Building Safety Bill

Debate between Lord Best and Lord Blencathra

Committee stage
Thursday 24th February 2022 Grand Committee

[Lord Blencathra (Con)]

My Lords, I rise to move Amendment 13 and to speak to Amendments 14 and 15 standing in my name. First, I declare a personal interest in that I am a leaseholder in a block of flats near here which qualifies for remediation work; we may have wooden balconies and other bits and pieces not technically covered.

Quite simply, I have tabled these amendments because I believe that the penalties for big building corporations are ridiculously light. I accept that for the single trader plumber, electrician or brickie, the magistrates’ court might suffice, but I say to my noble friend the Minister that it is preposterous to permit the Persimmon or Berkeley Homes of this world to be taken to a magistrates’ court for breaches of the law and fined a mere £200 per day that the breach continues. Theoretically, a magistrates’ court could impose an unlimited fine for breaches of the amounts imposed, but those amounts are trivial. Contrast that to the Health and Safety Executive, where last year the average fine was £140,000 and it fined the National Grid £4 million. Not a single person was killed in that incident, but the HSE believed that the National Grid’s records were inadequate and fined it £4 million.

In 2019, the Competition and Markets Authority fined three construction firms £25 million, £7 million and £4 million for indulging in a concrete pipe price-fixing ring. In 2021, another two firms were fined £15 million for fixing groundworks contracts—and these companies were not the large, mega housebuilding firms we all know and love. If the CMA can impose those levels of fines on small and medium-sized companies which have not compromised safety, why on earth should we even countenance four construction monoliths—which, in 2020, posted profits of £3.8 billion—getting a fine of £200 per day for breaching building regulations? That is why I believe we need to hit them hard, and the penalty in my amendment is the construction cost of the building they broke the law constructing, and that cost would double for each month that they fail to remedy it.

Let us emulate the CMA, which says:

“In calculating financial penalties … the CMA takes into account a number of factors including the seriousness and duration of the infringement, turnover in the relevant market, any mitigating and/or aggravating factors, deterrence and the proportionality of the penalty relative to each company’s individual circumstances.”


I simply suggest, in conclusion, that if that is the modus operandi of the CMA, it should be the modus operandi when we are tackling huge building firms which have breached building regulations. The big corporations need to be hit hard. Our penalties at the moment may be appropriate for the single plumber and electrician but not for the Berkeley Homes of this world, to name just one. I beg to move.

[Lord Best (CB)]

In the absence of others, I rise to speak to Amendments 94A, 94B and 97A, which seek to strengthen the hand of the new homes ombudsman. At Second Reading, I congratulated the Government on introducing this new dispute resolution service. I noted just how important it was for consumers to have an accessible and effective means of handling their numerous complaints against shoddy workmanship, building defects and appalling service in rectifying these problems, not least by the oligopoly of volume housebuilders.

My concern has been that the new homes ombudsman will not have sharp enough teeth to deal with these powerful players, and at Second Reading I posed a number of questions to the noble Lord the Minister accordingly. He was able to give me some reassurance on the independence of the new ombudsman from the industry. The housebuilders will be required to fund the ombudsman’s costs and will have a major say on the New Homes Quality Board, which will oversee the ombudsman service and agree the code of practice to be used, but the Minister assured me that the independence of the ombudsman will be preserved.

Subsequently, I have received a lengthy and extremely helpful briefing from the chair of the New Homes Quality Board, Natalie Elphicke MP. From that it is clear that considerable effort has gone into ensuring the genuine independence of the new arrangements from the influences of the housebuilding industry. I am grateful for those reassurances and for other details of the work that has been going on behind the scenes, which I hope will now receive the publicity it deserves.

Only Parliament in statute can endow the ombudsman with legal powers, and two of my amendments before the Committee today are intended to bolster the ombudsman’s jurisdiction to achieve better behaviour by the housebuilders. At present, the Bill makes provision for the ombudsman to make “make recommendations” about changes that developers and housebuilders should make to improve standards of conduct or standards of quality of work where,

“following the investigation of a complaint the ombudsman identifies widespread or regular unacceptable standards of conduct or standards of quality of work”.

This is good stuff, and making recommendations to this end is an admirable task for the ombudsman. However, making recommendations is not the same as placing requirements upon the builders to up their game. Amendments 94A and 94B add a power for the ombudsman to go further and place “improvement requirements” on the members of the scheme—that is on all the builders and developers selling homes, where widespread unacceptable standards of conduct or quality of work are found.

Amendment 97A seeks to strengthen the ombudsman’s hand in another way. At present, the remit of the ombudsman only covers any faults, defects, snagging problems and so on during the first two years after a new-build home is purchased. Certain defects that emerge after two years would be the subject of a claim under the 10-year warranty, which is a compulsory part of the sales process. The trouble with this cut-off of two years for the ombudsman is that the warranties thereafter do not cover all kinds of issues that may not be catastrophic defects but are, none the less, aggravating problems that can cause endless anxiety, annoyance and cost to the purchaser.

One example is that roofs are not covered when properties are converted into new homes. A more commonplace example might be a buyer trying to get a French window repaired or replaced who raises this with the builder within the first few months but does not take it to a formal complaint to the ombudsman until after the two-year time limit is up. Or the buyer has a plumbing problem that gets fixed but returns, gets worse and finally leads to an ombudsman complaint, only to discover that the issue is now too late to be considered.

Amendment 97A would enable the owner to take a complaint to the ombudsman up to six years after the property was first purchased, where the complaint cannot be dealt with under the warranty. It will not be possible to complain about the warranty to the Financial Ombudsman Service, which handles redress in relation to warranty providers, because these warranties do not cover snagging and minor defects. Most warranties are pretty tightly drawn and some are worse than others. There is a strong case for giving the ombudsman the power to insist upon all warranties satisfying proper quality standards.

But specifically in relation to the housebuilders, what the consumer needs is for their complaint about the multiplicity of things that the builder gets wrong to be handled by the new homes ombudsman without the buyer being told that they are out of time. The purchaser may simply have been giving the builder the benefit of the doubt, or the particular defect may not have emerged immediately, or the buyer was just not sure of their rights. Two years is simply not long enough. Six years matches the traditional time for liability in other circumstances, as in the Defective Premises Act. The Legal Ombudsman, for example, will investigate claims up to six years after a relevant incident is reported.

While not detracting from my congratulations to the Government on bringing forward the proposals that will create a much-needed new homes ombudsman service, I believe that these amendments—which would place requirements for better behaviour on all house- builders and support the consumer for six years, instead of two, after their purchase—would sharpen the ombudsman’s teeth and help ensure that the new arrangements can make a real difference to the performance and behaviour of this industry.