The government’s announcement of a new business rates relief fund and extra targeted support has been met with a mixed verdict.

The Treasury announced a new £1.5bn busines rates relief fund for businesses in England that have not been able to benefit from the existing £16bn business rates relief for retail, hospitality and leisure businesses.

Such firms have not had to pay any rates during the pandemic as part of a 15-month-long relief which runs to the end of June.

However, the government said market-wide economic changes to property values, such as from Covid-19, could only be properly considered at general rates revaluations, and it would therefore legislate to rule out Covid-19 related material change of circumstance (MCC) appeals.

It said the £1.5bn would be distributed according to which sectors had suffered most economically, rather than on the basis of falls in property values.

This would ensure the support was provided to businesses in England in the fastest and fairest way possible.

UKHospitality said the new relief fund and extra targeted support should benefit hospitality supply chain businesses but thousands of pubs, restaurants and coffee shop, hotels and leisure attractions would be left paying full rates form July.

Kate Nicholls, UKHospitality chief executive, said the worrying issue of the rates relief cap could still inhibit hospitality businesses’ recovery.

“Almost 8,000 businesses employing nearly 350,000 people will be paying full business rates in July. This is going to undermine viability and could prompt cost cutting, site closures and scare away investment. The problem needs addressing.”

The government’s announcement potentially compounded this problem because it prevented those businesses from readjusting their valuations – even where Covid has caused a fundamental shift in their local market, such as in city centres.

“Extending the full rates holiday to September now would provide government and industry with much-needed breathing space,” said Nichols.

John Webber, head of business rates at property agent Colliers called the government’s move “the wrong thing to do on every level”.

The government’s Valuation Office Agency spent the last part of last year negotiating with the agents of rate payers on the impact of Covid-19 and its effects on businesses, following the government’s working from home and social distancing policies and agreed these constituted a MCC by which businesses would be able to claim a rebate on their rates bills.

To now deny this is a MCC retrospectively, because the numbers are too high is deeply shocking.”