Supermarkets forgo business rates relief again

Britain’s big four supermarket groups – market leader Tesco, Sainsbury’s, Asda and Morrisons – said on Wednesday they would forgo business rates relief granted to them in Chancellor  Rishi Sunak’s budget statement.

Sunak extended a year-long business rates exemption for retail, hospitality and leisure businesses to the end of June to help them get through the COVID-19 pandemic.

He also said that for the remaining nine months of the 2021-22 financial year business rates would be discounted by two-thirds.

The major supermarket groups’ stores have stayed open throughout the crisis.

They initially benefited from Sunak’s freeze on rates for 2020-21 but paid it back after performing relatively strongly during the pandemic.

“We announced our decision to return rates relief for last year in December, because we felt it was the right thing to do, and we were financially strong enough to be able to return it,” Tesco said.

“Those same reasons still stand today and so we will not take advantage of the relief.”

However, Tesco said there was an “absolute need” for reform of the rates system and called on the government to move on it this year, a sentiment echoed by Sainsbury’s.

“We believe fundamentally that business rates are an outdated and unfair burden on retailers with physical stores and need to be permanently reduced,” Sainsbury’s said.

Treasury said last month it would delay publication of its review of business rates until the autumn when the economic outlook should be clearer.

Store-based retailers have for years complained that the business rates system is archaic and hands an unfair cost advantage to online retailers such as Amazon.

Many traditional retailers have urged the government to permanently cut business rates if it wants physical stores to survive in the age of mass online shopping.