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AB Foods’ Primark, John Lewis turn down government furlough bonus, pubs welcome it

The discount clothing chain put around 30,000 UK workers on furlough during the lockdown, which forced the closure of all of its stores

Associated British Foods PLC - AB Foods’ Primark turns down £30mln government furlough bonus

Associated British Foods PLC's (LON:ABF) Primark and John Lewis Partnership are among the retailers turning down the recently announced UK government bonus for bringing back furloughed employees.

The scheme, announced in the summer statement last week by Chancellor of the Exchequer Rishi Sunak, provides a ‘job retention bonus’ of £1,000 to companies for each employee they bring back from furlough and continue to employ between November and January.

READ: AB Foods upped to sector perform as RBC predicts stronger Primark recovery

However, on Sunday Primark said it has eschewed the £30mln bonus despite having to furlough 30,000 UK employees when it was forced to shutter all of its stores during the height of the pandemic, costing it around £650mln sales each month. Most of these employees have now returned to work as its stores reopened.

Across the company’s entire European operation around 68,000 staff have been placed on furlough to avoid mass redundancies.

A spokeswoman for Primark said on Sunday the firm believed it was “not necessary” to apply for payments under the scheme, which could cost the government £9bn in total if employers of all 9mln workers on furlough decide to opt for the payments.

John Lewis is also understood to forego the bonus, which would have netted it £14mln for its 14,000 furloughed staff, in a move that could push more retailers to give up the bonus. 

Fashion retailer Next PLC (LON:NXT) and bakery chain Greggs PLC (LON:GRG) are reportedly reviewing the issue.

Pubs say yes

The hospitality sector has taken a different approach, with Young & Co.'s Brewery PLC (LON:YNGA) and City Pub Group (LON:CPC) intending to apply to the scheme.

“The hospitality industry has been the hardest hit and social distancing even at a metre reduced our capacity and trade," Clive Watson, City Pub Group's chief executive, told the Evening Standard.

"Any support from the Chancellor is vital to keep our sector alive and we will apply for the £1000 incentive to bring staff back from furlough.”

Following last week's announcement, trade body UKHospitality said 1.5mln workers in the sector were still on furlough and said the Treasury's measures were "very positive".

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