HC Deb 22 April 1993 vol 223 cc165-6W
Mr. Nigel Evans

To ask the President of the Board of Trade what action is being taken to implement the Monopolies and Mergers Commission report on structural warranty services for new homes.

Mr. Neil Hamilton

The report on structural warranty services for new homes was published in March 1991 and the Monopolies and Mergers Commission—MMC—found that rule 12 of the rules of the National House Building Council—NHBC—operated against the public interest and was hindering the growth of competition in the market. The rule requires builders who are members of the NHBC to register all their new homes for cover under the NHBC structural warranty scheme. The MMC recommended that rule 12 should be amended to permit NHBC builders to use a comparable alternative warranty scheme. Therefore, I have today written to Sir Bryan Carsberg, requesting him, under section 88(1) of the Fair Trading Act 1973 to consult NHBC with a view to obtaining an undertaking to amend rule 12 in line with the MMC's recommendation.

The MMC also recommended changes to the rules on leaving and rejoining the NHBC scheme to make it easier for builders to transfer between schemes.

Action to implement the report has been delayed while NHBC sought judicial review of the MMC's findings on rule 12. The judgment delivered on 1 October 1992 upheld the MMC's findings on rule 12. Judicial review did not relate to the MMC's other recommendations concerning aspects of the rules on withdrawal and transfer from the NHBC scheme. Terms of undertakings on these recommendations are already being negotiated by Sir Bryan Carsberg, the Director General of Fair Trading—DGFT—and he will advise me of the outcome in due course.

The NHBC has lodged an appeal challenging the MMC's findings on rule 12, although no date has yet been set for the appeal. To avoid any further delay I have asked the DGFT to convene negotiations with NHBC with a view to obtaining the appropriate undertaking within three months.

I consider that the proposed amendment would open up a degree of competition, while providing consumer protection, in that competing house warranty schemes would conform to a broadly comparable standard, in terms of technical specifications, inspections and reserves set aside against future liabilities, to that established by the NHBC.