The Ombudsman's final decision
Summary: Mr X complained the Council was wrong to refuse Mr Y a business grant, causing him financial difficulties and distress. We found the Council at fault in its communications. We recommended the Council provide an apology to Mr Y, make payments for distress, time and trouble, and revisit its decision making.
The complaint
Mr X complains on behalf of Mr Y about the Council’s decision to refuse him a Local Restrictions Support Grant, causing financial difficulties and distress.
The Ombudsman’s role and powers
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) 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) 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”.
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)
How I considered this complaint
I spoke to Mr X and I reviewed documents provided by Mr X, Mr Y and the Council.
I gave Mr X and the Council an opportunity to comment on my draft decision. I considered their comments before making a final decision.
What I found
Local Restrictions Support Grant (“LRSG”) The Government introduced various grants to support businesses affected by lockdowns and restrictions it imposed during the COVID-19 pandemic.
The LRSGs were payable to the recorded ratepayer of a business, provided other eligibility criteria were met.
Where a council had reason to believe the information they held about the ratepayer on the first full day of the local restrictions is inaccurate they could withhold or recover the grant and take reasonable steps to identify the correct ratepayer. Councils were to make clear to recipients that the grant was for the ratepayer and may be liable for recovery if the recipient was not the ratepayer on the eligible day.
Liability for business rates The Local Government Finance Act 1988 (LGFA 1988) identifies three categories of ratepayer: occupiers owners, and persons named in central rating lists.
Case law says the four conditions of rateable occupation are: actual occupational possession exclusive occupation or possession occupation or possession which is of some value or benefit to the occupier/possessor occupation or possession which has a sufficient quality of permanence.
The case law on rates liability is highly technical. It is for a council to decide who is the correct liable ratepayer. However, the Ombudsman can consider if a council has followed a proper decision making process.
Principles of good administrative practice 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. The following points are relevant in this case.
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.
Councils should have clear and accessible appeal routes.
What happened Mr Y has provided a bill dated 8 March 2021 showing the Council recorded him as ratepayer at Address A.
On 1 April 2021 Mr Y applied for a LRSG.
An internal Council report dated 29 April outlined conflicts in the information available to the Council and suggested Mr Y would need to provide further evidence to support a grant request. I cannot provide further details for data protection reasons.
On 13 May the Council told Mr Y it had decided not to process the grant due to inconsistencies in his application.
Mr Y asked for more detailed reasons for refusal.
The Council said it had been provided with conflicting information regarding the people and businesses connected to the premises. Therefore, it was unable to determine eligibility to award the grant. It said it could not provide any further information regarding this matter.
On 7 September Mr Y raised a complaint.
In its stage 1 response the Council said the grant schemes were now closed and there were no rights of appeal. The criteria for a grant were not met and so it did not pay a grant. It could not provide any further information.
Mr Y escalated his complaint as the Council had still not explained its decision.
In its stage 2 response the Council said it held information that conflicted with the information he provided which meant it could not determine who occupied the property and who was the correct liable ratepayer.
Mr Y complained again, enclosing a copy of his sub lease and the main lease agreement. He confirmed he was the liable party under the terms of the lease and the Council had still not explained its decision.
In its final response the Council said the information Mr Y provided along with other information it held, led it to determine he was not the ratepayer and so not entitled to a grant. It referred him to the Ombudsman.
In response to enquiries the Council outlined discrepancies and/or conflicts in the information it held, which it says led it to believe Mr Y was not the liable party for business rates.
The Council agreed to share the following: Mr Y did not contact the Council to assume liability for rates, rather it set up an account in April 2019 using the business name following an inspection.
Mr Y applied for small business rates relief in 2019 which it applied. Although he did not specify the period claimed for.
All correspondence regarding the LRSG has come from third parties, not Mr Y directly.
A copy of Mr Y’s sub lease at Address A, showed he was just 17 at the start of the lease.
Extracts of bank statements in Mr Y’s name did not show business transactions. The most recent statements showed minimal transactions of any kind.
The Council said another reason that it did not process the grant application was due to advice from another Council team. It provided a copy of their report, referred at paragraph 17 above. However, I note this report suggested the Council seek further evidence to establish liability.
Although the complaint to the Ombudsman concerns the April 2021 grant request, the Council has provided documents suggesting it may have refused earlier grant applications from Mr Y for the same reasons.
I sent a draft decision to both parties for comments. I then held a case discussion with the Council to discuss its comments. The Council said in brief: It needed to make concurrent enquiries following information received on 29 April and it could not progress Mr Y’s application until it completed these.
I issued an amended draft decision taking account of the Council’s position; namely that it was limited in the actions it could take at this stage.
In comments on my amended draft the Council said it could in fact meet the original recommendations.
Findings
I cannot question whether the Council’s decision to refuse a grant was right or wrong simply because Mr Y disagrees with it. I must consider whether there was fault in the way it reached its decision.
We expect councils to consider relevant information, disregard irrelevant information and to reach evidence based decisions in line with law and policy. We also expect councils to give clear reasons for their decisions and to offer a review or appeal. This remains the case even if there is no right of appeal.
The Council told Mr Y it held conflicting information and could not decide on the liable ratepayer. However, it did not give Mr Y clear evidence based reasons for its decision. It did not give Mr Y any opportunity to challenge its decision or provide further evidence to support his request. And importantly, it did not explain why it would not take these steps. This is fault.
The Council’s poor communication caused Mr X distress and uncertainty. He was also put to avoidable time and trouble seeking reasons for the Council’s refusal through its complaints process. This is injustice. I will recommend the Council remedies this personal injustice. However, taking into account this case has very specific circumstances, I do not consider a service improvement to prevent recurrence is necessary.
Agreed action
To remedy the injustice set out above the Council should carry out the following actions:
Within one month
Provide Mr Y with an apology for the identified fault; Pay Mr Y £150 for distress and uncertainty; Pay Mr Y £150 for time and trouble and; Decide on the liable ratepayer then write to Mr Y with its decision on whether he is liable, giving reasons for its decision with reference to the law on rateable occupation. If the Council decides Mr Y is not the liable ratepayer, it should offer him the chance to request a review of its decision. If the Council decides Mr Y is the liable ratepayer, it should reassess any grant applications made by him to date and pay amounts equivalent to any grant he would have got, providing he meets the remaining eligibility criteria.
The Council has accepted my recommendations.
Final decision
I find fault in the Council’s communications with Mr Y. The Council has accepted my recommendations and I have completed my investigation.
Investigator's decision on behalf of the Ombudsman