Supermarkets Set to Return Over £1.6 Billion in Business Rates Relief

Supermarkets Set to Return Over £1.6 Billion in Business Rates Relief
Shoppers queue outside an Aldi supermarket in London, UK, on March 23, 2020. (Dan Kitwood/Getty Images)

UK supermarkets Asda, Aldi, and Sainsbury’s on Thursday joined their rivals Tesco and Morrisons in repaying business rates relief granted by the UK government since March.

The announcements follow Tesco and Morrisons decisions on Wednesday to pay back £585 million ($787 million) and £274 million ($368 million), respectively.
Asda announced that it will pay its business rates of £340 million ($457 million) in full to the UK government and devolved administrations, waiving the relief it received during the COVID-19 pandemic.
Aldi, the UK’s fifth-largest supermarket, said it will return over £100 million ($134 million).

“Despite the increased costs we have incurred during the pandemic, we believe returning the full value of our business rates relief is the right decision to help support the nation,” Aldi UK CEO Giles Hurley said in a statement.

Sainsbury’s said it expects to give up about £440 million in business rates relief after its sales and profits were “stronger than originally expected.”

“With regional restrictions likely to remain in place for some time, we believe it is now fair and right to forgo the business rates relief that we have been given on all Sainsbury’s stores,” Sainsbury’s CEO Simon Roberts said in a statement.

“We are very mindful that non-essential retailers and many other businesses have been forced to close again in the second lockdown and we hope that this goes some way towards helping them.”

Supermarkets have been permitted to remain open throughout the duration of any government-imposed lockdowns, allowing customers to shop for essentials. Home delivery services have also expanded considerably.

But all the supermarkets said the costs of dealing with the pandemic, such as making their stores “COVID secure” and paying staff who were shielding, were similar to or greater than the business rates relief received.

Sainsbury’s said it spent £290 million in the first half of its financial year to keep staff and customers safe. Since March, Sainsbury’s has also committed to donating £10 million to charities and local communities.

Tesco estimated its costs associated with the pandemic were around £725 million this year.

The Chancellor announced in March that all retail, hospitality, and leisure businesses in England would be given a business rates holiday for 12 months. Supermarkets, whose sales have been less affected in the crisis, have received criticism for taking government support while paying dividends to shareholders.

Asda President and CEO Roger Burnley said they will be “discussing with the government and devolved authorities the best mechanism to ensure the relief we have received can go towards helping those that need it most.”