Tesco CEO Dave Lewis defended the decision to pay investors £900 million in dividends (Credits: Bloomberg via Getty Images)

Tesco has paid out £900 million in dividends to investors despite securing a £585 million tax break from the Government.

The supermarket’s ‘aggressive’ move to hand cash to shareholders was criticised by politicians and analysts as some major firms have suspended payouts during the coronavirus pandemic.

Tesco CEO Dave Lewis defended the decision, saying the cash payout is ‘reflective of last year’s performance and the strength of the business’ and ordinary people with shares stand to benefit.

He said: ‘We looked at whether the business needs more liquidity even in the most stressed scenario and it was decided we do not.

Tesco was criticised for paying investors during the coronavirus pandemic (Picture: AFP via Getty)

‘We have a strong balance sheet and we do not need surplus cash.’

Tesco shareholders will receive 9.15p per share in its first shareholder dividend in five years.

The retailer said it would receive £585 million worth of relief as part of the business rates holiday for the current financial year, which the Chancellor Rishi Sunak announced as part of measures to support companies impacted by the virus.

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Rushanara Ali, the Labour MP for Bethnal Green & Bow, slammed the retailer, describing Tesco’s tax break as ‘completely disproportionate’.

The member of the Treasury select committee said: ‘It’s an absolute scandal that the government is providing this tax break to Tesco while millions of self-employed and freelance workers, even those who qualify, cannot get any money until June.’

Joe Healey, investment research analyst at The Share Centre, said: ‘It appears there are no signs of Tesco taking the foot off the pedal on its dividend distributions, something that will please investors.

Shoppers wear protective face masks as they queue outside Tesco (Picture: Reuters)

‘In my opinion, this is a somewhat aggressive move by a company who has openly announced a significant uptick in costs associated with the pandemic, defying similar companies such as Morrisons which has deferred dividends in an effort to preserve cash.’

It came as Tesco said that ‘significant panic-buying’ in recent weeks cleared its supply chain of certain items as sales jumped by 30%.

The supermarket giant said supply has now stabilised across the group as it reported its latest annual figures.

Bosses at the retailer said surging demand resulted in the sale of six million tins of baked beans, 3.3 million tins of tomatoes and 3.6 million packs of toilet roll each week as stockpiling increased.

It said 10% of shoppers bought 30% of products while it also reported stockpiling was most prevalent in the South East.

Tesco said operating costs are expected to be between £650 million and £925 million higher as a result of the pandemic, with vast amounts spent on recruitment and expanding its delivery business.

The company has recruited 45,000 more staff members in the past two weeks in a bid to cope with soaring demand.

Numerous workers have been appointed as drivers and pickers to help expand its delivery business.

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