Prem Sikka on the corporate winners in the pandemic
The Coronavirus Job Retention Scheme (CJRS) has helped many UK businesses stay afloat during the pandemic by paying 80% of the wages of furloughed staff. The scheme has been extended to run until September 2021, though increasingly employers will have to bear a greater share of the wages. The cost of the scheme is expected to be around £66bn.
UK furlough scheme
By 15th March 2021, some 1.3 million employers and 11.4 million jobs have been supported by the furloughed staff subsidy. The government has released a spreadsheet showing the names of nearly 860,000 businesses who have claimed CJRS support up to February 2021.
The spreadsheet does not show the exact amounts claimed by businesses. Instead, the amounts are shown in bands: £1 to £10,000, £10,001 to £25,000, £25,001 to £50,000 and so on, right up to £50m to £100m and £100m and above.
Early analysis suggests that the highest support has been claimed by businesses in the wholesale and retail, motor vehicles repairs, accommodation, education and food services sectors, as many non-essential shops and most of the hospitality industry had to close. The lowest support is claimed by the finance and insurance, water, real estate, information and communication industries. This isn’t surprising as banks have boomed and people have been using online platforms to work from home. The closure of non-essential shops and hospitality has hit female employment particularly hard. Younger people in the age bracket of 25-34 and people in regions with dense populations have been the biggest recipients of the furloughed staff support. London and South East England lead the field.
So which businesses have received the CJRS support? This question is not easy to answer as the names of the companies on the spreadsheet are only those who have a record with HMRC and have claimed furlough support. HMRC operated the CJRS support, so the names on the spreadsheet could be less glamorous companies in a group rather than the headline names that people may be familiar with. Some familiarity with business names and group structures is therefore needed to make sense of the disclosures. In addition, HMRC will not publish details of employers claiming through the scheme if they can show that publishing these would result in a serious risk of violence or intimidation. All in all, the analysis is very time consuming.
Claimants of the furlough support
Nevertheless, the government spreadsheet provides an interesting insight into contemporary capitalism as royalty, foreign governments, wealthy elites, presidents, hedge funds, political parties, tax abusers, tax exiles, neoliberal think tanks and even those failing to pay the national minimum wage have received public money.
An analysis by The Guardian revealed that various dukes, earls, viscounts, marquesses and peers, including some of the biggest owners of inherited estates, have received public funds.
The Ritz hotel, owned by the brother-in-law of the Emir of Qatar, claimed between £500,000 and £1m. Harrods, the posh London store owned by the Qatar Investment Authority, the sovereign wealth fund of the State of Qatar, claimed between £2.5m and £5m. The Dorchester hotel, controlled by the Brunei Investment Agency, a government-owned investment organisation, received between £500,000 and £1m.
Trump International Golf Club Scotland Limited, controlled by former US President Donald Trump and his family, had turnover of £3.3 million in 2019. It received between £25,000 and £50,000.
The Queen’s nephew, David Linley, received between £10,000 and £25,000 for his furniture business David Linley & Co Limited. In 2019, the company reported pre-tax profits of £2.3 million.
Celebrity chef Jamie Oliver is reported to have wealth of around £240m. In 2019, his company, Jamie Oliver Limited, made a pre-tax profit of £3.5m. It received up to £10,000 in furlough support.
The Arcadia Group, controlled by billionaire Sir Philip Green and his family – better known for brand names such as Topshop, Topman and Dorothy Perkins – received between £5m and £10m. The group is in administration and most of its shops are expected to close.
Two of the highest claimants are Mitchells and Butlers and JD Wetherspoon. Mitchells and Butlers is better known for brands such as Toby Carvery, Harvester and Vintage Inns, and it claimed between £25m and £50m. Wetherspoon is a well-known pub restaurant. In January 2020, its Brexit-funding chairman, Tim Martin, sold 4.37 million shares at £11.50 each for £50m, but still received £25m from the furlough scheme. Whitbread Group, the owners of the Beefeater and Brewers Fayre chains of restaurants and Premier Inn hotels, received between £10m and £25m.
Ryanair, the Dublin-based budget airline, claimed between £2.5m and £5m. EasyJet received between £5m and £10m and British Airways received £10m and £25m. Gatwick Airport, partly owned by the Abu Dhabi Investment Authority, hedge funds from Australia, and pension funds from California and South Korea, and Heathrow Airport, owned by a consortium which includes the state-owned Qatar Investment Authority and China Investment Corporation, collected between £1m and £2.5m each.
Primark claimed between £10m and £25m. Marks and Spencer has shut down a number of its stores and received between £5m and £10m. TJX UK, the owner of retailer TK Maxx, received between £10m and £25m. House of Fraser, the department store bought by entrepreneur Mike Ashley’s Sports Direct in August 2018, received between £1m and £2.5m.
In December 2020, Pizza Hut (U.K.) was named and shamed for failing to pay the national minimum wage to 10,980 workers, which added up to £845,936.41. It received between £1m and £2.5m.
The Brexit Party Limited, controlled by Nigel Farage, and with 2019 income of £17.3m, received up to £10,000. The Socialist Party also received up to £10,000.
The Institute of Economic Affairs, which champions free markets and calls for a minimalist state, received up to £10,000. Another neoliberal think tank, the Institute for Fiscal Studies, also received up to £10,000.
In 2018 Britain’s largest book chain, Waterstones, was bought by hedge fund Elliott Advisors. It has received between £1m and £2.5m
With a fortune of £12.5bn, Sir Jim Ratcliffe was listed as Britain’s fifth-richest person in the Sunday Times Rich List. In 2018 he moved his tax residence to Monaco, a tax haven that does not levy income tax. However, his UK businesses, Home Grown Hotels (£500,000 to £1m), Lime Wood Group (£250,000 to £500,000), Belstaff (£50,000 to £100,000), and Ineos Group (£10,000 to £25,000) have all benefited from the UK Government scheme.
For years, Richard Branson’s Virgin Atlantic Airways has been controlled from the British Virgin Islands, a tax haven, but the company received between £2.5m and £5m in support.
In 2018, HMRC defeated a £71m tax avoidance scheme used by Ladbrokes. Nevertheless, the company has claimed between £10m and £25m in furloughed staff support from the public purse. In 2016, the tax authority shut down a £30m tax avoidance scheme designed for Greene King by Ernst & Young. The company claimed between £10m and £25m in furlough support.
The sight of public money invites some to commit fraud and CJRS is no exception. In some cases, employers have failed to pass the furlough support to staff. In others, ‘furloughed’ staff have been assigned other duties. The Government has given HMRC additional funding of £100m to appoint 1,000 inspectors to investigate fraud in the furlough scheme and other Government support programmes. Some 10,000 inquiries have been launched and more are likely to follow. In one of the earliest cases, HMRC clawed back £357,000 from a company which threatened to sack staff unless they worked through the pandemic, but still claimed CJRS to cover their wages.