UPDATED: Asda, Sainsbury’s, Morrisons and Aldi have joined Tesco in returning their business rates savings from the government’s Covid-19 support package, with a total £1.7bn paid back so far.
Sainsbury’s will forgo around £440m. It will not include relief for Argos’s standalone stores, which closed during lockdown after being classed as non-essential retail.
Asda will pay back its £340m relief in full back to the government.
Morrisons has “brought forward” a decision to waive £274m, which is the amount in full, while Aldi will give back more than £100m.
When added to Tesco’s £585m repayment, the total amount paid back so far totals over £1.7bn.
Separately, value retailer B&M has also followed suit and will return £80m business rates relief.
Supermarkets that have yet to make a similar move include Lidl and Iceland.
Roger Burnley, president and chief executive of Asda, said: “Throughout the pandemic we have always sought to do the right thing – fulfilling our role in feeding the nation, protecting our colleagues and supporting our communities.
“But, as the hope of a vaccine and a more ‘normal’ life returning in 2021 grows, we have confidence that we are in a strong position to again do the right thing for the communities we serve.
“Almost half our customers are telling us they expect their financial position to worsen in the next 12 months and 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.
“We will therefore 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.”
Simon Roberts, chief executive of Sainsbury’s, said: “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.
“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.”
With the government receiving cash back that it did not expect, all eyes are now on how those funds will be redeployed.
John Webber, head of rating at Colliers International, told EG that the big supermarkets’ decision to pay back rates should pave the way for the government to announce either a 50% cut to rates for the 2021-22 year, or a six-month rates holiday, for non-food related retail.
He points out that the government will no longer need to wait until the New Year to decide changes to business rates from April, as outlined in the spending review last week.
“Father Christmas has come early and handed the government [around] £2bn, so [it has] a free run,” says Webber.
“It could come out now to grant 50% for the whole of next year to retail, excluding food, or six months’ relief from April. There is a hope and an expectation they would do it.
“There is a great opportunity for the chancellor to make an announcement now, so that businesses can start planning. Places with retail will recover, but they need help, and one of the obvious routes is continued relief on the rates side.”
Research from real estate adviser Altus Group showed that just over £3bn went towards “essential retailers” such as superstores, supermarkets, fascia convenience stores and food warehouses.
Robert Hayton, head of property tax at Altus Group, said: “It is crucial that government ensures future support is targeted to where it is needed, including funding the Valuation Office so it can expedite settlement of the tens of thousands of formal challenges against business rates assessments that must now be reduced to reflect the impact of Covid ahead of next year’s bills.”
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