Summary: Mr X complained about the Council’s administration of his home improvement loan. He said the Council paid the contractor before they completed the necessary works. This meant that Mr X did not have enough money left to hire another contractor to complete his home improvements. Additionally, Mr X said the Council did not communicate with him effectively about his complaints. We found the Council was at fault for sending the money to Mr X’s contractor before checking they had completed the required works. Additionally, we consider there was fault in the Council’s stage two investigation into Mr X’s complaint and overall drift in how the Council progressed Mr X’s case.

The complaint

1. Mr X complains about the Council’s management of the Special Guardian Home Improvement Loan that it assigned to him in June 2021. He says the Council:
• released money to a contractor without telling Mr X about this and checking if the previous work was completed to a satisfactory standard;
• communicated poorly with him about his concerns; and
• failed to respond to his complaint in line with its complaints policy.
2. Mr X says that as a result his family suffered and continues to suffer avoidable distress and are living on a building site. Mr X is still unsure how to progress, as the Council told him the remaining £22,000 of the loan is gone.
3. Mr X would like the Council to improve its communication with families and tell him what will happen to their extension.

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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 significant injustice, or that could cause injustice to others in the future we may suggest a remedy. (Local Government Act 1974, sections 26(1) and 26A(1), as amended)
5. We cannot investigate late complaints unless we decide there are good reasons. Late complaints are when someone takes more than 12 months to complain to us about something a council. (Local Government Act 1974, sections 26B and 34D, 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. As part of the investigation, I have:
• considered the complaint and Mr X's comments;
• made enquiries of the Council and considered the comments and documents the Council provided.
8. Mr X and the Council have had an opportunity to comment on my draft decision. I considered their comments before making a final decision.

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What I have investigated

9. Mr X complained about events that took place more than 12 months ago. We have decided to exercise our discretion and investigate his complaint. This is because:
• Mr X continued to contact the Council over his concerns;
• part of the delay in Mr X coming to us was due to the delay in the Council’s complaint handling; and
• Mr X complained to us soon after the Council sent him its final complaint response.

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What I found

Council’s Special Guardian Home Improvement Loan

10. The Council agrees and distributes Special Guardianship Loans.
11. When the loan is agreed, the Council makes a charge against the borrower’s, in this case Mr X’s, home for the amount of the loan.
12. The Council keeps the money and releases it to the contractor of the borrower’s choice in stages. This is supposed to ensure that each stage of the construction is completed before the contractor receives further funds.
13. The contract the Council signs as part of the Special Guardianship Loan agreement says that it is the borrower’s responsibility to ensure the quality of the works being done. Because of this, before making payments to the contractor the Council must:
• let the borrower know in writing that it received an invoice from the contractor and check if it is undisputed; and
• seek a signed statement of satisfaction with regards to the works that had been completed.

