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Clients slam house builders’ cuts

Client groups have now joined the chorus of condemnation over house builders imposing price cuts on their suppliers by saying they would achieve better results by working with their supply chain.

Persimmon, Bellway and Barratt have followed the example of Taylor Wimpey, which imposed a five per cent cut on subcontractors - including jobs still on site.

In the latest move, Persimmon’s up-market brand Charles Church has asked suppliers to “surrender their retention sums until the end of this year” in order to achieve a five per cent reduction.

But the actions, which the house builders say have been provoked by the fragile state of the housing market, have even managed to stir criticism from groups not normally noted for sticking up for subcontractors.

Peter Cunningham, director of the Construction Clients Group, said: “This five per cent doesn’t need to be pulled directly from the supply chain.

“If house builders collaborated with their subcontractors more effectively, these savings could be found in a different way. This problem could be managed out.”

Mr Cunningham - whose organisation represents clients such as the BBC, BAA, Birmingham City Council and Marks & Spencer - said his group had found that working with the supply chain early in the process was a more effective way to reduce costs.

And he said house builders would be welcome to join the group to learn more about collaborative ways of working.

He said: “We would like to welcome house builders into the group and adopt our thinking.

“We would like to encourage house builders to use the same kind of principles that we have found to work.”

Miller Homes, which has a turnover of more than £700 million, is one of the few house builders to come out and say it is not planning to impose cuts on subcontractors.

Procurement director Garry McDonald said: “We want to become one of the best customers in the eyes of our suppliers.

“We are therefore working in partnership with our suppliers and subcontractors to look at ways we can improve cost efficiencies and processes.”

The Federation of Master Builders has said it will take its objections to house builders’ demands to Parliament.

The group is asking a number of MPs to table an early day motion expressing their concern at the actions of Taylor Wimpey and others.

House builders’ demands

TAYLOR WIMPEY

Demanded five per cent pay cut “on all outstanding works on existing orders, as well as all new orders after January 2”

BARRATT

Have asked for pay cuts varying on a regional basis, telling subcontractors there will be reductions of up to five per cent on future contracts

BELLWAY
Asked for a 2.5 per cent reduction in future contracts and has also said it does not want increased materials costs passed on

PERSIMMON
Subsidiary Charles Church has suggested suppliers could help to achieve a five per cent price cut by “surrendering their retention sums until the end of this year”