The cascade of grocers rushing to pay back Covid business rates relief rather than suffer the slings and arrows of Westminster is something to behold.
The dam was breached by market leader Tesco under the fresh leadership of Ken Murphy.
His predecessor Dave Lewis, who restored Tesco to sanity over its audit and supply chain problems, publicly had seen no inconsistency in paying dividends to shareholders while effectively taking cash from taxpayers.
The cascade of grocers rushing to pay back Covid business rates relief rather than suffer the slings and arrows of Westminster is something to behold, says Alex Brummer
Clearly the last thing the big supermarkets Tesco, Sainsbury’s, Morrisons, Asda, Aldi et al wanted was to be seen as profiteering in a pandemic and incurring the biblical wrath of citizens who have never forgiven the High Street banks for the rescue by the Government way back in 2008.
A large chunk of that money, tied up in Natwest shares, is still deeply in the red. In comparison with expected government borrowing of £393.5 billion in 2019-20, the £2 billion or so of returned business rates is a drop in the ocean.
It is a recognition, however, that while the grocers have been doing sterling service in the pandemic, by keeping the nation supplied and fed, they have been doing so at the expense of much of the rest of the High Street.
Covid has delivered a terrible price for the hospitality industry, with coffee chains such as Caffe Nero, food outlets such as Pizza Express and pubs and hotels largely shuttered or restricted in what business they can do.
In the four years since the UK voted to leave the European Union, harbour operator Associated British Ports has spent £250 million upgrading the group’s port network
The supermarkets essentially have been the beneficiary, and as Sainsbury’s has acknowledged, as it upped its underlying profit forecast for the year by £65 million to £615 million to £618 million, it is a Covid winner. The significant lesson to be drawn from this is that companies are taking broader stakeholder responsibilities seriously.
As necessary as it is to pay dividends to fund all of our pension funds, customers, suppliers, employees (who have worked flat-out during the pandemic) and the Exchequer are important constituents. Fascinating that Marks & Spencer and the mutually owned grocers Co-op and Waitrose, self-described good corporate citizens, are sitting on their hands.
Flying the flag
If you thought it was all over for Britain now we are outside the European Union, then consider this. Harbour operator Associated British Ports is doing its own levelling up. In the four years since the UK voted to leave the European Union, it has spent £250 million upgrading the group’s port network so it is fit for a more global future.
At present it is spending £50 million on new container terminals at Immingham on Humberside, both to cater for worldwide trade and to our former partners in the EU, should Dover become overwhelmed.
The week in numbers
Encouragingly, ABP does not believe that in spite of the bruising for the cruising caused by Covid that the game is up. It is using the break in traffic as a consequence of coronavirus to build a new passenger terminal at Southampton, which it believes can maintain its leadership as a world cruise capital. It is certainly proving easier to develop than the fifth terminal at Heathrow or a third runway.
Elsewhere, Melrose is doing a bang-up job with GKN Automotive, which was almost sacrificed by the previous owners in the fight for independence in 2018. Electric drive technology, one of the hidden jewels in the GKN chest, is gaining great traction and is being deployed in 13 more electric and hybrid car models across the globe for four of the biggest car makers.
The edrive technology, developed here in the UK, chimes closely with Boris Johnson’s rushed agenda to go green on UK’s roads by 2030. Rolls-Royce is hoping to use the Covid interregnum not just to concentrate production in Derby but to move ahead with the Ultrafan engine for narrow bodied jets. If this happens, the UK’s engineering future will look brighter.
Investors like the message and marked the shares up 14 per cent from an admittedly very low base. Onwards and upwards.
Hard to think that the aggressive Sydney financial group was once an arm of the defunct merchant bank Hill Samuel. New British-born chief executive Shemara Wikramanayake is testing the waters on Wall Street with a £1.3 billion takeover of US asset manager Waddell & Reed with £93 billion under management. Could one of the City’s lacklustre fund management firms be next victim for the Aussie squid?