Among the assets of the 39-year-old billionaire William Bruce Harrison are a former racecourse, an 83,000-acre ranch and 19 mountains. Until 2024, Harrison, the son of a Texas oil dynasty, was also the ultimate beneficial owner of a construction company, ISG. The firm was a major supplier to the British state, working on everything from courts and hospitals to the House of Commons; its government contracts paid out £1.85bn over a decade.
In September 2024, ISG collapsed into administration, and 2,200 workers lost their jobs. These people had no claim on Harrison’s mountains. The £15,193,580 in redundancy settlements they received was not paid by ISG, by its holding company (which remains in business), or by Harrison himself. It was paid instead by the British government.
This figure is just one item in nearly £2bn in redundancy payments covered by the state, as recorded in five years’ worth of redundancy payments data, provided to the New Statesman under freedom of information rules. The data shows that a significant number of companies controlled by very wealthy individuals, often resident overseas, have had their employees’ redundancy payouts covered by the taxpayer.
When a company is liquidated, it is expected to repay those to whom it owes money – its creditors – but there is an order of priority. Secured lenders, typically banks, are at the front of the queue; smaller, unsecured creditors – the contract cleaner, the caterers – are at the back. When a collapsing company cannot, or will not, pay its employees off, they are referred to the Redundancy Payments Service, which covers statutory redundancy entitlements up to £21,570 per person. This money comes from the National Insurance Fund, better known for paying state pensions. More than £490m in redundancy payments was issued to laid-off British workers in the last financial year.
This system is a necessary part of the social safety net, protecting workers from the impact of sudden job loss. It also underpins a core principle of the British economy: that a company can go bankrupt while its owner remains solvent. This is known as limited liability, and it allows people to take the risk of starting their own businesses.
But the payments data raises a moral question. When a wealthy business owner or a foreign private equity firm cuts British jobs, they can do so in the knowledge that the UK taxpayer will pick up the tab. To which the taxpayer might ask: is that fair?
Jonathan Moulton CBE is British, and takes a considerable interest in British politics, as a Conservative Party donor and director of a right-wing think tank, the Centre for Policy Studies, which argues that fewer people should be “dependent on the state”. He lives outside the UK, however, in the crown dependency of Guernsey.
In 2012, Moulton’s private equity firm, Better Capital (also based in Guernsey), bought one of the UK’s largest double-glazing companies, Everest. In 2020, Everest went into administration, and the Insolvency Service paid £956,919 in statutory redundancy to the employees who were laid off. Everest was then sold to a new company, Everest 2020 Ltd, which was also owned by Better Capital.
Four years later, Everest 2020 also went under, and this time the state paid £3,150,443 in redundancy to its former staff. This was all legal, and for the employees who lost their jobs, the Redundancy Payments Service provided a lifeline. And yet a taxpayer might ask why Better Capital – still solvent when Everest 2020 collapsed – could not have found the money to pay those who had worked to enrich its investors. Moulton is thought to be a centimillionaire; the Sunday Times Rich List estimated his net worth at £185m in 2019.
The payments data includes a list of well-known British high street casualties, such as Laura Ashley, in which the Malaysian centimillionaire Khoo Kay Peng took a controlling stake in 1998. When the company went into administration in 2020, the state paid its workers £7,044,474 in redundancy. Khoo had recently paid his wife £64m in a divorce settlement.
The rent-to-own chain BrightHouse also went into administration in 2020, leaving the state to cover £6,411,497 in redundancy payments to its workers. BrightHouse’s parent company, Caversham Finance, had been owned by the American private equity giant Apollo Global Management, which at the time had more than $400bn in assets under management and paid its five top executives more than $35m that year. Among them was the firm’s billionaire founder, Leon Black, who stepped down the following year after admitting to having paid Jeffrey Epstein $158m for “estate and tax planning”.
Companies linked to Paul McGowan appear multiple times in the redundancy payments data. McGowan is a co-founder of Hilco Capital, a distressed investment and liquidation specialist—sometimes described as a “vulture fund”. Hilco has played a role in the restructuring of a number of troubled high street names, including Homebase (whose employees claimed £7,577,484 from the RPS), Wilko (£51,805,400) and UK Windows and Doors (£5,702,113).
