British House Building Industry

Justin Madders Excerpts

Thursday 5th September 2019 Commons Chamber

[Siobhain McDonagh]

I absolutely agree with the hon. Gentleman and would love an opportunity to have a debate about planning law, building on the green belt and other matters. I could speak at great length about them, but I will not because I want to allow other people to get in.

I would like Members to focus their attention on pay. Some of the figures are staggering. Let me be clear: I am new Labour to the core. I have no problem with successful business people earning a lot of money, but what happens in this sector goes beyond earning a fair day’s money. I was furious to see that, almost exclusively on the back of the British taxpayer through Help to Buy, Persimmon awarded its former chief executive Jeff Fairburn a staggering £75 million bonus, despite an appalling record of utterly substandard homes. How can that be right or fair?

[Justin Madders (Ellesmere Port and Neston) (Lab)]

That is a truly staggering pay packet. Does my hon. Friend agree that, given that Persimmon has recently given back the freeholds in Cardiff that it mis-sold to a number of homeowners, it should do that for everyone to whom it has mis-sold in the whole country?

[Siobhain McDonagh]

I completely agree with my hon. Friend and congratulate him on all the work he has been doing. Without the attention he has given the issue, much would not have happened.

Let us be clear: the money does not flow through the companies. Thanks to excellent new research from the High Pay Centre, I can reveal the quite extraordinary pay packets of the 10 FTSE 350 house building companies. In the heart of our country’s housing crisis, the four FTSE 100 house building companies spent an eye-watering £53.2 million on their CEO pay. David Thomas at Barratt earned £2.811 million; Peter Redfern of Taylor Wimpey earned £3.152 million; Tony Pidgley at Berkeley reached £8.256 million; and Mr Fairburn, formerly of Persimmon, got a whopping £38.9 million.

--- Later in debate ---

[Justin Madders (Ellesmere Port and Neston) (Lab)]

Week in, week out, housing problems are the No.1 issue in my constituency surgeries: a lack of affordable housing, poor living conditions, homelessness or landlords not acting to rectify problems. We should not forget that at the heart of this debate are real people facing very real difficulties because over the past nine years the Government have failed to act to tackle the housing crisis. I have too many people coming to see me who are sleeping on couches, in tents or in cars. That situation is becoming far too regular in my surgeries. It is an absolute disgrace.

Since the Government came into power, rents have become increasingly unaffordable, with private renters spending on average 41% of their household income on rent. Shelter reports that a third of low-income renters are struggling to the extent that they have to borrow money to pay their rent and keep a roof over their heads. In those circumstances, putting money aside to save for a deposit so they can eventually own their own home is completely unrealistic. There is a massive job ahead of us to replenish the depleted housing stock in this country and I am pleased to see that, after many years of stagnation, there is now significant house building in my constituency, particularly on brownfield sites. Very few, however, have affordable housing in them—or, as I would like to call it, council housing. That is because permissions were all granted some time ago and the developers have used rules brought in under the coalition Government to plead poverty and tell us that the requirement to build affordable homes means they cannot maintain their 20% profit margins. As a result, there is no affordable housing being built on just about any private development in my constituency. Most developers sought release from those obligations four or five years ago, but have only started building them in the past couple of years. It is clear that the affordable housing requirements were not what was stopping them; it was greed. As my hon. Friend the Member for Mitcham and Morden (Siobhain McDonagh) set out, it certainly has not harmed their profit margins.

It is greed that has poisoned many of the public’s opinion of the house building industry as a result of the leasehold scandal. As the Chair of the Housing, Communities and Local Government Committee, my hon. Friend the Member for Sheffield South East (Mr Betts), said about the voluntary scheme developers introduced to deal with some of the injustices of the scandal,

“Given the evidence we heard from leaseholders during our inquiry, we know it will be difficult for them to trust developers and freeholders to deliver on such pledges.”

The only way trust can be rebuilt is for there to be a full, independent public inquiry to get to the root of the issues. How did developers first dream up the business model of commoditising people’s homes? How did lawyers draw up the onerous terms? How did sales staff present, or not present, the leases? How did the conveyancers, surveyors and lenders all miss the implications of them? How has the Government’s Help to Buy cash propped up the whole scam?

The news this week that Persimmon has reached an out of court settlement on an estate in Cardiff by giving the homeowners the freeholds and repaying the ground rent is welcome, but unfortunately that is just one estate, in one city and one developer. There must be scores of identical scenarios around the country where developers have not been forced to come to the table, so a proper PPI-style compensation scheme is vital. As I have said in the past, this is the PPI of the house building industry and it needs to be treated as such. The admission by Persimmon that people did not know what they were buying should flag up huge alarm bells for every developer involved in leasehold that time is running out for them to put this right.

The National Leasehold Campaign has this week written to all developers involved in the scam to ask for the freeholds back. They should do it now and start to rebuild trust. As we know from the profit margins we have heard about, they can well afford to do it. The fact that they are still building homes on estates where there is no leasehold now, but where people who bought them a year or two ago are still in leasehold properties, is an absolutely injustice and a scandal. It needs to end.

It really is time that we had real action from the Government, so that those already trapped in unfair leases can expect to be released from them. I think we all agree that the situation is unfair and a significant injustice, but what are we going to do to force developers to put things right? There are plenty of ideas out there about how we can do that for those stuck with existing onerous and unfair leases. The Government may have lost control of the Chamber, but if they made proposals along the lines set out in my private Member’s Bill, for example, or in my party’s proposals, there is no doubt that there would be more than enough support on both sides of the House to get something on the statute book that would bring real, tangible change to help people and get many of the thousands who are stuck in toxic leases free of that obligation at last. Let us make a real difference to people’s lives. Let us pass these laws and build the homes that we need to get this country moving again.