Tackling Rogue Builders

Tuesday 13th June 2023 Westminster Hall

15:59

[Sir Mark Hendrick (in the Chair)]

I will call Mark Garnier to move the motion, and then call the Minister to respond. There will not be an opportunity for the Member in charge to wind up, as is the convention for 30-minute debates, although there will obviously be opportunities for interventions. I am sure that the Minister will accommodate those.

[Mark Garnier (Wyre Forest) (Con)]

I beg to move,

That this House has considered Government policy on tackling rogue builders.

Thank you very much, Sir Mark. I am conscious that we may have to break off to vote, so I will try to keep my words to the point. I thank my hon. Friend the Member for Mid Worcestershire (Nigel Huddleston), who is my constituency neighbour, for stepping into the breach this afternoon. He and I are very good friends. He is an outstanding Minister for International Trade and is replying on behalf of the Minister for Enterprise, Markets and Small Business, my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake), who is held up in a Bill Committee. I appreciate that this Minister may not be able to answer every single issue that I intend to raise.

It was nearly 18 months ago that I first brought my presentation Bill to the House, seeking to require the Government to look into the possibility of a licensing regime for builders operating at the smaller end of the market—servicing those people, for example, seeking domestic repairs or small business repairs. That area is known as the repair, maintenance and improvement sector, and it is the RM&I sector that I will concentrate on today. The Minister—when I refer to the Minister, I am in fact referring to his colleague, the Minister for Enterprise, Markets and Small Business—will be aware that at the time the Government were not minded even to look at the possibility of the sector being regulated.

Since then, of course, we have had several new Prime Ministers and a reorganisation of Government Departments, but the Government appear to be, dare I say it, increasingly less interested in talking about this consumer minefield, not more. The Minister, who I have an immense amount of respect for, and I have chatted informally about that and we agreed to meet, accompanied by the Federation of Master Builders, which is championing the cause of improved experience for consumers. It has been difficult to get a meeting set up, but I am delighted to say that we now have a meeting in the diary for the beginning of July.

The issue of rogue builders in the RM&I sector is not widespread, but it is appalling when it occurs. It is important to set out that the majority of builders in the sector are good and decent people. Last week, I had the pleasure of being a judge for the Federation of Master Builders awards, which will happen later this year. It is refreshing to see just how innovating building companies are when it comes to training staff, ensuring health and safety, in some cases offering medical insurance and training for emergencies. Indeed, some of the building firms up for awards demonstrated to me that their reputation is second to none and that they work tirelessly to ensure the longevity of their business through word of mouth and positive endorsements from customers and clients.

[Jim Shannon (Strangford) (DUP)]

I commend the hon. Member for introducing the debate. He is right: most builders are good workmen and do a grand job. That is the case in my constituency, but we also have cases of shoddy workmanship that go unchallenged as people cannot afford costly litigation on small claims, and feel unable to represent themselves. Does he agree that perhaps there should be a role for local authorities—I know that it is different in Northern Ireland than on the UK mainland—to take on the cases of people who have had shoddy workmanship and do not have the wherewithal to chase the case themselves?

[Mark Garnier]

I am grateful for the intervention. To a certain extent, local authorities can step in where builders fail to meet building standards, but the problem is that that does not work. That is what I am worried about. As I unwind my speech, the hon. Member will be able to understand a little of what I am proposing, which may be a solution to the problems in his constituency.

Of course, highly qualified and professional firms are not the target of any control that we may want to bring in, but a lot of those very good quality firms would benefit from a simple regime that demonstrates beyond any doubt that a builder firm is legitimate and that the workers within it are both honest and qualified. Repeated surveys from organisations within the sector reinforce that consumers are put off by stories of rogue builders. The FMB estimated a few years ago that up to £3 billion a year is wiped off building activity by consumers fearful of falling victims to rogues.

More recently, the HomeOwners Alliance conducted a survey of consumer worries: 79% of those surveyed reported obstacles in the way of their project, including 42% reporting that it was difficult to find a reliable builder, 29% a lack of available builders, and 15% a lack of confidence in the system. The problem that I am trying to address, working with the FMB, is that of rogue builders who prey on clients who are wholly inexperienced in this area. The vast majority of people who employ a builder have no idea how to manage them. Most of us will only infrequently need the work of a builder or tradesman.

