Housebuilders slash payments by 5%

Taylor Wimpey, Barratt and David Wilson Homes are all cutting payments to subcontractors and suppliers by as much as 5% as a result of the credit crunch.

In a report in Building magazine, Taylor Wimpey said it needed to take “urgent action” after a difficult year for the housebuilding industry and a tough economic outlook.

The housebuilder is introducing a 5% reduction in price on all outstanding works on existing orders and future orders placed after 2 January 2008.

The news comes just weeks after the Office of Government Commerce (OGC) introduced a Fair Payment Charter as a guide to best practice to paying the supply chain.

In its letter, Taylor Wimpey said it is reviewing its own overheads, house designs and build processes, but it also needed trade partners to “play their part”.

Taylor Wimpey said: “We have not taken this decision lightly, but it is essential that we take this action if we are to secure the long-term business – for Taylor Wimpey, our subcontractors, suppliers and consultants.”

The housebuilder also said it may review its credit terms for suppliers if it is not able to reduce overall costs.

A Taylor Wimpey spokesman added: “Taylor Wimpey is committed to reducing costs, and we expect our trade partners to work with us to do so.”

Barratt has blamed its average 3% payment cut on its £2.2 billion acquisition of Wilson Bowden in April of last year.

A statement from the housebuilder said: “As a result of the Wilson Bowden acquisition last year, we initiated talks with all of our suppliers. These discussions are now continuing on a region-by-region basis.” The 3% cut will vary across the country.

Nicholas King and Persimmon are to take similar action.