The chief executive of a timber-frame housebuilding company has received a whopping 29 per cent pay rise, just weeks after it was revealed almost a third of the workforce at his Witney factory was being axed.

Stewart Milne, chairman and chief executive of the Stewart Milne Group, will see his remuneration package rise from £1.55m to £2m a year.

In July, 78 of the 260-strong workforce at its Witney factory were made redundant due to a downturn in the building trade.

Defending the move, group managing director Glenn Allison said: "A wide range of time frames are used in deciding remuneration packages.

"We look at the long periods of significant and sustained growth the company has experienced in the past, though the timing of the remuneration package obviously comes afterwards."

He added: "We do not believe the remuneration package is out of line with the contribution Stewart Milne has made to the company's growth over the past 37 years."

Mr Milne and family featured at number 214 in this year's Sunday Times Rich List, with a fortune estimated at £294m.

The decline in the company's fortunes was reflected in its financial results to June 30, which showed show a 40 per cent drop in pre-tax profits to £25m, with the Witney factory shouldering 27 per cent of all the Scottish-based group's 278 redundancies during the year.

Mr Allison said the downturn in the housebuilding business, and the lack of liquidity in the credit market, had caused the redundancies in Witney — 20 per cent of which were compulsory.

He added: "We believe we have taken the appropriate actions in Witney, where the redundancy decisions were not easy, but of course we will continue to monitor the situation."

He believed the difficult times in the industry would continue for at least the next 12 months, but in the long term he considered the proportion of timber-frame houses being built in England and Wales would rise from about 12-14 per cent now to 30 per cent.

In Scotland, about 70 per cent of new houses are built using the pre-built timber frame system.

Stewart Milne Group constructed the £10m Witney plant in 2001.