Call for government grants returned by Tesco, Morrisons and Sainsbury's totalling £1.3bn to go towards supporting hospitality

Kate Nicholls, UK Hospitality's ceo, has called for a grant of £585 million returned to the government by tesco to go towards supporting hospitality businesses at risk of closure.

The UK's largest supermarket chain announced that it would return £585m of business rates relief it was awarded during the coronavirus pandemic, as it was internally concluded that the potential risks it faced from Covid-19 were now behind it.

Tesco saw its profits rise strongly in the first six months of the financial year, despite spending more than £500m on fighting the effects of the Covid-19 pandemic, bringing in a £551 million pre-tax profit in that period - almost a third more than over the first six months of 2019. 

Since then, Morrisons has agreed to do the same, pledging to return £274, as has Sainbury's, returning £440m, amid fears that they would be targeted for failing to do so as businesses whose profits were boosted by Government support during lockdown, and will likely pile pressure on Asda and other rivals to follow suit.

The latest news puts the total relief returned at £1.3bn, the grocers' way of addressing criticism for accepting tax breaks while at the same time paying dividends to shareholders. 

Now @sainsburys which takes it over £1.3 billion.

This is your opportunity, Chancellor @RishiSunak, to find a solution for the 3 million taxpayers left without support.

Please take it.@ExcludedUK @ForgottenLtd https://t.co/syoI5AEWAu

— Andy Burnham (@AndyBurnhamGM) December 3, 2020

Grocery purveyors did indeed experience a massive sales boost during lockdown, though it also forced them to spend hundreds of millions of pounds on buying PPE for staff, expanding online delivery services and hiring thousands of workers at the height of the crisis to keep food flowing despite a massive wave of panic buying.

Eyes will also be turning to online retailers such as Amazon, which has been criticised for failing to contribute despite having been boosted by the massive expansion of grocery sales and overall online spending.

Punchy from Sainsbury's CEO: "We continue to urge government to review the business rates system to create more of a level playing field between physical and online retailers." (translation - you wouldn't see Amazon do this)

— Simon Neville (@SimonNeville) December 3, 2020

In a statement yesterday, Kate Nicholls called Tesco's move "an admirable and altruistic gesture from a company that is clearly in a much better financial situation than the vast majority of the those in hospitality.

"The question now is what happens to this money, which the government had intended to invest in supporting businesses."

The trade body CEO implored that the government earmark the money "to create a fund for those hospitality and tourism businesses that are at high risk of failure, have been closed since March or that have had no grant support."

Akin to the Cultural Recovery Fund, she continued, "a Hospitality and Tourism Recovery Fund, including rent support to preserve the future of our high streets, would deliver a huge boost to businesses that are only just clinging onto life right when they need it most.”

The news follows on outcry from the industry on Tuesday as the Prime Minister announced that wet-led pubs forced to remain closed under Tier 2 and 3 restrictions would receive a one-off grant payment of £1,000, to "recognise how hard they have been hit" by the effects of the pandemic. 

Critics described the funding as "an insult," and "staggeringly and shamefully out of touch."