Persimmon asks subbies for 19% rates cut

Subbies claim that Persimmon has asked them to make the equivalent of a 19% cut in their rates as the housebuilder continues to try and save costs.

Work is currently suspended on all sites operated by Persimmon Homes' South Midlands division, and in a letter to subcontractors, the firm said it wanted to convince its own board members to recommence work.

In an effort to "crank-up production" on a number of sites Persimmon said it recognised subcontractors could not reduce the cost of materials and called for a reduction in labour costs instead.

"We are looking for you to reduce your labour prices to around £100 per day where possible. I should therefore be grateful if you would split your costs showing labour, materials and overheads," the letter said.

It gave subbies seven days to respond.

One subby told CJ that the requested cut was the equivalent to a 19% reduction for a day’s work.

"We received this letter this morning and our reaction can only be described as tearful (with mirth)," the subby said.

In a statement, Chris Walker, managing director for Persimmon Homes South Midlands, said: "Given the well documented challenging conditions within the housing market we, along with other businesses across the Persimmon Group, are focusing on managing cash flows and are reviewing all tendering processes.

"Consequently, we are in constant dialogue with our suppliers in order to find ways to reduce costs and optimise efficiency."