Summary: Mr X complained the Council wrongly refused him a discretionary business grant, causing financial loss. We find no fault in the Council’s decision making but we find fault in its complaint handling. We recommend it provides Mr X with an apology, pays him £100 for time and trouble and acts to prevent recurrence.

The complaint

1. Mr X complains the Council wrongly refused him a discretionary grant. He says he had to close his business during the national lockdown but has received no compensation for this.

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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 spoke to Mr X and I reviewed documents provided by Mr X and the Council.
7. I gave Mr X and the Council an opportunity to comment on a draft decision. I considered any comments before making a final decision.

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What I found

VOA

8. 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

9. 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).
10. Businesses which, on 11 March 2020, received Small Business Rates Relief (“SBRR”) were eligible for a Small Business Grant of £10,000.
11. Businesses, which on 11 March 2020 would have received the Expanded Retail Discount were eligible for a Retail, Hospitality and Leisure Grant.
12. Funding was payable to the person recorded as the ratepayer in respect of the business on 11 March 2020.
13. A council had to ignore any changes to the VOA rating list after 11 March, including backdated changes. However, where it was factually clear to a council on 11 March that the rating list was inaccurate on that date, it could withhold the grant and/or award the grant based on their view of who would have been entitled to the grant had the list been accurate.

Discretionary grants

14. The Government introduced further support for businesses, including a discretionary grant fund. In May 2020 it published “Local Authorities Discretionary Grants Fund- guidance for local authorities”.
15. Councils could give a discretionary grant of £25,000, £10,000 or any sum under £10,000 to businesses which could not access other grant funding (other than the Job Retention Scheme). The value of the payment was at the council’s discretion.
16. In making payments under £10,000, councils could adapt the approach to local circumstances, such as providing support for micro-businesses with fixed costs or support for businesses crucial to their local economies.
17. The funding was aimed at:
• Small and micro businesses.
• Businesses with relatively high fixed property costs.
• Businesses that have suffered a significant fall in income due to COVID-19.
• Businesses which occupy a property, or part of a property, with a rateable value or mortgage payments of under £51,000.
18. The Government wanted councils to exercise their local knowledge and discretion and recognised economic need would vary across the country. It therefore set some national criteria for the funds but allowed councils to decide which cases to support within those criteria.
19. It considered the following types of business should be a priority for funding but this was a guide only. Councils were to decide themselves if a business was similar and, if so, whether it should be eligible for grants. These businesses were:
• Small businesses in shared offices or other flexible workspaces, who do not have their own business rates assessment.
• Regular market traders with fixed building costs, such as rent, who do not have their own business rates assessment.
• Bed & Breakfasts which pay Council Tax instead of business rates.
• Charity properties in receipt of charitable rates relief.
20. Where limits to funding required councils to prioritise which types of businesses received funding, it would be at their discretion as to which types of business were most relevant to their local economy. There was no penalty for councils using discretion to prioritise some business types.
21. Councils were to set out their discretionary grant scheme on their website, providing clear guidance on which types of business were prioritised, and how they would decide on the level of grant.

Council’s discretionary grant policy

22. The Council has provided a copy of its guidance for round one of its discretionary grant policy.
23. This said it would support the four priority areas identified by the Government (as referred at paragraph 19 of this decision) in addition to childcare providers. It explained it prioritised childcare businesses due to their importance in enabling employees across all sectors to return to work.
24. The Council said it would open further application rounds to other sectors if it had funding available.
25. The Council has also provided a copy of its guidance for round two of its discretionary grant policy.
26. This explained it had opened the second and final round of funding to include further businesses, specifically: small manufacturers; suppliers to the retail, hospitality and leisure sectors; and local charities and childcare providers who have so far not received support.
27. At round two those eligible were:
• Small manufacturing/engineering businesses with their own business rate assessment with a 'Rateable Value' less than £51,000 and who do not qualify for Small Business Rates Relief.
• Micro retail hospitality and Leisure businesses with their own business rate assessment with a 'Rateable Value' of over £51,000 and less than £71,000.
• Businesses supplying the Retail Hospitality and leisure Sectors with their own business rate assessment with a 'Rateable Value' of over £15,000 and less than £51,000.
• Enterprise Agencies/Business Centre Operators – providing incubator/business space and business support services to aid local economic recovery with ‘Rateable Value” of less than £51,000.
• Local nursery businesses with 50 to 100 employees – with fixed property costs and not eligible for Small Business Rates Relief with a “Rateable Value” of less than £51,000.
• Local Charities with their own business rate assessment with a 'Rateable Value' less than £100,000
• Home based businesses with identifiable property costs – Subject to available funding

Council’s decision making

28. In response to enquiries the Council explained it directed the second round of funding at businesses and charities excluded from the mandatory Government support and not covered by round one of its policy. It included these businesses following feedback from businesses, MPs, Council members and others. The sectors included also reflected the categories of large volumes of applications rejected in the first round. It said the categories included were as consistent as possible with other West Yorkshire authorities and were discussed with contacts at BEIS (a Government department). The Council said based on this, officers made recommendations via a briefing note to the Leader of the Council for approval. On 6 August 2020 the Council approved these recommendations.
29. The Council has provided a copy of a briefing note dated 31 July 2020. Of relevance this says:
• The options for eligibility criteria are based on sectors unable to access the Government grant funding. These sectors are consistent with the criteria issued/being considered by other West Yorkshire authorities:
1. Small manufacturers – RV £15- £51k
2. Micro/Small RHL businesses with RVs over £51k
3. Businesses supplying the Retail Hospitality and leisure Sectors
4. Charities with RV over £15k
5. Enterprise Agencies – those providing incubator space and business support services to aid local economic recovery
6. Nurseries with up to 100 employees
• The above would qualify for grant payments at set rates - £5k, £10k and £25k. This would be as consistent as possible with neighbouring authorities.

