Big supermarkets should hand back almost £2bn in business rates relief on offer during the coronavirus pandemic because they are paying out dividends to shareholders, according to a former minister in Boris Johnson’s government.
The government introduced a 12-month break on business rates in March across England and Wales because it feared the pandemic would put strain on retailers’ finances, potentially threatening their ability to feed the country. However, the reality was very different, with big supermarkets enjoying a sales boost, albeit with higher costs.
In total the big six supermarkets – Tesco, Sainsbury’s, Asda, Morrison, Aldi and Lidl – will save £1.9bn in bills during the tax year to 31 March 2021, according to figures from Altus Group, a property adviser.
The biggest four supermarkets received one pound in every six from the business rates relief, Altus said.
Altus’s projections showed that Tesco, the UK’s largest supermarket chain, is expected to receive relief worth £585m during the year, while Sainsbury’s will receive £498m. Asda and Morrisons will receive £297m and £279m respectively.
Tesco, Sainsbury’s and Morrisons have paid dividends to shareholders even while receiving the state aid. Sainsbury’s disclosed business rates relief worth £230m in the first half of its financial year, while paying £231m in dividends, and in October Tesco announced a £315m dividend.
The payouts have prompted strident criticism from across the political spectrum, amid concerns taxpayers’ money is being directed to shareholders rather than alleviating the worst of the pandemic. The £1.9bn in reliefs would have funded the government’s belated funding of free school meals through the winter more than 10 times over.
Esther McVey, the Conservative MP for Tatton who previously served as housing and planning minister under the prime minister, Boris Johnson, said: “Supermarkets need to hand back the £1.9bn of government support. They don’t need it.”
McVey said the money would be better directed towards the owners of small limited companies, many of whom have not been eligible for any emergency coronavirus support.
The Labour party praised the hard work of supermarkets and their staff during the pandemic, but said that government financial support should be targeted at preventing job losses.
Lucy Powell MP, Labour’s shadow business minister, said: “If the public is to have confidence in these measures, ministers must ensure taxpayers’ money supports British jobs.”
However, the retail industry argues that the supermarkets have borne significant costs during the pandemic.
Helen Dickinson, chief executive of the British Retail Consortium, the lobby group that counts most of the major supermarket chains among its members, said: “Retailers have faced a plethora of costs: from PPE and safety screens, to the hiring and training of tens of thousands of new staff. They have spent millions expanding online delivery to ensure that those who are shielding are able to get the items they need, when they need them.
“All the while, these stores continue to offer the same low prices to customers, absorbing increased costs and continuing to pay staff who are self-isolating.”