Domestic Building Works (Consumer Protection) Bill

Mark Garnier Excerpts

Friday 19th November 2021 Commons Chamber

[Mark Garnier (Wyre Forest) (Con)]

I beg to move, That the Bill be now read a Second time.

In a debate in which we will talk about the activities of some possibly not-so-enhancing builders, I wish to start by saying what is good and brilliant about builders. Builders constructed the place in which we work, which is a testament to the building trades. They build our homes, workplaces, communal spaces, places of worship and recreational facilities. They build things of utter joy and things of absolute necessity. In short, they are extraordinarily important not just to our society but to our entire way of life.

There are enormous numbers of opportunities in the building trade for many different people. The skills involved range from those of the extraordinary artisans who do stunning carvings to those of the people who help with some of the most menial tasks. Were it not for this mainly manual industry, many people who prefer to work with their hands—who may not have found academia to be something for them—may not have found any gainful and worthwhile employment. The building trade is as important for those who work in it as it is for those of us who need its services. With 1.3 million people working in the industry in the UK, it is an incredibly valuable source of income for millions of workers and their families.

The industry is very wide. We have all seen large developments of homes or other buildings being carried out by well-established, well-resourced and well-run construction companies that take responsibility for their actions. When things go wrong, they have large legal departments and the processes seem to work well, on the whole. However, I am keen to concentrate on the smaller, domestic and small-business end of the market. The sector known as the repair, maintenance and improvement sector—RM&I—is where we see lurid and appalling stories of people’s lives ruined after taking on dodgy builders. There are countless stories in the press, and TV shows have been made that specialise in such problems.



I could turn to any number of articles in the national and regional press that talk about cowboy builders. A relatively simple search for stories about rogue builders reveals 1,500 such stories from the past five years alone, and that is just those stories that make the press. We could chat to almost anyone who has had any building work done, and they will roll their eyes in frustration at the problems they have had. However, we do not have to rely on hearsay and the media to understand the problem and its implications. The Federation of Master Builders, which I have been working with, conducts surveys to see the effect of this issue on the RM&I market. A recent poll of homeowners discovered that one in three were put off having building work done on their home by the fear of being ripped off. That equates to a potential £10 billion of lost economic activity every year, as a result of the fear of being ripped off by rogue builders. I can see why and there are any number of examples. My constituent, Gillian Smith, and her husband came to see me last week about their experience with Bromsgrove Construction and Development Ltd. They showed me some pretty appalling photographs of how the back end of their house is falling down as a result of appalling behaviour. They are now entering into a huge problem in trying to resolve that issue.

The consumer is not the only victim of the rogue cowboy builder. In the industry, many find themselves victims of the same problems as consumers, and subcontractors find that they are not paid or subject to poor safety standards. Merchants are the same, and plant hire companies are frequently the victims of theft or the abuse of equipment. Alarmingly, health and safety is a low priority among many SME building firms that operate within the RM&I market. While large firms working on major commercial and civil engineering projects have embraced health and safety legislation, a blitz of small refurbishment sites by Health and Safety Executive inspectors in 2016 found that a stunning 49% of sites fell below the standards set to comply with health and safety requirements.

More alarmingly, that cavalier attitude to health and safety reveals the potential problem of cowboy builders leaving dangerous sites. When someone builds an extension, might someone else be risking life and limb when they climb those stairs to go to bed one evening? Poor-quality building results not just in shoddy work, but potentially in work that is fatally dangerous. Cowboy builders also have an effect beyond their own unhappy activities. By undercutting those reputable builders who make up the majority of the market, they force high-standard builders to cut their margins to compete for work. Price competition is fine, but not when a worthwhile and reputable SME builder is competing against someone with no care for safety, honesty, or customer satisfaction. Given that the RM&I market is dominated by occasional customers, it is likely that the key element of choice is price. Unhealthy price competition drives down standards, even if those reputable firms are unhappy at being forced to cut standards to compete.

[Sir Oliver Heald (North East Hertfordshire) (Con)]

Does my hon. Friend also want to say a word about the environmental consequences? Is it not right that a number of extensions are built with the rainwater directed into the sewers? We have been talking about the result of that over recent weeks.

[Mark Garnier]

My right hon. and learned Friend is absolutely right. The implications of cowboy or rogue builders who do not build to standard are unbelievably widespread—indeed, that opens another interesting debate about inspections by local councils in terms of the amount of work done, and there is a completely different debate about that to ensure that building standards have been maintained. Sometimes there are questions about whether some councils examine building standards properly, and my right hon. and learned Friend raises an important point.

How does the victim of the rogue builder seek redress? The answer, as it turns out, is not simple. In the first instance they could go to trading standards, but with a rogue builder being, by definition, a rogue, the sanctions available are weak at best. Ultimately, the home or small business owner who has found themselves the victim of a rogue builder has no other recourse than the courts.

