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Mr. Deputy Speaker (Mr. Michael J. Martin): Order. We now move on to the next debate.

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National House-Building Council (Warranty)

1.30 pm

Mr. Brian White (Milton Keynes, North-East): Before I came into this place, I was the chair of the Local Government Association planning committee, and I worked for Abbey National designing its mortgage system. Since I have been elected, a couple of new estates have been built in my constituency, so Milton Keynes has a large number of new homes. We are having this debate in the context of the Government's policy that 60 per cent. of new development should be on brown-field sites, as was mentioned in the previous debate. That policyraises issues about the quality of that development, contaminated land, affordability and a number of other issues.

I congratulate the Government on the initiatives that they have already taken, the reviews that they have done, the updating of the planning legislation, the recent announcement on design for the disabled, and a number of other initiatives taken by colleagues, such as private Members' Bills on energy efficiency. In this debate, I shall try to be reasonable, but I suspect that some of the victims of defects in house building would be less than charitable.

Last week, a television programme called "On the House" looked at an estate in my constituency, where a few houses had serious defects and others had major problems, but most had problems of the niggly variety. The programme damned the whole estate because there is not an adequate system for remedying problems.

The National Association of New Home Owners estimates that about 1,000 to 1,500 new homes have serious defects, by which it means roof supports that do not support roofs and that kind of thing.

Mr. Jim Dobbin (Heywood and Middleton): I thank my hon. Friend for giving way at this juncture. I congratulate him on securing this debate at a timely moment in the Government's period of office. I also congratulate my hon. Friend the Minister on his recent consultation document "Combating Cowboy Builders". A recent Granada Television programme called "Builders from Hell" highlighted some of the serious problems created by rogue builders in various parts of the country.

If hon. Members had viewed that programme, they would have seen 20 minutes dedicated to the Kiely brothers, who have built sub-standard properties in my constituency and around greater Manchester. They are mainly new-built homes with plumbing deficiencies, insulation deficiencies and major structural defects. The builders have left streets unfinished, and failed to provide street lighting or even proper drainage.

One estate in particular--Victoria mews in Bury--has cost the National House-Building Council £750,000 in insurance claims to correct the mistakes. No national insurer will now insure that company. It encouraged clients to use its own firm of solicitors for conveyancing. It provides marketing services--

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Mr. Deputy Speaker (Mr. Michael J. Martin): Order. The hon. Gentleman's intervention is far too long. The hon. Gentleman, with the agreement of his hon. Friend, may make a short speech later. That may be the best way to proceed.

Mr. White: My hon. Friend has dealt with cowboy builders, and I agree entirely with him. Defects can occur with any builder. A large reason for that is the system of subcontracting. The National House-Building Council vets builders, but there is no way in which it can vet subcontractors. The system of competitive tendering, the penalties system and the low skills of the work force that many subcontractors use mean that we have a real problem of poor workmanship.

In my constituency, a reputable builder used a subcontractor from the Confederation of Registered Gas Installers to install gas pipes in houses eight or nine years ago. This year, a number of those gas pipes were found not to have been lagged. Home owners in that street are now worried that they will have major problems with their gas supply, and gas leaks.

There is a real problem with inspections. There is no agreement about how many inspections are needed. Local authorities argue that there about seven points at which new homes ought to be inspected. The NHBC argues that there are four, and does only two. A "Dispatches" programme last November highlighted what happened when half an estate was inspected by local authority inspectors and the other half by NHBC inspectors. In the first half there were few problems, and in the other there were substantial problems in many of the houses. The same programme identified a national survey that showed that many houses had blatant defects.

One builder in my constituency told the home owner that he had forgotten to put the foundations into the porch, and that it would have to be rebuilt. A former NHBC inspector told the "Dispatches" programme that he was constantly told not to upset the builders.

The NHBC gives quality awards to various builders. Despite its denials, I have a letter from a major builder saying that the NHBC tells the builders when the inspection will take place, and how to get round it. Another major concern is the time taken to inspect a house--in general, it is only a few minutes. It is easy to skimp on inspections, because profits are high and penalties almost non-existent for not doing them properly.