[Giles Watling (Clacton) (Con)]

I have a constituent, Michelle Thomas, who paid £70,000 for some restoration work to her house, and the house was left untenable. Building regulators said it should be destroyed. She has paid a further £70,000 and had a very honourable builder come and put it all right.

I am amazed that the Government are not minded to regulate the issue, because, as my hon. Friend says, it would be to the benefit of legitimate good builders who work hard and do good work. One of the issues is that we get repeat offenders, who offend time and again. In the case of my constituent, the rogue builder had been involved in six liquidations. That must be addressed in legislation.

[Sir Mark Hendrick (in the Chair)]

Order. Could I ask for interventions to be a bit briefer?

[Mark Garnier]

My hon. Friend raises the most important point. We have had six phoenix companies wind up; what we do not want is another six—another six victims who have to have their homes pulled down. That is why we are trying to come up with a system of regulation that can prevent that.

Most of us will only infrequently need the work of a builder or tradesman. When we do, most of us get lucky—it is important to say that. We hear stories of people who endorse workers and pass on their names, as their work is of good quality. However, when someone gets caught by a rogue builder, their life descends into a nightmare. I know what that is like. In the interests of full transparency, I declare my interest, having found myself in such a position a few years back. It is because of that experience that I am keen to help other victims find a way out of the problem and draw the issue to a close once and for all.

When a problem starts—from poor and potentially dangerous work, as we have heard, through to the other end of the scale, which is fictitious bills—ultimately the only recourse is expensive legal fees. My experience opened my eyes to just how many people are victims of those types of rogue traders in so many different ways.

Rogue builders do not just prey on their clients. Others who lose out are the subcontractors and suppliers who do not get paid, as well as the plant hirers who do not get paid and find their machinery is often stolen. Other building firms do not see business because rogue builders will undercut their prices only to hike them later. All of us lose out through tax fraud, as rogue builders take cash in hand to dodge VAT and corporation tax. Tax fraud distorts the market, with rogues undercutting legitimate builders, creating a false impression of costs. The wider economy also loses out; the Federation of Master Builders has estimated that billions of pounds of building work is not undertaken because consumers fear being ripped off.

After my presentation Bill had its Second Reading, I was contacted by a number of victims of rogue builders. I also appeared on an ITV programme talking about the issue, leading to more victims making contact with me. The Petitions Committee contacted me to let me know that there is not one but four petitions seeking a resolution to the problem. Between them, they have gathered over 4,000 signatures, and I urge anyone who hears this debate who has been a victim, or is interested in resolving the problem, to sign one of those petitions.

It is the stories of victims that crystalises the problem, as we heard earlier. I was contacted by a police officer married to a nurse—two fine public servants. They bought their dream home and engaged a builder to renovate it. The work turned out to be massively substandard: it failed building standards and was deemed so dangerous that they could not move back into their home without remedial work. They contacted trading standards, but the builder is refusing to engage and is hiding behind his solicitor.

Similarly, someone else who contacted me had wanted to improve her home so that her disabled sister could get access. She was so let down by the system that she was motived to get in touch with the FMB, and has now launched one of the petitions I referred to in order to seek a licensing regime. Again, I urge people to go on to the Parliament petitions page and add their name.

The problem is that there is actually little redress for victims of rogue builders. Trading standards will probably have a good go at trying to sort it out, but if the builder holds fast, it can do little more than give the builder a telling off and flag their name for future people. The reality is that the only recourse for everybody is the courts, but the legal process is hopeless. Those are not my words; they are the words of a number of solicitors and barristers who advised that, irrespective of the merits of the case, the risk of prosecuting was way too high, so people should cut their losses. “Cut your losses”—do we really think that is a way for 21st-century Britain to tackle a known problem that keeps repeating itself?

The reality is that rogue builders hold all the cards: they can do whatever they like, and there is no recourse. Anyone can pick up a brick and call themselves a bricklayer, anyone can pick up a plank of wood and call themselves a carpenter, and anyone can pick up a pipe and call themselves a plumber. Ironically, they cannot pick up a gas hob and call themselves a gas fitter; that job requires compulsory certification, so there is an acceptance that regulation can be necessary. When a problem arises, however, the only redress is in the courts.

