Housebuilder CEO receives 2,100% pay rise – time for the Scottish Government to end subsidy

Persimmon received over £77m from the Scottish Government’s help-to-buy scheme from 2013-17

THE Scottish Government must end help-to-buy subsidies which feeds astonishing corporate greed, the Common Weal think-tank has argued.

The call comes after the publication of housebuilder Persimmon’s annual accounts, revealing the details of an astonishing rise in annual remuneration for the executive team, including a 2,100% increase for the CEO Jeff Fairburn.

The accounts show Fairburn’s enormous bonus took his annual pay from £2.1m to £47m, while the two other executives saw their pay rise from £1.3m to £20.3m and £1.4m to £36.7m respectively. This is not likely to be the maximum the three executives will receive, with 60% of their bonus scheme attached to meeting certain conditions which are likely to be met. This would take the three executives’ bonuses over the £200m mark.

Persimmon’s profits have skyrocketed since the launch of the help-to-buy scheme in Scotland and the rest of UK in 2013, a measure which provides a subsidy to prospective mortgage buyers of up to 15% of the purchase price. Research, including from the Office for Budget Responsibility, has shown that the effect of this subsidy is to push up house prices in general, making mortgages more unaffordable.

In December 2017 The Ferret revealed that Persimmon is the biggest benefactor of the Scottish Government’s help-to-buy scheme, receiving over £77m from 2013-2017 from the subsidy. Just three big housebuilders received the overwhelming majority of the benefit from the help-to-buy scheme: Persimmon, Taylor Wimpey and BDW.

Commenting, Ben Wray, Common Weal head of policy, said:

“Persimmon’s executive team have taken corporate greed to whole new heights. There is a sickness at the heart of our economic system when, while millions have seen their pay stagnate for a decade, a company can dish out over £100m in bonuses between three people.  

“But perhaps the worst thing about this is that the Scottish Government is lining Persimmon’s pockets with its help-to-buy scheme. If the £77m the Scottish Government have subsidised Persimmon with was returned, the three execs would still have nearly £30m in bonuses between them, and that’s just 40% of what they are likely to receive when bonus conditions are met!

“It can’t be value for money, in the middle of a housing crisis with a serious homelessness problem, that this is what the Scottish Government is spending its austerity-hit budget on. Help-to-buy is a flawed scheme that only pushes up house prices for most – it should be scrapped and the money re-invested into public housing.”