My major concern in this debate is the conflict of interests between the inspection and the NHBC warranty. A little while ago, the previous Government forced local authorities to separate their client and contractor roles. With hindsight, I think that that was a good decision. The same applies to the NHBC. There should be a distinct split between the inspection role and the provision of warranties. One company should not do both.

Very few people understand warranties. If one gets one at all, it arrives weeks after moving in to the new home. It is not a guarantee, although most people believe it is. It starts on the day of the final inspection, not when one moves in to the house. Many people do not realise that. If the house has been empty for six or nine months, people have lost that amount of the warranty in the crucial first two years.

Zurich Municipal does have a buy-back scheme for local authorities, but the NHBC does not. That is a source of contention. Many people confuse the warranty system

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with the mortgage provider's building insurance. If people get a problem, the first response is a denial. The second is to shift the responsibility either from the NHBC to the builder or vice versa. The whole system seems to be delay, delay, delay, especially after that crucial two-year period. The timing of the claim can affect how much compensation people get.

One thing that really worries me about the NHBC is that everyone trusts the Consumers Association, which stands up for consumers' rights in everything except house purchases, which is the single biggest purchase that most people make. I do not accuse the Consumers Association of being corrupt, but if it investigated its role with regard to the NHBC, it would be less than complimentary if the investigation was about anyone other than itself. The Consumers Association should ask itself some serious questions about its role.

I have no faith in the NHBC's proposed consumer council. We ought to have such a council, but it ought to be independent, and have some teeth. Housing logbooks have been talked about for a long time. My hon. Friend the Minister has spoken about them in the past. It is long past the time when we should introduce them. They should be one of the top priorities for the Government.

If most new building is to be on brown-field sites, the warranty system must be extended to refurbishments, alterations, improvements and renovation, for example, of blocks of flats. In addition, the problem of the speed with which most problems are resolved and claims dealt with needs to be addressed, and an independent disputes resolution procedure--perhaps an ombudsman--introduced.

The Government must tackle the monopolistic aspects of the warranty system and the NHBC's role. It makes an operating profit of £10 million, and has reserves of £600 million. It pays out, on average, £15 million a year--although, if my hon. Friend the Member for Heywood and Middleton (Mr. Dobbin) is correct, this year's figure may be slightly higher--which means that only a small proportion of its reserves are used to pay out.

On the issue of building control, local authority fees are set by the Government, although the local authority associations came within a whisker of persuading the previous Government to devolve fee setting to local authorities. I hope that I can persuade the Minister to go one step further than the previous Government, and permit that devolution.

Independent structural surveys are crucial to proper inspection. There should be a full survey by an independent structural engineer immediately before warranty--I am sure that the issue of who pays for that can be resolved. If the housing logbook was be made valid by starting with that structural survey, it would build confidence among new home owners.

Before mortgage, purchasers should be required to get an independent structural survey, which would offer them the protection of knowing what they were buying. It would be possible to introduce into that process matters such as the energy rating and other environmental audit aspects of the house. Either the seller or, in the case of a new house, the builder could be made responsible for the first survey, which would help to increase confidence in the system.

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There should be an audit mechanism for the inspection process. My preferred solution would be to return the inspection process to the sole control of local authorities, although I am not sure that I can persuade my hon. Friend the Minister to go that far today.

A 1996 Justice report made several recommendations. I urge the my hon. Friend to implement the updating of the Defective Premises Act 1972, so that it is possible to ensure that work is done with good workmanship, using proper materials, and that a dwelling is fit for habitation; and to extend the period in which builders can be sued from six years to, say, 12 or 15 years. In addition, section 38 of the Building Act 1984, which would allow a breach of building regulations to be actionable, has never been implemented, and I urge my hon. Friend to consider implementing such a measure.

So as to allow my hon. Friend the Member for Heywood and Middleton to contribute, I shall end my speech. The problem is complex, as the Minister is aware, but there is an urgent need for comprehensive reform. Given that it is the Government's policy to build on brown-field sites, which is a welcome development, the problem needs to be addressed quickly so that house purchasers--especially new house purchasers--can have a degree of confidence.

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