After a week of vitriolic criticism levelled at football clubs for using the government’s job retention scheme to put some employees on furlough during the Covid-19 crisis, on Wednesday some balance was finally applied. Considering that the culture secretary, Oliver Dowden, had warned some Premier League clubs the scheme was not for them, and his fellow Conservative MP Julian Knight accused clubs of operating in a “moral vacuum” by furloughing staff while still paying players, the source of the measured response was perhaps unlikely: their own chancellor, Rishi Sunak.
He was asked at the government’s Covid-19 press conference about reports that British companies could put a remarkable nine million people on furlough, which, as the government pays 80% of a person’s wage up to £2,500 per month, could cost the Treasury £40bn in three months.
Sunak did not respond by saying, as Dowden did about football clubs, that his scheme was not designed for people employed by billionaire owners, nor that it has to be a “last resort”. He did not say, as Knight did about football, that if companies are still paying other employees much higher wages they are in a moral vacuum.
On the contrary, Sunak said the high take-up was a sign of the scheme’s success. It was set up for all seriously affected businesses, as a huge economic stabiliser for an unprecedented shutdown, aiming to prevent millions of people being laid off and consigned to the poverty-level welfare of the government’s universal credit system.
“We [set up the scheme] so that people were not … unemployed, they had a good income to get them through this, and they remain attached to their company and their employer,” Sunak explained. “If it ends up being significantly used I will view that as a success.”
Newcastle, Tottenham and Liverpool, owned by Mike Ashley, Joe Lewis and John Henry’s FSG respectively, look of course like a neat collection of least deserving cases. These are billionaire owners, Lewis in a tax haven; they had not looked to subsidise furloughed employees’ wages from players’ galactic pay, so were depicted as grasping public money. Critics pointed to Liverpool paying agents £44m last year, making a £42m profit, paying a £310m wage bill, to scorn the furloughing of shop and administrative workers while football is suspended.
The spectacle of players paid so much makes a glaring contrast and many Liverpool supporters did feel their club’s cherished values were being contravened. As has been seen, however, the issue of players taking pay cuts is not straightforward for clubs. Players are employed as assets clubs can sell and their contracts are protected; if their pay is cut, they become free agents. They have been lauded now for contributing to charity via the #PlayersTogether initiative agreed after talks between the captains of all 20 clubs but that has nothing to do with pay cuts. Still, none have been agreed at any of those clubs.
Similar critiques could be made of many major profitable companies but the scheme was not set up as a moral test or to carry stigma. Sunak said football clubs and all companies should use the scheme “responsibly” but he specifically did not require company owners or higher-salaried employees to pay furloughed staff’s wages, nor for companies to show they do not have cash. Nor do companies have to pick painfully through the complications of their particular business before putting some employees on furlough.
Dowden’s argument that the scheme was set up for struggling companies, not those owned by billionaires, is, simply, wrong. Some of Britain’s largest companies are making very substantial use of it. They are supported by trades unions, who were consulted on its design and are mightily relieved it enables people to remain employed, on wages they can live on.
To take just one example, British Airways’ owner, International Airlines Group, is costing the government many, many millions, having furloughed 30,000 staff. IAG last year had a £23bn turnover, made a £2bn post-tax profit and paid shareholders £630m in dividends. Its major shareholder is Qatar Airways, owned by the world’s richest per capita state. No government minister scorned this vast corporation for using the scheme, or complained at so much UK government money being advanced to pay its staff. Unite the Union welcomed the deal, saying: “This is what can and should be done to protect workers.”
Although the scheme is a grant not a loan, the public finances will have to be restored when the crisis is finally over, and companies and employees, including footballers, will be required to contribute, via higher taxes if the government deems that necessary.
Liverpool did, though, buckle under the criticism, their chief executive Peter Moore saying he was sorry and reversing the decision. Yet after the U-turn, a note of “deep concern” was sounded by the Labour MP and Liverpool supporter Ian Byrne, who wrote to Dowden arguing that the stigma could discourage other football clubs from protecting people’s livelihoods using the furlough. “We need to avoid singling out football clubs for using a scheme they are entitled to use … and ensure that government media briefings do not contribute to this,” Byrne wrote.
As for Knight, a representative of several top players told the Observer this past week that they were aware the MP had written a 2004 book giving advice for tax avoidance, including the suggestion that people might consider emigrating to avoid inheritance tax. The agent said his players, very aware of their seven-figure PAYE tax bills, failed to see how Knight could accuse football of existing in a moral vacuum, and actually did not understand how he could qualify to be an MP. The Observer put that to Knight after he issued another statement this past week calling the Premier League “laughable” and saying clubs should not use the furlough scheme. He did not respond.