People are praising Primark for refusing a £30m government handout – but not everyone agrees

Joanna Taylor
Monday 13 July 2020 08:45
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( David Rogers / JULIAN SIMMONDS / Getty Images )

People are praising fashion giant Primark for refusing to accept £30m of taxpayer money for bringing furloughed employees back to work.

Rishi Sunak announced last week that the government will pay businesses £1,000 per employee returned to work after the furlough scheme ends in October as an incentive for businesses to retain their workforce.

Primark placed 30,000 employees on furlough during coronavirus lockdown, meaning that they could receive around £30m in bonuses.

But their owner, Associate British Foods, said that Primark bosses don't think claiming the money is necessary.

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.

Shops like Primark have been open since 15 June, with furloughed employees already returned to work.

Sunak's scheme has been criticised for failing to distinguish between wealthy companies like Primark and those that desperately need government money in order to retain jobs for their employees.

Labour leader Keir Starmer said the money won't reach "the areas that most need it".

Our concern is the action they've taken isn't focused on the right places, so the Jobs Retention Bonus is a bonus for all jobs and many of those jobs, many of the people would have been brought back in any event.

Some are really at risk of losing their jobs, so we say it should have been targeted in the areas that most need it.

The scheme was also harshly criticised by Jim Harra, chief executive of HMRC and the Treasury's principle accounting officer.

In an open letter to Sunak, he questioned the "efficiency" of the measure, saying it did not represent "value for money".

Lots of people respect Primark's "smart move" of refusing to participate in the scheme.

John Lewis have followed suit, turning down a possible £14m handout from the government for returning their 14,000 furloughed staff to work.

But not everyone was impressed by Primark's announcement, with some questioning their reasons for refusing to participate in the scheme.

Primark's 30,000 furloughed employees have returned to work. The company has not announced redundancies for previously furloughed staff.

indy100 contacted them to ask if they're planning any redundancies, and they haven't responded yet. But if they do we'll be sure to let you know.

Primark say that they lost around £650m a month while their shops were shut during lockdown. People queued "for hours" to re-enter the retailer when shops reopened.

In turning down the government's handout for reinstating their furloughed workers, Primark could help pressure other corporate giants to do the same – saving millions in taxpayers's money.

Of course, we don't know exactly why Primark turned down the cash. But the enormous amount of money the government offered them, simply for doing something they had in fact already done, highlights the flaws in Sunak's job retention scheme as he fails to differentiate between large corporations and struggling small businesses.

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