesses with mixed premises, where only part of the business must close? A. A grant will be payable if the business must close its main service. Councils must exercise discretion and judge whether this is the case based on their local knowledge.

Local Restrictions Support Grants (Closed)

21. This grant applied from 2 to 19 December 2020.
22. The Health Protection (Coronavirus, Restrictions) (All Tiers) (England) Regulations 2020 schedule 3 part 2 took effect from 2 December 2020. Schedule 3 listed those business required to close. This did not include hair/beauty salons or training centres.

Local Restrictions Support Grants (Closed) Addendum – Tier 4

23. This grant applied from 19 December 2020 to 31 March 2021.
24. The Health Protection (Coronavirus, Restrictions) (All Tiers) (England) Regulations 2020 schedule 3A part 3 took effect from 20 December 2020. listed those business required to close. This included hair and beauty salons. It did not include training centres.

Business support from 5 January 2021

25. The Government introduced two further schemes.
26. The Local Restrictions Support Grant (Closed) Addendum: 5 January onwards. Councils were to provide funding to businesses ordered to close from 5 January 2021.
27. The Closed Businesses Lockdown Payment. This was a one -off payment to businesses ordered to close from 5 January 2021.
28. The Health Protection (Coronavirus, Restrictions) (No. 3) and (All Tiers) (England) (Amendment) Regulations 2021 amended The Health Protection (Coronavirus, Restrictions) (All Tiers) (England) Regulations 2020 schedule 3A. The updated list of those businesses required to close included hair and beauty salons. It did not include training centres.

Restart grants

29. This grant scheme ran from 1 April 2021 to 30 June 2021.
30. The primary principle of the Restart Grant scheme was to support businesses that offered in-person services, where the main service and activity took place in a fixed rate-paying premises.
31. It was available to businesses in the non-essential retail, hospitality, accommodation, leisure, personal care or gym sectors. This included hair salons. However, it excluded personal care businesses used solely as training centres for staff, apprentices and others.
32. Businesses were entitled to one grant per property on the rating list, payable to the ratepayer.

Additional Restrictions Grants (ARG)

33. The Government gave councils further funding for business support activities. Councils had the freedom to decide the eligibility criteria. However, the Government encouraged councils to support those sectors that remain closed or were severely impacted by the extended restrictions.

Council ARG policy

34. The Council has provided a copy of its policy published in November 2020. This shows it took account of the Government guidance.
35. Eligible businesses included:
• ratepaying businesses ineligible for LRSG but severely affected by restrictions
• non- ratepaying businesses ineligible for LRSG but severely affected by restrictions
• business in receipt of LRSG where a large business and important to its local economy
• charities active in the community and severely affected by restrictions
36. The Council would then consider:
• whether a business had evidence of high ongoing fixed property related costs, and;
• could show it had been severely financially impacted by restrictions.
37. The Council would award grants at the same level as LRSG payments.

Principles of good administrative practice

38. The Ombudsman publishes a guidance document setting out the standards we expect from bodies in jurisdiction. We issued an addendum in response to the COVID-19 pandemic; “Good Administrative Practice during the response to Covid-19”. The following points are relevant in this case:
• Basic record keeping is vital during crisis working. There should always be a clear audit trail of how and why decisions were made.
• 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.
• If you use new or revised policies and processes this should not lead to arbitrary decisions and actions. Ensure you have a clear framework for fair and consistent decision making and operational delivery.
• Councils should have clear and accessible appeal routes.

