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Asda offers exceptional value for bosses as it pockets profits

Troublemaker looks at the week's news including Asda pocketing profits, Beer companies getting in your dreams and Thames Water dump sewage again
Issue 2802

ASDA Bury St. Edmunds Suffolk Picture: Keith Evans/Wikimedia

How’s this for ­profits? Asda’s private equity co‑owner has announced that its stake in the ­supermarket chain is worth 20 times the amount it paid last year.

Even the Financial Times newspaper says this is “an exceptional return ­enabled by the extensive financial engineering used in the takeover”. Investment fund TDR Capital and billionaire Blackburn-based brothers Mohsin and Zuber Issa used only a small amount of their own money in the £6.8 billion purchase of Asda.

They funded the rest by piling debt onto the ­supermarket chain and ­selling off some of its assets. Now TDR has told investors that it has already marked its stake at 19.8 times its ­original investment and that it is worth £1.4 billion.

Where do all these profits come from? It’s not, you may be ­surprised to hear, the result of entrepreneurial brilliance from the very rich people at the top. One method is to sell off the assets of the firm you take over. Asda bosses grabbed a big cash windfall soon after the takeover when they sold 27 warehouse properties with a book value of £497 million to Blackstone for £1.7 billion last year.

Another is to load up the debt. The takeover merchants borrowed around £3.8 ­billion for the initial purchase, with the money to be repaid through Asda revenues. They then borrowed another £500 million last October. All of that, with interest, they will extract from the firm they have grabbed.

But the root of their gains is the exploitation of labour. Without the sweat of store workers, warehouse ­workers, drivers and others there would not be a penny for the bosses. When private equity bosses take on a new company, they look immediately to see how they can “cut costs”.

In February Asda announced it was imposing a below-inflation pay rise of 3.25 percent on its 150,000 retail workers.

Until recently they earned just £9.66 an hour, well below the industry average. A GMB union campaign has shamed them into raising this to £10.10—still low pay. But thousands of ­warehouse and admin ­workers face cuts to their sick pay and a real terms pay cut.

A GMB survey showed over half of Asda workers were forced to use payday lenders, foodbanks or borrow money from family and friends. This is the other side of the “exceptional return” for the private equity wizards—and it’s how capitalism works.

Do beers dream of electric bars?

The US brewer Molson Coors ran an experiment last year. In a discreet building in downtown Los Angeles, 18 subjects were instructed to watch a strange video featuring a synth-laden soundtrack and natural imagery interspersed with glimpses of Coors Light cans. The participants were then asked to sleep while listening to an eight-hour soundtrack featuring audio from the video.

Coors’ stated goal was science-fiction worthy. The company wanted to “shape and compel the subconscious” into dreaming about beer.

Around a third of the participants said Coors products made an appearance in their dreams. Coors isn’t the only brand looking into dreams as ad space.

Microsoft has explored ways to make gamers dream of their favourite Xbox video games. Burger King had a Halloween-themed burger in 2018 that it claimed was “clinically proven” to induce nightmares. A recent survey run by The American Marketing Association, 77 percent of marketers said they had plans to use technology to influence dreams within the next 3 years.

Advertisers could, in theory, use smart speakers to market products to us in our sleep. The technology to do this is nearly there. Google’s Nest Hub, for instance, can measure your breathing during sleep and detect your coughs and snores.

Boris Johnson keeps digging

Boris Johnson travelled more than 4,000 miles to India last week, despite a boiling crisis of his leadership—and managed to squeeze in a visit to a Tory donor’s factory on his first day. Johnson toured a new JCB facility in Vadodara, Gujarat, owned by Conservative peer Lord Bamford. JCB top boss Lord Bamford, his family and businesses have given some £14 million to the Tories since 2001. Bamford, was pictured with Johnson at the factory.

Johnson was asked if he was embarrassed to visit the factory at a time when the firm was accused of supplying diggers to destroy Muslim homes in Delhi.

A rather embarrassing moment last week for British MPs on the foreign affairs committee. Their investigation into the undoubted wrongdoing of the Russian Wagner “private military company” heard evidence from Dr Sorcha MacLeod,  chair of the United Nations (UN) group on the use of mercenaries. MacLeod said there were only 37 states that had signed the  UN convention on mercenaries, and added quickly, “The UK is not a party to that convention, before you ask.” That saw some ­confusion among MPs. “The US?” asked Tory Alicia Kearns. “No,” came the reply.

DWP slammed for claimants’ deaths

The Equality and Human Rights Commission has ordered the government to reform its treatment of disabled and mentally distressed benefit claimants after a string of deaths. It was responding to “serious concerns” about “failures” in the Department for Work of Pensions (DWP), including suicides. MPs had asked the EHRC to investigate “the deaths of vulnerable claimants by suicide and other causes between 2008 and 2020”.

The EHRC is now drawing up a legally‑binding agreement for a DWP “action plan”. It will be “focused on resolving issues for DWP customers, and offers a fast, effective means of redress, and helps to avoid lengthy investigations” the EHRC said.

It comes two years after an audit report revealed the government had investigated 69 benefit claimants’ suicides since 2014, and could have investigated more. Campaigners have spent years demanding an inquiry into the deaths of benefit claimants.

Thames water dumps raw sewage—again  

Thames Water dumped untreated effluent for more than 68,000 hours into the river systems around Oxford last year, campaigners have revealed. They add that the amount of money the company plans to spend to improve the situation is woefully inadequate.

The company discharged raw sewage into the River Thames and its tributaries 5,028 times in 2021. That’s according to data analysed by the Oxford Rivers Improvement Campaign. It used data from Thames Water and applied the Environment Agency formula for capacity required at any treatment works.

The campaigners assessed that the ten large sewage treatment works operating in the upper Thames area were unable to treat the full capacity of sewage for the population of 1.1 million. The failure to invest in the capacity of the treatment works had led to more raw sewage in the rivers, the campaigners said. All 10 works discharged sewage into the rivers in 2021 for an average of 11 hours a week.

Things they say

‘Sorry you were out when I visited. I look forward to seeing you in the office very soon. With every good wish, Rt Hon Jacob Rees‑Mogg MP’

Notes left by the minister for feudalism on the desks of civil service workers working from home 

‘She knows she can’t compete with Boris’s Oxford Union debating training, but she has other skills which he lacks.’

Unnamed Tory MP to the Mail Online manages to be offensive in multiple ways at once about Labour deputy leader Angela Rayner

‘They reached the same view and they have used the same words’

Tory spokesperson explains why Boris Johnson and Nadine Dorries both tweeted exactly the same words to distance themselves from the attacks on Rayner


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