Summary: Mr X complained the Council wrongly refused him a business grant causing financial loss. We found no fault in the Council’s decision making but we found fault in its communications. We recommended the Council apologise to Mr X and remind its staff to give evidence based reasons for decisions.

The complaint

1. Mr X complains the Council wrongly refused him a business grant causing financial loss.
2. Mr Y is acting on Mr X’s behalf in bringing his complaint to the Ombudsman.

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The Ombudsman’s role and powers

3. We may investigate complaints made on behalf of someone else if they have given their consent. (Local Government Act 1974, section 26A(1), as amended)
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 consider whether there was fault in the way an organisation made its decision. If there was no fault in the decision making, we cannot question the outcome. (Local Government Act 1974, section 34(3), as amended)
6. If we are satisfied with an organisation’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. I offered to speak to Mr Y and I reviewed documents provided by Mr X and the Council.
8. I gave Mr Y and the Council an opportunity to comment on my draft decision. I considered any comments before making a final decision.

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What I found

Government guidance

9. In December 2021 the Government introduced the Omicron Hospitality and Leisure Grant. It published guidance for councils to follow in administering this grant.
10. Councils would give a one off grant of up to £6000 to eligible businesses.
11. The primary aim was to support businesses that offered in-person services, where the main service and activity took place in a fixed rate-paying premises, in the hospitality, leisure and accommodation sectors.
12. The government defined a hospitality business as one whose main function was to provide a venue for the consumption and sale of food and drink. Eligible business included restaurants and cafés.
13. The definition excluded food kiosks and businesses whose main service (generating 50% or more of income) was a takeaway.
14. If a business operated services in more than one category, a council could determine the main service by assessing which category constituted 50% or more of the overall income. The main service principle would determine whether a business received funding.

Principles of good administrative practice

15. 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. This said:
• Decision reasons should be clear, evidence based and where necessary explained in the particular context and circumstances of that decision.

What happened

16. Mr X applied for a grant, describing his business as a food restaurant and café.
17. The Council responded by email refusing the grant. It did not give any reason for its refusal.
18. Mr X complained, noting he received previous grants.
19. The Council asked Mr X to provide photos of the dining seating area and a breakdown of sales.
20. M X sent the Council:
• Adverts for the business as a café and takeaway.
• A photo of store front stating “eat in or takeaway”.
• Photos of the inside showing seating. These show different table layouts with up to five tables visible in some photos and less in others.
• Total sales for a one month period.
• A letter from his accountant confirming over 50% of takings were from dining in and providing a breakdown of income and expenditure.
21. The Council responded:
• Each scheme had different criteria.
• The relevant scheme said hospitality excluded takeaways.
• His business was classed as a takeaway, he advertised it as a takeaway and his menu was for fast food takeaway items.
• Some takeaways were funded during the Local Restrictions and Restart grant programmes dependant on their seating criteria.
22. Mr X said:
• The Council had disregarded his photo evidence of seating and information from his accountant regarding sales.
• The Council gave the grant to his other similar business.
• Over 50% of customers dined in at tables.
23. The Council referred to information advertising the business as a takeaway and asked for evidence of 50% of customers dining in.
24. Mr X repeated his previous points and said his accountant could provide a breakdown of sales to show the percentage from dine in and takeaway separately. Mr X then sent the Council a breakdown on his accountant’s letterhead. This separated the total sales over one month into dine in and takeaway.
25. The Council said:
• It considered information from Mr X and his accountant. It also considered information available to the public about the business.
• It remained of the view that his business did not meet the definition of a hospitality business.
• It accepted his premises was used for the consumption of food and drink, but felt this was on a limited basis and not the main part of the business because products were mainly consumed away from the premises.
• He could contact the Ombudsman.
26. Mr X then contacted the Ombudsman.
27. In response to enquiries the Council said:
• The accountant’s information could not be verified and as Mr X ran the business as a sole trader there was no auditing that would allow it to have more assurance of the figures.
• In reaching its conclusion the business operated mainly, but not solely, as a takeaway, the Council took into account the following points:
1. The statements from the accounts could not be verified and so it could not rely solely on this information.
2. There is a sign saying takeaway visible from the street.
3. The website for the business made many references to the premises being a takeaway, although this had since been changed.
4. The photos showed limited provision for dining in, i.e. three tables, and it appeared the majority of customers would take their food away.
5. In an email dated 2 February 2022 Mr X said “majority of customers take food away...”.
6. The business operates a fast food delivery service.
7. The hours of operation are geared towards servicing the night time economy, i.e. takeaways.
8. The website also describes the offer as that of a takeaway.

Findings

28. It was up to the Council to reach a decision taking into account the evidence and in line with the Government guidance. If there was no fault in its decision making, I cannot question its decision outcome.
29. The documents show the Council had regard to the Government guidance and reviewed information to decide the main service of Mr X’s business. The Council concluded the main service was a takeaway and so excluded from the grant. I find no fault in the Council’s decision making process.
30. However, the Council did not provide clear reasons for its decision with reference to Mr X’s evidence. This is fault. Mr X was left uncertain as to why the Council refused him a grant. This is injustice.
31. In response to enquiries the Council gave further reasons for its decision, with reference to Mr X’s evidence. The Council explained why it did not accept the accountant’s statement regarding the sales. Mr X may disagree with its view, but I cannot question the Council’s judgement. The Council also explained its view on the photo evidence of seating. It appears to have erred in referencing just three tables for dining in, as the photos show as many as five. However, I consider it unlikely this oversight would have affected its decision outcome. This is because the Council had many other reasons for deciding the business was mainly a takeaway.

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Agreed action

32. To remedy the injustice above I recommend the Council take the following actions within one month of the date of my decision:
• Provide Mr X with an apology;
• Remind complaint handling staff of the Ombudsman’s expectation that they give evidence based reasons for decisions.
33. The Council has accepted my recommendations.

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Final decision

34. I find no fault in the Council’s decision making but I find fault in its communications. The Council has accepted my recommendations and I have completed my investigation.

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Investigator's decision on behalf of the Ombudsman