Summary: The Ombudsman found no fault by the Council on Mrs L’s complaint of it failing to give clear information about eligibility criteria for a grant. The criteria and limits of the grant were explained to her. It was not the type of finance she arranged that was the problem, but the length of its term. When alerted to this, the Council suggested a possible solution to help her.

The complaint

1. Mrs L is unhappy with the Council’s decision not to pay the 40% of the purchase price of a new eco-friendly vehicle for her business following approval of her application for a grant and says it:
1. Failed to give clear information about the eligibility criteria and any time restrictions for funding for the remaining 60% of the purchase price;
2. Entered into an agreement to pay the 40% but then said she was ineligible because of the type of finance agreement she had which did not make her a self-funder as declared on the application;
3. Asked for a copy of her finance agreement before entering into the agreement; and
4. Later agreed to pay the grant in 4 monthly instalments provided she paid off the loan in 4 monthly instalments, which was unrealistic given the need to apply for a grant in the first place.
2. As a result, she committed to buying the new vehicle when the agreement was signed, sold her previous vehicle at a loss of £3,000, was caused a great deal of distress and financial problems, and was put to a great deal of inconvenience.

Back to top

The Ombudsman’s role and powers

3. 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)
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)

Back to top

How I considered this complaint

5. I considered all the information provided by Mrs L, the notes I made of our telephone conversation, and the Council’s response to my enquiries, a copy of which I sent her. I sent a copy of my draft decision to Mrs L and the Council.

Back to top

What I found

6. Mrs L is a sole trader who decided to apply for a grant from Low Carbon Across the South East which is a grant and business support scheme (the Scheme). This was funded by the European Regional Development Fund. The aim of this project was to help businesses adopt eco-friendly and low carbon solutions to improve business performance.
7. There were several bodies involved with the Scheme:

• The Scheme is run as a partnership between 5 councils and a university. East Sussex County Council (Council A) is a member of this partnership.
• One of the councils, Council B, is the lead partner for the work package. It organised the assessment of grant applications, issued application paperwork, and made grant payments for example.
• The Scheme could fund up to 40% of the cost of qualifying projects.
• Any suspension or withdrawal of funding was a joint decision for Council B and the partner organisation where the business was based to make. For Mrs L, this was Council A as her business is in its area.
• X Ltd: this is a private firm which Council A chose to deliver the Scheme’s project. It supplied Mrs L with the application form and guidance notes, for example.

8. In September 2018, Mrs L applied for a grant of £7,199.60 (40%) towards the £18,000 purchase price of a hybrid eco-friendly vehicle for her business. In response to a question about how she would fund the remaining 60% of the cost, she declared she was ‘Self-financing’.
9. Later the same month, Mrs L received a letter confirming approval of her grant application. It said the offer was made subject to terms and conditions of the grant funding agreement attached to it.
10. After receiving this letter, Mrs L emailed X Ltd and stated she was unsure what qualified as proof of purchase required as she was buying the car on finance. X Ltd replied saying Council B said she needed to show a copy of the contract agreement with the company, bank statements showing upfront costs, and any incremental costs. Council B emailed Mrs L at this point as well. It said she needed to provide copies of various documents, including the finance agreement showing payment terms, interest, and monthly payments.
11. Mrs L replied saying she could not afford the whole purchase price herself without the grant. Nor had she realised she would have to make upfront payments. She then asked if the car finance could go in her husband’s name because of her poor credit history but with the car in her name. She was told the car finance had to be in her name.
12. She emailed Council B saying she had ‘finally managed to get the car purchase sorted’. She was asked to send Council B the documentation which she did. It was at this point Council B told her about a problem.
13. The grant team at Council B found Mrs L did not have the funds to meet the conditions of the grant. An email to her warned it was highly unlikely she would recover anywhere near the £7,199.60 within the allocated timeframe mentioned in her letter. She had 3 months to complete the project unless she could make a ‘bulk deposit’.
14. Council A explained it became apparent after emails between Council B and Mrs L, that she had arranged car finance over 58 months. The project under this Scheme was due to end in June 2019, 49 months before she would complete payments. The Scheme refused her application.
15. Mrs L argued the Scheme was aware of her intention about financing as she sent a copy of her finance agreement. I have not seen a copy of this agreement.
16. The Scheme’s decision to refuse her application meant she now owes the full purchase price to the finance company, lost money trading in her old car in, and owes £3,000 on her credit card used to clear the finance on that car. The Scheme offered to give her the grant if she paid off the car finance over 4 months before the funding ended. This would involve her paying off a quarter of the finance each month before she received a quarter of the grant. Mrs L could not afford this as the upfront car finance payment would be about £5,000 each month before the Scheme would reimburse part of it.
17. Mrs L complained to Council A about how she had been dealt with, but it did not uphold her complaint.
18. In its response to my enquiries, Council A noted:

• The guidance states applicants need to match 60% of the total cost through private sector funding. Eligible funding includes: bank loan or overdraft facility; company own funds; and private investor/new share capital/new investors.
• The guidance sets out ineligible match funding. This includes: costs already incurred; and loans or overdraft facilities committed to cover previous expenditure and potential future profits. It explained if funding is provided through hire purchase, the grant is only paid on a monthly basis for the lifetime of the project and so may not add up to the award amount.
• Mrs L failed to explain the period her finance agreement covered until October 2018 when she complained. It was at this point it became aware the period covered was 58 months in total.
• The way the grant works is it reimburses 40% of the cost incurred. This means it would repay this amount on each of her payments. It could not have paid any further reimbursements after the project ended. This explains why the Council offered to meet the claims if she could pay the loan back within 4 payments to coincide with the end of the project.
• The grant payment is conditional. It is conditional on an applicant submitting a claim. Mrs L did not submit a claim.
• Car finance and hire purchase agreements are treated differently by the Scheme than a bank loan for example. This is because a bank loan’s full value is made available to a business at the start of the loan. The business can then pay the full cost the Scheme agreed to part-fund. Paying the full amount triggers the payment of the grant. A car finance agreement is tied to the vehicle and is paid by way of installments. The car is not owned until all payments are received. The payment of the grant would, as it is triggered by ‘eligible expenditure’, be made monthly over the lifetime of the agreement.
• There is no discretion to act differently where the conditions of the grant funding agreement are met or not met.

19. The application process is as follows:

• Stage 1: business completes eligibility form and where eligible, a needs assessment/energy audit is done. A grant application form is then issued;
• Stage 2: business completes the application form;
• Stage 3: the application is appraised and considered by the Scheme’s Grants Panel;
• Stage 4: when approved, the business is sent a grant offer letter and funding agreement to sign and return; and
• Stage 5: when the agreement is signed and returned, the applicant can draw monies according to the agreement.

Analysis

20. I found no fault on this complaint for the following reasons:
1. Mrs L declared on her application she was self-financing the remaining 60% of the purchase price of the vehicle. The details she entered on the application makes no mention of any hire purchase agreement or any other type of financing. Those assessing the application were entitled, therefore, to accept what she stated at face value;
2. The grant funding agreement she signed referred to the ‘grant period’ which it defined as, ‘the period for which the Grant is awarded commencing on the Start Date and ending on the date by which the grant must be spent (no later than 3 months from the date of this agreement)’. (paragraph 1.1) This should have alerted Mrs L to the grant ending no later than 3 months from the date of the agreement. The agreement goes on to confirm the grant shall be paid for the period specified in the grant funding agreement. (paragraph 4.1.2) This meant any finance agreement to buy the car needed completing within that period;
3. The guidance notes X Ltd sent her with the application form states clearly that if, ‘match funding is being provided via hire purchase then the grant will only be paid on a monthly basis for the lifetime of the Project and may not therefore add up to the award amount’. The guidance, therefore, explained for this type of financing, the grant was payable each month. The guidance also informed her the grant was only payable for the lifetime of the Scheme’s project. Again, this should have alerted Mrs L to the danger that the lifetime of the finance agreement and that of the Scheme’s project, may not overlap. If she was unclear about the conditions in the agreement and the information in the guidance, she could have sought clarification from Council A or got her own legal advice;
4. The type of finance Mrs L got was not a problem. The problem with it was the period over which it was repaid. It went beyond the life of the project. Put simply, it would go beyond the period when the project was set to end; and
5. Information on the internet states the Scheme’s project duration was from 2016 to 2019. This was publicly available information.

Back to top

Final decision

21. The Ombudsman found no fault on Mrs L’s complaint against the Council.

Back to top

Investigator's decision on behalf of the Ombudsman