Tesco and Morrisons to hand over millions of pounds from business rate holiday

Supermarkets Tesco and Morrisons have said they will pay more than £850 million to the Government – money they saved from a business rates holiday introduced to help struggling retailers.

Tesco chairman John Allan said the board "are conscious of our responsibilities to society" and that the company did not need the £585 million saving due to remaining open and trading strongly throughout the pandemic.

And following its bigger rival's announcement, Morrisons chief executive David Potts said the company was "grateful for the Government's swift action at the start of the pandemic" as he announced the firm would pay the £274 million it saved.

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Shoppers hit high streets as lockdown ends
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Shoppers hit high streets as lockdown ends
People queueing outside Primark in Northumberland street, Newcastle, as non-essential shops in England open their doors to customers for the first time after the second national lockdown ends and England has a strengthened tiered system of regional coronavirus restrictions.
Shoppers walk past the Christmas market being erected in the market square in Nottingham city centre, as non-essential shops in England open their doors to customers for the first time after the second national lockdown ends and England has a strengthened tiered system of regional coronavirus restrictions.
People queueing outside Card Factory in Farnborough, on the day non-essential shops in England open their doors to customers for the first time after the second national lockdown ends and England has a strengthened tiered system of regional coronavirus restrictions.
Harriet Henry, manager of The Tea Room in Knutsford, hangs an open sign outside her cafe, as non-essential shops in England open their doors to customers for the first time after the second national lockdown ends and England has a strengthened tiered system of regional coronavirus restrictions.
Shoppers outside Primark in Nottingham city centre, as non-essential shops in England open their doors to customers for the first time after the second national lockdown ends and England has a strengthened tiered system of regional coronavirus restrictions.
Shoppers leaving Primark in Birmingham as non-essential shops in England open their doors to customers for the first time after the second national lockdown ends and England has a strengthened tiered system of regional coronavirus restrictions.
Shoppers queue outside Primark in Nottingham city centre, as non-essential shops in England open their doors to customers for the first time after the second national lockdown ends and England has a strengthened tiered system of regional coronavirus restrictions.
Shoppers in Northumberland street, Newcastle, as non-essential shops in England open their doors to customers for the first time after the second national lockdown ends and England has a strengthened tiered system of regional coronavirus restrictions.
Shoppers leaving Primark in Birmingham as non-essential shops in England open their doors to customers for the first time after the second national lockdown ends and England has a strengthened tiered system of regional coronavirus restrictions.
LONDON, ENGLAND - DECEMBER 02: Crowds of shoppers are seen on Oxford Street on December 2, 2020 in London, England. Last night MPs voted in favour of government proposals to enter England into a tiered system of lockdown beginning at midnight. Residents of Tier Two - High Alert can socialise with anyone they live with or who is in their support bubble in any indoor setting, whether at home or in a public place. Outdoors they must observe the rule of six. Pubs and bars must close, unless operating as restaurants. Hospitality venues can only serve alcohol with substantial meals and must close between 11pm and 5am with last orders called at 10pm. Organised indoor sport, physical activity and exercise classes will be permitted if it is possible for people to avoid mixing with people they do not live with. Schools remain open. (Photo by Peter Summers/Getty Images)
Shoppers and pedestrians walk along Oxford Street in the main high-street shopping district of London on December 2, 2020, as England emerges from a month-long lockdown to combat the spread of the novel coronavirus. - England on December 2 exited a month-long lockdown into a new 3-tiered system of curbs with non-essential retail, leisure centres and salons all reopening but with some sectors, including hospitality, seeing tighter restrictions. (Photo by Niklas HALLE'N / AFP) (Photo by NIKLAS HALLE'N/AFP via Getty Images)
Shoppers and pedestrians are seen in London's main high-street shopping district on Oxford Street in London on December 2, 2020 as England emerges from a month-long lockdown to combat the spread of the novel coronavirus. - England on December 2 exited a month-long lockdown into a new 3-tiered system of curbs with non-essential retail, leisure centres and salons all reopening but with some sectors, including hospitality, seeing tighter restrictions. (Photo by Niklas HALLE'N / AFP) (Photo by NIKLAS HALLE'N/AFP via Getty Images)
MANCHESTER, ENGLAND - DECEMBER 02: Shoppers walk past a closed pub displaying political signage in the city centre as Manchester enters Tier 3 on December 02, 2020 in Manchester, England. Last night MPs voted in favour of government proposals to enter England into a tiered system of lockdown beginning at midnight. Areas in Tier Three - 'Very High Alert' - sees people not able to meet socially indoors or outdoors with anybody they do not live with or have formed a support bubble with. Hospitality settings, such as bars, pubs, cafes and restaurants must close except for takeaway, delivery and click and collect services. Schools remain open. (Photo by Anthony Devlin/Getty Images)
