Unscrupulous Builders

Jim Shannon Excerpts

Wednesday 9th February 2011 Westminster Hall

[Stephen Lloyd]

I thank my hon. Friend for his extremely well-made intervention. I have heard about such cases again and again both in my constituency and as an officer of the all-party group for consumer affairs and trading standards. We are in a ludicrous position where criminals are ripping off people, often elderly people, up and down the country. However, because they are clever at using—or abusing—the law, it is almost impossible to pin them down and seek redress. That is an absurdity, and times need to change.

The issue is not simply about providing adequate protection to the public; the trouble caused by such activities is far-reaching and widespread. I know some tremendous local builders in Eastbourne, but the actions of the cowboy builders impede legitimate businesses and create an unfair marketplace for the many—the vast majority of builders, renovation companies and tradespeople who are wholly legitimate. The problem causes particular difficulty for the small firms that we are counting on to help bring us out of recession. Because the unscrupulous individuals who prey on the public operate outside the law, they often do not pay VAT. That gives cowboy builders an illegitimate financial advantage by enabling them to charge much lower prices—20% lower—than responsible legitimate companies, thereby distorting the marketplace and creating unfair competition.

That practice results in a significant loss of tax revenue, because much of the work that would be invoiced is currently paid cash in hand and is off the books, resulting in an enormous revenue loss to the Exchequer. Given the current economic situation, it would be foolish to pass up the opportunity to clamp down on such behaviour. It is deeply unfair to law-abiding citizens who pay their taxes to continue allowing fraudsters and charlatan building companies not to contribute their fair share. Beyond that, a further worry must be addressed. Around 80% of the informal economy—sometimes known as the black economy—is work undertaken by companies that are completely outside the tax system. I have already mentioned VAT, but such evaders are much more likely to avoid other key legal obligations, such as health and safety legislation. That puts their customers not only at a financial, pecuniary risk, but at physical risk.

[Jim Shannon (Strangford) (DUP)]

Everyone has seen the programme, “Cowboy Builders”, that the hon. Gentleman referred to. It illustrates that a small number of people will take advantage of vulnerable people. Does the hon. Gentleman feel that one way of monitoring and keeping an eye on things and regulating the system would be to use local government to oversee work and say whether it should be passed? Perhaps that would be one way of resolving the situation.

[Stephen Lloyd]

That is a good point. It is not the conclusion that I have reached, but it is a strong point. The challenge with local government oversight is that it varies a lot around the country. Some local authorities would make it a high priority, while others would not. It is an option, but the conclusion I have drawn is that the Government must start taking steps to look at a licensing proposal.

I am aware that there are already programmes to help regulate the construction industry and mitigate fears, and I do not wish to undermine the valuable work of organisations such as TrustMark and the National House-Building Council. However, those schemes are taken up mainly by large companies that operate at national or regional level, and they are not the problem. The administration and cost involved in registering with such schemes is a natural deterrent to the individuals and small firms that I, and many of my colleagues, want to help. Because the vast majority of substandard work is carried out by individuals or small gangs of rogue builders, the current measures are inadequate.

According to Local Authority Building Control, TrustMark has insufficient funding to deal with the problem. Therefore, we need serious consideration about how to proceed with more effective methods of regulation. The seriousness of the matter is heightened by the well-known target of the illegitimate traders—older people, who are often the most vulnerable in our society. An ageing population coupled with increased home ownership necessitates a Government response.

Between 1981 and 2001, the proportion of the population over 75 years old increased by more than 30%. The number of pensioners living alone increased by 150,000 between 1991 and 2002, and now accounts for 14.4% of all households. That means that there are now more than 5 million pensioner-only households. Let me be clear: MPs in the House know that unscrupulous builders target vulnerable, often elderly, people. That is a growing market, and unless something is done, those builders will have ever more opportunities to rip people off.

Numerous investigations have shown that unscrupulous builders are taking full advantage of the gaps in our legislation and our rising pensioner population. Crooked salespeople are commonly overbearing, persistent and totally unscrupulous. That is a particular problem for older people, as they often live alone and are trapped by such intrusive door-to-door sales techniques. Once a salesperson is in their home, a vulnerable individual has limited means by which to end the transaction. The option of asking someone to leave is not always available to them because many home owners feel too intimidated in that situation to broach things so directly. That may sound absurd, but our experience as Members of Parliament, dealing with a large amount of casework and listening to constituents, who are often elderly, means that we know that they will be too frightened to ask the cowboy builder to leave.

When hard-sell tactics are used, many individuals feel trapped in their homes and have nowhere to retreat, leading to increased pressure and a desire to rid their home of the unwanted guests as quickly as possible, often—crucially—by accepting the service being offered. In fact, there are even reports of people being driven to their bank immediately to draw out large sums of money when faced with threatening demands.