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Fat cats cashing in on Covid

Some big companies have cashed in on pandemic bonanza but are still slashing jobs – UniteLIVE investigates
UniteLive, Friday, November 6th, 2020


While the pandemic has claimed tens of thousands of lives and destroyed the livelihoods of many thousands more, some large companies have cashed in on a Covid-19 business bonanza.

Still, these fat cats have refused to pass on their good fortune to their workers who are the backbone of their success.

Most recently, supermarket giant Sainsbury’s announced on Thursday (November 5) that it would be slashing 3,500 jobs, with the majority of cuts resulting from the closure of Argos stores and another 500 jobs going after the chain said it would close its deli, fish and meat counters permanently.

The company has consigned thousands of its workers to unspeakable fear over an uncertain future just as the UK enters into a second national lockdown, even as the retailer has amassed hundreds of millions in revenues this year throughout the pandemic.

Sainsbury’s underlying pre-tax profits surged by 26 per cent in the six months to September to a record £301m. Even though it posted a pre-tax loss over the period of £137m, this was only because of a one-off cost of £438m associated with restructuring its Argos stores, not because the supermarket giant was performing poorly.

To add insult to injury, Sainsbury’s has slashed jobs at the same time as announcing it would be paying out £231m in dividends to shareholders. This is while the company has also benefited from a massive business rates holiday – relief that is worth almost the exact same amount as the shareholders’ windfall at £230m.

Sainsbury’s isn’t the only retailer that’s cashing in on the pandemic, all-too happily accepting business rates relief and then handing over hundreds of millions to line the pockets of their shareholders.

Both Tesco and Morrisons too have shamefully defended their decision to pay dividends to shareholders even as they also benefit from business rate holidays and a surge in sales.

Tesco, the UK’s largest retailer, posted a 4 per cent rise in operating profits to an eye-watering £1.2bn in the six months to August, yet has claimed business rates relief to the tune of £249m. The retailer’s finance director Alan Stewart justified Tesco’s decision to accept business rates relief and pay out dividends by pointing to ‘extra costs’ associated with the pandemic.

But critics have highlighted that such costs were more than offset by business rates relief – relief that was meant for shops that were forced to shut down during the pandemic — alongside a massive rise in sales.  

“For Tesco to accept this relief, and then be able to turn around and pass the benefit straight on to shareholders, shows that the system is not fit for purpose – public funds should not be captured as private profit,” New Economics Foundation senior economist Sarah Arnold told the Guardian.

Business, energy, industry and skills select committee chairman and Labour MP Darren Jones likewise slammed big supermarket chains for taking advantage of taxpayer funds.

“The chancellor continues a one-size fits all approach to financial support through the pandemic with no rules attached to how public money can be spent,” he told the Times. “Some businesses are doing very well and shouldn’t be taking taxpayers’ money, especially when that goes towards shareholder dividends or bonuses. If companies can afford not to take taxpayers’ money, they should give it back and the chancellor should put it to better use for those who need it most.”

Unite Sainsbury’s senior shop steward Neelam Verma expressed anger at the her employer’s relentless thirst for profits amid the pandemic that’s led to a surge in sales, even as they slash jobs.

“It’s very sad that on the one hand they’re announcing closures of the fish, meat and deli counters and Argos stores, and then on the other hand you see they’ve had a huge increase in grocery, online and Argos sales – it shows they’re only in it for the money,” she told UniteLIVE. “They’re not in it for the people. You’re only a number to them.”

Lloyds Banking Group

Meanwhile, over in the finance sector, Lloyds Banking Group (LBG) has taken a leaf out of Sainbury’s book and announced a massive wave of job losses despite healthy profits.

Lloyds said on Wednesday (November 4) that it would be sacking more than 1,000 workers despite raking in profits of £1.4bn in the third quarter of this year. These much higher than expected results, posted less than a week before it announced the job losses, came off the back of a recent mortgage boom.

Unite national officer for finance Rob MacGregor lambasted the bank for sacking the very people who have worked so hard to make the bank a success.

“Unite cannot comprehend why LBG would choose to cut 1,000 staff who have given the bank such commitment and dedication during a global pandemic,” he said. “These staff have worked tirelessly despite any risks to themselves.

“LBG has produced better than expected Q3 results, posting in excess of £1 billion of pre-tax profit – a direct result of the hard work and versatility of its workforce,” he added. “This cost cutting strategy will not serve the bank or its customers. It is impossible to reconcile the job losses announced with such an improved balance sheet.”

By Hajera Blagg

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