// Tesco to hand over £585m it saved from the business rates holiday
// Chairman John Allan said Tesco did not need the saving as has remained open during the pandemic
// Supermarkets face growing calls to hand back the savings which were aimed at helping retailers unable to open
Tesco has said it will return to the government £585 million it saved from a business rates holiday introduced to help struggling retailers amidst the Covid-19 crisis.
Chairman John Allan said the board “are conscious of our responsibilities to society” and that the Big 4 giant did not need the saving due to remaining open and trading strongly throughout the pandemic.
The decision comes as supermarkets face growing calls to hand back the savings which were aimed at helping retailers that were unable to open and struggling to make ends meet.
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Data compiled last month by real estate adviser Altus Group projected that the UK’s four largest grocers – Tesco, Sainsbury’s, Asda and Morrisons – and German rivals Aldi and Lidl would save around £1.87 billion as a result of the rates holiday.
This was set to represent more than a sixth of the total £10.1 billion rates bill which has been written off for all businesses during the current financial year.
Bosses at Tesco said they would work with the UK Government on how best to hand over the money.
“The board has agreed unanimously that we should repay the rates relief we have received,” Allan said.
“We are financially strong enough to be able to return this to the public, and we are conscious of our responsibilities to society.
“We firmly believe now that this is the right thing to do, and we hope this will enable additional support to those businesses and communities who need it.”
In October, Tesco revealed it made a pre-tax profit of £551 million in the six months to August 29 – an almost 29 per cent increase compared with the same period in 2019.
Sales during that period were up 0.7 per cent to £28.7 billion, with sales in the UK and Ireland up more than eight per cent.
“We have invested more than £725 million in supporting our colleagues, putting safety first, more than doubling our online capacity to support the most vulnerable customers in our communities, and hiring thousands of additional colleagues at a time of need,” Tesco chief executive Ken Murphy said.
“While business rates relief was a critical support at a time of significant uncertainty, some of the potential risks we faced are now behind us.
“Every decision we’ve taken through the crisis has been guided by our values and a commitment to playing our part.
“In that same spirit, giving this money back to the public is absolutely the right thing to do by our customers, colleagues and all of our stakeholders.”
Early in the pandemic Tesco and rival supermarkets faced criticism for taking the rates relief at the same time as handing out dividends to shareholders. It did not use the government’s furlough scheme.
The one-year business rates relief was first announced by Chancellor Rishi Sunak earlier this year and applies to all retail, leisure and hospitality firms until March 2021.
The data from Altus Group showed that Sainsbury’s is expected to save £498 million from its rates holiday for the year – although Sainsbury’s said it was closer to £450 million.
Last month, Sainsbury’s said it had received a break worth £230 million for the half-year to September in an update which also saw it reveal plans to axe 3500 jobs.
However, the grocery giant came under fierce criticism as it also declared an interim dividend of 3.2p plus a special dividend of 7.3p for shareholders.
In November, the boss of value retailer B&M Bargains, which has stayed open through the lockdowns as it was classed as essential, paid his offshore family trust £44 million in dividends as it saved £38 million through the rates holiday.
Richer Sounds chief executive Julian Richer, whose business was classed as non-essential, said previously that he was “really annoyed” that the grocery chains had benefited from the tax break as they also saw “queues around the block”.
The figures from Altus Group show Asda is projected to save £297 million, Morrisons around £279 million, Aldi £109 million and Lidl £108 million, for the year.
In Wales, the six major supermarkets still had to pay around £78 million for rates for some stores as a result of devolved business rates.