Edinburgh coffee shop owner fails to challenge reduction in COVID-19 grant for multiple premises

The owner of six coffee shops in Edinburgh who received reduced support under the Scottish Ministers’ grant scheme for hospitality businesses during the COVID-19 pandemic has failed to challenge the decision of the Scottish Ministers to give smaller additional grants to businesses with multiple properties.

The petitioner, Jon Sharp, submitted that the decision to restrict the amount payable to second and subsequent properties was irrational, based on statements made by Cabinet Secretaries at a sitting of the Scottish Parliament on 18 May 2020.

The petition was heard in the Outer House of the Court of Session by Lord Fairley.

75 per cent of full value

From 8 June 2020, qualifying businesses in the retail, hospitality and leisure sector (RHL) could claim grant funding, the amount of which was determined by a number of factors. RHL businesses could claim a grant of either £10,000 or £25,000 for a single property depending on its rateable value. For businesses with multiple qualifying properties, the first property would receive the full grant, but any other properties would only allow the business to claim 75 per cent of the full grant for each one.

The petitioner owned and operated six coffee shops, five of which were within the upper rateable value bracket with the remaining one being in the lower value bracket. The petitioner accordingly received a total grant of £107,500 made up of one grant of £25,000, four grants of £18,750 and one grant of £7,500.

The petitioner brought attention to a statement made by the Scottish Cabinet Secretary for Economy, Fair Work and Culture, Fiona Hyslop, to the Scottish Parliament on 18 March 2020 in which she said: “We will provide 12 months’ relief for properties in the hospitality, leisure and retail sectors, and we will provide a £25,000 grant for hospitality, leisure and retail properties with a rateable value between £18,000 and £51,000.” Subsequent Scottish government publications also brought attention to this figure.

On 24 March 2020, the UK government issued its guidance to local authorities in respect of the parallel scheme operating in England, which stated that RHL businesses would receive a fixed sum of £10,000 or £25,000 for all properties. A later Scottish government factsheet stated that ratepayers would receive 100 per cent of the grant on the first property and 75 per cent for all subsequent properties.

The petitioner submitted that, had his shops been situated in England, he would have received an aggregate grant of £135,000, made up of five payments of £25,000 and one of £10,000. He had a legitimate expectation of receiving this amount as the statements made in the Scottish Parliament on 18 March 2020 constituted a clear promise to “mirror” the English scheme.

The respondents submitted that the statements made in March 2020 had to be taken in their full context, and could only give rise to an expectation that all consequentials arising from the policies announced by the Chancellor of the Exchequer on 17 March 2020 would be passed on in Scotland as rates relief and business support. Furthermore, an exact replication of the English scheme in Scotland would cost more than the aggregate amount of the Barnett formula consequential generated by the English scheme, due to the higher percentage of hospitality properties found in Scotland.

Relevant qualification

In his opinion, Lord Fairley noted the wording of the Chancellor’s original address, saying: “On 17 March, the Chancellor spoke of providing businesses in the RHL sector with ‘an additional cash grant of up to £25,000 per business’.”

He continued: “The Chancellor’s statement was ambiguous on the issue of whether the proposed grant support being described by him was intended to be per business or per property. Having regard to the way in which the grant schemes ultimately developed in Scotland, it is also worth noting that the use by the Chancellor of the qualifying words ‘up to’ clearly signified that whilst individual grants would be capped at £25,000, they would not necessarily be paid at that maximum level. The words ’up to’ were relevant words of qualification.”

On the promise to “mirror” the English measures, he said: “None of the Cabinet Secretaries who spoke on 18 March expressly addressed the question of whether grants would be per business or per property. In the context of the Chancellor’s announcement on 17 March, the consistent and repeated use by the Cabinet Secretary for Economy, Fair Work and Culture and the Cabinet Secretary for Rural Economy and Tourism of the singular definite and indefinite articles (‘the £25,000 grant’ and ‘a £25,000 grant’) might also be said to be consistent with a single grant per business.”

He continued: “The respondents did not state sufficiently clearly and unequivocally that any grant would be paid in respect of second and subsequent properties such as to create a legitimate expectation to that effect upon which the petitioner was entitled to rely. Since the petitioner cannot point to a sufficiently clear, unambiguous and unconditional promise in the terms for which he contends, the part of his argument which is based upon the principle of legitimate expectation must fail.”

On the respondents’ arguments regarding the Barnett formula, he said: “I saw significant force in the respondents’ submission that the policy for allocation of Barnett consequentials fell, in the particular circumstances of this case, within what is referred to in the case law as the ‘macro-political field’ where a change of policy would not readily be seen as an abuse of power.”

For those reasons, the petition was dismissed.