Clause 127 - Establishment of the new homes ombudsman scheme

Building Safety Bill – in a Public Bill Committee at 12:30 pm on 21st October 2021.

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Question proposed, That the clause stand part of the Bill.

Photo of Peter Dowd Peter Dowd Labour, Bootle

With this it will be convenient to discuss the following:

Clause 128 stand part.

That schedule 8 be the Eighth schedule to the Bill.

Clause 129 stand part.

Photo of Eddie Hughes Eddie Hughes Parliamentary Under Secretary of State (Department for Levelling Up, Housing and Communities)

This is an exciting day for me. I hope that the Committee will indulge me briefly while I refer back to my time as the chair of the all-party parliamentary group on excellence in the built environment. Our report seeking better redress for homebuyers came just a year after I became an MP, working with the Government and hoping to enjoin them to create a new homes ombudsman—so, an exciting day.

The Government are committed to improving redress for new build homebuyers and improving the quality of new build homes. The clause places a duty on the Secretary of State to ensure that a new homes ombudsman is—finally, I might say—established in England. The clause should be read alongside clause 128, which sets out the conditions that must be met for the new homes ombudsman scheme.

There is no existing provision in legislation for purchasers of new build homes to complain to an ombudsman or redress scheme. The new homes ombudsman is intended to provide clearer and more comprehensive means of redress when problems arise. It will provide a place for new build homebuyers to go with complaints, and it will be able to undertake objective determinations based on its investigations. By creating a trusted independent redress system that is easily accessible, we can drive up performance and create a better housing market.

Photo of Brendan Clarke-Smith Brendan Clarke-Smith Conservative, Bassetlaw

I thank the Minister for giving way, and may I say what a pleasure it is to serve under your chairmanship, Mr Dowd? Have the Government considered extending the new homes ombudsman provisions to Scotland, Wales and Northern Ireland?

Photo of Eddie Hughes Eddie Hughes Parliamentary Under Secretary of State (Department for Levelling Up, Housing and Communities)

Regardless of where in the UK people live, it is important that they have access to the redress that we have set out in the Bill. Discussions are ongoing with the devolved nations, because housing is a devolved matter and so it is for them to determine. Those negotiations seem to be going well, and the feeling seems to be warm, so we may have to return to the matter at a later stage of proceedings on the Bill.

The arrangements are flexible to ensure that the best provider can establish and maintain the service. The scheme will be free for homebuyers and is intended to be funded by fees that are paid by the scheme’s members. However, should it be necessary, the clause provides the power to give financial assistance to a person for the establishment and maintenance of the scheme.

Photo of Shaun Bailey Shaun Bailey Conservative, West Bromwich West

Will my hon. Friend confirm that the provisions will allow the new ombudsman scheme to work effectively with other ombudsmen and redress schemes to maximise its impact for affected residents?

Photo of Eddie Hughes Eddie Hughes Parliamentary Under Secretary of State (Department for Levelling Up, Housing and Communities)

Schedule 8 allows the scheme to include provision about a person exercising functions under the new homes ombudsman scheme, and it allows them to do so jointly with persons exercising functions from other redress schemes. It is important that we make it possible to work collaboratively. That may include the making of joint determinations by the new homes ombudsman and an independent person making determinations under another redress scheme. We are considering whether amendments may be required further to facilitate joint determinations and other forms of co-operation between the new homes ombudsman and other ombudsmen or redress schemes. I thank my hon. Friend for that helpful intervention, and it is something we are considering.

Clause 128 relates to the conditions that the new homes ombudsman scheme must meet under clause 127, and it sets out who can make a complaint to the scheme. The clause requires the scheme to be open to all developers to join as members so that qualifying complainants can escalate complaints about the scheme’s members. A qualifying complainant is a person who, at the time of the complaint, is a relevant owner of a new build home in England. The scheme is given the flexibility to set out other persons who can complain about the scheme’s members.

Schedule 8 details the other provisions that the scheme must or may include. This includes provision on which matters may be complained about; how complaints are to be made, investigated, determined and enforced; and complaints about the scheme itself. The scheme must also contain certain provisions required by schedule 8, such as the procedure for developers to become and remain members of the scheme.

To avoid duplication, the scheme may provide that the ombudsman will not be required to investigate and determine complaints that are dealt with under another redress scheme, or complaints that are subject to legal proceedings. The scheme may make provision about working with another redress scheme.

