- [Gill Furniss in the Chair]
- 3:00 pm
- I beg to move,That this House has considered the matter of protecting consumers from rogue builders.I am conscious that we may have to go off for multiple votes before half-past 4, so I will crack on with what was going to be 45 minutes of the most magnificent speech—I will abridge it to just 42. I am missing out the bit where I was going to be nice about builders—I am afraid I will concentrate on the nastiness of builders.I start by defining the area that I am keen to concentrate on, which is the smaller end of the market. Known as the repair, maintenance and improvement sector, or RMI, this is the area where we see many appalling stories of people’s lives being ruined by unwittingly taking on so-called dodgy builders.There are countless stories in the press, and there are TV shows specialising in these types of 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 of rogue and cowboy builders reveals 1,500 such stories in the last five years alone, and that is just the stories that made the press. This is a very insidious problem.Chat to almost anybody who has had any building work done to their home, and they will roll their eyes and admit that they have had trouble of one sort or another. But we do not have to rely on hearsay and the media to understand the problems and the implications. The Federation of Master Builders conducts surveys to see what the effect is on the RMI market, and a recent poll of homeowners discovered that one in three were put off having work done on their home because of the fear of being ripped off. That equates to a possible £10 billion of lost economic activity.
- I would like to shine a light on one of those many stories. My constituent in Esher and Walton paid over £16,000 for a kitchen remodelling that was never delivered, and the same company is alleged to have defrauded other constituents, including one this year who lost £20,000. When fraud occurs on this scale, it is theft from honest people, but consumers find that the civil courts are slow, complex and costly. Does the hon. Member agree that the Ministry of Justice should ensure accessible routes to redress, which may be small claims courts or an ombudsman scheme, so that consumers can get justice quickly?
- I will talk about that in my speech. The fundamental problem is that, at the moment, the only course of redress is through the court system, and it is not good enough.The FMB does a lot of work in this area, and it is worth looking at some of its statistics. Thirty-seven per cent of customers report unreliability, and many of them cite apparently unqualified operators. Nearly a quarter—that is 25%—of all customers have lost money to rogues, with losses averaging £1,760, but in many cases the amount is far higher. The national loss is horrific. The FMB estimates that, over five years, homeowners have lost an astonishing £14.3 billion to unreliable builders, putting an astonishing burden on the housing market and households. It turns out that young adults are more at risk, with 33% scammed by rogue traders found via social media.The consumer is not the only victim of rogue or cowboy builders. Within the industry, many find themselves a victim of the same problem. Subcontractors find they are not paid, and it is the same for merchants. Plant hire companies are frequently the victims of theft and abuse of equipment. Alarmingly, health and safety is a low priority among many small and medium-sized building firms operating in the RMI market.
- I commend the hon. Gentleman for securing this debate, and he is absolutely right. In Northern Ireland, consumer protection against rogue builders involves preventive measures, official reporting channels and legal recourse through the Consumerline service, trading standards and the small claims court. The reality is that those protections are difficult to navigate, and they are often off-putting for people who are not used to filling in forms and writing things out. Does the hon. Member agree that there must be a more straightforward approach? People, who are often vulnerable and need support, should not have to jump through hoops.
- The hon. Gentleman is absolutely right. The current system does not satisfy people in any way, shape or form. Also, there is an inequality of risk, which I will come to in my speech.Although 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 for compliance 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 has an extension built, might they be risking life and limb when they climb those stairs? Poor-quality building results in not just shoddy work, but dangerous and potentially fatal work.Rogue builders have an effect beyond their own unhappy activities. By undercutting reputable, high-standard builders that make up the majority of the market, they force them to cut their margins. 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 RMI market is dominated by occasional customers—we are not doing this very often—it is quite likely that the key element of choice is price. Unhealthy price competition drives down standards, even if reputable firms are unhappy being forced to cut standards to compete.In an extreme example of the problem—this is an important point—I recently met Andrew Bennett, who had engaged a local firm in Liverpool to refurbish a six-bedroom property that he owned—a job that was to be worth around £100,000. He checked out the firm and was happy with references and testimonials. He engaged the firm, but it turned out that the work was dangerously below standard. When he started to seek redress, he discovered that the company in question was not what he had been led to believe. It was a rogue builder passing off as a well-known, reputable company. Moreover, this dubious company had nine county court judgments against it and therefore had no money to pay the award to Mr Bennett when he won his case.
