Calls are mounting for the supermarket giants to hand back their business rates’ windfall after seeing profits leap during lockdown.
MPs have raised the ante by joining the chorus for supermarkets to pay back almost £1.9bn in business rates relief they were awarded to help them through the coronavirus crisis.
Initially dividends were cut or scrapped across the board but already retail giants such as Tesco and Sainsbury’s have restarted paying out millions to shareholders, according to national news reports.
Back in March, the government introduced a year-long break in business rates payments across England and Wales, to support and ensure businesses could continue to supply the country with essentials and food.
However, grocery businesses have thrived under lockdown with a huge surge in online deliveries creating bumper profits for supermarkets; as well as consumers rushing to any shops, particularly in places like Wales where the sale of non-essential goods were banned under the recent “circuit break” lockdown.
Data released to The Press Association and compiled by industry experts claimed that Tesco, Sainsbury’s, Asda, Morrisons, Aldi and Lidl are in for a saving of £1.87bn. The data indicates Tesco, alone, was expected to receive around £585m from the hand out, while Sainsbury’s gets £498m.
According to The Guardian, former minister Esther McVey, the Conservative MP for Tatton, said supermarkets needed to hand back the £1.9bn of government support. “They don’t need it.” She stated. She echoed calls that the money should be used to help smaller retailers and SMEs which are still closed or unable to trade during the second national until Dec 2.
Shareholder dividends overall have taken a huge hit this year with UK dividends falling 49.1% in the third quarter, dropping to £18bn – the lowest total for Q3 for a decade apparently.
But some companies are starting to reward shareholders once again. Other businesses that have seen profits take off during lockdown have already offered to repay some Government assistance funding. For example, ASOS, IKEA and Redrow have all offered to pay back furlough money they initially received from the Government. So far around £380m has been paid back, but this is a tiny percentage of the £41bn that has given out since March as part of the furlough scheme.
As more dividends are sure to be announced it will be interesting to see if the PR fall out gathers momentum and if it will be enough to break down any business resolve to give more back to shareholders in this strangest of financial years.