The scheme will require developers to provide complainants with redress if a complaint is well founded. This includes the ombudsman requiring the scheme members to provide compensation, make an apology, provide an explanation or take such other action in the interests of the complainant as the new homes ombudsman may specify. The scheme may also include provision about how the ombudsman’s determination will be enforced. This may include provision for the ombudsman to request a member to take action and, where a developer does not meet its requirements, the scheme may as a last resort include the expulsion of a member from the scheme. In such cases, provision must be made for how they can then rejoin the scheme.

Photo of Ian Byrne Ian Byrne Labour, Liverpool, West Derby 12:45 pm, 21st October 2021

I thank the Minister for giving way, and it is an honour to serve under your chairmanship, Mr Dowd. The independence of the scheme is critical and the Minister has not really outlined the make-up of the ombudsman, and how people will be able to have confidence in it. I will keep going back to the culture change point because if the ombudsman is seen as reputable and upstanding, people will have confidence in it. Culture change can then derive from the ombudsman. I welcome the scheme, but I would like a bit more clarity on who will sit on the ombudsman. The explanatory notes say that the scheme could also select a third party to be established to run it, so may we have some clarity on that point, too?

Photo of Eddie Hughes Eddie Hughes Parliamentary Under Secretary of State (Department for Levelling Up, Housing and Communities)

I thank the hon. Gentleman for his intervention. I completely agree with the premise of his point, which is that that independence needs to be present in such a way that those making complaints can have confidence in it. The scheme could be set up in a number of ways. For example, it would be possible for it to be done in-house so that the Government have tighter control of it, or it could be done by another party. With the New Homes Quality Board, a shadow version is being constituted at the moment. We will be able to see further details on that, but there is no presumption that the shadow board would become the final board once the Bill is passed into law. We will be able to get some indication of how the scheme will work by looking at the workings of the shadow board, and details are available for that, but as I say it will be for the Secretary of State to determine in what form it continues to ensure that there is the confidence that the hon. Gentleman so rightly says is important.

Photo of Ruth Cadbury Ruth Cadbury Shadow Minister (Housing, Communities and Local Government) (Planning)

May I ask the Minister a question on another aspect of the scheme? It is a voluntary scheme, so I believe that for the developers it is voluntary whether they join or not. Can he clarify that point, and if that is correct, what is the redress for leaseholders and other affected parties in blocks developed by developers that are not voluntary members of the scheme?

Photo of Eddie Hughes Eddie Hughes Parliamentary Under Secretary of State (Department for Levelling Up, Housing and Communities)

I apologise if there was any ambiguity in the point that I was making. Housebuilders will have to be a member of the scheme, so if they do not comply with the scheme requirements and are therefore rejected from it, that will effectively prevent them from developing in the future, and that is why we are making provision for them to rejoin subsequently.

Photo of Ruth Cadbury Ruth Cadbury Shadow Minister (Housing, Communities and Local Government) (Planning)

May I get absolute clarification? Is the default that all developers of defined blocks are members of the ombudsman scheme, unless they are excluded? Is that correct?

Photo of Eddie Hughes Eddie Hughes Parliamentary Under Secretary of State (Department for Levelling Up, Housing and Communities)

The purpose of the ombudsman is not only to resolve complaints but to drive up standards of quality. Therefore, the scheme must include provision for the making of recommendations by the ombudsman to improve widespread or regular unacceptable standards of conduct or quality of work by the scheme’s members. Additionally, the scheme must include provision about the provision of information to the Secretary of State and reports on the operation of the scheme. The clause sets out a comprehensive framework for an effective ombudsman scheme that will afford homebuyers substantially more protection and redress than they currently receive.

The new homes ombudsman scheme will allow new build homebuyers to complain to the new homes ombudsman about a developer for up to two years following the purchase of a home from a developer. Clause 129 provides definitions which determine who may complain to the new homes ombudsman, and a definition of a developer, who the Government can require to belong to the ombudsman scheme. The definition of developer includes those constructing new homes and converting existing buildings into new homes, so that complaints about developers of converted homes under permitted development rights, or those creating additional homes from larger buildings with the intention to dispose, sell or grant them to someone else, can be required to become scheme members and subject to the scheme’s rules under clause 130. I hope that offers the hon. Lady some reassurance. Clause 129 also includes a power to include an additional description of a developer, which could include organisations connected to developers.

