Primark has said that it won’t need the new Coronavirus Job Retention Bonus Scheme money for its 30,000 UK employees.
What Job Retention Bonus Scheme?
In his Summer Statement, Chancellor Rishi announced a new Job Retention Bonus Scheme for employers. They can receive £1,000 cash bonus from the government for every employee they bring back to work. This will begin when the current Coronavirus Job Retention Scheme ends in October. To earn the bonus, each employee must be employed until January 2021 and be earning a minimum monthly average wage of £520.
There is no limit on how many employees can be included in the scheme. This means it could cost £9bn if employers claim for every one of the nine million employees currently on furlough, as they return to work.
Why aren’t Primark taking the government’s money?
Primark is owned by Associated British Foods, their spokesperson said: “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.”
This is great news for the government and it may inspire other similar companies to follow their lead.
Primark lost £800m during lockdown and said that, had it not been for the all the furlough schemes across Europe, they would’ve had to lay off 68,000 employees. 30,000 of those jobs are in the UK stores. They’ve managed to open most of their 375 shops since mid-June and are still predicting that they’ll make a profit.
Are there any criticisms of the new scheme?
The Chancellor doesn’t have 100% backing for this new Job Retention Bonus Scheme. The Treasury’s principal accounting officer and chief executive of HMRC, Jim Harra, wrote to Mr Sunak to express his views. He said that the scheme isn’t “value for money” and he’s not signing off on it.
Sir Kier Starmer, the Labour leader, supports action but is concerned that it is not focused on need, saying: “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 Chancellor responded to this criticism during a BBC Radio 4 Today programme: “In an ideal world… 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.”
Will the new scheme be successful?
Only time will tell how successful the scheme is as part of the government’s strategy to prevent mass unemployment. There is no blueprint for economic survival during a global health pandemic. It is commendable that Primark have not taken advantage of a substantial pot of government money and simply said that they don’t need it, so they’re not applying for it. Hopefully other large companies will have the same integrity. Whatever your political persuasion, everyone wants to see the UK pull through the health and financial impacts of this crisis as successfully as possible.