- I thank the hon. Gentleman for securing this important debate. One of my constituents was ripped off to the tune of £19,000 when the builder walked off the job part-way through. However, when they went to trading standards and the police, they were told that, because the work had begun, it was a civil and not a criminal matter. Does the hon. Gentleman agree that more needs to be done to protect our constituents who are caught by that loophole?
- Yes. It is shameful how these builders can get away with it—it is absolutely astonishing. By the way, this campaign has been going on for a number of years. It is very good to see, behind the Minister, the official who has worked with me in the past, although we have yet to achieve what we want to achieve.How do victims of rogue builders seek redress? The answer, as we know, is not simple. They go to trading standards in the first instance but, with a rogue builder being, by definition, a rogue, the sanctions available are weak at best. Ultimately, the homeowner or small business owner who finds themselves a victim has no recourse other than the courts. However, the reality is that contract law simply does not work for people with problems above the small claims limit but below around £1 million.The reality is that anyone can make up a fictitious bill that they want us to pay, and we have to negotiate. To challenge or defend that type of bill requires a commitment of between £100,000 and £200,000 in legal and court fees to prosecute a court case, and in professional fees to demonstrate the loss. I spoke to any number of friends and colleagues with very senior legal experience, and everyone said that this type of problem has absolutely nothing to do with justice and everything to do with negotiation. One even said that it is like being mugged and then being charged for the knife, with the backing of the law. For many reasons, our legal system is so clogged up that it serves no one properly, allowing it to be abused by rogue traders.
- The hon. Gentleman speaks powerfully of the devastation that can be caused by rogue builders, as families in Altrincham and Sale West have experienced. Many have been ripped off by Frank Deary, a rogue builder who has taken over £1 million for work that he has never finished. He repeatedly liquidates his various building companies, making it extremely difficult for victims to recover any money, before he starts all over again with a different company name popping up. Does the hon. Gentleman agree that this case, and so many cases that we all see in our constituencies, shows the need to crack down on rogue builders and improve customer protections?
- The hon. Gentleman has probably read my speech, as that is the core of it. The legal problem is bigger than just failing to support victims through the court system. Rogue builders know the legal system works in their favour. There are builders who create fictitious bills or charge fictitious costs for work not carried out—I have seen that as a victim myself. I contracted a builder to renovate a much-loved family home, and they failed to do the work in time, which was a breach of contract. They rattled on for far too long, they did not do the whole work and, at the end, they put in a massive, fictitious bill. Our quantity surveyor reckoned there was an outstanding balance to pay of perhaps £6,000, but they put in a bill for £100,000.In the end, everybody said, “You have to negotiate.” We negotiated a final settlement, which was multiple times in excess. This is a fundamental problem. We do not get redress, and we have to negotiate even if we know the negotiation is bogus.
- I thank the hon. Gentleman for securing this debate. There are lots of excellent and reliable builders in Bournemouth East, but I am thinking of my constituents Andrew and Heather, who have really suffered at the hands of a rogue builder whose contact details they were unable to access. They got in touch with me because of their concern about their circumstances. Does the hon. Gentleman agree with me, and with them, that the domestic building industry needs strong licensing and regulation? Without that, we will not stop cowboy builders exploiting my constituents.