McGowan was born in Belfast and is an Irish citizen, but he lives in Monaco, which charges no tax on income or capital gains. Fellow Monaco resident Tina Green was not required to pay tax on the £1.2bn dividend she received in 2005 from Arcadia, the high street giant – the parent company of Topshop, Miss Selfridge, Wallis and Dorothy Perkins – of which she was the majority owner and her husband, Philip Green, was the CEO. The Greens were often to be found on their 90-metre superyacht, Lionheart, valued at $150m.
When Arcadia collapsed in 2020, its employees were sent to the state for redundancy, claiming £19,143,060 over two years through the RPS.
When the restaurant company Casa Negra Ltd went into liquidation in January 2021, its 64 employees were directed to the RPS, from which they claimed £105,893. This is a relatively small sum, but once again it was claimed by the employees of a Monaco resident: the company’s major shareholder, and the sole person listed as having significant control, was Lord Edward Albert Charles Spencer-Churchill, who is registered at Companies House as living in the tax-free principality.
As chair of the Blenheim Art Foundation, and half-brother of the Duke of Marlborough, Spencer-Churchill was responsible for installing Maurizio Cattelan’s America – a working toilet cast in solid 18-carat gold – at his family home, Blenheim Palace. The artwork was stolen in September 2019 and never recovered, but it had been insured for £4.8m.
The taxpayer did not have the same level of cover. According to the liquidator’s progress reports for Casa Negra Ltd, the Redundancy Payments Service has yet to recover any of the money paid out to Lord Churchill’s employees.
Among the many notable names in the redundancy payments data is Greensill Capital, a financial firm that secured loan guarantees from the British Business Bank before collapsing in March 2021, costing the state around £335m. Among Greensill’s employees – though presumably not among those who claimed redundancy pay from the RPS – was the former prime minister David Cameron, whose salary was reported to be $1m a year for 25 days’ work.
Lex Greensill, the Australian banker who founded the firm, is reported to have sold, along with his family, around $200m worth of shares in the company in 2019 alone.
The government can recoup some of the money spent via the Redundancy Payments Service. The Insolvency Service can register as a creditor in an insolvency and seek repayment, but this happens in a minority of cases, and the sums recovered are relatively small. In each of the last two financial years, the Insolvency Service has recovered less than £1 for every £10 spent, recouping around £40m (including estimated future recoveries from roughly £500m in redundancy payments.
Is all this money – half a billion a year in redundancy pay – simply lost to the taxpayer? Ewan McGaughey, professor of law at King’s College London, says it shouldn’t be. The principle of limited liability, he explains, is “the foundation of corporate law, and has been there since 1856”, and this should remain the case where people have power to negotiate.
But there is also the principle of “enterprise liability,” which holds that when a company owns another company, it can be held responsible for its subsidiary. In tax law, it is well established that a single holding company must file accounts for the group of companies it owns; in competition law, a group of companies can be treated as a single monopoly. McGaughey says that “a small amendment to the Employment Rights Act” could extend this principle to workers, who usually lack negotiating power. Under such a reform, when a private equity firm or holding company bought a British business, it would be regarded as the ultimate employer of its workers – and liable for their redundancy pay.
The only change needed, McGaughey says, is to “make clear that the employer includes the parent companies or others in the corporate group.” This would give employees “a direct right of action if their employer goes bust, to get redundancy pay from the parent company.” Alternatively, if they claimed from the RPS, the government would be “subrogated to their claims,” meaning it would have a simpler and more direct way to recover the money from a solvent owner, rather than becoming just another claimant in a liquidation.
This reform could save the National Insurance Fund hundreds of millions – but it could have an even more important effect. Overseas owners acquire British companies all the time: they are relatively cheap thanks to a weak pound, and UK workers do not have the same protections as their French or German counterparts. The result is that much of the economic activity we consider British – from high-street chains to healthcare, housing, and education – is in fact owned by investors abroad, especially in the US. Private equity firms control the businesses that employ 2.5 million workers, or about one in every 12 workers. By leaving the state to look after the workers they abandon, these investors have effectively pushed us into subsidising their great British shopping spree. It’s time we started asking for our money back.
[Further reading: How the powerful profit from disorder]
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