This is the point at which it is really important that I declare my interest. There has been much debate of late about Members’ experiences—I think you were in the Chair, Madam Deputy Speaker, when we discussed the Domestic Abuse Bill, and we heard a stunning speech from the hon. Member for Canterbury (Rosie Duffield) about her experience, which was very valuable. When someone finds themself the victim of a rogue builder, they suddenly discover that they are in an extraordinary Kafkaesque world of misery, and trying to deal with legal practitioners, professionals and all the rest of it. I was going to speak at length about my first-hand experience but, frankly, it is important to move along in the interest of the next debate. Suffice it to say that, apart from anything else, as Members of Parliament we find ourselves subject to blackmail, threats to break into our property to recover items that we have already paid for and multiple final bills—in my case multiple fictitious final bills. The list goes on and on, and it becomes unbelievably depressing and wearing, as we find ourselves having to deal with the problem and, ultimately, there is no justice.

The fundamental fault with the whole system is that contract law simply does not work for people with problems bigger than the small claims court, which is fine, but below a value of £1 million. The reality of the situation is that anyone can make up a fictitious account that they want us to pay and we have to negotiate. In addition, if we want to get redress against a builder, we have to go to court and seek legal action. It works both ways. It is not just about bad building standards; it is also about builders’ bad business practices and vexatious bills.

To challenge or defend this type of bill requires a commitment of between £100,000 and £200,000 in legal fees, court fees and professional fees to demonstrate the loss and to provide the evidence. I have spoken to any number of friends and colleagues with very senior legal experience—this place is stuffed to the rafters with lawyers and barristers—and they all say that the type of problem I am facing, and that hundreds of thousands of people face, has nothing to do with justice and everything to do with trying to achieve a negotiated settlement.

[Anthony Mangnall (Totnes) (Con)]

My hon. Friend is making an extraordinarily important point. Many of my constituents have had to deal with rogue builders, and I am sorry for what he has had to go through. Could we improve the civil litigation process rather than creating an ombudsman under this Bill?

[Mark Garnier]

I have privately asked all sorts of senior people and, weirdly, they just roll their eyes and say, “It is what it is.” Perhaps we could, but I am certainly not qualified. I was an investment banker rather than a lawyer, so I approach this from a slightly different direction.

One of our colleagues pointed out that the process of negotiated settlement is like being mugged and then being charged for the mugger’s knife, and it has the backing of the law. The consumer of repair, maintenance and improvement building services has no consumer protection at all. There is absolutely no practical protection for consumers that avoids the highly risky, unbelievably expensive and emotionally draining prospect of prosecuting contract law. Indeed, the subcontractors working on our home were victims of the same rogue builder. They were eventually paid, but they were not paid initially.

While we were going through this nightmare, an unrelated subcontractor came to me with a complaint that he had not been paid by the firm with which we were in litigation. The builder’s manager even boasted to our subcontractor that he usually had five legal cases on the go at any given time, playing the system to get more money. This is not just an accident; it is a deliberate action by these builders.

It is extraordinary that consumers are completely unprotected. When we think about the whole building process, it is even more astonishing. The proud homeowner who is seeking to improve their home will go to an architect, who will be regulated by the Architects Registration Board. They might contract a quantity surveyor, who will be regulated by the Royal Institution of Chartered Surveyors. They will probably need to borrow money, so they might approach a mortgage broker who is regulated by the Financial Conduct Authority. The mortgage broker will help with the mortgage, which will be provided by a lender, again regulated by the FCA and possibly by the Prudential Regulation Authority, with advice from a solicitor regulated by the Solicitors Regulation Authority. The money will then be deposited in a bank, regulated again by the FCA and the PRA. The whole process is laden with consumer protection and regulation, right up to the point at which the money is handed over to someone with no regulation—and possibly no qualifications—and with no protection mechanisms for the consumer in any way, shape or form.

Unbelievably, the problem gets worse. The victim may well prosecute the court and win—possibly both damages and costs—but at that point the rogue builder goes bust with no assets and starts a new business the following day to continue the process of ripping off consumers. Meanwhile, the costs to the victim, running into hundreds of thousands of pounds, are unpaid. The reality is that there is absolutely no disincentive for the cowboy builder to present fictitious bills or to do shoddy and appalling work. While the consumer must engage in a risky legal process to seek redress or protection, the rogue builder can game the system with no jeopardy whatsoever.

What is the solution? How do we protect honest builders and subcontractors, builders’ merchants and, importantly, consumers? I repeat that most people in the trade are very honest people who also need to be protected from the activities of rogue builders. How do we redress the balance of risk away from favouring the rogue builder to giving equal weight to both consumer and builder? We must remember that the builder is not always in the wrong, so we need to ensure that the solution is balanced. The answer must lie in a regulation and licensing scheme.