What happened before 2021

14. In 2016 the Council placed Mr and Mrs X’s grandchild in their care. Mr and Mrs X live in a three-bedroom house outside the Council’s area.
15. In 2019 Mr and Mrs X asked the Council for financial support and secured a Special Guardian’s Home Improvement Loan against their home. The Council formally accepted the terms of the agreement in early June 2021.
16. Mr and Mrs X entered separate agreements with private contractors: Contractor 1 and Contractor 2. They hired them to extend their home, but at some point, Mr and Mrs X came across problems with the contractors. Contractor 1 went into administration, and Contractor 2 had a disagreement with Mr X and left the property site and did not return.
17. What happened in 2021 onwards
18. In June 2021 the Council made the first payment to Contractor 1 of £26,400 to enable it to start building works to Mr X’s home.
19. After October 2021, the Council made a further payment to Contractor 1 for £21,600 so it could begin the second phase of Mr X’s extension. The Council did not contact Mr X before sending this money, and it did not check with him if all the works from phase one of the build were completed. The Council failed to give Mr X notice that it would send the money to the Contractor 1. Because of this he could not seek professional advice about the quality of the work the Contractor carried out so far.
20. In November 2021 the extension works to Mr X’s home started. Around this time Contractor 1 went into administration and Mr X engaged with Contractor 2 who said he could finish the build in the same budget as offered by the Contractor 1.
21. Around May 2022 Contractor 2 told the Council that it could not start the work on Mr X’s extension because they did not have the money to do so. It asked the Council for an advanced payment of £5,000 to enable them to buy materials. The Council’s records show that Mr X raised concerns about another payment in advance considering what happened with Contractor 1. The records show an officer's comment that he assumed Mr X had no option but to accept and so the Council sent the £5,000 with hopes that it would progress Mr X’s extension. It is our understanding this did not go to plan and Mr X had to find a new contractor.
22. In August 2022 Mr X organised to tidy the surroundings of his home and remove rubble and asbestos that was left behind by Contractor 1.
23. In the same month Mr X told the Council Contractor 1 accepted £53,000 of the loan money the Council sent him after only completing the footings. The Council advised him that it was a private matter between him and Contractor 1 and that he should look for alternative contractors after his agreement with Contractor 2 fell through. The prospective contractors made proposals to the Council about what it would take to finish the extension of Mr X’s home. All consulted contractors said the costs of the work would rise as the time went on.
24. In September 2022 Mr X contacted the Council and said that it still had £22,000 left from the original loan. He considered it would be best to assign that money to an alternative contractor to begin building work. The Council could then decide if it would provide him with further funds to complete the work. He also said that he did not wish to make a complaint then, but he wanted to know what was going to happen about his extension.
25. The Council responded two days later and said that it would deal with his question as a service request and a service manager would reply within 10 working days.
26. Mr X chased the Council for an answer to his previous communication at the end of September. The Council responded on the same day and apologised for the delay in contacting him. It also said that an officer would ring him that day to provide an update.
27. The following day Mr X contacted the Council again to express his frustration with the lack of progress and information about his concerns.
28. In October 2022 Mr X spoke to the Council on a few occasions, and it told him the head of service changed. To progress his case, the Director of Children’s services would have to be involved.
29. In the same month Mr X contacted the Director of Children’s Services himself and raised his concerns. The Director said he would investigate but asked Mr X to confirm he still had £22,000 of the loan left.
30. Mr X responded on the same day and explained that the Council held the funds and sent them directly to the contractors, so it was the Council who had the remaining £22,000 of his loan. Mr X confirmed the works that had been completed were demolishing the outbuilding, partially removing rubble, and laying concrete footings at a cost of £53,000. Mr X said the Council told him to take private legal action against Contractor 1. The Council said it would not be able to take Contractor 1 to court because of the loan agreement it had with Mr X.
31. In late October Mr X contacted the Director again and asked him for an update on the building works progress.
32. Mr X complained to the Council in mid-November 2022. He said that he had originally complained on 9 September 2022 but had no reply from the Council. The Council told him it would resolve the original complaint within 10 days, but to date this had been not responded to. The Council acknowledged his complaint later in the month.
33. Mr X contacted the Council again in early January 2023 and chased the response to his complaint. This time Mr X also included the family’s social worker in the correspondence. The social worker chased the Council for the response to Mr X’s complaint and advised that if this was not forthcoming it should tell him how to escalate his complaint to stage two of the process.
34. The Council contacted Mr X in response to this and explained that his complaint had been assigned to a manager to investigate, but it looked like this had not been completed. It also included information about how he could escalate his complaint if he wished to.
35. At the end of January 2023 Mr X asked the Council to consider his complaint at stage two of its complaints process.
36. Within a couple of days the Council:
• allocated an investigating officer to Mr X’s complaint; and
• told Mr X it would consider his complaint under stage 2 of the statutory children’s complaints process.
37. Around the same time the Council’s Children’s Services department held a meeting to discuss the case. The Council has no minutes from the meeting. It told us that during this meeting it decided Children’s Services should take responsibility for building the extension and the finances and Mr X did not need to instruct solicitors.
38. In early February Mr X’s social worker visited him and told him:
• Children’s Services were taking over the management of the extension and finances;
• he did not need a solicitor; and
• all he needed to do was get three quotes from building contractors, which he did.
39. The following day the Investigating officer called Mr X to discuss his complaint.
40. In late February 2023 the Council told Mr X that:
• it was waiting for quotes from contractors before funding more work;
• the Council would pay for specialist legal advice to Mr X about the possibility of taking the contractor to court; and
• if Mr X would find a solicitor for advice, he should check how much that would cost.
41. The Council told us that following this request it only received one quote from an alternative contractor.
42. The following month the Council’s Children’s Services held another meeting about Mr X’s case, but it remained unresolved. The Council told us that it did not take minutes of the meeting but that it was a meeting for another department’s head to understand Mr X’s case.
43. In April 2023 the Council said that the Loan Agreement prevented it from taking Contractor 1 to court, but it would support Mr X in doing this.
44. In late August 2023 the Council issued its Stage Two Report under the statutory children’s procedure. It did not uphold most of Mr X’s complaint but made some recommendations. The Council said that:
• Mr X was responsible for his contractors and the Council was not;
• Mr X entered into agreements with Contractor 1 and Contractor 2 and determined how they would engage, what work they would do, where and when they would do it;
• the Council had a process in place to gradually release funds to Mr X’s contractors to ensure the building works were progressing;
• the Council followed the process and checked with Mr X stage one was completed before releasing the next instalments of the loan to the contractor. This was verbally confirmed by an officer who was responsible for managing the loan money and the investigating officer had found no evidence to suggest otherwise; and
• it would organise for a mediation meeting with Mr X to agree the best way to take it forward.
45. Mr X was unhappy with the Council’s response. He said the Council did not check with him if Contractor 1 completed the works before it paid the second instalment.
46. In July 2023 the Council considered Mr X’s request to finish the extension using additional funding from the Council. The Council decided that it would agree to either:
• build a fully functional cabin in Mr X’s garden that could serve as an additional room; or
• reduce the size of the extension that needed to be built.
47. The Council told Mr X about its decision in early August 2023, so over three weeks after it had made it. The Council agreed the delay in letting Mr X know about its decision was not acceptable.
48. Mr X and the Council attended a mediation meeting in late November 2023. The Council issued its action plan nine days after this. The meeting notes show the Council:
• considered that it would get the first loan money back once Mr X sold his home, because the loan was secured against his property;
• Mr and Mrs X still have the original issue of insufficient capacity within their home to properly accommodate their grandchild with the need to extend their property being the only viable option;
• considered it should provide financial support, via another loan secured on Mr and Mrs X’s property, to provide a single storey bedroom extension for use by the grandchild;
• considered its Property Service would be able to offer Mr and Mrs X technical advice with regards to developing a scheme that provides sufficient space and layout to suit their needs and current property restraints;
• should contact Mr and Mrs X as soon as possible to both apologise for the considerable delay in remedying the position and in offering to assist with building a new single storey extension.
49. In mid-December 2023 the Council submitted a proposal to its Cost Control Panel so that it would approve an additional loan for Mr X. The Panel decided within seven days and said that it could not approve any further funds without more information such as a valuation of Mr X’s home and the remaining mortgage.
50. The Cost Control Panel met again in late January 2024 but requested more information, namely a feasibility exercise. A feasibility exercise is simply an assessment of the practicality of a proposed project plan or method.
51. In April 2024 the Council assigned an officer to work with Mr X to complete the feasibility study to see if the Council would provide additional funds to Mr X to complete the extension. Mr X decided that he would not assist the Council further until he knew the outcome of our investigation.
52. In summer 2024 Mr X began conversations with Contractor 2 to see if he would be able to assist with the extension. The contractor confirmed that they had repaid £5,000 the Council had sent them in May 2022 and they could see if they could assist Mr X with completing the extension.
53. This meant that the Council still has £27,000 of the original loan to Mr X left available.