What happened

39. Mrs X has two businesses, company A and company B.
40. In August 2020 the Council recorded Mrs X as ratepayer for company A at Address A. It also recorded the property as unoccupied pending refurbishment.
41. The Council says it received no update from Mrs X on occupation until it received her application for a grant in December 2020.
42. The Council says it offered one application form for both the LRSG and ARG. It says it assessed applications as to whether the business was a ratepayer and whether mandated to close.
43. On 15 December Mrs X applied for a grant for company A. The Council has provided a copy of the application which only refers to the LRSG. Mrs X recorded the following details on the application about company A:
• Community interest salon that rented space for training
• Ordered to close during lockdown 5 November to 2 December
• Reasons for loss of income included reduced numbers in training due to social distancing and fear, and having to close the salon side
• Sector included education and personal services
44. The application asked for an upload of a bank statement and evidence of fixed property related costs. Mrs X uploaded a bank statement for company B only.
45. In January 2021 Mrs X chased payment.
46. The Council asked for a bank statement for company A or for Mrs X to explain why she could not provide this.
47. Mrs X explained she set up company A at Address A in July 2020 but found it hard to open a bank account during the pandemic. Company B then moved into Address A in November 2020 for practical reasons.
48. In February the Council confirmed it had awarded company A an ARG for the period 5 November 2020 to 15 February 2021. It did not explain why it had not awarded the LRSG or give reasons for awarding the ARG.
49. Mrs X told the Council she had applied for the LRSG and so it should amend and pay the top up grant.
50. The Council explained on consideration of Mrs X’s application it decided company A was not ordered to close but was severely impacted. Therefore, it paid the ARG. It confirmed the level of payment matched the LRSG. I note the Council did not explain how it reached its view that the business did not have to close.
51. On 10 February Mrs X said she understood salons were ordered to close. She referred to news reports in support. She also asked the Council to apply the latest LRSG closed guidance which covered the period 2 to 19 December 2020.
52. On 8 February 2021 Mrs X applied for a grant for company B at Address A. The Council has provided a copy of the application which only refers to the LRSG. Mrs X recorded the following details on the application about company B:
• Company B was a training organisation
• It first started trading on 13 December 2020
• It closed during the December lockdown
• It had struggled to move learners online and could not enrol them due to restrictions and the mandated closure of the training academy
53. The application asked for an upload of a bank statement and evidence of fixed property related costs. Mrs X uploaded a bank statement for company B.
54. On 24 February 2021 the Council responded to Mrs X’s request that it review its decision for company A. It also addressed her application for company B.
55. In respect of company A the Council said:
• Mrs X’s application described the business as a community interest salon that also rented space for training. She said the sector was education. Under loss of income she said training was at reduced capacity due to restrictions and the salon side had to close.
• In articles filed at companies house Mrs X said the company objectives were to carry on activities which benefit the community and in particular (without limitation) to Hair & Beauty Treatments and Training and its activities were hair and beauty training and low cost hair and beauty treatment. This was supported by an email she sent to the Council that said she had moved her training business to address A as training could continue while salons had to close.
• It considered the primary use of the business was training and that treatments, while not currently allowed, would be part of that training process.
• Company A did not have to close [as required for an LRSG] and so it considered it for an ARG, which it had since paid.
56. Regarding company B the Council said:
• It was not in the rating system [as required for an LRSG] and so the Council considered it for an ARG.
• businesses had to show they were severely financially impacted by the restrictions and had high, ongoing fixed building costs which are unavoidable.
• Mrs X did not provide evidence of any fixed property related costs. Further, it viewed any payment arrangement between company A and company B unenforceable given Mrs X is director of both. With no legal avenue for the Landlord to recover any unpaid costs the Council did not consider them ongoing or unavoidable.
57. On 1 March Mrs X complained to the Council. In summary:
• Due to lack of guidance she included information about both company A and company B on her December application; combining information about the business activities on one form. Following third party advice she corrected this by making a second application for company B.
• Despite her best intentions for company A when setting it up and completing records for companies house, it did not secure any contracts for training. It served solely as a community training salon offering education. It operated for four days providing training before the Government ordered salons to close on 5 November.
• Company A could only cover running costs by offering salon services, not for profit treatments and renting space. It opened on 1 November but was ordered to close on 5 November. Company A could not open a bank account until recently, due to the pandemic.
• Company B continued to rent the space. It would have posed a health risk to students and others to continue operating during the pandemic. She decided to close on 10 December ahead of further restrictions imposed from 19 December. The Council ordered all education to close from 5 January and the “top up grant” applied to all those that had to close on 5th.
• The Council had delayed issuing grants and made decisions inconsistent to those of other councils.
• She believed company A was entitled to all grants irrespective of whether the Council considered it to be a salon or an education facility. Its salon had closed to the public from 5 November and so it received no income from this part of the business.
• It was wrong for the Council to say company B did not have to pay rent.
58. In response, on 13 March, the Council said:
• Company A was not entitled to the LRSG for reasons given in its review response of 24 February. This decision was final. (I note the Council did not address Mrs X’s new information that she gave incorrect details on the application for company A).
• It had paid company A an ARG to cover the period to 15 February 2021 and would now make a further ARG payment to cover the period 15 February to 31 March 2021.
• On review of its decision for company B, it found its previous decision correct. As a director of both companies her agreement to pay rent was not enforceable. This was therefore not an ongoing and unavoidable high fixed property cost. (I note the Council did not address Mrs X’s claim that it closed and was entitled to a top up grant).
59. On 9 April Mrs X said the Council’s response did not take into account the latest Government guidance.
60. On 4 May Mrs X complained the Council had not supported her businesses. She said:
• She initially gave details of the two separate companies on the same form though she tried to correct this later.
• Company A was entered on the rating list at Address A. Company B originally operated from another address and moved to Address A in October 2020.
• The Council had ignored emails she sent on 4 March and 14 April.
• Company A is a hairdressing salon and had to close at various times from 5 November 2020.
