Industry's financial woes worsen

Subcontractors furious at housbuilders' attempts to slash up to 5% off their bills are demanding an Office of Fair Trading investigation.

Contract Journal (CJ) reported that several firms have contacted the competition watchdog after receiving letters informing them of the cuts. One was quoted as saying: 'All the housebuilders have suddenly decided to act at the same time and the letters are all using the same phrases, which is the sort of thing that gets the competition authorities interested.' Another told CJ: 'We are effectively under duress to accept the price cuts because if we don't we won't get any work.'

Taylor Wimpey sparked uproar earlier this month when its Bryant Homes unit wrote to trade contractors detailing plans to knock 5% off previously submitted bills. Several other housebuilders, among them Persimmon, Bellway and Barratt, then followed suit with similar cuts.

Construction News (CN) reported that client groups are now also backing suppliers' complaints, saying housebuilders would fare better by working with their supply chain. CN quoted Peter Cunningham, director of the Construction Clients Group, whose clients include the BBC, BAA and Marks & Spencer, as saying: 'This 5% doesn't need to be pulled directly from the supply chain ... if housebuilders collaborated with their subcontractors more effectively, these savings could be found in a different way. This problem would be managed out.'

As the industry's financial problems deepen, Building magazine reported that Gladedale, one of the UK's largest private housebuilders, is planning to close two offices. The firm, which builds 3900 homes a year, will close an office in Alfreton in Derbyshire and merge its Manchester and North-west businesses in an attempt to cut costs.

And another big project has been hit too. Building reported that a £300Bn HBG mixed-use scheme in Chester has been put on hold due to financial instability. It was supposed to get the green light in December, but developer ING Real Estate has said 'market conditions' have med the scheme's future unclear, and work has stopped.