Chancellor Rishi Sunak’s £30million bonus for Primark to bring its staff back from furlough as announced last week in a move to restore the UK economy to normal after the devastating effect of the coronavirus pandemic has been turned down by the retail chain
Primark furloughed 30,000 employees during the coronavirus lockdown, and now it has reportedly burned through £800million of cash during the pandemic after making profits of more than £900million last year.
Experts believe that Primark’s decision to turn down Rishi Sunak’s offer from the Treasury may possibly put pressure on other businesses to do the same as the Sunday Times post says that William Hill also rejected the bonus payments.
During Chancellor Rishi Sunak mini-budget last week, he announced new measures to prop up the economy amid fears over a possible recession, saying every business which brings back one of the 9 million furloughed employees and keeps them working until January will receive £1,000 even if they were back at work before the policy was introduced.
It is also expected that VAT will be cut down from 20 per cent to five per cent for the hospitality industry until January 2021, While “Stamp Duty” will be axed on all homes worth up to £500,000 until March next year.
Furthermore, the UK government also promised to subside up to 50 per cent of people’s meals in restaurants from Monday to Wednesday until August, to a maximum of £10 person.
After the announcement, Mr Sunak said: “Throughout the crisis, I’ve had decisions to make and whether to act in a brand way at scale and at speed or to act in a more targeted and nuanced way.
“In an ideal world, you’re absolutely right, you would minimise that dead weight and do everything in an 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.”
However, the IFS think tank has argued that the majority of Mr Sunak’s bonus plan was likely to go to businesses that do not need it.
Director Paul Johnson said: “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.
“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.”
Mr Rishi Sunak was commended for his switch and decisive move by introducing the furlough scheme which allowed employees to still receive 80 per cent of their salary during the lockdown.
Mr Sunak is still continuing with plans to end the furlough scheme even though there are concerns that a second wave of the virus might result in another lockdown. The scheme will run until the end of October but the government will cut the 80 per cent rate down to 60 per cent from August.
“Until the end of July, there will be no changes whatsoever. Then from August to October, the scheme will continue for all sectors and regions of the UK but with greater flexibility to support the transition back to work.
“As we reopen the economy we need to support people back to work. Between August and October, the scheme will continue but with greater flexibility to support people back to work. We will share the cost of paying people’s salaries,” Mr Sunak said last month.