UK supermarkets urged to pay back £1.9bn COVID-19 business rates relief

Lucy Harley-McKeown
Trolleys are stacked outside a Tesco store in Hammersmith, west London October 3, 2012. Tesco, Britain's biggest retailer, showed its fightback plan following a shock profit warning was starting to make a difference as it stemmed sales falls, but its performance was outshone by rival J Sainsbury.    REUTERS/Paul Hackett  (BRITAIN - Tags: BUSINESS)
Atlus said that Tesco, alone, was expected to receive a bump of around £585m from the tax break, while Sainsbury’s would receive £498m. Photo: Reuters/Paul Hackett

MPs have made calls for supermarkets to pay back the £1.9bn ($2.5bn) in business rates relief they were awarded to help them through the coronavirus crisis.

Some, such as Tesco (TSCO.L) and Sainsbury’s (SBRY.L) have already restarted paying out millions dividends to shareholders, according to a former minister in prime minister Boris Johnson’s government.

In March, the government introduced a year-long break in the payment of business rates across England and Wales, amid fears businesses may struggle to feed the country at such a crucial juncture.

However, grocery businesses have thrived under lockdowns, with many consumers rushing to the only open shops on the high street to stock up on products such as tinned goods and toilet paper.

Data compiled for the PA news agency by real estate adviser Altus Group projected that Tesco, Sainsbury’s, Asda, Morrisons, Aldi and Lidl are in for a saving of £1.87bn.

Atlus said that Tesco, alone, was expected to receive a bump of around £585m from the tax break, while Sainsbury’s would receive £498m.

According to reports The Guardian, Esther McVey, the Conservative MP for Tatton, said: “Supermarkets need to hand back the £1.9bn of government support. They don’t need it.”

The MP, who previously served as UK housing and planning minister, said the money could be directed towards the owners of small limited companies instead.

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Shareholder dividends have seen a huge hit this year due to pressures put on businesses amid the pandemic. UK dividends fell 49.1% in the third quarter, dropping to £18bn. This is the lowest total for Q3 for a decade, when companies were still grappling with the fallout from the financial crisis.

Alongside supermkarkets, BAE Systems (BAESY) and engineering concern, IMI (IMI.L), became among the first companies to catch up on all the dividends missed year-to-date.

Berkeley Group (BKG.L), which had rescinded a big special payout earlier in the year paid a very large interim, five times bigger than 2019, to make up some of the lost ground. Others, like Direct Line (DLG.L), restarted their payouts.

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