Primark is expected to reject around £30million in ‘bonuses’ from the government for bringing back furloughed staff, it emerged today.
The retail chain will reportedly shun the huge payout unveiled by Rishi Sunak last week as he desperately battles to avoid a wave of redundancies.
The firm had furloughed 30,000 staff and is said to have burned through £800million of cash during the coronavirus crisis – but made profits of more than £900million the previous year.
The move will heap pressure on other businesses to turn down the £9billion handouts from the Treasury, which the Chancellor admits will go to many companies that are already back up and running after lockdown.
According to the Sunday Times, William Hill has joined Primark in rejecting the bonus payments.
Primark will reportedly shun the huge payout unveiled by Rishi Sunak last week as he desperately battles to avoid a wave of redundancies
Mr Sunak used his mini-Budget last week to announce more extraordinary steps to prop up the economy.
Every business that brings back one of the 9million furloughed employees on a decent wage and keeps them on the books until January will also get £1,000 – even if they were already back at work before the policy was introduced.
VAT is being slashed from 20 per cent to 5 per cent for the hospitality industry until January in another huge intervention – and stamp duty is being axed on all homes worth up to £500,000 until March.
There is also a £2billion ‘kickstarter’ scheme to pay wages for young people, and the government is subsidising up to 50 per cent of people’s meals out at restaurants from Monday to Wednesday during August, to a maximum of £10 per head.
A spokesman for Primark’s parent group ABF said: ‘I can confirm that Primark does not intend to take advantage of support under the Job Retention Bonus announced by the Chancellor this week.
‘The company removed its employees from government employment support schemes in the UK and Europe in line with the reopening of the majority of its stores.
‘The company believes it should not be necessary therefore to apply for payment under the Bonus scheme on current circumstances.’
Sources stressed that the decision was based on the company’s individual position, and was not intended as criticism of other businesses, or the government’s bonus scheme.
TUC head Frances O’Grady praised Primark today and suggested other employers who could afford it should consider its example.
She told Sophy Ridge On Sunday: ‘I think what we are worried about is that there is a risk of getting into gimmicks rather than giving the targeted support that industries need.’
She suggested that government, industries and unions need to talk about national recovery plans and to help sectors that are ‘in real trouble’ due to the crisis.
She told the programme: ‘We have to have targeted plans and support to keep them on their feet. The autumn will be too late.
‘We are looking for flexibility and targeted support to get us through this tough period.
‘It is a lot easier to hold on to good jobs that we have already rather than to try and create them later down the line. The biggest threat we face now is mass unemployment.’
In interviews after his mini-Budget last week, Mr Sunak admitted there would be some ‘dead weight’ of wasted public spending from the bonus scheme for businesses who bring back fuloughed workers.
He said ‘there has been dead weight in all of the interventions we have put in place’.
‘Throughout this crisis I’ve had decisions to make and whether to act in a broad way at scale and at speed or to act in a more targeted and nuanced way,’ Mr Sunak said.
‘In an ideal world, you’re absolutely right, you would minimise that dead weight and do everything in incredibly targeted fashion.
‘The problem is the severity of what was happening to our economy, the scale of what was happening, and indeed the speed that it was happening at demanded a different response.’
Mr Sunak (pictured visiting a Wagamama restaurant in London last week) admitted there would be some ‘dead weight’ of wasted public spending from the bonus scheme for businesses who bring back fuloughed workers
The respected IFS think-tank said the majority of the bonus scheme was likely to go to businesses who did not need it.
‘A lot, probably a majority, of the job retention bonus money will go in respect of jobs that would have been, indeed already have been, returned from furlough anyway,’ director Paul Johnson said.
‘This money will go even in respect of jobs which were briefly furloughed, are already back at work and can expect to be still back at work in January, the employer still gets £1,000.
‘Much of the VAT cut and the stamp duty cut will be deadweight; but that may be fine if they have a significant behavioural consequence.’
MailOnline has contacted both Primark and William Hill for comment.