The news, reported by The Guardian in March, that Persimmon paid three executives a combined salary of £104m in 2017 highlights a key problem of UK corporate welfare practices — they can be exploited by individuals who operate without being subject to the rigours of the market nor state control.
What’s more, it’s British taxpayers who ultimately foot the bill. In Persimmon’s case, it was the taxpayer-funded Help to Buy home scheme that appears to have boosted profits and the company’s share price rather than the fortunes of those struggling to buy their own homes.
As The Independent reported in January 2018, half of Persimmon’s customers in 2017 were supported by the Help to Buy scheme which not only increased the revenues of the company (by 9 per cent over 2016) and sales (by 6 per cent), it also helped to push up house prices (by 3 per cent on average) — a fact that would itself have helped to price would-be home-owners out of the market.
The direct benefits to Persimmon were clearer: £3.42bn in revenue and a 25 per cent increase in pre-tax profit to £977.1m.
In fact, Persimmon’s profit from this scheme dates back to 2013 — the year that the scheme was first introduced. The Guardian reported in February 2014 that the company’s pre-tax profits grew by 49 per cent in 2013 over 2012. The jump was fueled by a 16 per cent growth in completed sales and a 41 per cent increase in forward sales, which were, in turn, fueled by the Help to Buy scheme.
In addition to this, our research shows that Persimmon has received more than half a million pounds in direct corporate welfare in the form of government grants over the years (CW Database).