• Company A rents space to company B and other third parties.
• She is aware of third parties that have received grants for both salons and training centres.
• Company B is a separate company providing training. It did have to close as education was ordered to close from 20 December until 8 March 2021.
• Company A opened for more days and hours than company B.
• The Council did not pay company A the LRSG, ARG top up or Restart grants as it should have done.
• The Council did not pay company B the ARG as it should have done.
• The Council delayed awarding grants.
• She wanted the Council to review its decisions, address the disparity in awards and apologise for ignoring her.
61. On 6 May the Council awarded company A a further ARG payment.
62. On 14 May the Council told Mrs X it considered this another request for a review of its decisions, not a complaint. However, it had already reviewed its decisions. It had determined the main business of company A was training as per the details provided in both her application and the company information registered with Companies House. Accordingly, an LRSG was refused. It did not have to close its main service, i.e. training, and therefore a Restart Grant was not payable. It had made three ARG payments to company A. It would not carry out a further review.
63. Mrs X asked the Council to deal with her correspondence as a complaint.
64. On 10 June the Council said its previous response addressed her query about the grants. It found no evidence of ‘unethical’ practice or ‘neglect’ of her business.
65. On 6 July Mrs X escalated her complaint. She said:
• She was unhappy with the Council’s response.
• She was unhappy with the Council’s management of grants.
• The Council’s reports made no sense.
• She was unhappy the Council delayed allocating grants from October 2020 to February 2021.
• She was aware of others with two businesses that received a grant for each.
• Company B was mandated to close and affected by restrictions yet had not received a grant.
• Company A was a salon and it was not relevant that it also rented space for training. The Council should not have based its decision on Companies House information.
• The Council should arrange an external audit of its figures.
• The Council had not applied updated guidance.
• The Council had acted with bias.
66. The Council issued a final response on 27 July. In summary it said:
• It had nothing further to add regarding its decisions.
• The Government would audit its accounts.
• It refused to comment on slanderous comments about staff.
• She could contact the Ombudsman.
67. In response to enquiries as to how it decided the main use of company A, the Council said:
• Information on Companies House reported the nature of business was other business support, other education and hairdressing. And the objectives of the company were to carry on activities which benefit the community and in particular (without limitation) to Hair & Beauty Treatments and Training.
• Company A became ratepayer at Address A on 7 August. It recorded it was unoccupied pending refurbishment. On inspection on 14 October 2020 it recorded that the premises were being refurbished into a training salon.
• Following inspection on 10 December it recorded the property as primarily used for training. It also recorded Mrs X explained she had used the property for training since November 2020 and it was not operating as a beauty salon.
• A social media post of October 2020 said company A would work with a third party to provide hair and beauty training, starting from November 2020.
• In correspondence to the Council of 1 March 2021 Mrs X said company A was a community training salon offering education. And that it operated for four days providing training, prior to salons being ordered to close.
• Based on the application form and inspection visits, it concluded the main service of company A was training, not personal care. Accordingly it was not mandated to close, and importantly had not closed during the national lockdown. Government guidance in regard to LRSG is clear; a) the business must have been mandated to close, and b) must have actually closed, to be eligible for payment. The Government guidance is also clear that if a business, which is not mandated to close, chooses to close, then the business is not eligible for LRSG.
• The VOA description of the property was out of date at the time of Mrs X’s application and still referred to the property at Address A as a restaurant. This has since been updated. In any event this did not evidence actual use or grant entitlement.
• Its ARG policy aimed to support those businesses with fixed, ongoing and unavoidable premises costs which were not eligible for LRSG. It gave company A ARG payments exactly in line with the Government LRSG payments at £667 per 14 days, for non-domestic premises with a rateable value of £15,000 or less, for the period 5 November 2020 to 31 March 2021.
• It made three ARG payments to company A. The Councils ARG policy was updated in April 2021 to include “Kickstart Grants”. It also paid this to company A. These were aligned with the Government’s “Restart Grants”.
• It did not award company A the closed business lockdown payment as it did not have to close.
• Government FAQs said: “Part 4 of The Health Protection (Coronavirus Restrictions) Regulations 2020 states a business required to close “must cease to carry on that business or provide that service”. To remain open would be against the law and any business doing so will be ineligible for a grant.”
• Government FAQs said “Schools and education providers, including English language schools, tutoring services, private and state schools are not mandated to close in the regulations and are therefore not eligible to receive a grant under these schemes. This includes “wraparound” care providers, who are also not mandated to close in the regulations.”
68. When I spoke to Mrs X she clarified the top up payment sought referred to the Closed Businesses Lockdown Payment (CBLP).
69. In comments on a draft of this decision the Council said:
• In regards to the LRSG and ARG sharing one application form, its web page provided links to the government guidance, explained the difference in the two grant schemes and provided links to the full policies for each scheme. That the application form itself was named LRSG, was an oversight. The sheer volume of work created by the grant schemes meant officers did not revisit this.
• When Mrs X applied for a grant on 15 December she could have referred to both companies on the form but did not do so.
• It was unaware company B had moved to Address A until Mrs X mentioned this in January 2021.
• While it did not give reasons for awarding company A the ARG, details of both the LRSG and ARG were on its website and neither its policy nor Government guidance required it to give a detailed explanation for its decisions.
• Mrs X was aware at the time of applying for the LRSG that her business had not closed.
• While Mrs X’s application for a grant for company B said it started trading on 13 December 2020, up to that time the Council understood it was trading from another address.
• Its guidance did not suggest an application could be made for more than one business.
• It was under considerable pressure and dealing with a large number of applications. Neither its policy nor Government guidance required it to provide detailed reasons for decisions in these circumstances.
• It sought clarity on the complaints still to be addressed.
70. In comments on a draft of this decision Mrs X said:
• The Council paid particular attention to a social media post where they worked in collaboration with another company. However, she had not denied they performed training alongside the community salon.
• She had given the Council a copy of her lease for company A which said “Permitted Use: As a community salon with hair and beauty treatments and training”.
• Company A also had a website with a section about it, describing the purpose of the community salon and why it was set up.

