Greedier than the bankers
WHEN the public thinks of financial excess it normally conjures up images of overpaid bankers, private equity princelings and hedge fund managers taking all kinds of immoral bets on the markets.
It is not expected that the fattest of all fat cats in Britain would reside at a provincial housebuilders which has grown hugely profitable on the back of taxpayer subsidies for Help to Buy starter homes and incomes from leasehold properties.
In fact, York-based Persimmon has quietly become the most cash rich company in Britain holding £1.3billion on its balance sheet, according to the just-released UK plc Debt Monitor report. It is now throwing £300million in bonus payouts at 130 of its senior executives and middle managers as if there is no tomorrow, while barely paying some of the workers on its building sites the living wage.
The Lottery- style payments mean that many will be leaving the industry to enjoy luxury lifestyles just at the time when their expertise is most needed to assist in reaching Government housing targets.
The group has become such an embarrassment to the rest of Britain’s housebuilders that they can barely mention the company’s name without spitting blood. The trigger for much of this opprobrium is Persimmon’s self-made chief executive Jeff Fairburn and his genuinely astonishing £131million bonus plan.
It was only after the resignations of his chairman and the head of the pay committee – and pressure from big investors – that Mr Fairburn agreed to accept bonuses closer to £80million. He has also pledged to give some of his cash to charity.
The nation might feel that the sums involved were deserved had Persimmon done an upstanding job in helping to deliver the 300,000 or so new homes a year which Britain needs simply to keep up with the demand of a soaring population.
But in the last financial year Persimmon managed to deliver the grand total of 16,043 homes. Much of the company’s success can be put down to the Bank of England keeping interest rates at super-low levels, making it easier for builders to buy land and expand, and for homebuyers to afford mortgages.
But the biggest subsidy has been George Osborne’s Help to Buy scheme introduced in 2013, which benefited 200,000 people buying new homes over the last four years.
The bonus payouts at Persimmon are a gross distortion of free market capitalism at work and have fuelled resentment of the housebuilders, making them an easy target for Labour’s Left-wing tendency.