Co-op chief rejects Justin King’s attack on Living Wage

Former Sainsbury’s boss Justin King was wrong to say that the Government’s so-called Living Wage will “destroy jobs” when pay will rise to £7.20 an hour next year, according to the head of the Co-operative Group.

Richard Pennycook told the Standard: “In the Co-op we don’t see that. We’re growing and made that investment around our colleagues [increasing pay by 8.5%] before George Osborne’s Budget statement and didn’t know it was coming, but with the ethics of the Co-op it was important to do.”

His comments come as the business made a pre-tax profit of £36 million for the six months to July 4 compared to a £9 million loss a year ago.

Sales at its core convenience stores jumped 3.3% although group revenues dipped from £4.7 billion to £4.6 billion.

Pennycook insisted the worst was over for the member-owned business which faced near-collapse at its bank, which was rocked by a drugs scandal involving its then-chairman, Paul Flowers, and an over-stretched balance sheet.

He said: “We think we’ve turned the corner and we’re now into a rebuild period and we’re pleased so far.”

Co-op’s new chairman, Alan Leighton, added: “Clearly the governance issue was at the lead of everything. We’ve got a new board with a number of new executives with high-calibre people. From a governance perspective, which was an issue, we’ve made great strides.”

The company is also keen to focus more on London where it is under-represented. Eight of 35 new stores during the last six months were opened in London and Pennycook said his fresh fruit and vegetables are cheaper than in Tesco Expresses and Sainsbury’s Locals.

He also dismissed fears discounters Aldi and Lidl will take away business.