HC Deb 20 November 1952 vol 507 cc2215-24

Motion made, and Question proposed, "That this House do now adjourn."—[Major Conant.]

11.44 p.m.

Mr. George Thomas (Cardiff West)

A few days ago my hon. Friend the Member for Faversham (Mr. P. Wells) rendered a signal service to the House by raising the question of the London Builders' Conference, and the Minister of Works, who replied to that debate, was as forthright as my hon. Friend. Together, in my opinion, they saved the local authorities hundreds of thousands of pounds.

The question which I have to raise tonight deals with an entirely different issue—the national schedules of day work charges for general building work. The schedules as issued are described as follows: These schedules are authorised by agreement between the Royal Institution of Chartered Surveyors and the National Federation of Building Trade Employers and supersede the previous schedule authorised in 1933. This is the copy as amended on 30th November, 1951. These schedules of charges are authorised only by agreement between the surveyors and the builders, and many members of the general public, quite understandably, associate authority with the word "authorised." They think there is a legal sanction for the charges which are being imposed by builders.

My first submission is that here we have a private combination to exploit the public in a period of national difficulty. It is true that it does not involve large contracts or affect local authorities or similar bodies, but it does affect very substantially the single householder or the small landlord who has to face the burden of repairing his property.

As hon. Members will know, there is an agitation under way by the National Property Owners' Association for increasing rents to enable landlords to meet the cost of repairs. I submit to the House that the issue of raising rents need never be accepted if the Government are prepared to intervene in this matter where the cost of building repairs is being inflated by greedy men.

Many people have a wrong impression as to why building repairs are costing so much at the present time. They believe that it is due to the cost of wages and materials. What they do not realise is that the rate of profit has gone up much more than either the cost of materials or the rate of wages. Bills sent out nowadays by builders for day work fulfilled usually include only a block amount for labour and material charges. The bills do not reveal the basis of assessment by which these charges are arrived at. Indeed, this matter has only now come to light to some of us in this House because one of my hon. Friends was persistent when he received what he considered to be an exorbitant bill for repairs done.

What is the basis of charging by the Federation of Building Trade Employers in conjunction with the chartered surveyors? First, the wages of the men concerned with the job are taken into account. These already allow a profit for the employer. Then 4 per cent. is added to the wages of all the workpeople to cover public holidays and holidays with pay, with the result that the employers probably reap much more than the cost of paying the wages for their workpeople during holidays.

But they are not content to stay there. Where the labour costs do not exceed £200, the builders are adding an extra 40 per cent. of the wages of the men to cover the overheads of their concerns. I am interested tonight in the small people who have a bill for £50 or £60 for repairing their property and who are being milked by a proposal which allows 40 per cent. for overheads and 4 per cent. to cover public holidays on top of the wages of the people concerned. When we come to the question of materials it becomes an even uglier picture. Where the materials are supplied out of builder's stock which he has obtained at wholesale prices he charges the market retail price for the materials. In addition, he keeps for himself a cash discount of 5 per cent. He then adds to his bill a further 10 per cent. for what he calls the justifiable charge of handling the materials to do the job.

Not satisfied with that, he then charges for storage and waste of materials, but gives no separate indication on the bill that this charge is being added. If second-hand materials are used they shall be charged, says the agreement, at actual cost. I ask the Minister to note that in a valuation of the market prices of similar materials, second-hand material can be charged for as though it was new. This agreement therefore holds the public up to ransom: it must be preventing thousands of people from doing urgent and necessary repairs to their property.

Where the materials are supplied by the owner of the property they are included for an assessment for private purposes in the bill as though they had been provided by the builder. There are certain direct charges which are added to the bill. There is a charge for any machinery used and a charge for any other materials used. The builder is adding charges for water, sponges, and leather things that he has in any case in his job, so making people pay over and over again for the same things. Then there are charges for the insurance on his property and for the testing of materials. All these amount to the equivalent of another 3d. on the wages of the workers.

After these charges and profits which are, goodness knows, exorbitant enough, he then lumps together the profit that he has been making on the wages and the materials, adds them together and makes a 10 per cent. addition on all that sum, which gives him roughly 108 per cent. profit altogether on any job that he is doing. On a bill that ought to cost £50, builders are charging £75, in those cases where the bill is under £500.

There are additional charges. If the main contractor calls in a sub-contractor to do the work, then the main contractor is allowed to charge a further 5 per cent. on the whole of the bill, including the 10 per cent. profit which the sub-contractor has included. All this is little short of legalised robbery of the public and I believe that the Government cannot be indifferent to such organised exploitation of the public. It is anti-social and unjustifiable, and I trust that the Parliamentary Secretary will be as forthright as the Minister of Works himself was in condemning not dissimilar practices a few days ago.