A consumer can be completely rolled over by a rogue trader, but in order to get redress, they need to put aside up to £150,000 to prosecute a legal case, securing barristers, surveyors, solicitors, court fees and all the rest of it. They may win—in fact, they probably will win—but they then need to recover their costs and damages from the builder, who closes their business and moves on to the next scam, having taken all the money out of the business so that there is no way to recover anything. The next victim is engaged and the circus goes on, but our successful litigant is left facing appalling, unrecoverable costs. Meanwhile, more suppliers, subcontractors, plant hirers and the wider building trade lose a little bit more.

However, the solution is simple. The problem lies in the imbalance of jeopardy between the victim and the perpetrator. The reason why there is so much rogue building going on is because it is an easy way to rip people off. In some ways, it is a basic level of fraud, although proving fraud is incredibly difficult. With no loss to the perpetrator, they can go on and on while the victim bears all the costs. How do we balance the jeopardy between the victim and the rogue builder? The answer must lie in regulation, with something such as a compulsory licence that the builder will lose if he or she falls foul of the rules—rules, by the way, that can and will save lives.

[Dr Dan Poulter (Central Suffolk and North Ipswich) (Con)]

I congratulate my hon. Friend on securing the debate. Rogue builders will often go into liquidation to avoid potential litigation or paying out when they have been taken to court and successfully sued, so should we also look at potentially holding the individual responsible in a fiduciary manner, not just the company? That may be a much more effective mechanism for people to be able to chase potential assets that they can then charge against successful litigation.

[Mark Garnier]

My hon. Friend gets to the nub of the point. At the end of the day, individuals have to find some sort of personal liability if rogue builders perpetrate these endless infringements. The point is that they have nothing to lose at the moment. If they run the risk of losing their livelihood, they will think again before acting in such a way. It may be that they go on to another type of criminal activity, but we would at least get them out of the building market.

The Minister and I have had informal conversations about this issue, and I know that he and the Minister who replied to my Bill’s Second Reading in 2021—my hon. Friend the Member for North East Derbyshire (Lee Rowley)—are instinctively against licensing and overregulation. To a certain extent, I can see their point. Why burden an industry that gives opportunities to people who choose to work with their hands and avoid a life of form filling? Indeed, I can see from the Wikipedia page for the Under-Secretary of State for Business and Trade, my hon. Friend for Thirsk and Malton—for whom this Minister is standing in—that he was a very successful estate agent. There is limited regulation around estate agents beyond the Estate Agents Act 1979 and the Consumer Protection from Unfair Trading Regulations 2008.

Conversely, I was an investment banker and investment manager, and I know what it is like to be regulated up to the eyeballs. Having been on the Treasury Committee during the passage of the Financial Services Act 2012, and on the banking commission for the Financial Services (Banking Reform) Act 2013, I can see why people might accuse me of being an instinctive regulator. However, even residential estate agents have to be members of a redress scheme. The estate agency of the Under-Secretary of State for Business and Trade would have been required to be signed up to either the property ombudsman or the property redress scheme. Without membership, I understand that it would not have been allowed to trade under the Consumers, Estate Agents and Redress Act 2007.

When I, the two victims I referred to earlier or any of the millions of people who want to improve their home undertake this momentous challenge—as I have said, they might do that only once or twice in their lives—they start by approaching an architect. They may speak to surveyors, and they may go to their bank or mortgage broker to secure a loan to pay for the improvements. They will apply for planning permission from the local planning authority. They may even seek legal advice, and then they will engage a builder.

The architect is regulated by the Architects Registration Board, established by the Architects Act 1987. The surveyor is required to be a member of the Royal Institute of Chartered Surveyors, set up by royal charter and independent of the Government. The mortgage broker is required to be regulated by the Financial Conduct Authority, which was set up by this Government, and cannot trade without that membership. The local planning authority is subject to the oversight of the local government and social care ombudsman. When our home improver starts to pay the builder, it is done from a bank regulated by both the FCA and the Prudential Regulation Authority, the latter of which is run by the Bank of England. Both were set up by the Financial Services Act 2012. Legal advice is regulated by the Solicitors Regulation Authority.

Our home improver then pays the money—their hard-earned cash—having had to go through umpteen regulatory hoops, to someone with no meaningful regulation. That is ridiculous. Not only is the builder not subject to any meaningful regulation, but they could do something that results in someone being severely injured or even losing their life. It is all very well saying that the builder may then be subject to criminal proceedings, but that is small consolation to the relatives of a dead father or a mother with life-changing injuries.

