Brick scam adds œ40m to tenders

Contractors are paying more than œ40 million over the odds for bricks every year because of deals struck between manufacturers and middlemen, it emerged this week.

The brick factors' practice of "covering" sites (see panel) means that contractors are left with no option but to pay inflated prices for bricks specified for particular projects.

Brick factors account for 35% of the UK's annual 3 billion brick sales. With a typical mark-up of œ40 per 1,000 achieved by covering sites, the scam is adding some œ42 million a year to construction clients' bills.

Bernard Smith, an architect with housebuilder Fairbriar, told CJ: "The client is the one who suffers as all the extra cost is passed on to him.

"We try to beat covering by going back to the local authority saying that the brick factor is trying to push prices up; some then agree to allow three or four different types of brick," he added.

Graham Davies, chief executive of the Buxton Group, described brick covering as outrageous. "It is an on-going scandal," he said. "It falsifies the market. The market should find its own price level."

Buxton is currently bidding for the œ1.4 million Wandle Valley School in Sutton, south London, a project involving the use of around 30,000 bricks.

"The project has been covered by brick factor Procter & Lavender," said Davies. "The architect has specified Ockley brick and we're being quoted œ285 per 1,000 because it is a covered site. Where we brake cover we find we can buy bricks œ30 per 1,000 cheaper."

The Brick Development Association insists that a new trading code, which comes force today, will outlaw brick covering.

Michael Ankers, BDA chief executive, said: "Covering will stop. The new code will block it out."

But buyers were quick to rubbish the BDA's trading code. "It won't stop covering" was one buyer's blunt assessment. Site covering: how it works

n Brick factors obtain data on brick type specifications in newly-approved developments from the industry's business leads publications.

n The brick factor who is quickest off the mark, calls the manufacturer and agrees a price for the site, which can be as much as œ80 per 1,000 above market prices. The manufacturer then quotes all other parties a price œ20 higher still, the project having become "covered".

n The builder who wins the project has no choice but to pay whatever cover price has been agreed by the brick factor.