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Co-op boss defends decision to keep £66m business rates relief

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The boss of Co-op has defended its decision not to repay £66m of business rates relief it received from the Government during the pandemic despite rises in annual sales and profits.

Steve Murrells, chief executive of the group, said: “What the board has done is completely in line with our values and ethics. The decision was completely supported by the members’ council, we haven’t paid a dividend and we don’t have the same access to capital markets as others might.”

The mutual, which also has funeral, legal services and health divisions, posted sales of £11.5bn for the year to Jan 2 – £600m higher than 2019. Meanwhile, pre-tax profits rose from £67m to £92m. 

The firm said it had to spend £84m to cover costs directly associated with the pandemic.

Mr Murrells added: “We have chosen to repay the furlough money, and I have already said, the business rates relief was something that was given for all businesses.”

The Co-op has also decided to pay bonuses to its senior executives and managers.

The business rates holiday covers the 12 months to the end of March 2021. It will opt out of a three-month extension of the relief and will repay £15.5m in furlough support.

More than £2bn has been handed back to the Government by 14 major retailers, including the big four supermarkets, which continued to trade during all lockdowns.

The Office for Budget Responsibility said at last month’s Spring Budget that the repayments would be deemed a “gift” for fiscal calculations.

The three-month extension to the relied in England, which started on 1 April, provides a further £758m tax windfall to essential retailers. However, relief worth about £490m has already been turned down. 

Robert Hayton, UK president of property tax at Altus, said “some parts of the retail sector thrived during the pandemic and the rates holiday was the icing on an already very sweet cake”.

Allan Leighton, Co-op group chairman, said the supermarket chain had played a “vital and unique role in feeding and caring for the nation” during the pandemic.

“We welcomed money from the Government on the basis that it was not a loan and we would not need to pay it back – and we took business decisions accordingly.”

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