The only outcome that would be satisfactory would be a scheme that honest and decent builders—the majority—would be both happy to sign up to and of which they would enjoy the benefit through being part of a system of excellence. Meanwhile, rogue builders who either game the system or care not one iota about their customers will have something to lose. Without membership of whatever scheme we come up with, they would never be able to trade again, either as individuals or as businesses.

My appeal to the Minister was originally going to be for a meeting, but I am delighted that he, or someone from his office, has got in touch with me. I have every confidence that nothing will get in the way in the diary to stop that meeting happening. I very much look forward to meeting the Minister in early July. However, this is the really important point: will his Department—I know that it has been working to a certain extent on this—work with us to find a solution to this problem and stop the scourge of rogue builders once and for all? Every one of us who comes to Parliament baulks at unnecessary regulation, but just how long are we prepared to knowingly allow people to be ripped off without any usable form of redress?

16:17

[The Minister of State, Department for Business and Trade (Nigel Huddleston)]

I congratulate my constituency neighbour, my hon. Friend the Member for Wyre Forest (Mark Garnier), on securing the debate. He is a great champion for his constituents and for many causes that impact right across the country, this being one of them. I am well aware that he has proposed a private Member’s Bill to improve consumer protection from rogue builders. I am also grateful to him for giving other hon. Members the opportunity to discuss this important subject today. I thank the hon. Member for Strangford (Jim Shannon) and my hon. Friends the Members for Clacton (Giles Watling) and for Central Suffolk and North Ipswich (Dr Poulter) for their contributions, because I suspect that every Member has had correspondence and interaction with constituents on this issue. It impacts right across the country.

I assure my hon. Friend the Member for Wyre Forest that the Government are committed to ensuring that there are high standards in the construction industry and that consumers can have confidence that the work they commission will be undertaken competently and will comply with building regulations to ensure safety. We are also committed to ensuring that there are high standards of consumer protection and redress for those who pay for work that falls short of acceptable standards of quality and safety.

The construction industry makes a great contribution to the UK economy. In 2021, it had a turnover of £439 billion, accounting for nearly 9% of the economy, and employed 2.2 million people in about 430,000 firms, with an additional 700,000 self-employed workers. That speaks to some of the challenges that my hon. Friend mentioned in terms of the fragmented nature of the industry. He is also right to point out that the vast majority of those engaged in this sector are hard-working, honourable and decent people, but there are rogues—there is no doubt about it.

The domestic repair, maintenance and improvement sector is a vital part of the industry, employing about 60% of all those who work in it. The small firms and tradespeople who make up this sector deliver essential work to people right across the country. They play an important role now, which will become only more important as we seek to improve the environmental and carbon performance of homes. They are critical to our approach to reducing the 40% of carbon emissions generated by the built environment, and to achieving our net zero targets. However, it is also a part of the industry where genuine concerns about consumer protection exist.

As I have said, while the majority of tradespeople are honest and competent and provide excellent service, there are some incompetent or dishonest firms and individuals who exploit consumers, undertake defective work or overcharge for the services that they deliver. That must be stopped. The Government are committed to working with the industry and local authority trading standards to improve standards of competence and consumer protection, and to take action against rogue builders. While we are not convinced that the introduction of a licensing scheme in such a large and varied sector would be practical or cost-effective, I hope that I will be able to reassure my hon. Friend and other hon. Members that the Government take the issue of consumer protection from rogue builders seriously, and that we are taking meaningful action.

The Government have taken action to strengthen consumer rights. The Consumer Rights Act 2015 sets out the standards that consumers can expect when a trader supplies goods and services, including building work, and remedies if those rights are breached. Under the Act, traders are required to carry out a service with reasonable care and skill, and, where the timeframe is not specified in the contract, within a reasonable timeframe. Where a trader fails to meet the standards required by the CRA for the supply of a service, or if the service does not conform to the contract, there is likely to be breach of contract and the consumer is entitled to ask for a repeat performance of the service or for a price reduction. If a trader and a consumer cannot agree to a remedy, the consumer can pursue a claim against the trader in the courts. The small claims procedure provides the means to pursue a claim for up to £10,000, at a modest cost and without the need for a solicitor. Consumers have up to six years to bring a claim against a trader for breach of contract.

The Government have also signalled their intention to go further in order to protect consumers with provisions in the Digital Markets, Competition and Consumers Bill, which will give enforcement bodies the power to levy tougher fines. However, we know that many individuals and businesses are reluctant to have recourse to the courts to resolve a dispute, with the costs and time that that entails.

