Sainsbury’s bows to pressure to pay back £440m pandemic rates relief

Sainsbury’s has followed supermarket rivals and revealed plans to pay back £440 million in business rates relief it received during the coronavirus crisis.

A number of retailers have faced criticism about benefiting from the business rates holiday, aimed at helping firms ride out pandemic, because they are also paying out dividends to shareholders.

Sainsbury’s is paying out £231 million to investors via two separate dividends relating to this year and last.

Sainsbury’s today said lockdown restrictions have remained in place for longer than originally expected and throughout the pandemic all its stores have been deemed essential retail. It added that almost all have been open and trading strongly, with the exception of a small number of convenience stores.

The grocer said: “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.

The update comes after Tesco and Morrison’s yesterday said they would repay the business rates relief- the former £585 million and the latter £274 million.

Simon Roberts, chief executive of Sainsbury’s, said: “While we have incurred significant costs in keeping colleagues and customers safe, food and other essential retailers have benefited from being able to open throughout. 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."

The boss added: "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.”

Roberts said the company continues to urge government to review the business rates system to “create more of a level playing field between physical and online retailers”.

More to follow….