Findings

LRSG, Restart, CBLP

71. Company A may have been entitled to LRSG grants, the Restart Grant and the CBLP, provided it was a hair/beauty salon, ordered to close.
72. Although Mrs X intended to apply for the LRSG the Council awarded the ARG. However, the Council did not give clear evidence based reasons for awarding the ARG rather than the LRSG. This is fault. Mrs X was put to avoidable time and trouble seeking clarity from the Council.
73. Upon Mrs X’s request for a review the Council explained its decision with reference to the evidence provided. The Council concluded company A’s main service was training and it did not have to close. The Council followed a proper decision making process and so I do not find fault.
74. Upon Mrs X’s further request for a review, the Council maintained its previous decision. However, it did not show any consideration of the new information provided. In particular that Mrs X had provided incorrect information on her application form. This is fault. Mrs X pursued a complaint as a result, however she got no further answers through the complaints process. Mrs X was therefore put to avoidable time and trouble. However, on balance, I consider the decision outcome would not have been any different, given the Council’s reasoning in response to enquiries. Further and in any event, Mrs X has not suffered any financial loss as the ARG payments to company A were equivalent to any LRSG payment and she would not have been entitled to both.
75. The Council told Mrs X company A was not entitled to a Restart Grant as its main service was training and it did not have to close. The Council has since confirmed it would not have paid the CBLP for the same reasons. While I recognise Mrs X disagrees with the Council’s view, I cannot find fault where it has followed a proper decision making process. The Council considered the information available and decided in line with the law and Government guidance. I therefore do not find fault.

ARG

76. The Council refused to pay company B an ARG because Mrs X did not provide evidence of property costs. This decision was in line with Council’s policy. I do not find fault. The Council took the view that any payment arrangement would not be legally enforceable and so it would not consider such as ongoing, even if evidence of costs were provided. The Council is entitled to reach such a judgement and so I cannot find fault here.
77. The Council also said it would only pay the ARG if there were unavoidable costs to the business. This was not a requirement of its policy. However, this did not affect the decision outcome, given the above. I therefore find no fault causing injustice.

Delay

78. Taking into account the volume of applications the Council would have had to deal with I find no undue delay in the Council’s decision making or awarding of grants.

Complaint handling

79. The Council had the opportunity to respond to the new information Mrs X provided through its complaints process but did not do so. It also failed to address any other complaints raised by Mrs X. This is fault. Mrs X was put to time and trouble contacting the Ombudsman as a result.
80. I consider Mrs X’s complaints about the Council’s decision to refuse various business grants and her complaint of delay have since been addressed in this decision. However, the Council should seek to address any outstanding complaints, including Mrs X’s complaints it made inconsistent decisions for other businesses and ignored her emails.

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Agreed action

81. To remedy the injustice set out above the Council should take the following actions:
82. Within one month:
• Write to Mrs X to provide an apology and to address any outstanding complaints;
• Pay Mrs X £150 for time and trouble;
83. Within three months:
• Provide training or guidance to staff on the Ombudsman’s expectations; that decisions should be properly explained and complaints addressed in full.
84. The Council has accepted my recommendations.

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Final decision

85. I found the Council at fault in its communications with Mrs X, though this did not affect its decisions on her grant applications. The Council has accepted my recommendations and I have completed my investigation.

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Parts of the complaint that I did not investigate

86. I did not investigate Mrs X’s complaints about the Council’s reporting as the Government has oversight of this and because any fault has not caused injustice to Mrs X.
87. I did not investigate the Council’s decisions in respect of other businesses as any fault did not cause injustice to Mrs X.

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Investigator's decision on behalf of the Ombudsman