Small businesses facing a dramatic hike in rates could stand to receive a lump sum of up to £800 from a central government relief policy.

The payment, which will be no more than the actual increase in rates, stands to be paid to 400 local business with a rateable value between £12,000 and £200,000.

At a meeting of the overview and scrutiny panel on Thursday, South Hams District Council, which will administer the payments, recommended that policy is adopted, following consultation with Devon County Council, Devon and Cornwall Police and Devon and Somerset Fire and Rescue.

At the meeting, it was agreed that appeal decisions would be reviewed by a group of three: Cllr John Tucker; the portfolio holder for customer first, Cllr Hilary Bastone; and the chair of the overview and scrutiny panel, Cllr Michael Saltern. This followed concerns raised by Cllr John Green that all decisions, including appeals, were to be reviewed by the leader of the council, something he said could make the council seem like a “corrupt regime”.

Cllr Tucker pointed out that, all discretionary relief funds had been administered by the leader and officers for at least 23 years.

In the spring budget, central government allocated £300m nationally over four years to help small businesses who have seen an increase in their rates bill. South Hams District Council has been allocated £307,000 for 2017/18; £149,000 for 2018/19; £61,000 for 2019/20 and £9,000 for 2020/21.

The policy will divide the money into two separate funds: the initial lump sum payment, of up to £800, for those local businesses with a rateable value between £12,000 and £200,000.

And the second fund will be for discretionary awards for those businesses, regardless of the lump sum payment received.