Sainsbury’s has earned its tilt at Argos. But its period of grace won’t last for ever

Sainsbury’s is in an enviable position for a big supermarket chain – it has breathing space. Its latest trading update demonstrates that. The company continues to outperform the sector and has just managed to turn in its first quarterly sales growth in two years – quite a result with prices continuing to fall. Its growth drivers – online, clothing, non-food – are all strongly ahead and even the unloved big stores have started to hold their own.

That’s not to says life is easy for the grocer’s managers, who are still grappling with an extremely tough trading climate. But while rivals struggle with shopping trolleys full of seemingly intractable problems, and keep talking about their turnaround plans, Sainsbury’s seems to be in rude health. Its executives have the luxury of being able to poke their heads above the water for a look around every now and again, and that is what has led to the potential bid for Argos.

Now the catalogue company poses a risk to Sainsbury’s, and a big one. However, as I’ve said before, the supermarket has set out a realistic pitch for what Argos could become. Non-food (sales up 8 per cent) is a growth engine for the grocer and it is just possible that Argos could turbo-charge that business – as long as Sainsbury’s managers can keep their eyes on the ball while the tricky process of integration is completed.

Those managers have arguably earned their chance as this is the one member of the traditional big four supermarket groups that is more or less holding its own in the face of the challenge laid down by Aldi and Lidl.

Perhaps shareholders could even afford to provide a little leeway by allowing them to sweeten their proposal enough to see off South African rival Steinhoff (if its challenge is a realistic one) as the deadline to table a bid for Argos or walk away approaches.

If, however, the deal is ultimately doomed, so be it. There is still a chance for Sainsbury’s to use its breathing space for a little out-of-the-box thinking.

Its move into the discount sector via a joint venture with Netto has always seemed a little half-hearted, and a pause is now planned to assess the venture’s progress, which makes sense in the event that Argos comes into the fold. But if it ends up under African skies, Sainsbury’s should make a rather quicker decision on whether Netto-bury’s is working or not and either drive it forward or dump it. The grocer might have breathing room. But it is limited.

Gary Hoffman is one of the City’s more quotable executives, and he was at it again on Tuesday with his description of insurance premium tax (IPT) as a “stealth tax”.

However, the chief executive of car insurer Hastings is not strictly correct. There is nothing stealthy about it – IPT is a naked cash grab by the Chancellor. Insurance is a compulsory product for motor vehicles, but in other classes – buildings and contents, travel – it’s simply pretty much essential. Taxing it isn’t quite as bad as, say, putting VAT on food. But it is in the same ball park. Worse still, its heaviest impact is on the poorest members of society.

Those with comfortable incomes might grouse about IPT, but they can probably afford it. They tend to live in better postcodes, with better claims histories, so they usually benefit from much lower premiums (and thus lower IPT bills) than those of more humble means.

If the levy is increased, some people on lower incomes may face difficult choices. Do they get their home insured or do they just cross their fingers? Do they insure their car or should they take a risk? There are few more irresponsible things to do than take to the road in an uninsured vehicle, but if you are already living hand to mouth and it’s a choice between that and eating, what would you do?

Increasing IPT in effect punishes people for doing the right thing. That the Chancellor has a need for revenues is not in question. He just ought to find better ways of raising them.

Can we accuse the Serious Fraud Office of passing the buck on those involved in rigging foreign exchange rates? The fraud-busting agency has decided not to pursue criminal charges, so there will be no repeat of the successful prosecution of Tom Hayes for his role in Libor rigging.

Of course, what stood out about that case was that Hayes had initially been a co-operative witness who performed a volte face and pleaded not guilty. It appears there is no one like that in the forex case and it would therefore require some creativity for prosecutors to go back to the well. The laws banning the manipulation of a benchmark rate weren’t on the books at the time.

Given the failure of Libor trials subsequent to Hayes’s, perhaps this is a case of discretion being the better part of valour. However, it does put the onus back on the Financial Conduct Authority, which can impose fines and bans under a civil standard with a lower burden of proof.

Doing so will present quite a challenge. Those involved would seem to have little motivation to come quietly if they feel the regulator’s hands on their collars.

The FCA will just have to get ready for a fight. Several institutions were heavily fined for their part in the forex-rigging scandal. But institutions can only engage in wrongdoing if individuals that they employ do so first. Those people must be held to account.