A woman from Newry said she felt “sickened” by communications from her local council after it demanded she return flood support money which it said was paid to her by mistake.

Loretta Gallagher, who owns a textile art and gift shop, applied and received £7,500 from Newry, Mourne and Down District Council.

But since then the council have told her she was ineligible for the scheme and asked her to return the money.

Ms Gallagher was sent an invoice demanding the money be returned but was subsequently sent an email stating the invoice was sent in error.

A spokesperson for the council said it “does not comment on matters relating to individual business application”.

In October 2023 heavy rain caused Newry canal to burst its banks, leading to severe flooding in parts of the city.

Ms Gallagher’s shop is located on the first floor of a building in one of the worst affected areas, Sugar Island.

“The flood was at about five feet, six feet at the front of this building… it was underwater for the guts of a week,” she said.

Ms Gallagher said she was forced to close her business for seven months.

“It was like an open building site, there was damp running through, there was no electricity, there was no water a lot of the time, there were no toilets, there were lumps falling out of the walls because of the damp.”

In November Ms Gallagher applied for a grant open to businesses impacted by the flood.

“I had the council’s environmental health officer come out to asses the building and the business,” she said.

“He passed it presumably because it went back and then gratefully I received the £7,500 because I was at the end of my tether at that stage.”

Ms Gallagher said it was in the new year that she received a phone call from the council that a mistake had been made and the grant needed to be returned.

She said by that stage she had already spent the money.

“To try and get this building up and going… even to help the boys on the ground floor as well… it was to try and keep body and soul together at the time whenever our whole income suddenly dries up in one night.

“I made the decision [not to return the money] because I knew I deserved it, I knew I was affected, I knew I was impacted.”

A few months went by and Ms Gallagher didn’t hear anything from the council.

And then “a couple of days before the anniversary of the flooding I got an invoice requesting the money within 14 days”.

Ms Gallagher said she “can’t pay” the money and it would “end” her business.

On Wednesday night Ms Gallagher received another email from the council to say that the invoice received “should have been withheld pending further discussion with the council”.

She said she “didn’t know what to make” of this and has “no idea” what is going to happen next.

In the immediate aftermath of the flooding, businesses could apply for rates relief and grants of up to £7,500.

The eligibility criteria for this scheme that Loretta Gallagher applied for was as follows:

• The business must have been ordinarily occupied and trading on the date of the flooding incident.
• The relevant district council has confirmed that the business was flooded.
• The business plans to re-open in due course.
• The business had no insurance to cover flood damage.
• The business must be an SME and trading as such.
• The business must be responsible for the immediate clean-up costs and work to re-establish the business.
• Public sector properties were excluded.

In February, the Department for the Economy and two local councils opened the Enhanced Flood Support Scheme, offering up to £100,000 per eligible business.

Baffled by Ms Gallagher’s situation is Eamonn Connolly, managing director of Newry Business Improvement District.

“We don’t really know what’s happening.

“Lorretta was fundamentally impacted by the floods, that’s undeniable,” he said.

“Mistakes can happen, and if on a technicality Loretta didn’t qualify there should have been a conversation to explain that and engage.

“Unfortunately letters went out saying she wasn’t impacted which added insult to injury and there has been a void in the interim and this sword of Damocles of owing money and being chased for it remains hanging over her 12 months later, which hasn’t been good for her mental health.”