Iceland’s smooth boss doesn’t need our money

Richard Walker may be genuine in his desire to help the poor and underprivileged, but taxpayers don’t owe him a handout

F‘Gas prices have left businesses stamping their feet and demanding support now’

or a man who sells frozen fishfingers and choc ices for a living, Iceland boss Richard Walker has an awful lot to say about the challenges facing the world today. Not content with flogging cheap frozen food to the masses, Walker moonlights as a commentator, appearing regularly on the Today programme, Question Time and Good Morning Britain to talk about pressing issues, though still not quite as often as doom prophet Martin Lewis. Walker also pens his own blog on subjects as varied as Ukraine, levelling up and, predictably, climate change.

What’s wrong with that, you ask? Well, nothing on the face of it. In fact, the world would be a more colourful place if more business leaders had the courage to speak out on major issues.

Instead, social media and ESG extremism have created a perverse world in which business leaders too often remain silent on the real matters of the day such as the Russian invasion of Ukraine – or, even worse, sit on the fence because they are too terrified of offending either side.

However, it seems most major corporations that do speak up feel duty-bound to throw their weight behind every radical woke campaign going from taking the knee to pronoun name badges in the workplace, for fear of becoming the latest target of a Leftist Twitter hate mob.

Walker isn’t afraid to tackle meaty subjects. Indeed some Question Time viewers were so offended by his support for Priti Patel’s Rwanda deportation policy that they laughably threatened to never shop at Iceland again.

It highlights the sort of silly, knee-jerk responses that companies face – customers boycotting frozen lasagnes because they are offended by a chief executive’s point of view on a perfectly mainstream subject.

But efforts to set himself up as a representative of the poor and the dispossessed are not entirely convincing. That’s not to say his concern is altogether disingenuous. Iceland has launched several initiatives to help struggling customers, including 1p vegetables, although a buy-now, pay-later scheme sold as “micro-loans” was less well-received, with Labour MP Stella Creasy branding it “deeply disingenuous”.

The same might be said of Walker’s enthusiasm for championing social causes in one breath while advocating another giant round of state-sponsored corporate welfare in the next. On this subject he really does risk tying himself in knots.

Walker told BBC Radio 4’s Today programme yesterday that the Government must ride to the rescue of businesses “big and small” because inflation isn’t about to suddenly go away, despite signs it has peaked. Food prices in particular would probably continue to rise, he said.

Iceland’s track record when it comes to state handouts isn’t great, to put it mildly, a point on which the BBC failed to challenge him. The chain was given a huge Treasury lifeline during the Covid crisis and never paid the money back despite its stores remaining open.

Worse was the way in which Iceland’s bosses behaved after receiving this generous taxpayer support. True, they had to cope with the standard “direct costs” of the pandemic such as PPE and till screens, as well as having to employ additional staff to cope with the spike in demand.

But soon after the business was given an estimated £46m through the Covid business rates relief scheme, Walker’s father Sir Malcolm and chief executive Tarsem Dhaliwal bought out Iceland’s majority shareholder and took full control of the company.

The sight of already-wealthy entrepreneurs consolidating their business interests via some opportunistic deal-making after a handout was not an edifying one.

There’s another elephant in the room when Walker is pushing for a bailout while professing to care deeply about those affected by the cost of living crisis, and that’s Iceland’s finances.

The business has long operated a debt-heavy business model, which has benefited its owners but leaves it vulnerable to sudden swings in the economic cycle.

A £550m bond that needs to be repaid in 2025 has been trading at distressed levels of as low as 73p in the pound in recent weeks after ratings agency Moody cut the chain’s creditworthiness and warned of refinancing risks, along with the possibility of further downgrades.

Analysts say soaring costs including energy and inflation have left its balance sheet looking increasingly precarious. Iceland is especially exposed to spiralling refrigeration charges and will be hit by a doubling of its electricity bill this year, Moodys says. Soaring gas prices have left businesses stamping their feet and demanding support now.

The Government cannot leave companies to fend for themselves, particularly when households are being bailed out.

But the danger is that the pandemic has created a dependency culture in which individuals and companies expect the state to ride to the rescue any time things get tough. After all the waste and fraud that plagued the Covid support schemes, it is essential that Government gets it right this time.

Nor can ministers be expected to prop up businesses whose problems are, to a large extent, of their own making. In the pandemic, those that had over-stretched themselves during the good times, and had a wealthy benefactor to fall back on, were ordered to stand on their own two feet.

This time is no different. There will be lots of businesses deserving of taxpayer money in the current crisis, but Iceland isn’t one of them.