Fat cat housebuilder in record £1bn profit
... thanks to home loans funded by the taxpayer
BRITAIN’S biggest housebuilder was accused of cashing in on the taxpayer- funded Help to Buy scheme last night after posting record £1.1billion profits.
Persimmon faced a fierce backlash as it revealed its profits jumped 13 per cent last year.
The company is already in the firing line over fat cat pay, shoddy workmanship and the sale of homes with rip-off leases.
Yesterday it appointed a new chief executive after former boss Jeff Fairburn was axed following a row over his £75million bonus.
However, the decision to promote managing director Dave Jenkinson triggered further outrage after it emerged he had received £40million through the same bonus scheme.
Critics said the decision to give Mr Jenkinson the job ‘ suggests Persimmon has learnt nothing’ from the outcry over fat cat pay.
Nearly half of Persimmon’s new homes were bought through the Help to Buy scheme which offers families taxpayer loans to secure a mortgage.
Campaigners say it is pushing up house prices and funnelling public into developers’ pockets.
Since the scheme was introduced, Persimmon’s profit per home has jumped from around £22,000 to £66,000.
Liberal Democrat leader Sir Vince Cable said it was ‘a scandal’ Persimmon’s profits had topped £ 1billion ‘ at the taxpayer’s expense’. He added: ‘The Government must act to stop Help to Buy, rather than allowing big housebuilders to pinch their profits from the public purse.’
And former foreign secretary Boris Johnson said: ‘ Persimmon has while let down reaping profits.’ too vast many taxpayerfunded customers of the The its scheme right firm could to after sell now homes sources be stripped through said Housing was Secretary ‘increasingly James concerned Brokenshire by the behaviour’ of the firm.
Issues of concern include lowquality building work, poor customer service and the sale of homes with leases that force buyers to pay ground rent.
The firm attracted further criticism executive yesterday of Mr following Jenkinson, over the the 51, departure appointment as chief of Labour Mr Fairburn, MP John 52. Mann, a member of the Treasury select committee, said: ‘To replace one chief executive on a £75million bonus with another who got £40million smacks of total complacency.’ Labour MP Clive Betts, chairman of the housing select committee, added: ‘People struggling to buy a home will be wondering if we should really be paying executhe tives this amount of money because they are making so much from a publicly funded scheme.’ Mr Jenkinson will be one of the lowest paid bosses in the FTSE 100 this year as the firm battles to restore its battered reputation.
He will receive a salary of £515,000 – the same as when he was managing director – and has agreed not to take a bonus.
Persimmon said all employees would be paid the Living Wage and announced ‘significant invest- ment’ in training.
Chairman Roger Devlin, 61, who was brought in last year to lead the turnaround, also pledged to improve quality of new-builds.
The firm sold 16,449 new homes at an average price of £215,563 last year, driving revenues up 4 per cent to £3.7billion. Some 7,970 were sold through Help to Buy.
Introduced by then- chancellor George Osborne in 2013, the scheme offers buyers with a deposit of only 5 per cent a taxpayer loan worth up to 20 per cent of the asking price, or 40 per cent in London.
However, Persimmon’s participation in Help to Buy is under scrutiny as the Government decides which builders can use scheme from 2021. A Government spokesman said it would ‘carefully’ examine the vast profits made by Persimmon.
Official figures released yesterday showed around one in five families who have bought using Help to Buy were already on the property ladder.
Some 37,206 – or 19 per cent – of the 195,219 households who have used the scheme since it started in 2013 already owned a property.
These families have been given £2.2billion of taxpayer cash. Many are likely to have used the money to trade up for a bigger home.
The figures also showed the cash is supporting the relatively welloff, with some 83,872 on household incomes in excess of £50,000.
Paula Higgins, of the HomeOwners Alliance, said: ‘Help to Buy is pushing up house prices and the money is going to people who don’t really need it.’ However, housing minister Kit Malthouse said the scheme was ‘helping make the dream of home ownership a reality for a new generation’.
Yesterday Mr Jenkinson said Persimmon had had ‘no direct communication’ from the Government on Help to Buy. Of the firm’s latest results, he added: ‘We are the first company to make over £1billion profit in this sector. The whole team are very proud.’
‘Pinching from the public purse’