- The hon. Gentleman makes exactly the right point. We need a balance of risk, and I will come to that point later.Consumers of repair, maintenance and improvement building services have no protection whatsoever. There is no practical protection for consumers to avoid the highly risky, unbelievably expensive and emotionally draining prospect of prosecuting contract law. Indeed, subcontractors working on my home were also victims of the rogue builder because they were not paid, either. It is extraordinary that consumers are unprotected. When we think about the whole process of refurbishing a home or building an extension, it looks even more astonishing.The proud homeowner seeking to improve their home will go to an architect regulated by the Architects Registration Board. They might contract a quantity surveyor regulated by the Royal Institute of Chartered Surveyors. They will probably need to borrow money, so they might approach a mortgage broker regulated by the Financial Conduct Authority. They will get help with a mortgage provided by a lender—again, regulated by the FCA, and possibly the Prudential Regulation Authority—with advice from a solicitor regulated by the Solicitors Regulation Authority. The money will then be deposited in a bank, again regulated by the FCA and the PRA.The whole process is laden with consumer protection right up to the point where the money is handed over to someone with absolutely no regulation, possibly no qualifications, and no protection mechanism for consumers. As I said before, the problem gets worse, but it is worth repeating. The victim may well prosecute the case in court and win both damages and costs. But at that point the rogue builder goes bust with no assets, as pointed out by the hon. Member for Altrincham and Sale West (Mr Rand), and starts a new business the following day to continue the process of ripping off consumers. Meanwhile, the victim’s costs are unpaid and run into hundreds of thousands of pounds. The consumer ends up winning the moral victory but losing an enormous amount of money, while the rogue builder goes on to do the same again without any consequence.
- As well as the financial cost, there is also an emotional cost. A constituent got in touch with me after trying to resolve an issue with leaking roof insulation. When we got involved, it took us eight months and 97 emails to get the builder back out to repair it. There is an emotional impact on the whole family. Does the hon. Gentleman agree that this is an intolerable burden to put on people, and that we need to do something more?
- Absolutely. Not only that, but if we think about the consequences, those 97 emails could have been sent for any one of the 100,000 constituents that we each have. We should not be doing this, and there should be a mechanism to sort it out.The important reality of all this is that there is no disincentive at all for the cowboy builder to present fictitious bills and do bad work. While the consumer must engage in a risky legal process, the rogue builder can game the system with no jeopardy whatever. As we learned from Mr Bennett's story in Merseyside and the many other people who contacted me, the police will not investigate a case with regard to fraud and rogue builders, as they deem it a civil matter.So what is the solution? How do we protect honest builders, subcontractors, merchants and, importantly, our constituents and consumers? How do we redress the balance of risk so that it does not favour the rogue builder but gives equal weight to both consumer and builder? The builder is not always in the wrong, so the solution must be balanced. Builders may occasionally need to be protected from rogue customers. The answer must lie in a scheme of regulation and licensing. In essence, what I am seeking to do—I have had a couple of presentation Bills on this topic—is get the Government to come up with a scheme of compulsory licensing for SME building firms working in the renovation and domestic improvement space. We do not know what it will be, but we need a system in which there is an equivalence of risk on both sides. There must be something that the builder as an individual can lose if he or she is found not to be doing their job properly.My experience in this area has been with financial services and regulatory reform. Although I am not proposing anything remotely as complex as the FCA or the PRA to regulate builders, there is more than one important carry-across from financial services regulation. The first is that we do not want regulation to be a burden on the taxpayer. A licensing scheme must be self-financed through licensing fees: the building firms must pay for it.
- I am keen to bring this debate to a conclusion before the first of many expected Divisions is called, with all participants having had a satisfactory opportunity to contribute to it. Mr Garnier and the Front Benchers have graciously agreed to watch the clock, curtail their remarks and be very succinct. I ask all of you to be extremely brief with speeches and interventions.I expect the first Division at 4.15 pm. To help me to enable all those who wish to contribute to the debate to do so, please stand now that Mr Garnier has moved the motion and made his speech, so that I can calculate accurately the initially informal limit on speeches that I will strongly encourage.
- Several hon. Members rose—
- There will be a limit of four and a half minutes for each speech. I call Sarah Hall.
- 3:20 pm