CRAVEN District Council has been criticised by the Ombudsman about the way it administered a discretionary grant scheme for businesses impacted by coronavirus.

It has been ordered to apologise to two business owners and pay each £500 in ‘recognition of the distress caused by its raised expectations and uncertainty’.

In March and May 2020, the Government introduced grant schemes to support businesses impacted by the pandemic. Businesses who qualified under these schemes could receive grants of £25,000, £10,000 or any sum under £10,000.

The Ombudsman was contacted by two small business owners who complained about the way Craven Council handled their grant applications.

In the first case, a man who runs a small business from a shared office was awarded a grant of £1,000, later increased to £2,000 on appeal. The second man, who runs a business from his home, was awarded £2,000. That man also appealed and was unsuccessful.

The Ombudsman’s investigation found a lack of transparency with the way the council recorded how it decided the level of grants businesses would receive.

The council decided it would favour some sectors over others, but did not publish this information. It also gave more weight to the business sector than it did to the size of the business or their costs and losses - despite saying these were key deciding factors. The council therefore raised some small business owners’ expectations that they may receive grants of up to £5,000 when this was rarely the case.

The investigation also found a lack of record keeping explaining the council’s individual decisions and inconsistent decision making, raising concerns with the way the council allocated its grants, and at times made awards to businesses in direct contradiction to the rules of its scheme.

Michael King, Local Government and Social Care Ombudsman, said:“We have carefully considered how the council had to react quickly to new challenges in preparing its Covid support scheme last year, but have decided it still failed to administer it properly.

“We published guidance to councils on good administrative practice during the pandemic, and advised them that those basic principles of openness and transparency should remain the bedrock of councils’ work regardless of the external pressures they are under.

“I hope that the ‘lesson learned’ exercise I have asked the council to carry out will help inform good practice in any future policies and procedures both this, and any other council, introduces.”

The Local Government and Social Care Ombudsman’s role is to remedy injustice and share learning from investigations to help improve public, and adult social care, services.

In this case the council should apologise to both men and pay them £500 in recognition of the distress caused by its raised expectations and uncertainty.

The Ombudsman has the power to make recommendations to improve processes for the wider public. In this case the council should ask its scrutiny committee to carry out a ‘lessons learned’ exercise, and provide clear guidance to staff setting out records they should keep.

In response, Councillor Richard Foster, Leader of Craven District Council, said the council was obviously very disappointed with the findings.

“Councils were given very little time to set up a local discretionary scheme, and to make the payments. Since the start of the pandemic our staff have worked extremely hard to support local residents and businesses. Our Revenues and Benefits team has distributed grants of over £40 million to over 2,500 local businesses.

“Due to the pandemic, councils were required to deliver payments as quickly as possible. The Government made it very clear that speed was of the utmost importance.

“The council did publish information on its website that explained how claims would be considered against the criteria specified in the scheme, taking into account business size, relatively high property costs and reduced income. We do not accept that we made any payments which were in direct contradiction of our scheme. We also do not accept that there was a lack of record keeping – in fact we had a significant amount of paperwork relating to each application and realistically we could not provide every document for every application to the ombudsman.

“Like every other council in the country, we were given a fixed allocation of funds and we had an unknown number of potential applicants; therefore it was impossible to advertise in advance the exact amount of grant each business might receive. However, we did show clearly within the local scheme the maximum amounts each category of business might expect to receive.

“Our local approach, supported by local business groups, was to maximise awards as much as possible over as many businesses as possible, within the criteria and priorities defined nationally. Our intention was to get as much money out as quickly and fairly as possible. This approach paid off as we paid out 99 per cent of our discretionary funding, above the nationwide average (95 per cent).

“This directly benefited our community and businesses, and therefore met the Government’s primary objective – something that this decision does not recognise.”