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UK executives at companies who received Covid support saw bigger pay increases – new research

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4 min

Tom Mills


  • The report shows executives at FTSE 350 companies that accepted government support during the pandemic have been receiving larger pay increases than other companies.
  • It found few UK Government Covid support schemes contained restrictions on executive pay or capital distributions to shareholders.
  • Experts say the report raises important questions about the redistributive effects of government subsidies.


New research from Aston University and the University of Sheffield has found that executives at FTSE 350 companies that accepted government support during the pandemic have been receiving larger increases in executive pay than other companies.


The research also found that few UK Government Covid support schemes contained restrictions on executive pay or capital distributions to shareholders such as dividends and share buybacks. Furthermore, those restrictions that did apply were limited, subject to exemptions and characterised by weak enforcement.


Experts say although the UK government's financial support to businesses during the COVID-19 pandemic was widely justified as necessary to protect jobs and livelihoods and to ease the financial burden for businesses and the population, they suggest that this may not tell the whole story and raises important questions about the redistributive effects of government subsidies.


The report by Aston University’s Centre for Health and Society and Sheffield University Management School reveals that in many cases companies that received and did not repay grants under the Coronavirus Job Retention Scheme (CJRS) made large profits and then awarded executives large pay rises and paid out large sums in dividends to shareholders.


For example, five companies that furloughed employees in 2020/21 generated £6.5 billion in profits in that year, while the five highest dividend-paying companies that held on to CJRS grants received in 2020/21 paid out £1.3 billion to shareholders in that year. Additionally, a significant portion of the shareholdings of these companies are owned by overseas investors.


The report highlights a similar pattern with Business Rates Relief, which covered companies in the retail, leisure and hospitality sectors. Just five companies that accepted business rates relief in 2020/21 generated a total of almost £5 billion in profits (EBITDA), while the five highest dividend paying companies that accepted the relief in 2020/21 together paid out £540 million to shareholders in that year.


Dr Gary Fooks, from the Centre for Healthy and Society at Aston University, said:


“The government's financial support to businesses during the pandemic played an important role in mitigating its economic impacts .


“However, as the report shows, there is a need to examine the redistributive effects of such support and ensure that it’s not siphoned off to support outsized executive pay packets or to reward company owners.


“The effective absence of restrictions on executive pay, shareholder dividends, and share buybacks in government support schemes like CJRS essentially gave companies the power to determine their own priorities, often resulting in significant pay-outs to executives and shareholders.


“The lack of restrictions (on executive pay and capital distributions to shareholders) raises important questions about who decides where the line between private gain and public benefit should be drawn. Poor scheme design has allowed less scrupulous companies to enrich owners and senior executives with public money.”


“We’re calling for government supports to companies to be conditional on restraint of executive pay and capital distributions to shareholders, a commitment to paying a fair effective rate of UK corporation tax, and 'fair-pay plans', which seek to reduce the gap between high and low earners within companies. These are all sensible recommendations that take account of the deep reliance of companies on government support, which we’re likely to see more of moving forward.”


Dr Tom Mills, a lecturer in sociology and policy at Aston University and co-author of the report, said:


“In a narrow sense, our findings underline the importance of policymakers attaching clear conditions to government support on executive pay and capital distributions to shareholders, with appropriate transparency enforcement mechanisms.


“However, they also raise bigger questions about the relationship between corporations and society, and the potential role that government assistance, grants, and public procurement can play in ensuring companies and our broader economy are managed in the long-term interests of society.”


Dr Killian Mullan, a lecturer in sociology and policy at Aston University and co-author of the report, said:


“The pandemic highlighted the underlying reliance of UK businesses on government support, which socialised business risks and, ultimately, underwrote corporate profits.


“However, although the scale of pandemic-related support was exceptional, 'corporate welfare' generally is the norm. Many UK companies owe their success to it in one form or another.


“It is, therefore, imperative that companies, in turn, seek to act in the wider public interest.”


You can read a summary of the findings in an associated Policy Brief (accessed here) and Executive Summary (assessed here). The full report, Who Gained, who Lost? The Distributional Impact of COVID-19 Government Support for Business, can be accessed here. An interactive dashboard of showing which companies received supports by value can be accessed here.

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Tom Mills

Tom Mills

Lecturer in Sociology and Policy

Tom Mills is a sociologist with an interest in media and communications, elite institutions and networks, and the use of digital methods.

Corporate PowerElitesBBC ImpartialitySociologyMedia Communications

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Bailey CJ. Metformin: Historical Overview. Diabetologia, 2017. Bailey CJ & Day C. Treatment of Type 2 Diabetes: Future Approaches. British Medical Bulletin, 2018.

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