As three more supermarkets hand back business rates relief, it’s a £1.8bn windfall for the taxman
- Sainsbury’s, Asda, Aldi and discounter B&M followed Tesco and Morrisons
- They paid back the windfall after their sales boomed in lockdown
- Ministers say the action is a ‘real model of good, healthy capitalism’
Supermarkets have handed £1.8 billion of business rates relief back to the taxman following a backlash.
Sainsbury’s, Asda, Aldi and discounter B&M followed Tesco and Morrisons in paying back the windfall after their sales boomed in lockdown.
Ministers praised the ‘impressive’ move, adding that the supermarket groups had shown themselves to be ‘real models of good, healthy capitalism’.
Supermarkets have handed £1.8 billion of business rates relief back to the taxman following a backlash
The sector has been criticised for paying huge dividends to shareholders while receiving taxpayer support designed to help businesses crippled by the pandemic survive.
On Wednesday Tesco blindsided rivals by handing back £585 million, leading to a procession as rivals rushed to follow suit.
Morrisons returned £274 million on Wednesday night, followed by Sainsbury’s, who yesterday morning said they will repay £440 million.
Aldi then said it would hand back more than £100 million and B&M Home Stores, which saw its half-year profits double in lockdown, paid back £80 million.
On Wednesday Tesco blindsided rivals by handing back £585 million, leading to a procession as rivals rushed to follow suit
Asda, which is owned by US giant Walmart, announced it would hand back £340 million. Its chief executive Roger Burnley said: ‘We recognise that there are other industries and businesses for whom the effects of Covid-19 will be much more long-lasting and whose survival is essential to thousands of jobs.’
Leader of the House of Commons Jacob Rees-Mogg said: ‘It’s absolutely brilliant and we should be grateful to our supermarkets who have done so much to improve the standard of living of the British people in recent decades. They are real models of good, healthy capitalism and I think they have done something very impressive.’
But he warned the money could not be diverted to other sectors because it ‘has been spent’ as part of the £280 billion of support for businesses in the pandemic.
‘As regards a debate on where the money will go, as £280 billion has been spent on supporting businesses during the pandemic, this just reduces it to about £279 billion, so I’m afraid the money has already gone,’ Rees-Mogg said.
The gesture led to renewed calls for ministers to reform the business rates system which gives online sellers such as Amazon an unfair advantage. The issue has been highlighted by the Mail’s Save Our High Streets campaign.
Sainsbury’s chief executive Simon Roberts said: ‘We continue to urge the Government to review the business rates system to create more of a level playing field between physical and online retailers.’
Michael Hewson, chief market analyst at CMC Markets UK, said: ‘While the move is welcome, it doesn’t change the fact that the Government needs to look at a business rates model that is outdated and penalises bricks-and-mortar retailers in a way that online retailers don’t have to contend with.’
Retailers deemed ‘essential’ that opened in lockdown saved £3 billion in business rates, out of a total government tax break of £10 billion, according to estimates from data provider Altus Group. The decision by the five supermarkets puts more pressure on rivals to follow suit.
Marks & Spencer and the John Lewis Partnership, owner of Waitrose, said they will keep the business rates relief because their department stores were forced to close.
Co-op pushed the decision over whether to pay £90 million of rates back until January, saying it was ‘still facing huge uncertainty’, especially in its funeral business.
But individuals on the mutual’s National Members Council were last night pushing for an immediate pledge to pay the rates windfall back, Sky reported. Iceland declined to comment.
Eyes were also on lockdown winners such as Pets at Home, Dixons Carphone, Dunelm and Kingfisher. Sainsbury’s shares rose 4.1 per cent, Tesco’s by 1.8 per cent, B&M fell by 0.7 per cent and Morrisons by 0.2 per cent.