Taylor Wimpey to repay furlough cash putting pressure on other firms

Firms that rake in huge profits have come under pressure to hand back taxpayer’s cash for furloughed staff, after Taylor Wimpey became the latest big employer to vow to return the money.

The housebuilder, which made an £836million profit last year, said it accepted the support as a ‘precautionary measure’ but no longer needed it due to the ‘strength of the business.

Its decision piles pressure on rivals to follow suit and comes after other large businesses such as Ikea, Bunzl and Games Workshop also said they would repay furlough money.

Others such as fashion brand Burberry, housebuilder Persimmon and Paddy Power owner Flutter took a stand by avoiding using the scheme.

Taylor Wimpey’s move was welcomed last night by campaign group, the Taxpayers’ Alliance, which said it should ‘serve as an example for other firms using furlough that have come out the other side in rude health’.

And chief executive John O’Connell warned firms who can return the money, but decide not to, or for those which never needed the support in the first place that ‘taxpayers will have long memories of those that helped in the national effort and those that didn’t’.

It aims to help businesses retain staff who would otherwise have been laid off, providing them with a grant worth 80 per cent or up to £2,500 per month of a furloughed employee’s wages.

More than 9m workers have been placed on the scheme by 1.1m firms, official figures have shown, at a total cost of £20.8billion so far.

Although the scheme is gradually being wound down from August, it is still expected to cost £60billion by the time it is closed at the end of October.

Financial support for firms furloughing workers – was unveiled by Chancellor Rishi Sunak in March and launched the following month

Its use by housebuilders – which have generated vast profits, fuelled in part by the taxpayer-backed Help to Buy lending scheme – has proved highly controversial. Taylor Wimpey would not reveal how many of its 5,800 staff had been furloughed.

But it said all of them had returned to work and that it was expecting to reach 80 per cent of its normal building capacity by the end of this month, with social distancing rules still in place on construction sites.

A spokesman said the builder ‘intends to return the taxpayer funds utilised from the government furlough scheme’.

Rival Barratt Developments was the biggest known user of the scheme in the housing industry, furloughing about 5,500 staff – about 85 per cent of its total headcount.

When asked whether it would make a similar move to Taylor Wimpey yesterday, a spokesman said: ‘It is too early to assess what the full impact of Covid-19 will be on our business but we are keeping our use of funding available through the furlough scheme under review.’

A spokesman for Redrow, which furloughed 1,700 staff, said it would set out its ‘latest position on the government schemes’ next month in a trading update.

Crest Nicholson previously said it furloughed 629 staff but declined to comment yesterday.

However, it is understood that the builder is unlikely to return any taxpayer cash.

Smaller rivals Countryside and Bellway also said they furloughed staff but did not take any money, and instead paid staff wages themselves.

Vistry Group, which did use the taxpayer-funded scheme, did not respond to a request for comment.

A string of companies, including British Airways and Rolls-Royce have applied for taxpayer support under the Job Retention Scheme to pay the wages of thousands of workers.

Just weeks later they have announced brutal job cuts, sparking fury amongst union bosses. Transport committee chairman Huw Merriman accused BA in the House of Commons this week of ‘ripping off taxpayers’.

But BA has said it is battling for survival and desperately needs to slash costs.

Taylor Wimpey is to ramp up building in areas outside the normal commuter belts as people increasingly work from home.

The number of white-collar employees using their home as an office has rocketed during the coronavirus crisis, because of official advice to work remotely where possible.

But that has also meant it is no longer as important for some people to live within easy commuting distance of their employer’s building, the housebuilder’s boss Pete Redfern said.

Taylor Wimpey raised £522million in a fundraising this week and has said it will use the cash to buy land that is being sold at knock-down prices because of the pandemic.

And it is focusing on regions such as East Anglia and the South West, as demand grows for properties in areas further out from big cities that have space for home offices.

Redfern said a shift towards home working had already been seen in recent years but the pandemic would ‘increase that trend towards markets which are accessible and attractive places to live, but don’t work if you have to be in the City every day of the week’.

Taylor Wimpey yesterday said it received strong support for its shares placing on Wednesday night, having originally aimed to raise £500million.

It placed 355m new shares at 145p each, while directors also bought 324,823 and small investors bought 4.9m shares.

Some £1.15million of shares were bought by nearly 330 employees.

Taylor Wimpey stock fell 6 per cent, or 9.05p, to 142.75p yesterday.

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