There is a public concern over the amount of property which is falling into disrepair, and I suggest to the House that if this sort of practice is not stopped much more property will fall into a state of disrepair, and we shall have hon. Members on that side of the House making pleading speeches for the poor landlord, and wanting to put this increased cost into the tenants' rents, whereas the landlord ought to be helped by attention being paid to this combination.

The Minister will be fully aware of this national schedule, and I earnestly hope that, in the interests of private enterprise, in the interests of public confidence, he will expressly dissociate the Government's sympathy from these practices, which can only be described as the overweening greed of people who are making a fair profit without this sort of practice.

11.56 p.m.

Mr. W. T. Williams (Hammersmith, South)

I am sure that the House will be grateful to my hon. Friend the Member for Cardiff, West (Mr. G. Thomas) for raising this matter, as I believe, the country will be. I had hoped, had I been successful in the Ballot, to have raised it on a more auspicious occasion, but I am glad to have an opportunity of underlining some of the points which my hon. Friend has made.

This matter was brought to my notice when I had a small job done in my own house and received a bill that seemed to me to be exorbitant. The bill was sent to me without any notice as to how the work had been done; it was merely a statement that it had been done, and the bill with which I was presented was for £10.

I should like to draw the Minister's attention to the way the bill was made up, because it seems to me that this would be a practical example of the way in which the public are being held to ransom, because it is the kind of thing going on not only in London, as with the London Builders' Conference, but all over the country. It affects the small people who cannot afford to pay exorbitant charges of this kind which, in my judgment, are even more iniquitous than the activities of the London Builders' Conference because they, at least, it can be said, make charges on those people in a better position to pay than these small folk.

There were 28 hours charged for, for the workman himself. The charge was made at 3s. 6d. an hour. I discovered that the average cost to the employer of the carpenter in London was 3s. 3d. an hour. He, therefore, earned, on every hour the man put in, an initial 3d. or 5 per cent. In addition, there was a further charge of 4 per cent. which was a further 3s. 6d., and then a further charge on top of that of 4 per cent., or £1 17s. 6d.—this for a charge to him of some £6. The builder in this case made a profit of no less than £2 7s.

I was told that, in addition to that, it was possible for him to charge 3d. for the man, had he used brushes. Materials come to £2 10s. 8d. The charge made to me was the charge at the retail price, which rose above the wholesale price 33⅓ per cent. or 16s.—and a further charge of 5 per cent. cash discount.

On a charge to me of £2 10s. the builder had made already a profit of no less than £1 1s. In addition, the builder charged me what he regarded as a reasonable handling charge. That he put down at 10 per cent., or a further 5s., so that on a small charge of £2 10s. the builder had made no less than £1 6s. profit charges. The bill was further added to by 10 per cent., which, I learned from the builder afterwards, was a profit charge, though goodness only knows what he must have called the other charges.

As a result of all this, the position was that on a bill of £10 0s. 3d., the builder had made a profit of no less than £6 1s. My hon. Friend, the Member for Cardiff, West said, very moderately, that this action made a profit to the builder on small undertakings of between 50 per cent. to 75 per cent. Here is an actual example of a bill I myself received and which, undoubtedly, hundreds of thousands of other equally innocent and gullible people have received all over the country and from which the builder has made considerably more than 100 per cent. profit.

Mr. G. Thomas

I should like to correct my hon. Friend and say that I gave an illustration to show how much less the cost would have been if the builder had made 50 per cent. profit.

Mr. Williams

The bill would have been rather less than half.

I wrote to ask the builder how he could make this charge, and he replied that it was an agreed and authorised schedule of charges, the impression obviously being left that the Government, in some way, sanctioned this daylight robbery. In fact, the charge was authorised by no more responsible people than the National Federation of Building Trades Employers and the Royal Institution of Chartered Surveyors, who apparently, are responsible to nobody but God and history, and care not a damn for either.

Brigadier F. Medlicott (Norfolk, Central)

I have no wish to join issue with either of the hon. Members over this important matter, nor seek to justify every charge. But would the hon. Gentleman concede that in all these bills there must be something added to provide for the overhead charges which go on day in and day out, even when no work is done at all?

Mr. Williams

Certainly, I will deal with that.

When I wrote to say that I regarded this as an outrage and an imposition, the only reply I got was that the builder was not in the least interested in what I thought about the bill as long as I paid it. I was brought up in a builder's house and I had never heard of these charges. I wrote to a builder I knew, who is not a member of the National Federation of Building Trades Employers. He replied that it was his practice invariably to charge 12½ per cent. or 1½d. in the 1s. on every hour's work by all his men. This man had approximately the same number of employees as the man who did the work for me. This man told me that, in addition, it was his practice to charge a discount of 5 per cent. if he had not received a cash discount of 5 per cent. from the builder from whom he bought his materials. He said he had been in business for 50 years, and his father before him. This had always been the practice and he discovered that at no time did he suffer a loss.

