The Co-op Group, Britain’s biggest mutual, is facing disquiet from members after refusing to commit to emulating rival grocery retailers and returning tens of millions of pounds of business rates relief.
Sky News understands that some of those who sit on the Co-op’s National Members Council want the group’s board to make an immediate pledge to waive the government windfall.
Well-placed sources said that a £150m windfall from the protracted sale of its insurance arm – which was finally approved by regulators this week – and the Co-op’s decision to invest substantial sums of money in a new entertainment arena in Manchester meant the Co-op was facing “a battle for its reputation within the group”.
A 36-hour period this week has seen Tesco, Wm Morrison, J Sainsbury, Asda and Aldi to hand back a combined £1.7bn of business rates relief following public and political pressure on the supermarket industry.
While Britain’s biggest supermarkets say they have spent more than that sum to deal with the impact of the coronavirus pandemic, they accept that they have been among the few corporate beneficiaries of the crisis.
The picture at the Co-op is more nuanced, and one source close to its board said it was “unlikely” to volunteer to hand back £70m to the government and devolved administrations.
Its business had suffered because of the costs incurred by its funeral care operations, while a commitment to paying the National Living Wage from next year will also have an impact on its cost base in 2021, the source said.
The Co-op was also unlike many of its supermarket counterparts because it had not paid a dividend to its members for many years as it sought to rebuild its balance sheet in the wake of the crisis that brought it to the brink of collapse seven years ago, they added.
A Co-op spokesperson said: “The Co-op response to helping to feed and care for the nation during COVID has been outstanding, and we are immensely proud of what our colleagues have achieved.
“We’ve clearly put the interests of people before profits and the extra costs for keeping our colleagues and customers safe have far outweighed the government support we’ve received, in respect of business rates and furlough payments.
“Given the huge uncertainty we’re facing into still and the ongoing costs we are incurring, we’ll consider our approach in terms of the government support we’ve received at year-end.”
A number of employees have raised concerns on an internal forum about the purported £100m investment – over a 15-year period – in the new Manchester arena, located near the Co-op’s headquarters.
The Co-op has said the project will create more than 4000 jobs in total, and boost the local economy by more than £1.5bn over the next 20 years.
One Co-op insider said that Allan Leighton, the group’s chairman, and Steve Murrells, the chief executive, would “eventually have to move” on the rates relief issue.
“They should be acting now, not waiting until the year-end,” he said.
The Co-op employs 63,500 people, more than 55,000 of whom work in its retail business.
The John Lewis Partnership, another of Britain’s big retail mutuals, said that it would not be repaying the government because of the costs borne by its department store chain, which has been forced to close for large parts of the year.
It also owns Waitrose, the supermarket chain.