Shoppers and pedestrians are seen in London's main high-street shopping district on Oxford Street in London on December 2, 2020 as England emerges from a month-long lockdown to combat the spread of the novel coronavirus. - England on December 2 exited a month-long lockdown into a new 3-tiered system of curbs with non-essential retail, leisure centres and salons all reopening but with some sectors, including hospitality, seeing tighter restrictions. (Photo by Niklas HALLE'N / AFP) (Photo by NIKLAS HALLE'N/AFP via Getty Images)
MANCHESTER, ENGLAND - DECEMBER 02: Shoppers walk past a Debenhams store on Market Street in the city centre as Manchester enters Tier 3 on December 02, 2020 in Manchester, England. Last night MPs voted in favour of government proposals to enter England into a tiered system of lockdown beginning at midnight. Areas in Tier Three - 'Very High Alert' - sees people not able to meet socially indoors or outdoors with anybody they do not live with or have formed a support bubble with. Hospitality settings, such as bars, pubs, cafes and restaurants must close except for takeaway, delivery and click and collect services. Schools remain open. (Photo by Anthony Devlin/Getty Images)
MANCHESTER, ENGLAND - DECEMBER 02: Shoppers are seen on Market Street in the city centre as Manchester enters Tier 3 on December 02, 2020 in Manchester, England. Last night MPs voted in favour of government proposals to enter England into a tiered system of lockdown beginning at midnight. Areas in Tier Three - 'Very High Alert' - sees people not able to meet socially indoors or outdoors with anybody they do not live with or have formed a support bubble with. Hospitality settings, such as bars, pubs, cafes and restaurants must close except for takeaway, delivery and click and collect services. Schools remain open. (Photo by Anthony Devlin/Getty Images)
MANCHESTER, ENGLAND - DECEMBER 02: Shoppers walk past a Debenhams store on Market Street in the city centre as Manchester enters Tier 3 on December 02, 2020 in Manchester, England. Last night MPs voted in favour of government proposals to enter England into a tiered system of lockdown beginning at midnight. Areas in Tier Three - 'Very High Alert' - sees people not able to meet socially indoors or outdoors with anybody they do not live with or have formed a support bubble with. Hospitality settings, such as bars, pubs, cafes and restaurants must close except for takeaway, delivery and click and collect services. Schools remain open. (Photo by Anthony Devlin/Getty Images)
MANCHESTER, ENGLAND - DECEMBER 02: Shoppers are seen on Market Street in the city centre as Manchester enters Tier 3 on December 02, 2020 in Manchester, England. Last night MPs voted in favour of government proposals to enter England into a tiered system of lockdown beginning at midnight. Areas in Tier Three - 'Very High Alert' - sees people not able to meet socially indoors or outdoors with anybody they do not live with or have formed a support bubble with. Hospitality settings, such as bars, pubs, cafes and restaurants must close except for takeaway, delivery and click and collect services. Schools remain open. (Photo by Anthony Devlin/Getty Images)
MANCHESTER, ENGLAND - DECEMBER 02: Shoppers walk past COVID-19 signage displayed on the Arndale in the city centre as Manchester enters Tier 3 on December 02, 2020 in Manchester, England. Last night MPs voted in favour of government proposals to enter England into a tiered system of lockdown beginning at midnight. Areas in Tier Three - 'Very High Alert' - sees people not able to meet socially indoors or outdoors with anybody they do not live with or have formed a support bubble with. Hospitality settings, such as bars, pubs, cafes and restaurants must close except for takeaway, delivery and click and collect services. Schools remain open. (Photo by Anthony Devlin/Getty Images)
Shoppers are seen in London's main high-street shopping district on Regent Street with non-essential shops reopening in London on December 2, 2020 as England emerges from a month-long lockdown to combat the spread of the novel coronavirus. - England on December 2 exited a month-long lockdown into a new 3-tiered system of curbs with non-essential retail, leisure centres and salons all reopening but with some sectors, including hospitality, seeing tighter restrictions. (Photo by Tolga Akmen / AFP) (Photo by TOLGA AKMEN/AFP via Getty Images)
NEWCASTLE UPON TYNE, ENGLAND - DECEMBER 02: Shoppers walk along Northumberland Street in Newcastle city centre on December 02, 2020 in Newcastle upon Tyne, England. Today is the first day of the new Tier system introduced at the end of the second Coronavirus lockdown to prevent against further spread of the Coronavirus. Newcastle has been put into Tier 3 restrictions. (Photo by Ian Forsyth/Getty Images)
NEWCASTLE UPON TYNE, ENGLAND - DECEMBER 02: Shoppers walk along Northumberland Street in Newcastle city centre on December 02, 2020 in Newcastle upon Tyne, England. Today is the first day of the new Tier system introduced at the end of the second Coronavirus lockdown to prevent against further spread of the Coronavirus. Newcastle has been put into Tier 3 restrictions. (Photo by Ian Forsyth/Getty Images)
LONDON, ENGLAND - DECEMBER 02: A woman enjoys the artificial snow-fall as Covent Garden welcomes back shoppers and diners after UK lockdown at Covent Garden on December 02, 2020 in London, England. (Photo by Chris Jackson/Getty Images)
LONDON, UNITED KINGDOM - DECEMBER 2: All non-essential shops open after national lockdown imposed to curb the spread of the coronavirus (Covid-19), formally lifted due to upcoming Christmas in London, United Kingdom on December 2 2020. Four weeks nationwide lockdown ended today and new tier system entered into force in the country easing restrictions on travel and shopping. (Photo by Tayfun Salci/Anadolu Agency via Getty Images)
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Business Secretary Alok Sharma said Tesco's move was a "very welcome gesture".