Principles of good administrative practice

30. In 2018 the Ombudsman published a guidance document setting out the standards we expect from bodies in jurisdiction “Principles of Good Administrative Practice”. This said councils should:
• Have clear and accessible appeal routes
• Provide clear and timely information on how and when to appeal or complain
31. 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. We expected councils to:
• Continue to use complaints as an effective and immediate form of feedback during the crisis. Complaints can continue to tell you where new challenges are developing and where things are going wrong.

What happened

Background

32. Mr X’s business was not on the VOA rating list on 11 March 2020. He was not a ratepayer on that date and so he was not eligible for a business grant.
33. In May 2020 the VOA entered Mr X’s business onto the rating list. Mr X registered for business rates and qualified for Small Business Rates Relief (SBRR). This relief was backdated to January 2020.

This complaint

34. Mr X applied for a discretionary grant.
35. The Council refused a grant. It said Mr X’s business was not one of those supported at either round one or round two of its discretionary grant policy. It enclosed a list of eligible businesses.
36. Mr X says he called the Council to ask for reasons for its refusal. He says the Council told him: because the business received SBRR it was not eligible for the grant; he could not appeal this decision and; he should have received the Small Business Grant.
37. Mr X contacted the Ombudsman and we checked with the Council if he had completed its complaints process.
38. The Council told the Ombudsman Mr X did not submit a complaint or appeal. It then said there was no appeal process. Its decision was final and Mr X had exhausted its internal process.
39. The Ombudsman told the Council we expected councils to have a means of responding to expressions of dissatisfaction with a decision. And putting a complaint through its complaint procedure was appropriate where there was no right of review or appeal. We therefore asked the Council to investigate the complaint.
40. Mr X then sent the Council details of his complaint. He explained he did not qualify for the Small Business Grant as his business was not on the rating list at the relevant time, that is why he applied for the discretionary grant.
41. The Council responded to explain he did not meet the eligibility criteria and it again listed eligible businesses.
42. Mr X said he believed the discretionary grant was for businesses who were not eligible for the Small Business Grant, which he was not. He referred to Government guidance which gave councils discretion who to support. As he did not qualify for the Small Business Grant he felt he should get the discretionary grant. He also asked what other support he could get for the losses incurred due to his business closure.
43. The Council suggested Mr X check its website for information on any other grants.
44. Mr X asked the Council whether he should consider this its final response noting it had addressed him incorrectly and ignored his point about Government guidance.
45. The Council apologised for addressing him incorrectly. It said it had addressed his complaint at stage 1 and it would not investigate further at stage 2, but he could contact the Ombudsman.
46. Mr X then complained to the Ombudsman again.
47. In response to enquiries the Council provided documents as referred above. It also said it had no record of a call taking place as Mr X suggested. However, it felt sure no staff would have told Mr X he should have got a Small Business Grant as there were many documents on file explaining why he was not eligible.

Findings

48. The Government gave councils discretion which businesses to support under their discretionary grant schemes. However, we can consider if councils exercised that discretion properly. We would expect councils to take account of Government guidance and give reasons for their decisions.
49. The Council’s policy at round one reflected Government guidance. The Council also supported an additional business area and it gave clear reasons for doing so. I find no fault in how the Council decided round one of its discretionary grant scheme.
50. The Council considered which businesses to support at round two and again recorded its reasons. Its intention was to support businesses that had not received other Government funding, including SBRR. I find no fault in how the Council decided round two of its discretionary grant scheme.
51. The Council refused Mr X’s request for a grant as his business was not one of those supported at round one or round two of its scheme. The Council decided in line with its policy. I find no fault.
52. I acknowledge Mr X missed out on a Small Business Grant. However, it was up to the Council which businesses to support under its discretionary scheme and whether to support those who missed out on grants.
53. Mr X says the Council told him he should have got the Small Business Grant when he queried its refusal of the discretionary grant. The Council does not have a record of this call and so I cannot verify what exactly was said. However, the Council had previously told Mr X he was not entitled to a Small Business Grant and the Ombudsman had confirmed this to Mr X in a previous decision. I therefore find any error in the Council’s communication did not cause Mr X injustice.
54. The Council did not give Mr X the opportunity to challenge its decision to refuse him a discretionary grant until the Ombudsman intervened. And then the Council did not fully address Mr X’s complaint causing him to contact the Ombudsman again. This is fault. Mr X has been put to avoidable time and trouble contacting the Ombudsman a second time.

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Agreed action

55. To remedy the injustice set out above I recommend the Council carry out the following actions within one month of the date of my decision:
• Provide Mr X with a written apology;
• Pay Mr X £100 for his time and trouble;
• Inform staff that the Ombudsman expects councils to allow complainants the opportunity to challenge council decisions, irrespective of whether there is a right to appeal. This could be through a formal appeal process or through its complaints process. The Council should also provide the Ombudsman with evidence it has given staff this information.
56. The Council has accepted my recommendations.

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Final decision

57. I find no fault in the Council’s decision to refuse Mr X a discretionary grant but I find fault in its complaint handling. The Council has accepted my recommendations and I have completed my investigation.

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Investigator's decision on behalf of the Ombudsman