My Bill asks the Government to come up with a scheme of compulsory licensing for SME building firms working in the RM&I space. While it does not set down the specific framework for a licensing scheme with associated regulations—it would be wrong for a Back Bencher to try to undertake that work, because it is complicated—I will suggest my vision of how it would work. My experience, which informs how I look at it, is with financial services and banking regulation—back in the 2010 Parliament, we were heavily involved in changing financial services regulation—and while I do not propose anything remotely as complex as the FCA or PRA, there are some important carry-acrosses from financial regulation.

First, any regulatory scheme must not be a financial burden on the wider taxpayer. A licensing scheme for builders must be self-financed through licence fees. Rules for having a licence must be straightforward; they cannot be complicated. Importantly, no firm can be allowed to offer services direct to customers without a licence. That in itself would result in the wider industry policing the market. For example, mortgage lenders would require evidence that money would be spent on a licensed firm, while architects and surveyors acting as project managers would need to see a licence to engage a building firm, ensuring that builders were licensed. The consumer could check the builder on the regulator’s website, just as can be done with the FCA. The regulator should probably be TrustMark, which currently operates a voluntary scheme. There should be rules regarding code of conduct, honesty, safety and quality of work. Those failing to comply should face a series of sanctions resulting in the ultimate sanction of the loss of licence and, therefore, the loss of the ability to work in that industry.

[Mr Gagan Mohindra (South West Hertfordshire) (Con)]

My hon. Friend is making some valid points. Does he think that the voluntary scheme is not effective as things stand?

[Mark Garnier]

Self-evidently not. My hon. Friend is right to ask that. A voluntary scheme is good, because builders who sign up to it can demonstrate that they are maintaining a certain level of trust and obligations to their consumer. The problem is that the consumer needs to know an awful lot about the building trade to know about that scheme in the first place. We as Members of Parliament have many people coming to our surgeries who have got themselves into trouble with, for example, financial advisers, only to discover that they were not regulated. The problem is that those people did not understand the system well enough to work that out. While some will recognise that there is a voluntary scheme that they can check out, it was not until I got deep into the weeds of the Bill that I discovered it, having spoken to all sorts of quantity surveyors and all the rest of it as I tried to progress my own building problems.

Within all this, there should be rules regarding a code of conduct, honesty, safety and quality of work. Failure to comply should carry a list of sanctions, including losing the licence. An option that could be included is a compensation scheme rather like the Financial Services Compensation Scheme. That is an example of how consumers who have lost out as a result of poor and bad practice are compensated for their loss from a scheme financed, again, not by the taxpayer, but by levies placed on licence holders of the relevant sector. The double effect is that the consumer gets their losses covered, if that is deemed appropriate, while the industry as a whole is incentivised to self-police. At the end of the day, the industry does not want to pay more money to bail out these compensation schemes for rogue builders; it would be incentivised to report rogue builders. Importantly, an ombudsman would be able to assess loss to consumers without the need for expensive and lengthy engagement of legal and professional experts to defend bogus bills or to challenge poor work.

These proposals are aimed at ending the decades-long history of consumers who being ripped off in one way or another by shoddy, rogue, cowboy builders. Voluntary schemes do not seem to have done away with this problem, and the building industry seems to be the one industry remaining where consumers spend quite significant amounts of money in a totally unregulated and uncovered area. Indeed, many people agree that this is beyond redemption. The report of the Federation of Master Builders on this subject in 2018 cited the fact that even the construction firms themselves agree that a compulsory licensing scheme is necessary: 77% of SME builders agreed to the FMB proposals, while 78% of consumers did likewise. I think we would all agree that enough is enough. To steal a phrase from those on the Front Bench, you cannot build back better if you cannot trust your builder.

This is a very complicated area, and I do appreciate that it is not straightforward to go rushing in and create a compulsory licensing scheme, but I am very interested to hear what the Minister has to say. By the way, I am very grateful to him for coming along. Although building is his area, his role does not cover the Bill, but the Minister responsible for consumer protection—the Under-Secretary of State for Business, Energy and Industrial Strategy, my hon. Friend the Member for Sutton and Cheam (Paul Scully)—was not available. However, I am very interested to hear what he has to say, and incredibly keen to continue to collaborate with the Government to try to find a solution to this quite huge problem.

--- Later in debate ---

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Lee Rowley)]

Thank you for giving me the opportunity to contribute to the debate, Madam Deputy Speaker. Let me first congratulate my hon. Friend the Member for Wyre Forest (Mark Garnier) on the points that he has raised about the important issue of consumer protection and the need to get the balance right between the sale of goods and services and ensuring that quality is achieved at the end of the day. Ensuring that we have a high-quality and professional construction industry and consumer protection is very important, and I am really grateful to him for raising awareness of that.