Analysis

Council’s procedure to pay Mr X’s contractor

54. The Council’s contract stipulated what should happen before the Council sent the money to Mr X’s contractors. These stipulations are listed in paragraph 14.
55. Mr X told us that the Council did not check with him the Contractor had completed all the necessary work to a suitable standard before it sent the next payment to Contractor 1 in October 2022.
56. Good stewardship of public funds and the contract it had with Mr X required the Council to keep detailed written records showing what action it completed and when. On this occasion the Council has no records showing when it contacted Mr X before sending the October 2022 payment to Contractor 1. This is fault. Keeping this in mind, on balance, we consider that Mr X’s version of events is more likely to have happened,
57. The Council also does not have a written statement of Mr X’s satisfaction with the works that Contractor 1 completed. This is also fault.
58. This caused a disproportionate imbalance of power. Although Mr X signed a loan agreement with the Council, he did not have access to the money as with a conventional loan and the Council did not contact him before sending the payment to Contractor 1.
59. The Council’s records show that it was not interested in pursuing Contractor 1 for the repayment of the money because the contract with Mr X would prevent it from doing this. Instead, the Council would receive the money when Mr X came to sell the house. This was because the Council had secured the loan against Mr X’s home. This further emphasises the imbalance of power. The money that Mr X should have available to complete his extension is not available to him, but he would have to repay this to the Council if he ever sold his home.
60. We consider it is not reasonable for the Council to require Mr X to take legal action against Contractor 1 because of the Council’s fault.
61. Because of this, we have made recommendations on what action the Council should take to address the injustice its faults caused to Mr X and his family.

