BDO does U-turn on £4.1m furlough repayments
14 Dec 2020
BDO has bowed to public pressure and announced it is to return £4.1m of furlough money back to the government, after facing a backlash when the mid-tier firm revealed its partners were receiving more than £500,000 each on average
14 Dec 2020
The U-turn followed the publication of the firm’s results at the end of last week, in which BDO noted its financial performance over the three months from April to June had seen revenues fell by 13% while profits were down 50%, as a result of the impact of Covid-19.
At the time, BDO managing partner Paul Eagland said: ‘To brace ourselves for the Covid-19 impact, our first step was to ask partners to reduce their monthly “pay” and forego their quarterly distributions.
‘Subsequently – and in order to protect the jobs and pay packets of our 5,500 UK people - we applied to use the coronavirus job retention scheme.
‘We ensured our furloughed employees were paid in full by topping up their wages to 100% during their time on furlough, and we brought all our employees back into full time employment with no redundancies made across our workforce.’
Overall, BDO reported a £25m reduction in profits, resulting in partner distributions dropping 14%.
Average distributable profit per partner, before taxation, for the year was £518,000 compared to £602,000 the previous year.
In total, the firm’s 264 partners were paid £137m, while around 700 members of staff were put on furlough during the pandemic.
However, a number of pressure groups and other commentators criticised the firm for not returning the support payments, with the High Pay Centre saying it was ‘pretty shameful’ to take millions of pounds of public money while paying ‘vast sums’ to its senior management.
The think tank said: ‘The defence that they need it to protect jobs is risible when a small sacrifice from each partner would comfortably cover the costs of repayment, and would still leave the partners earning over £500,000 a year.’
In an updated statement at the weekend, Eagland said: ‘BDO accepted £4.1m of furlough money from the government in order to protect jobs that were otherwise at risk.
‘We were planning to review paying this back at the end of our current financial year, which is June 2021.
‘Recognising the public mood requires a much quicker process, we have accelerated this and we will be returning the money before Christmas.’