Photo of Mike Amesbury Mike Amesbury Shadow Minister (Housing, Communities and Local Government)

I thank the Minister for the explanation, and his enthusiasm for the creation of the new homes ombudsman scheme, which by his admittance he has rightly argued for in principle since before coming to this place as a Member of Parliament. In principle, the new homes ombudsman is a good thing, though some Committee members have raised concerns and advocated for ensuring that it will be truly independent. I think new build homes have an average of 157 snags at the moment. We will all be familiar from our casework, regardless of where we represent in Britain, that this is a big and very live issue. I would hope that the ombudsman will change the landscape.

On the New Homes Quality Board, which is operating as a shadow board at the moment, sits Jennie Daly, a group director of Taylor Wimpey. The board has representatives of housebuilders and the finance sector, and Mrs Elphicke is the independent chair. I can think of examples in my constituency of Taylor Wimpey homes that have considerable snags and are what we call leaky homes. The 19 million leaky homes that are not properly insulated have been constructed with gas boilers, fossil fuels and the rest of it. All of them will need to be retrofitted and a number have snags. In fact, there is one such development that will probably go forward in the Sandymoor and Daresbury part of my constituency, on former farmers’ fields, despite all the rhetoric that we hear in this place. I would hope that they will not be leaky homes, full of snags. It is very important that those on the shadow board take things forward in future.

On the reassurance about independence, if someone is part of the club, whether they be Taylor Wimpey or another housebuilder, they are paying for that service. Then the complaint goes from our constituents—our residents—to the ombudsman. I have real concerns about the checks and balances, and the independence. The Minister mentioned that there are various models to take it forward. It could be done in-house or at arm’s length as a Government agency. That would certainly by the Opposition’s preference, via a principle, to ensure that checks and balances are hardwired into the process. In principle, we welcome the new homes ombudsman, which is very much needed, but we already have concerns about the evolution of the process, if we look at the shadow board.

Photo of Eddie Hughes Eddie Hughes Parliamentary Under Secretary of State (Department for Levelling Up, Housing and Communities)

I thank the hon. Gentleman for bringing some of his casework for us to consider. The hon. Member for Brentford and Isleworth mentioned the demise of the role of the clerk of works. I started life as a civil engineer but then moved into building site management for housing projects. At that time, we would have had a clerk of works whose job it was solely to monitor the progress of the work and ensure that it complied with the relevant standards. With cost-cutting and other things, we no longer have that, but thanks to the clause and the prospect of the new homes ombudsman, the industry has bought into the concept that quality has to rise and that people will be held more accountable in future.

On the point that the hon. Member for Weaver Vale made regarding the number of snags in a property, we will all have seen that. A comparison that has been made previously is that someone has more rights if they buy a faulty kettle than if they buy a faulty home that has minor problems that do not qualify under the National House Building Council regulation. They do not have something such as subsidence; they just have niggly problems. The developer has taken the money and perhaps trades are no longer on site, and the buyer wants to see those things addressed.

I genuinely think that we will see the industry taking quality much more seriously than they might have previously, particularly with that line of accountability coming back to Parliament. I understand that the hon. Gentleman may have reservations about members of the shadow board. We need to draw the sector into the programme and get them bought into the idea that we will raise quality. I do not think that this Secretary of State or any future one would want to be associated with a product that was not delivering for the public, so they will ensure that that confidence remains.

Photo of Mike Amesbury Mike Amesbury Shadow Minister (Housing, Communities and Local Government)

One of the roles that the ombudsman will be charged with will be dealing with rogue builders. What would happen if one of the members of the board seemed to be classed as a rogue builder? How would the checks and balances be assured going forward?

Photo of Eddie Hughes Eddie Hughes Parliamentary Under Secretary of State (Department for Levelling Up, Housing and Communities)

Such a complex question may be outwith the coverage of the Bill; however, it would be beholden on the Secretary of State to ensure that the process was managed appropriately. Given that the scheme allows for builders who are not complying with the code to be ejected from the ability to develop, I am sure that the opportunity would be there for us to deal with members of the board appropriately. If we can chuck a builder out of the scheme, I am sure that we can deal with a member of the board.

Question put and agreed to.

Clause 127 accordingly ordered to stand part of the Bill.

Ordered, That further consideration be now adjourned. —(Scott Mann.)

Adjourned till this day at Two o’clock.