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Christmas is a time for giving. And Sainsbury has just become the third UK supermarket chain to give back its business rates relief to the government.
Twenty four hours after Tesco got the ball rolling down the aisle, Sainsbury has decided to forgo a total of £440m of business rates relief, which was granted by the UK Government and the Devolved Administrations since March to support retailers.
That’s on top of Tesco’s decision to return £585m, with Morrisons following suit last night by pledging to hand back £274m.
This takes the total waived by these three major supermarkets to £1.3bn.
The decision means Sainsburys will give up around £410m of business rates relief this financial year — it had received £450m in total, but is keeping the £40m on its Argos stores (which, to be fair, were closed in the lockdown).
It is also planning to forgo another £30m in the 2021-22 financial year.
Sainsbury argues that it took the decision because its sales and profits at its supermarkets have been stronger than expected since the second English lockdown, last month.
It says its base case had originally been that the cost of protecting customers and colleagues, and the loss of clothing, fuel, general merchandising and financial services sales would be balanced out by the business rates relief.
However, lockdown restrictions have remained in place for longer than originally expected and throughout the pandemic all Sainsbury’s stores have been deemed essential retail.
Almost all have been open and trading strongly, with the exception of a small number of convenience stores. As a result of this, Sainsbury’s sales and profits have been stronger than originally expected, particularly since the start of the second national lockdown in England and we have therefore taken the decision to forego the business rates relief on all Sainsbury’s stores.
However, the move also follows criticism that the supermarkets should never have received such a windfall.
They received around £1 in every £6 of business rates relief, even though they kept running through the crisis, saw a jump in sales, and – crucially – kept paying dividends to shareholders.
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