Summary: Mr X complains about the Council’s actions to withdraw rates relief and a grant from his business and how it dealt with his complaint, causing upset, stress and business risk. We find no fault in the Council’s decision making but find fault in how it communicated with Mr X. We recommend the Council provides an apology, payment and acts to improve its administrative practice.

The complaint

1. Mr X complains the Council abruptly withdrew rates relief and a business grant awarded to his business. It also failed to deal with his complaint adequately. Mr X says the Council’s actions caused upset, stress and risk to the business.

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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. 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”.
4. 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)
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 spoke to Mr X and I reviewed documents provided by Mr X and the Council.
7. I gave Mr X and the Council the chance to comment on a draft of this decision. I considered the comments provided before finalising my decision.

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What I found

Business grants

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 eligible for a Small Business Grant of £10,000.
10. Businesses which, on 11 March 2020, would have received the Expanded Retail Discount, were eligible for a Retail, Hospitality and Leisure Grant (“RHL Grant”) of up to £25,000.
11. Grants were payable to the person who according to the council’s records was the ratepayer on 11 March. However, where a council had reason to believe the information they held about the ratepayer on 11 March was inaccurate they could withhold or recover the grant and take reasonable steps to identify the correct ratepayer.
12. Councils were to ignore any changes to the rating list (rateable value or property) after the 11 March, including backdated changes. However, in cases where it was factually clear to the council on 11 March that the rating list was inaccurate on that date, councils could withhold the grant and/or award the grant based on their view of who would have been entitled to it.

Expanded Retail Discount (the “Discount”)

13. In April 2020 MHCLG published “Business Rates, Expanded Retail Discount 2020/21: Coronavirus Response Local Authority Guidance”.
14. Each council was to adopt its own scheme and decide whether to grant the Discount, having regard to the guidance.
15. The Discount was available to premises wholly or mainly used for retail, hospitality or leisure.
16. The guidance listed the types of businesses that were eligible. However, it was for councils to decide if a business was broadly similar in nature to those listed and so eligible.
17. The guidance also listed the types of businesses not eligible. This included premises used for:
• Financial services e.g banks
• Medical services e.g dentists
• Professional services e.g solicitors
• Post office sorting offices and;
• Premises not reasonably accessible to visiting members of the public.
18. It remained for councils to decide if a business was broadly similar in nature to those listed.

Council policy

19. The Council has provided a copy of its Discretionary Rate Relief Policy 2020. I note this was published in October 2020. This says the Council will award retail relief in line with the published Government guidelines. The same approach applies to extraordinary reliefs granted during the pandemic; the Council will follow Government guidance.

Principles of good administrative practice

20. The Ombudsman publishes a guidance document setting out the standards we expect from bodies in jurisdiction, “Principles of Good Administrative Practice” December 2018. This includes:
• Being open and clear about policies and procedures and ensuring information, and any advice provided, is clear, accurate and complete.
• Stating the criteria for decision making and giving reasons for decisions.
• Explaining clearly the rationale for decisions and recording them.
21. In May 2020 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 the crisis. Of relevance in this case, this says:
• 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.

VOA

22. 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 commercial properties for business rates.

