It hasn’t been a great start to the year for contractors and suppliers to housebuilders. Many have been told to take pay cuts to shore up their clients’ finances for the end of the fiscal year.

Taylor Wimpey set the ball rolling with a letter to its subcontractors announcing that it was cutting payments on existing and future contracts by 5%. Barratt and David Wilson followed suit with announcements of 3% cuts as did Bellway with a request for a 2.5% discount. Other housebuilders including Redrow and Crest Nicholson said they were in talks with their supply chains.

The National Specialist Contractors Council (NSCC), which launched its Fair Payment Campaign in September, reacted angrily on behalf of its members with a steady stream of press releases condemning the actions.

NSCC chief executive Suzannah Nichol said that housebuilders were not suffering financially and that even if that were the case, they should be looking to negotiate.

‘They should be going back to their supply chain and saying: “We have got to save money somewhere, how can you help us do that?” That is the collaborative way of doing things.’

Nichol confirmed that some of her members had reported the housebuilders to the Office of Fair Trading, claiming the similarly worded letters all arrived at the same time, suggesting uncompetitive practice.

The Home Builders Federation, which represents the interests of housebuilders, did not want to comment on the issue. A spokesman said that it was a contractual matter for individual companies.

However, a spokesman for Barratt told Building magazine: ‘This is normal business practice in a tight market and we are duty-bound to obtain the most competitive price possible.’

Source

Construction Manager