Scottish Government boost as Tesco hands back £585m from business rates holiday

Tesco is to hand back the £585 million it saved from a business rates holiday introduced to help struggling retailers amid the pandemic.

Tesco it the biggest supermarket chain in the UK with hundreds of large and convenience-sized stores. Picture: Andrew Milligan/PA Wire
Tesco it the biggest supermarket chain in the UK with hundreds of large and convenience-sized stores. Picture: Andrew Milligan/PA Wire

Chairman John Allan said the board “are conscious of our responsibilities to society” and that the retail giant did not need the saving due to remaining open and trading strongly throughout the crisis.

The decision comes as major supermarkets and other large retailers that remained open throughout the pandemic face growing calls to hand back the savings which were aimed at helping retailers that were unable to open.

Bosses said they will work with governments on how best to hand over the money. Business rates are devolved in Scotland so there are likely to be consequentials as a result of the Barnett formula.

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

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“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 £551m in the six months to August 29 – an increase of almost 29 per cent compared with the same period in 2019.

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

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Online delivery capacity more than doubled to reach 1.5 million slots a week, including serving 674,000 vulnerable customers. The group also said it was rewarding loyal customers through exclusive deals with extension of Clubcard prices to some 2,000 products.

Results for the Edinburgh-based Tesco Bank operation revealed an operating loss before exceptional items of £155m, driven by provision for potential bad debts and reduced income. That compared with a profit of £87m in the same period a year earlier.

Tesco chief executive Ken Murphy said: “Our colleagues have done an exceptional job in responding to the challenges of the pandemic.

“We have invested more than £725m in supporting our colleagues, putting safety first, more than doubling our online capacity to support the most vulnerable customers in our communities, and hiring thousands of additional colleagues at a time of need.

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“While business rates relief was a critical support at a time of significant uncertainty, some of the potential risks we faced are now behind us.”

Scottish Finance Secretary Kate Forbes said: “This is a public spirited announcement from Tesco who, along with other essential retailers, have played an important role in Scotland’s response to the pandemic. I thank them for it.

“At the beginning of the pandemic the effects on businesses were uncertain and Tesco acknowledge that the rates relief provided by the Scottish Government gave them the confidence to retain staff and ensure essential supplies were available to customers.

“Now the situation has evolved, and Tesco’s business is proving to be resilient, I am pleased that the company are willing and able to refund the public support provided, which we estimate to be in the region of £60m.”

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