Tesco (TSCO.L) has announced it will repay the UK government £585m ($781m) it saved under a business rate holiday for retailers during the pandemic.
But Britain’s biggest supermarket also mounted a staunch defence of its decision to take the handout, calling it a “game-changer” and saying “every penny” had been spent responding to the pandemic.
The UK government introduced the temporary tax cut for retail, hospitality, leisure, and nursery firms in England in April, with similar measures announced soon after in the rest of the UK.
Supermarkets came under fire for taking the relief as they have been able to remain open throughout the pandemic, unlike many other firms receiving support. ‘Essential’ retailers have also faced criticism for continuing to profit from sales of non-essential products, and Tesco and Sainsbury’s (SBRY.L) sparked further controversy by paying out dividends to shareholders.
John Allan, Tesco’s chairman, said its board had unanimously agreed to repay the savings made in an announcement to investors on Wednesday.
“We are financially strong enough to be able to return this to the public, and we are conscious of our responsibilities to society,” he said.
“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.”
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But the company’s statement made clear the value of the relief when the pandemic began, saying the firm was “immensely grateful” for the support from the UK government and devolved administrations.
“In March, the UK faced an unprecedented situation as the pandemic took hold.
“For food retailers, the impact was immediate and potentially disastrous: panic buying, severe pressure on supply lines, major safety concerns and the risk of mass absences from work, culminated in a real and immediate risk to the ability of supermarkets to feed the nation.
“The decision at the time to provide rates relief to all retailers was hugely important. These funds meant that we had the immediate confidence, in the face of significant uncertainty, to invest in colleagues, and support our customers and suppliers.”
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