Job Retention Bonus

Grumpy_chap

The BBC today reports some companies that say they will not claim the Job Retention Bonus when it becomes available early next year:
https://www.bbc.co.uk/news/business-53465971

I wonder what the motive is by these companies making this statement now? 
Do they work on the basis that the value of the "positive publicity" outweighs the value of the claim?

Given none of the companies can be certain what shocks lie around the corner, none of the companies can know whether they will need that grant funding in a few months time, even if they do not see that they will be in that desperate position based on what they know right now.  None of us can say what type of a Christmas the retail sector will face, nor what will happen to the housing market if there is weak confidence.

Normally these companies employ highly paid experts to work with the sole purpose of minimising their tax liability and part of that work means ensuring that the company claims every allowance they are legally allowed to claim.  This is all done under the guise that the management are answerable to their stakeholders above the tax payer /  HMRC.  The stakeholders that the business would normally have in mind are shareholders, customers and employees:

• I can see that taking the grant and then risk being perceived to just pass it on to shareholders as part of a dividend payout could generate high volumes of negative publicity.  That ignores the fact the shareholders are largely the pension funds of individuals.  If the grant ultimately ends up passed to shareholders that is particularly poor value for money for HMRC as it does little to stimulate short term demand.
• If sales remain sluggish, then the grant could be used to fund purchase incentives / discounts and stimulate sales, this passing the benefit to the customer as stakeholder.  This is probably not what the grant is intended for, but would be value for HMRC as it keeps cash flowing and therefore boosts the economy.
• If jobs are secure, but employees have suffered during lockdown, especially if they have been on furlough at 80%, then if the grant is not needed to secure jobs, the grant could be passed onto employees as a bonus.  This would provide good value for money as those employees return a chunk straight away as taxes and spend the remainder, thus boosting the economy, washing cash around the system, creating manufacturing / service demand and creating jobs.

Either way, for companies to reject the grant now seems particularly unusual, or have I missed something?

sharpe106

I think most of them think it is fairly pointless and won't make any difference to if they keep the employee or not. So obviously think the good publicity is worth more to them. 

Grumpy_chap

I agree it won't make any difference to whether they keep individual employees or not.

However, John Lewis said they are closing 8 stores permanently and will also not pay an annual bonus to their staff next year because of coronavirus impacts.  If they took the grant and paid each member of staff, say £500 bonus, that would be quite good value for the tax payer.  Alternatively, maybe they could use the grant to keep 1 or 2 of the closing stores open until a better recovery happens.  OR, are John Lewis saying these 8 stores were always going to close and the management were just looking for a suitable excuse as cover?  

Thrugelmir

Yet to hit the bottom. Little point in talking about recovery. 

gary83

primark were another good example, they furloughed 30,000 members of staff so would be entitled to £30 million but said it wouldn’t be necessary to apply for the bonuses. As a taxpayer I’m pleased, it’s clearly a ridiculous scheme and that £30 million is better off spent elsewhere. Despite that, to be honest their decision to refuse the money is not going to make me rush into a primark shop, I still won’t be buying anything from there. If I was a shareholder I don’t think I’d be so pleased, it doesn’t seem to be good value from a business point of view. I’d be very surprised if they got £30 million worth of value in extra sales and “free” positive publicity out of it and I’m sure all their competitors will be using it. The people to blame for the scheme work in the exchequer if large companies are opting out of huge amounts of free money at the moment on seemingly not much more than moral grounds that seems a pretty good indicator the scheme is a terrible waste of money.

Grumpy_chap

gary83 said:

primark were another good example, they furloughed 30,000 members of staff so would be entitled to £30 million but said it wouldn’t be necessary to apply for the bonuses. 
Despite that, to be honest their decision to refuse the money is not going to make me rush into a primark shop, I still won’t be buying anything from there. 

If I was a shareholder I don’t think I’d be so pleased, it doesn’t seem to be good value from a business point of view. I’d be very surprised if they got £30 million worth of value in extra sales and “free” positive publicity out of it and I’m sure all their competitors will be using it. 

If large companies are opting out of huge amounts of free money at the moment on seemingly not much more than moral grounds that seems a pretty good indicator the scheme is a terrible waste of money.

Assuming these companies really don't claim.  They could say now that they won't claim on moral grounds but then claim anyway.  HMRC won't break confidentiality.

I find it hard to see that some of the companies that are making a moral statement about the grant, but reportedly happy to use child labour in far flung parts of the world.  Seems like double standards.

Thrugelmir

Appears that M&S maybe the next major retailer to announce restructuring plans. 

hb2

I agree with 'Grumpy' that what companies say in public now could be very different from what they actually do in January!

diggingdude

I think there's a lot to be said for the publicity. Can you imagine if Virgin Atlantic said they were going to take it. The uninformed masses would be out there slagging off Branson, whilst British airways would get away with doing it

Grumpy_chap

To my knowledge, there is no company that has come out to say they will claim the funds, only companies making statements that they will not claim. 
Unless the publicity is worth more than the value of the claim, this is the management of the company failing the stakeholders to whom they owe a duty of care - shareholders, employees and customers.  In some cases it is significant sums - there is one post suggesting one company was eligible for £30m - that buys a lot of marketing to the best of my knowledge. 
I am surprised that the Unions are not out saying these companies should take the revenue and then pay a bonus across the staff. 
I cannot think of another case where the management of a large company could come out and say "we will pay £30m extra tax to HMRC this year" and anyone think it was acting in the proper interests of the company or their stakeholders.

jimkelly

It's somewhat bizarre to be advocating that companies claim the grant when they don't need it, whilst in the other threads denying support to the excluded people.

If a company has done better than expected financially from this whole situation - as some have - then, surely it is morally the right thing to do for them to refuse the bonus.  Not only that, if profits exceed previous years then they should also be paying back the original furlough money - again, as selected companies have already done.