DMB Solutions: Liquidation

Peter Kyle Excerpts

Monday 5th March 2018 Commons Chamber

[Caroline Lucas (Brighton, Pavilion) (Green)]

The issue that I should like to raise tonight has arisen in my constituency in recent weeks, but it has national implications. I am also sure that it will be familiar to many Members of this House: namely, the sudden collapse of a private sector business—in this case, a building services company. That collapse has left my constituents out of pocket and in some cases literally out of their home. Understandably, they are angry and frustrated by the response, or more accurately, the lack of it from the relevant state bodies.

DMB Solutions, a Brighton-based building and design company, went into voluntary liquidation over the new year. It had operated in my constituency since about 2009 and, to a slightly lesser extent, in the neighbouring constituencies of the hon. Member for Hove (Peter Kyle), who I am delighted to see in his place, and the hon. Member for Brighton, Kemptown (Lloyd Russell-Moyle). The fallout from the collapse of the company has gained national media attention, owing to both the number of people affected and the scale of the financial losses they suffered. More than 400 local people have joined a victim support group on Facebook set up more than a year before the company collapsed—a point to which I will return—while a significant number have lost in excess of £50,000. This was money saved up over years and paid to DMB for work that will now never be completed, or at least not by DMB Solutions.

It has been shocking and heart-breaking to meet my constituents and hear at first hand the devastating situations in which many have been left by the demise of the company. For example, Norma Smith, who is 84 years old, employed DMB Solutions last summer to build a wet room with a toilet in the downstairs of her house in anticipation of one day being unable to use the stairs. In common with many others who have complained to me about DMB Solutions, Norma paid in full before work commenced. She reports that the contract time of three to four weeks for completion stretched into months and months, during which she was confined to living in her bedroom.

Norma eventually cancelled part of the project in a bid to save costs, but that money was never returned to her. Moreover, a leaking pipe caused flooding in her home and damage to floorboards that she had to pay a carpenter to repair. The project was never fully completed by DMB Solutions, and Norma has since had to employ another building company to create a shower space instead of the wet room originally envisaged. She says:

“As the weeks went by with very little work being carried out, downstairs a building site, I become very exhausted. In the end, I had to ask my son-in-law to take on all communication with the company, and with Trading Standards. I do hope that the company will be fully investigated, as the damage, not only in financial terms but also the emotional toll, has been huge.”

The psychological impact of such cases—the stress and anxiety caused, as well as the financial problems—cannot be overestimated.

[Peter Kyle (Hove) (Lab)]

The hon. Lady is making a powerful point. To add to her catalogue of constituents, I can speak of those who have turned to me, such as Alison, who gave £30,000 to this company six days before it went bust. It knew it would not fulfil the order, yet it took £30,000 from somebody—in the full knowledge that it would not complete the work. Does the hon. Lady not think that in such cases the authorities should investigate fully to ensure that the full force of the law is on the side of people such as Alison, not of the directors, who were clearly ripping her off?

[Caroline Lucas]

I thank the hon. Gentleman for his intervention, and I agree entirely. It is a point to which I will return shortly. As he says, the company must have known six days before it chose to go into liquidation that it was about to do that. I would have thought that to seek tens of thousands of pounds just days before was criminal—I would have thought it was fraud—but we are having great difficulty prosecuting the case.

I want to share one last story from a constituent who told me:

“My partner and I started a project with DMB Solutions in May last year. The project – to rearrange rooms in the loft extension, and create an extension housing a large open plan family room downstairs – was intended to take four weeks and cost about £95,000. We did some research on the company and were unable to find anything concerning. We had seen several boards outside houses and were impressed by the website and by the promises of the design consultant. However, in early January this year, we found ourselves in the position of having an upstairs with no heating, water or Building Control approval, and a downstairs with holes in the ceilings, unattached electrical cables hanging through ceilings, damage to rooms which were outside the scope of works, and a water system which does not provide enough hot water for a bath. We had paid all the money in accordance with the staged payment plan we had signed, so we are £60,000 out of pocket, and our lovely home has been ruined. These events have rocked me to the core and I still cannot quite believe this awful thing has happened to us. In my opinion, DMB Solutions have acted incompetently, immorally and illegally. What I find so distressing is that various bodies and organisations that exist partly to protect the public in these situations seem to have been ineffectual, enabling the company and Directors to continue to operate.”

--- Later in debate ---

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

Thank you, Mr Speaker, for such a lengthy and erudite introduction. I expected nothing less, and I was not disappointed.

The hon. Member for Brighton, Pavilion (Caroline Lucas) has brought a serious matter to the House, and I thank her for raising this important issue. I am also grateful for the interventions and contributions from the hon. Members for Hove (Peter Kyle) and for Strangford (Jim Shannon). We have heard terrible stories about their constituents. I have to say that I was not surprised, however. I had heard such stories before, being an occasional reader of the Brighton Argus, and I know that the hon. Lady is not just describing a one-off here. It is the job of the Insolvency Service, the Department for Business, Energy and Industrial Strategy and the entire trading standards system to do what they can to provide recompense for her constituents.

[Peter Kyle]

I am pleased to hear that the Minister reads the Brighton and Hove Argus. He has mentioned several of the agencies that people can turn to in these situations, but is it not the case that the landscape of regulation is very complicated? The constituents that we have been describing today simply do not think that any one agency has a grip on such situations.

[Richard Harrington]

I thank the hon. Gentleman for his intervention. I hope that I will be able to partly satisfy him with the comments that I am going to make. If not, I will be happy to meet him and the hon. Lady, representing the Greater Brighton constituencies, to take up any further points.

The insolvency regime is an important part of the framework of business, even though it has to deal with the unintended consequences of it. To put this into perspective, levels of insolvency are low, but when it does happen—particularly in consumer-facing companies such as this building company—it can have a significant impact on customers, employees and suppliers. It is an unfortunate fact of life that companies sometimes have to cease trading without paying their debts, and that when they do, creditors can often suffer, with little or no chance of receiving their money back. This is exacerbated in circumstances such as these when customers have paid for work in advance, because those people have often saved for some considerable time to have improvements made to their house, for example.

In many cases, insolvency proceedings such as liquidation will follow. These allow an expert in insolvency, who is authorised and bonded, to be appointed to oversee an orderly winding-up of the company’s affairs, to sell its assets and to make dividend payments to creditors from the funds available. It is an important principle of the insolvency regime that unsecured creditors rank equally when it comes to receiving such payments. Only certain creditors, such as employees, are paid in priority.

Hon. Members will appreciate that I cannot comment specifically on the liquidation of DMB at this early stage of the proceedings. The liquidators have an important task to carry out in winding up the company and making such reports to the creditors as are appropriate. I am aware that complaints have been made to trading standards—