[Dr Poulter]

My hon. Friend will be aware that the cost of even relatively modest building works is likely to exceed £10,000, but that is the small claims court limit, so that form of redress is not open to many of the victims of rogue builders.

[Nigel Huddleston]

Yes, we are aware of the challenges with the small claims court. Of course, many building works go above £10,000. The Ministry of Justice is also looking at other forms of redress and procedures, and I understand that those are live considerations within Government. I am happy to forward my hon. Friend’s comments to the relevant Ministers, but we do understand the challenges with the small claims court. It works in many circumstances but it is not right for everybody.

We know that consumers would prefer swift, cost-effective and less time-consuming measures to settle their differences with business. That is why, following the recommendations of the independent “Each Home Counts” review in 2016, the Government have worked with the industry to establish the TrustMark scheme. This created the first Government-endorsed quality scheme for homeowners across a range of trades and types of work. TrustMark provides consumers with a single brand to identify schemes run within the industry that require participating firms and tradespeople to demonstrate competence, and which provide for consumer redress.

We are also working with the industry to ensure that high standards of consumer protection are embedded in relation to domestic households.

[Mark Garnier]

The TrustMark scheme is great and is a very good start, but it is not compulsory, which means that a lot of consumers do not necessarily know about it. If they do not know about it, they do not know whether they should be asking for it in the first place. The key point is that we can run on TrustMark, but if that becomes the standard it needs to be made compulsory.

[Nigel Huddleston]

I completely understand the arguments that my hon. Friend makes. He is right: it is not compulsory, but it is an important signal, and a good signal to the industry. It is Government-endorsed, which is also important. We certainly encourage people, when they are seeking such works, to look for that TrustMark, because it is an important indicator.

In this area, and on all the things that my hon. Friend has raised today, the important principle is getting the right balance, as he acknowledged in his speech. That means not overburdening industry and small traders, most of whom operate very effectively and professionally, but we have to make sure that we have systems and processes in place so that when things go wrong, there is appropriate redress.

My hon. Friend mentioned that the temptation, certainly for most of us, is not to overburden businesses with regulation. There will always be an ongoing debate. I appreciate that he has had consistent engagement with the Department and multiple Ministers and that he has brought many other representations from industry to the attention of the Department. We appreciate that, because these are live debates.

[Giles Watling]

rose—

[Sir Mark Hendrick (in the Chair)]

Just before the Minister takes an intervention, I remind Members that this is supposed to be a short debate. I understand that we are possibly going to have as many as five votes, when the votes are called. In the short time we have available, I would be grateful if we could minimise interventions.

[Giles Watling]

I am very grateful to the Minister for giving way. Is it not the case that historically we have relied on the cry of caveat emptor so much that we have not regulated, but that the time has come to regulate now?

[Nigel Huddleston]

I am sure the appropriate Minister has heard my hon. Friend’s appeals, and I promise to pass on those comments. The key thing is to get the right balance. If things work, we have got the balance right, but if they do not work properly, we need to reassess the balance. I assure him that on an ongoing basis, officials and Ministers pay close attention to what is going on in the sector. Many of the things that my hon. Friend and colleagues have appealed for today have been asked for by many people, but there is also some quite strong opposition, for good reason, so it is a matter of balance.

I will bring my comments to a close shortly, Sir Mark. On decarbonisation, the Government are working with the industry to ensure that high standards of consumer protection are embedded in our domestic household decarbonisation retrofit programmes. Government-funded schemes require installers to hold appropriate certifications. The Government are also seeking to increase the number of qualified and competent tradespeople and to ensure that they have the skills to deliver the quality of work required. We have already provided nearly £7 million to fund 8,000 training opportunities for the energy efficiency and low-carbon heating supply chains. We are considering options to work with the industry to support further training in key skills shortage areas and new routes of entry to increase capacity. My Department is also working closely with the Department for Levelling Up, Housing and Communities to strengthen the consumer protections available through competent person schemes.

In conclusion, I would like to thank my neighbour, my hon. Friend the Member for Wyre Forest, for securing a debate on this important issue. I hope that I have been able to reassure hon. Members that the Government are not only committed to, but taking action to ensure that high standards of consumer protection exist and to tackle the problem of rogue builders and tradespeople.

Question put and agreed to.