What happened

23. Mr X says his business premises is used both for medical services and as a shop. Further, the VOA rates it as a shop and premises.
24. On 25 March 2020 the Council issued a business rates bill to Mr X, applying the Discount and leaving nil payable.
25. On 9 April the Council wrote to Mr X’s business inviting it to apply for the RHL Grant.
26. On 10 April the business applied for the Grant.
27. On 22 April the Council issued a further business rates bill, removing the Discount of £10,000 but applying the RHL Grant of £25,000. This left a credit payable to the business.
28. On 28 April Mr X emailed the Council to say it had made a mistake in removing the Discount. He asked for it to correct and resend the invoice. The business was struggling and needed the money in the account as soon as possible.
29. On 21 May Mr X chased the Council for a response to his previous email.
30. On 12 June the Council issued a further business rates bill. This made no reference to the Discount or RHL Grant. Rather the full sum of business rates was now payable.
31. On 16 June Mr X called the Council. An officer told him the Council had removed the Discount and Grant as it had decided the business was not a shop. Mr X disputed this as the business was both a dentist and a shop. He questioned how the Council decided this.
32. The Council has since explained to the Ombudsman that as a result of this phone call it decided to inspect the premises.
33. The Council has provided a copy of an internal enquiry form dated 16 June. This included:
• A note of the Council’s telephone call with Mr X; that Mr X had said the back of the property was a dentist and the front was a shop.
• A query from the Council to an inspector, for them to confirm whether the premises was used as a shop as the owner had said it was used for medical services at the front with a shop at the back (sic).
• The inspector’s comments dated 24 June. These say the premises is a dentist and it does sell products, the dentist is at the rear, see photos.
34. One photo shows the front of the property, with products for sale inside. Another photo shows a side view of the property that is screened.
35. The same inspector sent an email to the Council on 25 June. This says “dentist, does sell to public”.
36. On 26 June Mr X complained to the Council that it had failed to inform him of its decision to remove the Discount and Grant. It had not followed a proper decision making process and had not responded to his previous emails. He said there had been no changes to the rating list and the Council’s decision to remove the grant contradicted Government guidance.
37. The Council has provided a copy of an email to Mr X, dated 1 July, with reference to his previous queries. This explained he did not qualify for the Discount or RHL Grant as dentists were excluded, with reference to the Government guidance. It said it would issue a business rates demand shortly.
38. In September Mr X contacted the Ombudsman as he had not received any response from the Council.
39. The Council told the Ombudsman it had not received a complaint from Mr X. Therefore, the Ombudsman told Mr X to complain to the Council again.
40. On 6 October Mr X forwarded his complaint of 26 June to the Council.
41. The Council responded on 30 October. It said it failed to address his complaint due to human error and apologised for this. There had been delays to enquiry responses due to an unprecedented demand on its service. It explained it awarded the Discount and RHL Grant based on the premises VOA description as a “shop and premises”. It carried out further checks upon review of the grant application and found the premises was used as a dentist. Under Government guidance medical services were excluded from the Discount. It therefore had to remove the Discount and associated RHL Grant. An inspector visited the premises on 24 June and confirmed it was a dentist. It had since extended his business rates instalment plan to assist with payment.
42. Mr X complained further. He questioned:
• why the Council awarded the RHL Grant before carrying out any checks;
• why the Council issued a bill awarding the RHL Grant on 22 April;
• that the Government guidance was to award a grant based on the rating list as of 11 March so the Council should ignore any later changes. The VOA had not reclassified the property in any event;
• that he had no record of a visit on 24 June and there is a shop; he does not understand how it reached its decision.
• that the Council’s response did not justify or recognise that the money was taken without consent or notification from their business rates account. It was his understanding that any money in the account was the property of the account holder and not the Council.
43. In its final response the Council apologised for how it dealt with the initial complaint. It had raised this with the officer to prevent recurrence. The Council explained it preloaded relevant grants and reliefs onto all business rates accounts with the description of “shop and premises”. Upon his grant application it reviewed this. It found the use of the premises was a dentist. Based on this it removed the RHL Grant from the business rates account on 12 May 2020. Government guidance excluded medical services from the Discount and associated Grant. It could not be flexible on this criteria, set by central Government. The VOA rating list remained the same.
44. In response to enquiries the Council further explained its view that dentists were on the exclusion list regardless of whether they sold items related to dentistry. Unless the dental surgery was separate from the shop it could not have the Discount or the associated RHL Grant. It therefore removed both.
45. When I spoke to Mr X he said the business made decisions on the basis of receiving the Discount and Grant. For instance, they brought staff back from furlough earlier than they would have done. It was a factor in their decision making and the removal of these funds placed the business at financial risk.
46. In response to my draft decision the Council acknowledged delays but highlighted it was under unprecedented demand due to the pandemic. Further, the national lockdown fell during the annual billing period creating a challenging situation. And, while it did not issue a written response until 1 July it did speak to Mr X on 16 June. The Council further explained it pre-loaded rates relief prior to issuing the first bill but could not pre-load grants until it received the Government guidance.
47. In his response to my draft decision Mr X maintained the Council acted against Government guidance which said to ignore changes to the rating list after 11 March.

