The Treasury has announced a new £1.5bn fund for businesses not eligible for the retail, hospitality and leisure business rates relief.
The funding will be distributed according to official data on the impacts of the pandemic on different sectors to ensure a more proportionate allocation of support across England, and in the ‘fairest way possible’.
However, support delivered as appeals against rates bills on basis of material changes of circumstance due to the pandemic are to be ruled out.
Many of those ineligible for reliefs have been appealing for discounts on their rates bills, arguing the pandemic represented a ‘material change of circumstance’ (MCC).
The government has made it clear that market-wide economic changes to property values, such as from COVID-19, can only be properly considered at general rates revaluations, and will therefore be legislating to rule out COVID-19 related MCC appeals.
UKHospitality welcomed the announcement of the support, but warned that thousands of pubs, restaurants, coffee shop, hotels and leisure attractions will be left paying full rates from July.
UKHospitality Chief Executive Kate Nicholls said: “This is a positive development for hospitality businesses, specifically those in the supply chain.
“We had been banging the drum for hospitality supply chain businesses, as they have struggled to access reliefs even though many have faced catastrophic drops in sales. It was absolutely critical that they received financial support, to save jobs and businesses and eliminate a threat to the recovery of the sector.
“However, the worrying issue of the rates relief cap could still inhibit the recovery of hospitality businesses. 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.
“Today’s announcement potentially compounds this problem as it prevents these businesses from readjusting their valuations – even where Covid has caused a fundamental shift in their local market, such as in city centres.”
John Webber, Head of Business Rates at Colliers said it was a ‘staggering response’ to sectors adversely impacted by Covid-19.
“The Government is ripping out the rule book retrospectively. It is the wrong thing to do on every level.
“The Government’s Valuation Office Agency (VOA) 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 “Material Change of Circumstance” 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.”