OBSCENE BONUS SHOWS WHY WE NEED A NEW APPROACH TO HOUSEBUILDING
Most people in Midlothian are familiar with Persimmon Homes. They’ve built many new houses in Dalkeith, Bonnyrigg and Gorebridge. What most people won’t know is that last week the company announced a record 25% increase in their pre-tax profits, to almost a billion pounds. That’s a £61,000 profit on every house they built in 2017.
And what did they do with those record profits? They gave them back to their shareholders, who will receive £4.1 billion over the period 2012-21, more than double the amount they had previously been promised. In order to fund this magnanimity, the Chief Executive of Persimmon had to agree to a cut in his bonus from £110m to a penny-pinching £75m.
Let’s put this in perspective. The annoyance of the Persimmon shareholders that they weren’t being paid enough for the effort of putting money into a guaranteed pay-back scheme led to the boss shuffling off £35m from his account into those shareholders’ coffers. Thirty five million pounds. In one year. Enough to plug the entire Midlothian Council budget deficit for the next three years. And the Persimmon boss will still have £75m this year alone, on top of his salary.
In conventional economic terms, the housebuilding business is massively successful. In moral and social terms it is bankrupt. In Midlothian we have thousands of people who cannot afford the houses that are on offer and who need and deserve social housing. But we carry on approving thousands of private houses that no-one in this county can buy, sending millions of pounds into the coffers of Persimmon and their ilk which should be getting re-invested into our communities here.
The system is bust and we need politicians with the guts and the nous to stand up and get it changed. We need a land value tax so that local authorities and their communities get some benefit from the increase in land prices that comes from getting a planning consent. And we need local authorities to be back in charge of building houses for affordable social rent.
Unless we take back control of house building from the mega speculators we will continue to see the obscenity of single individual “entrepreneurs” being paid more than would keep the whole of Midlothian Council going. It has to stop.