Communication standards and complaints handling

62. The Council’s records show that the Council failed to respond to Mr X’s complaint at stage one of its procedure. This is fault. It resulted in additional delay and avoidable frustration for Mr X.
63. Mr X also spent additional time chasing the Council on many occasions for updates and responses to his complaint.
64. The Council’s stage two investigation was late and did not uphold most of Mr X’s complaint. We consider the investigation was flawed in the areas listed below.
• It said the Council followed the contract it had with Mr X because there was no evidence to suggest it failed to check with Mr X if Contractor 1 completed the required works before paying the contractor’s invoice. The Council’s investigating officer failed to check if the Council kept the written records the contract with Mr X required it to.
• It referred to a two-storey extension, when the plans submitted to the Council showed that from the beginning it was intended to be a single storey extension.
• The report was long, complicated, and overly technical. The Council accepted this and in response to our enquiries it confirmed that it no longer approves such long reports.
65. We consider these are all faults. They caused Mr X additional avoidable distress and frustration.
66. Mr X told us the Council failed to communicate with him properly about the issues he was reporting. Even after mediation concluded in November 2023, it failed to keep him updated of the Council’s progress.
67. The Council’s records show it committed to providing weekly updates after November 2023, but it did not. This is fault.
68. The records show that for various reasons, such as staff changes and the complexity of Mr X’s complaint, his case drifted. Additionally, it continues to be unresolved. This is fault. It caused Mr X, and his family avoidable distress and frustration. This has been made worse because of the years it has taken for the Council to address it. Understandably, Mr X is disillusioned with the information the Council gives him about its proposed actions.
69. Additionally, as a result of the drift of this case the cost of the extension has risen, and the works completed by Contractor 1 were left unprotected from the elements. It is possible that to continue Mr X’s extension the contractors will have start from the beginning. This causes Mr X avoidable uncertainty about how this will affect the cost of the works going forward.
70. Lastly, Mr X’s extension continues to be unfinished since 2021, and the partial works that began meant the family, including a vulnerable looked after child could not use their garden for the last three years.

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Agreed action

71. Within one month of the date of the final decision statement, the Council will:
• apologise to Mr X for its failure to follow the procedure set out and the distress and frustration this has caused him. The Council should refer to our guidance on making an effective apology. The apology should come from a senior officer that has an understanding of Mr X’s case;
• pay Mr X £1,200 to recognise the avoidable distress, frustration and uncertainty the Council’s faults identified in this decision caused him;
• pay Mr X £300 to recognise the unnecessary time and trouble he experienced as the result of the Council’s poor complaint handling; and
• continue the management of the extension works as it told Mr X it would in February 2022.
72. Within three months of the date of the final decision statement, the Council will:
• find a way to repay the money it had wrongly sent to Contractor 1 to Mr X’s loan again, so that the Council can use it to complete his extension without it making new charges against Mr X’s home.
• create a comprehensive procedure note for the process the Council should follow and the level of evidence the Council should keep when dealing with Special Guardian Home Improvement Loans.
73. The Council should provide us with evidence it has complied with the above actions.

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Final decision

74. We found the Council was at fault for sending money to Contractor 1 before checking with Mr X they had completed all the necessary works, its stage two complaint considerations, and the delay in responding to Mr X’s complaint. This caused Mr X and his family significant avoidable distress at an already difficult time. The Council agreed to our recommendations on what to do to remedy the injustice its actions caused to Mr X and his family.

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Investigator's decision on behalf of the Ombudsman