We all know there are issues and we all have such stories, whether they are ours personally or others that we have heard, and I am very sorry to hear about his constituents Mr and Mrs Smith. We know that there is a challenge from a minority of people and organisations in this industry who do not do the right thing time in and time out. The question is not about the problem—I think the definition of the problem would be accepted by people across the House and outside it—but about what is done proportionately to try to mitigate and reduce it. As we know from other elements of consumer protection that we deal with, even if we have ombudsman schemes, licensing schemes and alternative resolutions, they may improve situations but they are not guaranteed to and they are not panaceas on their own.

The question always comes back to the philosophical discussion that we have daily in this place: what we think the Government should do, when they should intervene and when it is proportionate to do so. This is rightly about balancing how we protect the consumer and protect and support individual agency—with markets that have sufficient information and knowledge in them so that people can make decisions without needing other organisations, groups or the state to intervene—with how we prevent guilds from being created, which is vital. I am not suggesting for a moment that my hon. Friend’s Bill would do that. There are already hundreds and hundreds of employee systems that require substantial qualifications, licensing schemes or costs to be paid, which, over time, create issues for a dynamic workforce, industry and sectors that support people wanting to obtain goods and services.

As my hon. Friend rightly indicated, this is a question of risk. It is about where to draw the line. Although, I am afraid to say, on balance we as a Government are not minded to support the Bill at this time, we are very keen to continue to discuss this, because we accept that there is an issue. The question is whether a licensing scheme is proportionate to the problem at this time.

Notwithstanding the fact that we understand there is a problem, the Government are doing a lot of work on this. Let me run through some of that quickly. First, the Government have recently consulted on proposals for a mandatory alternative disputes resolution scheme in the home improvement sector. There will be more information on that in due course, because none of us wants a situation where any consumer or business should have to, want to, need to or be required to go to court in the first instance to try to resolve such a situation.

Secondly, additional work is under way through the domestic household decarbonisation retrofit programme. That is where the Government have more ability to impact processes. We are requiring installers to hold appropriate certifications or to be TrustMark-registered.

Thirdly, we are working closely with the Department for Levelling Up, Housing and Communities to look at the consumer protections available through the competent persons schemes, which allow builders to self-regulate in areas where they can self-certify. For example, competent person schemes must ensure that consumers are provided with the appropriate financial protection for a minimum of six years to put work right to dwellings that are non-compliant with building regulations.

Fourthly, we have the Building Safety Bill. To ensure that there are safe and high-quality buildings, we want to make sure that, throughout a building’s life cycle, the building safety regulations can provide support. There are powers in the Bill to make regulations regarding competence requirements. These have already been published in draft alongside the Bill.

In summary, nobody would disagree with the actuality of the problem and the challenge that it creates for individuals, such as for my hon. Friend and his constituents as well as for people in my constituency and those of all Members. Given that this is such a long-standing issue that has been around for decades, if not centuries, the question is what we do about it. We hope that the measures that are being taken, which I have outlined, indicate that the Government intend to step in where necessary while retaining proportionality in what we do and in making sure that there is a functioning market without state intervention. The Government would like to extend to hon. Members, including my hon. Friend, an invitation to continue to discuss the ways to address this issue and how we build on existing organisations and initiatives and the other activities that I have outlined. I finish by thanking my hon. Friend.

[Mark Garnier]

My hon. Friend is being incredibly kind. First, let me quickly say a great thanks to everybody, particularly the hon. Member for Newcastle upon Tyne Central (Chi Onwurah) and all the various people who have been involved in the Bill. I think the Minister is very sincere in what he is saying about how we can collaborate. Before he finishes, in the light of all his undertakings and assurances of collaborative work, it would probably be a good idea if I were to withdraw my Bill. Am I allowed to beg to ask leave to withdraw my Bill, Madam Deputy Speaker?

[Madam Deputy Speaker (Dame Eleanor Laing)]

The hon. Gentleman cannot procedurally withdraw his Bill during an intervention on the Minister. If the Minister finishes his speech and the hon. Gentleman, with the leave of the House, is able to make another speech, then he may withdraw his Bill, but I have another Member trying to catch my eye. I think the answer might be that if we proceed speedily, all this might come to pass.

--- Later in debate ---

[Mark Garnier]

Thank you, Madam Deputy Speaker. I will just rattle through some thanks to colleagues—

[Madam Deputy Speaker]

Order. The hon. Gentleman has to ask for the leave of the House. Say, “With the leave of the House”.

[Mark Garnier]

I was going to lead up to that.

[Madam Deputy Speaker]

No, you have to do it now. Can we just get on with it, please? Say, “With the leave of the House”.

[Mark Garnier]

Okay. With the leave of the House, and in the light of the Minister’s assurances of further collaborative work on this issue, I beg to ask leave to withdraw the motion.

Motion and Bill, by leave, withdrawn.