The decision led to calls for other supermarkets to make similar commitments, with new data from business rates specialists Altus Group showing "essential" retailers enjoyed savings of £3.03 billion.

Tesco chairman John Allan
Tesco chairman John Allan said the retailer is "conscious of our responsibilities to society" (Tesco/PA)

There are also calls for the money to be handed to the pub sector, which is struggling hardest from the new restrictions.

Sainsbury's, Asda, Aldi, Lidl, Iceland and B&M Bargains were approached to ask if they would follow Tesco's lead, but declined to comment.

The Co-op said the amount spent on protecting staff and customers outweighed the savings.

It added: "Given the huge uncertainty we're facing into still and the ongoing costs we are incurring, we'll consider our approach in terms of the Government support we've received at year end."

And a spokesman for Waitrose-owner The John Lewis Partnership said: "We are incredibly grateful for this vital support because we have lost significant sales while our John Lewis shops have been closed, and have invested heavily to keep our partners and customers safe.

"The outlook remains incredibly uncertain and Government support remains crucial to help us navigate the crisis.

"We're a business owned by our employees – our partners, not external shareholders – and we don't intend to pay a bonus this year.

"Whenever we make any money, it is invested in our partners, our business and charitable giving."

Conservative MP Esther McVey tweeted calling on supermarkets to follow suit.

She wrote: "Tesco is leading the way & returning £585 million back to government – the business rates exemption provided during the pandemic.

"Other supermarkets need to follow suit. Whilst they don't need this money others do."

Mayor of Greater Manchester Andy Burnham also tweeted: "This is the right move from Tesco. I call on other supermarket giants to follow suit.

"Together they've had over £1.3 BILLION in business rates grants. The money should be earmarked for Tier 3 areas & the 3 million people excluded from public support."

Data compiled last month for the PA news agency 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 year.

Bosses at Tesco said they will work with the Government on how best to hand over the money. It is understood this will be via HM Revenue and Customs.

Mr Allan said: "The board has agreed unanimously that we should repay the rates relief we have received.

"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% increase compared with the same period in 2019.

Sales during that period were up 0.7% to £28.7 billion, with sales in the UK and Ireland up more than 8%.

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.

Robert Hayton, head of property tax at business rates specialist Altus Group, said: "It should have been obvious from the outset that not all businesses would need the same level of taxpayer support through the pandemic.

"It is great that Tesco has taken the lead and repaid this relief.

"The Government must now redeploy that revenue to where it is most needed."

Coronavirus
Sainsbury's and rivals have all benefitted from having "essential" status and remaining open throughout lockdowns (Danny Lawson/PA)

Rates relief was first announced by the Chancellor for 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 3,500 jobs.

However, the company 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, paid his offshore family trust £44 million in dividends as it saved £38 million through the rates holiday.

The figures from Altus show Asda is projected to save £297 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.

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