It is windfall time for those lucky few who sit in the shade of the magic money tree. Take Peter Cowgill, for example, executive chairman of JD Sports. He has been paid almost £6m in bonuses since February last year. What makes this huge amount even more shocking is that his company has received more than £100m in government support since the start of the pandemic.
Unlike Primark, which has committed to paying back £121m received under the furlough scheme and business rates relief, and the big UK supermarkets, which will pay back about £1.8bn in business rates, JD Sports has not yet decided whether it will return any furlough scheme money to the government. It wants to wait and see until Covid restrictions are fully lifted.
Let’s not forget that the massive public subsidies to Britain’s businesses were drawn up in the spring of last year, when many businesses faced existential crises and did not know if they would survive the pandemic. As it turned out, though, some of them thrived as our spending habits changed. And JD Sports was one of the winners. Its profits are set to rise by at least 70% to an estimated £550m this year.
Other businesses also seem happy to take the government money and run. Alison Brittain, chief executive of Whitbread – owners of Premier Inn – could get a £729,000 annual bonus, delayed until next year, in spite of the business losing £1bn in its past year of trading. The good news, the company says, is that they “continue to optimise government support packages”.
The chief executive of estate agents Foxtons, Nicholas Budden, will get an annual bonus of almost £400,000 to “reward hard work” in 2020, plus another £569,000 to be received five years’ time. Less hard to achieve was the £4.4m in furlough money and £2.5m in business rates relief the company received from the taxpayer, money the company is not paying back.
While it is true that some CEOs (including Cowgill) experienced pay cuts in the last 16 months, very few saw their bonuses (which can be far more lucrative) being similarly reduced. Research by the High Pay Centre found that, while 37% of FTSE 100 companies cut top pay during the lockdown, only 13% cut bonuses and long-term incentive packages.
It seems that business leaders, for all their fighting talk about welcoming competition and embracing the rigours of the free market, seem to like nothing more than featherbedding and taxpayer-enabled bonuses.
The gap between top and average pay was already a chronic and glaring problem. But when so many of us have been hit so hard by the uncertainties of the pandemic, to see monster pay packages on offer again is doubly offensive. It has not been tougher at the top in the past year or so: it’s been tough for everyone. Especially those on low rates of pay, forced to travel in to work and at continued risk to health. A 1% pay rise for NHS workers stands in painful contrast to the millions available at the top in the private sector.
There was impressive boldness and speed in the way the Treasury moved to launch its furlough scheme last year, to avoid mass unemployment and a near-certain depression. But it now seems clear there were not enough strings attached, and that the government was wrong to hope that businesses would do the right thing.
It is reminiscent of the costly recovery from the great financial crisis of 2008-9, when banks were rescued – using public money – from their own mistakes. Meanwhile ordinary citizens’ reward was a nationwide programme of austerity, the effects of which we still suffer from (and which left us more vulnerable to the impact of the pandemic).
State handouts for the bosses have turned out to be very popular in the boardroom. With any luck we are slowly, finally, beginning to emerge from the worst of the Covid nightmare. There are costs to be met, and surely it’s time to introduce higher taxes for those who can afford to pay them. For the businesses, and their leaders, who have been kept on life support it must now be payback time.
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Stefan Stern is co-author of Myths of Management and the former director of the High Pay Centre
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This article was amended on 2 July 2021 to clarify the details surrounding Alison Brittain’s potential bonus