These matters prove that this cartel, this agreement on the part of builders to hold up the country to ransom, puts them into the category of vampires, who are literally sucking the blood of ordinary people and making more than difficult the task of keeping houses in decent repair. There are cases of decent people who, because of this vicious extortion, are unable to keep their premises in good repair as they cannot afford to feed these bloodsuckers.

12.5 a.m.

The Parliamentary Secretary to the Ministry of Works (Mr. Hugh Molson)

I have no doubt that the hon. Members for Cardiff, West (Mr. G. Thomas) and Hammersmith, South (Mr. W. T. Williams) who have raised this matter tonight, and have spoken so strongly upon it, believe that what they have referred to is a secret agreement between builders for extracting exorbitant charges from the public which is having a substantial effect upon the cost of repairs.

In the first place, I would say that, in the vast majority of cases the businesslike and prudent person asks for an estimate from the builder for the work that is to be done. He has every opportunity of obtaining estimates from a number of different builders, and from them he is able to choose one who appears to him to be doing the work at a reasonable price.

The schedule to which the hon. Member for Cardiff, West has referred has no bearing whatsoever upon any case where an estimate is asked for and where a quotation is given. The only cases in which this schedule comes into operation are those rather exceptional cases where, for some reason or another, it is impossible to obtain an estimate for the work from any of the builders who are anxious to obtain an order of this kind. It is only in those cases that this schedule then applies.

Mr. Glenvil Hall (Colne Valley)

I know that the hon. Gentleman has not much time, but might I ask him if what he is saying now means that if a person trusts the builder he is going to rob him?

Mr. Molson

No, that is not what I am saying. I am now coming on to this schedule. This national schedule of day work charges is, in fact, a maximum charge that may be made.

Mr. W. T. Williams

It is the usual charge.

Mr. Molson

It is not the minimum charge.

Mr. Williams

It is the usual charge.

Mr. Molson

In a very great many cases it is possible to arrange with builders to make charges which are less than those laid down in this schedule. Now, this agreement was come to between the National Federation of Building Trades Employers and the Royal Institution of Chartered Surveyors. The hon. Gentleman referred to the Institution as being an irresponsible body. They are a thoroughly respectable institution of professional men who represent the interests of those of their customers who require building work to be done, and there is not the slightest reason to suppose that when they agreed to this schedule they had not carefully ascertained what the costs of the builder were likely to be.

In point of fact, the National Federation of Building Trades Employers by no means includes all the builders in the country, as the hon. Member for Hammersmith, South himself mentioned. There is no obligation upon the members of the Federation to charge these prices; and, certainly, those outside the Federation very often do make lower charges.

The hon. Member for Cardiff, West has raised this matter because he considers that the Government as a whole should intervene in a matter of this kind. When, in 1934, the Ministry of Works were asked to accept this schedule we declined to do so on the ground that we had not been given an opportunity of investigating the charges; and we have never been willing to regard this schedule as being in any way binding upon ourselves. We do not know that any Government Department has been asked to accept the 1950 schedule, and I have very little doubt that if they were asked to do so they would give the same answer which he gave in 1934.

I am bound to say that we have no special reason to suppose that the charges which are made are exorbitant. In fact, the provisions of this schedule are very similar to the Ministry of Health's form of Prime Cost contract as agreed with the Ministry of Works, the War Damage Commission, the National Federation of Building Trades Employers, to be used by local authorities for the repair of war damaged buildings.

Therefore, there is no reason to suppose that there is anything unreasonable in this schedule. The hon. Gentleman have rather given the impression that there is something secret and surreptitious about it. It is published in Spon's "Architects and Builders Price Book," and is shown as being an agreement in which architects or surveyors can check the bills sent in, and what is provided for in that schedule is the maximum.

When the hon. Gentleman suggests that the high cost of building repairs at present is due to this schedule we know that the high cost of repairs is due to the greatly increased earnings in the building industry and the very greatly increased building materials prices. If we take the level of 1938–39 as 100 the earnings of those employed in the building and contracting industry has gone up to 265, and in the case of building materials to 300. In the last Girdwood Report on the cost of building it is stated that the profits of contractors and builders has only gone up by 1 per cent. above what the profits were before the war.

There is, therefore, no reason to suppose that this schedule is in any way unreasonable. The Government accepts no responsibility for it, however, but the really substantial increase in the cost of repairs is due to the easily ascertainable increase in the earnings of those employed in the industry and the great increase in the price of building materials. I have no reason to suppose that any exorbitant charges are being made under this schedule, and as it is a matter of negotiation by two parties in the industry there is no justification whatsoever for the Government to intervene.

Adjourned accordingly at Thirteen Minutes past Twelve o'Clock a.m.