Housebuilding crisis latest

Banks are urging Taylor Wimpey to quickly sell off its Taylor Woodrow construction arm after it failed to secure a £500m equity rescue package.

With existing debts of £1.9bn there are fears Taylor Wimpey will breach banking covenants unless it acts soon. One source close to the company told Building: 'What the banks want is fresh cash, either through a sale of Taywood or the raising of equity, but preferably both. And preferably soon.'

The housing slump has forced the firm to close 13 of its 39 regional offices, laying off a total 900 jobs after land writedowns of 11% (£550m), reported Building magazine. Finance director Peter Johnson has also left the company.

Construction News reported that the UK's number three housebuilder Persimmon has outraged its suppliers by demanding further rate reductions.

Despite having already asking subcontractors to submit lower invoices, a letter sent by the firm's Lancashire division to suppliers reads: 'The discounts agreed between both parties were gratefully received but we now find ourselves in a position where, due to the continuing deterioration of the economy, we need to further request that you reduce your contract rates and, if possible, suggest further savings.'

Persimmon is expected to make several hundred of its 5,500 staff redundant in a first wave of cuts next week.

Finally, Contract Journal (CJ) reported that 100,000 builders are likely to lose their jobs on sites across the country this year. Roger Humber, strategic policy advisor at the House Builders Association, told CJ that every home scrapped represents a builder losing his job. Since statistics show the number of homes built will fall from 180,000 last year to 80,000 this year, that means 100,000 jobs will go, he said.