Findings

48. Government guidance set out the eligibility criteria for a grant. This made clear councils were to use their records of the ratepayer as held on 11 March and the information on the VOA rating list as held on 11 March unless certain exceptions applied. Further, a business had to qualify for either SBRR or the Discount to be eligible for a grant.
49. In this case there was no dispute as to the ratepayer or the information held by the VOA on 11 March.
50. A business first had to qualify for the Discount and could then be eligible for the RHL Grant.
51. The Government issued guidance to councils on how to apply the Discount. However, councils could create their own scheme based on the guidance. On the information I have seen, I accept on balance that the Council decided to adopt and apply the Government guidance directly. I find no fault in it doing so.
52. The Government guidance said the Discount was available to shops. However, it was not available where premises were used for medical services.
53. I note the Council preloaded the Discount and RHL Grant to all business rates accounts based on the information on the VOA rating list. It therefore applied the Discount and RHL Grant to Mr X’s business, because the VOA listed this as a “shop and premises”. While it was up to the Council how to administer the scheme, I consider this blanket approach without further communication to ratepayers was not good practice. The Council did not put businesses on notice that it may remove the Discount and Grants after further checks.
54. We expect councils to communicate their decisions clearly and that reasons for decisions are both open and transparent. In this case Mr X received business rates bills awarding and then removing the Discount and RHL Grant without any further explanation or reasons and, despite his efforts to query this. This amounts to fault.
55. As to the Council’s final decision to remove the Discount and Grant, I note the Council considered the information available, including Mr X’s comments, and visited the business. It found the business was in use as both a dentist and shop. Taking into account the Government guidance, the Council concluded businesses used for medical services were excluded from the Discount and so ineligible also for the Grant. I am satisfied the Council reached this decision taking all relevant information into account. I find no fault in its decision making.
56. In view of the correspondence dated 1 July, I am satisfied the Council sent Mr X a copy of its final decision and reasons, though I note Mr X did not receive this.
57. However, the Council did not clearly communicate its decision and reasons to Mr X from 25 March 2020 to 1 July 2020. Although the Council gave Mr X some information by phone on 16 June, I do not consider it gave a clear evidence based decision explained in context at that time.
58. I consider the Council’s actions in first applying the Discount and Grant raised Mr X’s expectations and I accept, on balance, this would have influenced business decisions. I consider he suffered distress and uncertainty as the Council’s communications then changed without explanation. And I accept Mr X and the business suffered further stress once the Council confirmed both the Discount and Grant were no longer available, despite earlier communications. As there will be many factors that contribute to a business’ financial position I cannot say the Council’s actions directly caused the business any financial loss. However, I consider a payment is due in recognition of the distress and uncertainty suffered.
59. I note the Council did not respond to Mr X’s complaint of 26 June until he followed this up in October. While I recognise the Council’s services were under great pressure at the time, this was a significant delay and amounts to fault. I note the Council has already apologised to Mr X and taken steps to prevent recurrence. However, I consider a payment is also appropriate, in recognition of the time he spent in the complaints process.
60. I note the Council did not address Mr X’s query as to why it issued a business rates bill on 22 April awarding the RHL Grant, if it had already decided his business was ineligible and removed the Discount. Further the Council did not address Mr X’s complaint that it removed money from the business rates account without consent or notification. I consider this shortfall in complaints handling also amounts to fault. If the Council had provided a full complaints response at the outset Mr X may not have contacted the Ombudsman, putting him to further time and trouble.
61. Although the Council had registered the Discount and Grant on Mr X’s business account it did not pay any funds directly to Mr X’s business and did not have to claw back or recover any sum. Rather it simply amended his bills. The Government guidance does not give councils any instruction in such circumstances. However, I have found fault in the Council’s communications, as explained above.

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Agreed action

62. To remedy the injustice set out above I recommend the Council carry out the following actions:
63. Within one month:
• Provide Mr X with a further written apology for the identified failings;
• Write to Mr X addressing the outstanding queries identified at paragraph 60;
• Pay Mr X £250 for time and trouble;
• Pay Mr X £750 for distress and uncertainty.
64. Within three months:
• Provide training or guidance to staff to ensure they are aware of and take into account the Ombudsman’s Principles of Good Administrative Practice in future.
65. The Council has accepted my recommendations.

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Final decision

66. I find the Council at fault in its communications with Mr X. The Council has accepted my recommendations and I have completed my investigation.

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Investigator's decision on behalf of the Ombudsman