Housebuilders: Information Sharing

Question

15:09:00

Asked by

To ask His Majesty’s Government what assessment they have made of the implications for housing policy of the Competition and Markets Authority’s investigation of seven major housebuilders regarding information sharing.

My Lords, the housing market can thrive only if there is fair, open competition, and it is right that the CMA acts where this is not the case. The CMA housebuilding study was right to highlight the areas for improvement in the market, and that is why we have responded to its findings about delivering a system that works in the public interest. The £100 million additional funding proposed for affordable housing will mean more families can benefit from a safe and secure home. To answer the noble Baroness’s point about information, the seven companies highlighted in the CMA report have agreed to work with the Home Builders Federation and Homes for Scotland to develop industry-wide guidance on information sharing and not to share certain types of information with other housebuilders, including the prices houses are sold for, except in very limited circumstances.

My Lords, I thank the noble Baroness for her Answer. There could be an alternative version to this: major housebuilders pay £100 million to halt the CMA’s investigation into potential illegal collusion through the sharing of competitively sensitive information that could have inflated house prices. While this settlement might appear a pragmatic, cost-effective solution, would it not be more useful to have some evidence-led answers about whether the business models of the major developers are a significant factor in the slow delivery of housing? Therefore, should not the Government insist that the CMA actually completes its investigation, rather than allowing a financial settlement that obscures the fact and definitely looks dodgy?

The CMA is continuing its work on this, and on 9 July it announced that it is consulting on its intention to accept commitments offered by the housebuilders in relation to the investigation. That consultation closes on 25 July, and I have already set out some of the commitments that the seven companies have made. The £100 million payment, the largest secured through commitments from companies under investigation, will be split between affordable housing programmes across all our four nations. I hope that will make a significant contribution to delivering the affordable housing we all want to see.

My Lords, if the Competition and Markets Authority confirms this £100 million payment for anti-competitive activity, can the Minister give an assurance that none of the affordable homes to be built with that money will be built by the volume housebuilders responsible for this activity, otherwise they will simply get their money back?

The noble Lord makes a very good point. I am sure that the Competition and Markets Authority, as part of its consultation, will be looking at the best way of distributing that money, so it is not just recycled to the people who caused the problem in the first place.

My Lords, irrespective of the merits of the £100 million deal done between the CMA and the seven volume housebuilders, does the Minister agree that we should be reducing and indeed eliminating our dependency as a nation on a small oligopoly of major housebuilders? We need more variety; we need SME builders doing more; and we need the new development corporations set up at arm’s length to local authorities by mayors and combined authorities to replace our dependency on a very small handful of large-scale housebuilders which, I am afraid, will always let us down.

I have much sympathy with what the noble Lord says. He has great expertise in this area, and I recognise that. Our focus is on creating a more balanced and competitive market overall by addressing the systemic barriers that prevent SMEs and others delivering more homes. We are taking action to support SMEs across the three main challenges that we know they face: access to finance, access to land, and an uncertain and complex planning system. We have announced two immediate packages of measures to support buildout and SMEs via £100 million in SME accelerator loans and measures to support faster decisions on smaller sites, which I hope will help.

My Lords, the one-off payment of £100 million towards affordable housing is only about 3% of the operating profit of the five biggest housebuilders this year. Is this a relatively small penalty for them to pay for anti-competitive practices over many years?

As I already commented, this is the biggest settlement ever achieved by the CMA. Of course, we can always do with more money for housing. We have to consider what is appropriate in these circumstances. I am sure the CMA has done that. This will undoubtedly make a significant contribution to delivering the affordable housing we all want to see. I am sure that the CMA will continue to watch the market very carefully to see that the changes that are introduced as a result of its report make the difference that we know we need.

My Lords, UK GDP fell by 0.1% in May, with declines in industrial output and construction dragging down the overall performance. What communication has the Minister had with the construction industry to ensure that not just major housebuilders, which we have heard about, but the important SME housebuilding sector are supported? What support is she giving them to grow rather than stall or regress, as they are at the moment, particularly in the context of the Government’s housing ambitions?

I thank the noble Baroness, although I have set out already the action that we are taking to support SMEs, including the £100 million in SME accelerator loans. We are working collaboratively with all stakeholders, including large developers. That includes setting up the major sites accelerator, which is helping to unblock some of the sites that we know have been held up in the process. A lot of work is being done with the Home Builders Federation, the industry and development companies to make sure that, alongside our reforms to planning and infrastructure delivery, we are moving this on as quickly as possible. As my noble friend Lord Livermore has just said on the previous Question, this will make the biggest contribution to growth, and we know that that is what will get our country going again.

My Lords, I welcome what the Minister has said about support for SMEs and construction. Are the Government also looking at other issues bedevilling SMEs in the construction sector, such as poor payment practices and cash retentions?

I understand that slow payments and retentions are long and ongoing issues. We have to continue to look at all the barriers to SMEs as we go through the process of trying to speed up housing delivery in this country. Without removing some of those barriers we will not meet the ambitious total of 1.5 million homes that we want to deliver. We need to make sure we are unblocking all the areas that are causing problems in the system.

My Lords, the Minister has rightly talked about the barriers faced by SMEs and smaller developers entering the market. One of the issues identified is planning departments. What conversations have the Minister or the department had with some of the smaller housebuilders, as a facilitator to conversations with planning departments, to ensure that they are able to understand some of the complexities of getting their developments through planning?

The issue of skills and capacity in planning departments has been a real focus of this Government since last July when we were elected. We know that that is one of the areas in which we need to support local authorities. We have put large sums of money into creating 300 new skilled planning roles in local government and improving the pipeline of planners coming through, as well as addressing some of the other skills issues in the sector, which we know are critical to delivering this. Lots of developers have mentioned the building safety regulator, which is another aspect to this, and the noble Lord may know that we have made rapid changes there. That is moving on very quickly now.

My Lords, what are the Government doing to encourage more skills and expertise, which I gather are lacking?

The noble and learned Baroness is quite right. The age profile of some of the skilled workers in the construction sector is higher than we would want it to be. We have put £600 million into improving skills, setting up 10 new technical colleges so that we can encourage young people to take up trades in the construction industry. It is an exciting industry to be in, so I hope that they will follow that through. We are trying to encourage some of those people in the construction sector who are getting closer to retirement age to take on roles as trainers of young people, so that we pass on the skills of the current generation to the next generation.