The Ombudsman's final decision
Summary: Although the Council wrongly paid COVID-19 business support grants to the complainant’s business, under the circumstances we have not fault with this. Guidance from the Government also instructs councils to recover grants paid in error, and so the Council is also not at fault for doing so this in this case. There is no fault here, therefore, and so we have completed our investigation.
The complaint
I will refer to the complainant as Ms M.
Ms M complains the Council is seeking to recover COVID-19 business support grants it paid to her in error.
The Ombudsman’s role and powers
We investigate complaints of injustice caused by ‘maladministration’ and ‘service failure’. I have used the word fault to refer to these. We consider whether there was fault in the way an organisation made its decision. If there was no fault in the decision making, we cannot question the outcome. (Local Government Act 1974, section 34(3), as amended) 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)
How I considered this complaint
I reviewed Ms M’s correspondence with the Council, and other supporting evidence Ms M provided.
I also shared a draft copy of this decision with each party for their comments.
What I found
Ms M is a chiropodist and runs a surgery for which she is the sole employee. During the second and third national COVID-19 lockdowns, she applied for and received a series of ‘closed’ business support grants from the Council, as well as a grant under the restart scheme, totalling more than £17,000.
In July 2021, the Council wrote to Ms M to inform her it should not have paid her the grants. This was because her business was classed as an essential medical service, and was therefore not required to close during the COVID-19 lockdowns. The Council explained she would need to repay the grant money, and asked her to contact it if she would need to set up a payment arrangement.
Ms M replied to the Council’s letter. She said there had been confusion during the first lockdown about what action she should take. She noted most of her patients were elderly and vulnerable, and for this reason she had closed her business. While closed she made the surgery COVID secure in accordance with Government guidelines.
Ms M said she had received a letter around this time from the Council which implied she was entitled to receive support grants. She also received a letter from the Director of Public Health informing her she was classed as clinically extremely vulnerable.
Ms M explained she had become ill and had taken a long time to recover, meaning her practice had suffered a significant financial impact. She asked the Council to consider her circumstances.
The Council wrote to Ms M in August to provide a statement of the support grants she had received. It noted that acceptance of the payments was taken as confirmation by Ms M that she was eligible to receive them, and that the Council was required to make post-payment assurance checks, which could lead to her being asked to repay the grants if it identified she was not entitled to them.
Following this letter, the Council emailed Ms M to explain that, although it empathised with her situation, the COVID-19 grant schemes had strict criteria which it was required to adhere to. It acknowledged Ms M had applied for the grants in good faith, but explained the Government required councils to seek recovery of all grants which had been wrongly paid, whatever the reason.
The Council reiterated the schemes Ms M had applied to were for businesses forced to close in lockdown, which hers was not. It also explained that chiropody businesses were explicitly excluded from the restart grant scheme.
In June 2022, Ms M referred her complaint to the Ombudsman. She said the Council had told her her business had been “obliged to stay open”, but explained she could not do this, because of her own clinical vulnerability and that of her patients. Although she had re-opened when Government advice allowed her to stop shielding, she said the business did not recover and it had now closed down.
Legislative background COVID-19 business support grants Beginning in March 2020, the Government created schemes for councils to pay grants to small businesses and retail, hospitality and leisure businesses. This was because the COVID-19 restrictions affected so many of them.
The Government later introduced the local restrictions support grant to help businesses required to close from November 2020 due to COVID-19. Eligible businesses were those mandated to close by the Government and included non-essential retail, leisure, personal care, sports facilities, and hospitality businesses.
Restart grant The Government also introduced the restart grant scheme in 2021, to give further support to businesses which were soon to start reopening at the end of the third lockdown.
At paragraph 45, the scheme guidance says: “For these purposes, the definition of a personal care business [which would qualify for the grant] should exclude: … chiropody, chiropractors, osteopaths and other medical or health services…” Debt recovery In January 2021 the Government issued guidance on the recovery of wrongly paid COVID-19 support grants. This guidance has since been updated several times.
The guidance explains that a ‘non-compliant grant’ is one which the relevant business applied for in good faith, but the council later identifies it was not eligible for. And, at paragraph 12, it says: “A Local Authority must instigate recovery on all grants judged to be non-compliant, and reasonable and practicable steps … must be followed by a Local Authority to attempt to recover a non-compliant grant.”
Analysis The Ombudsman’s role is to review how councils have made their decisions. We may criticise a council if, for example, it has not followed an appropriate procedure, not taken account of relevant information, or failed to properly explain a decision it has made. We call this ‘fault’ and, where we find it, we can consider what difference it may have made to the outcome and ask the council to address this.
However, we do not provide a right of appeal against council decisions, nor do we make operational or policy decisions on councils’ behalf. Where a council has made a decision without fault, we cannot criticise it, no matter how strongly a complainant may feel it is wrong. We do not uphold complaints simply because someone disagrees with what a council has done.
In this case, Ms M applied for a series of grants intended for businesses which were required, by law, to close during the COVID-19 lockdowns. However, her business, as a medical service, was not one of these. The restart grant scheme also explicitly excluded chiropody services, and so, again, she was not eligible to receive money under this scheme.
I note Ms M closed her business anyway, due to concerns both about her own clinical vulnerability, and that of her patients. She has provided evidence showing that, in doing so, she was following the advice she received from the Institute of Chiropodists and Podiatrists.
I acknowledge this, and I do appreciate why Ms M decided it was appropriate to close her business. However, as the Council has explained, the eligibility criteria for the grant schemes were strict, and it was required to apply the schemes as they were set down by the Government. As a business not required to close, therefore, Ms M’s simply did not qualify for the schemes. We cannot direct the Council to disregard this fact, whatever other professional guidance Ms M may have received.
Ms M says she received a letter from the Council during the first lockdown, implying she was entitled to receive these grants. However, I have reviewed this letter, and it appears Ms M is referring to the small business grant scheme, which closed at the end of the first lockdown. This was an entirely different scheme to the ones she later applied for and had different qualifying criteria.
It could be argued the Council was at fault for wrongly accepting Ms M’s applications in the first place. There is no suggestion she did so in bad faith, or that she obscured the nature of the business in doing so, and so, with greater scrutiny, the Council would have had an opportunity to avoid wrongly paying the grants to her.
However, we are conscious that councils were under significant pressure from Government to quickly pass on the funding it had provided, without the same level of pre-payment scrutiny which might otherwise be expected. That appears to be what happened here. Therefore, while it would clearly have been better if the Council had not paid the grants to Ms M in the first place, I am not persuaded this, alone, justifies a finding of fault.
The Government guidance also says that councils must take reasonable steps to recover any grants paid out in error, regardless of the reason for the error. I am therefore satisfied the Council is not at fault for asking Ms M to repay the money. I will add the guidance also says councils may be required to repay wrongly-paid grants from their own funds, if the Government is not satisfied they have taken reasonable steps to recover the money.
I note Ms M says she is not in a position to repay the money because her business has now shut down. I appreciate this, but this does not mean I can find fault because the Council is seeking to recover it, when this is what the guidance requires it do.
If Ms M feels she will struggle to repay the money then this is something she will need to discuss with the Council.
Final decision
I have completed my investigation with a finding of no fault.
Investigator's decision on behalf of the Ombudsman