Lidl agrees to hand back £100m saved in business rates relief

Lidl has become the latest retailer given “essential” status to agree to hand back millions of pounds in business rates relief to the Government.

The supermarket said it would return £100 million, claiming to have “brought forward” plans to make the payment following similar moves by rivals.

Pets At Home also announced on Friday that it would repay £28.9 million it saved on the property tax.

The total committed by essential retailers is £1.95 billion.

Lidl said the rates relief was vital during the first lockdown, allowing it to make Covid-related upgrades and investments.

But bosses said that, as stores become busier, it is “well placed to manage any further changes to the business as a result of the pandemic, and therefore has brought forward plans to return the relief”.

Lidl GB chief executive Christian Hartnagel said: “The business rates relief that was provided to us, and the rest of the supermarket sector, came with a lot of responsibility that we took extremely seriously.

“We’ve been considering this for some time, and we are now in a position to confirm that we will be refunding this money as we believe it is the right thing to do.

“We feel confident that the business is well positioned to navigate and adapt to any further challenges brought by Covid-19.”

Earlier in the day, Pets At Home said it was repaying the money as the emergence of a Covid-19 vaccine had allowed it to reassess the levels of uncertainty and that trading remains strong.

The moves follow a similar decision by discount retailer B&M, which said on Thursday afternoon that it will repay savings of “around £80 million”.

Asda also said on Thursday that it will return more than £340 million it saved from the rates holiday, following moves by Tesco, Sainsbury’s, Morrisons and Aldi.

Waitrose, Marks & Spencer and Co-op have said they will not be making similar moves because the savings are needed to offset the Covid-related costs.

Pets At Home said the decision “reflects the company’s guiding principle of treating all stakeholders fairly and is supported by the continuing strong performance of the business”.

It pointed out that the retailer, which has more than 400 stores across the UK, spent £35 million on Covid-related costs and had previously said the rates holiday would offset them.

But on Friday chief executive Peter Pritchard said the company will make the payment.

He said: “We were very grateful for the rates relief provided back in March during a time of significant uncertainty, which helped us to take the decision to keep our stores, online operations and veterinary practices open.

“Recent positive news around the launch of vaccinations for Covid-19 has led us to reassess the level of uncertainty ahead.

“Our decision today demonstrates our clear commitment to acting responsibly and treating all of our stakeholders fairly.”

Pets At Home has seen a surge in sales during the pandemic, benefiting from a self-described “baby boom” in new pet owners.

Earlier on Thursday, Aldi and Sainsbury’s said they will hand back more than £500 million in business rates relief to the Government.

It came after rivals Tesco and Morrisons made the same commitment on Wednesday.

The decision by the retailers means almost £2 billion will be returned to the Government and puts more pressure on rivals to follow suit.

Retailers are also hoping the payments will lead to wholesale reform of the property tax, with many warning it gives an unfair advantage to online retailers at a time when high streets are struggling.

Sainsbury’s said it will hand over £440 million saved from the business rates holiday.

Discount retailer Aldi plans to give back more than £100 million, Tesco £585 million and Morrisons £274 million.

Downing Street welcomed the retailers’ decisions to hand back the cash.

Asked whether any remaining supermarkets should follow suit, Prime Minister Boris Johnson’s official spokesman said: “It’s a matter for individual businesses but we have been clear throughout that businesses should use our support appropriately.

“We welcome any decision to repay support where it is no longer needed.”

There have been calls for the money to be handed over to the struggling pubs and hospitality sector.

However, House of Commons Leader Jacob Rees-Mogg said in Parliament on Thursday that the money “has already gone”.

Asked for a debate on where the money could be used, he said: “As regards a debate on where the money will go, I’m sorry to say to my honourable friend that, as £280 billion has been spent on supporting businesses during the pandemic, this just reduces it to about £279 billion, so I’m afraid the money has already gone.”

The business rates holiday was announced by Chancellor Rishi Sunak in March, aimed at helping retailers and hospitality firms forced to close due to the pandemic.

Data compiled last month for the PA news agency by real estate adviser Altus Group projected that the UK’s four largest grocers – Tesco, Sainsbury’s, Asda and Morrisons – plus German rivals Aldi and Lidl, would save about £1.87 billion as a result of the rates holiday.

The total saving for all “essential” retailers, which have been allowed to remain open, is about £3.03 billion, Altus added, from a total rates bill of £10.1 billion.