Cowboy builders are tarnishing the whole industry's image. Everyone from small contractors to eminent figures such as Bovis chairman Sir Frank Lampl are concerned that the association with cowboys will drive away staff and make it difficult to attract high-flying graduates. The problem is: how to ostracise the crooks and rogues. A taskforce set up by construction minister Nick Raynsford was due to deliver its proposals for tackling the cowboys this week. Some are sensible, such as the establishment of an ABTA-style quality mark, backed by insurance. But, overall, the package is too complicated and bureaucratic – and it doesn't go far enough.
In appointing Tony Merricks, general manager of Balfour Beatty's specialist contracting businesses, to head his taskforce last summer, Nick Raynsford effectively said to the construction industry: "Cowboy builders are your problem. You sort them out."
Well, up to a point.
Cowboys do cause havoc for some small builders. By employing unskilled labour and not paying VAT, they can undercut reputable rivals. But, as Graham Watts, chief executive of the Construction Industry Council, points out, it is unfair for the government to ask the industry to eradicate cowboy builders on its own, not least because no one knows who many of them are. "It's a bit like asking football to sort out hooliganism," says Watts. "The only way to control the cowboys is to make them part of the industry. To do that, we need legislation."
That is also the view from Down Under. Michael Kefford, chairman of Victoria's Plumbing Industry Board, flew to London in November 1998 to explain to the Merricks taskforce how draconian measures in his state had cut the failure rate of new installations by 80% in the previous year. In Victoria, any homeowner or commercial client with a plumbing job worth more than A$500 (£180) must collect a certificate of compliance from a licenced plumber on completion. The system works, but industry leaders in Australia say it would not without legislation. "You can't self-regulate on a wholly voluntary basis," argues Ray Herbert, executive director of the Master Plumbers and Mechanical Services Association of Australia. "You need legislation. If a government isn't prepared to legislate, it isn't meeting its responsibilities."
The word from Whitehall, however, is that Raynsford is unwilling to make the registration of builders mandatory for several years at least, even if he can find the parliamentary time. Nor does the Merricks report discuss the compulsory registration of companies, although it does suggest that, in the long term, only "competent persons" should be licensed to carry out work.
This focus on individuals, rather than companies, is opposed by contractors and specialists. "It's companies that should be registered," says Construction Confederation chairman Alan Crane. "They have the contract with consumers, and it's for them to ensure they have the right calibre of people."
As Building revealed last week, the disagreement between Merricks and other industry leaders may knock the wheels off the whole anti-cowboy bandwagon. Merricks was planning to enclose a personal letter with his report explaining the divisions within the taskforce, although pointing out that he does not think them serious.
Serious or not, the spat has overshadowed some sensible proposals in the report. It says the quality mark should certify that a builder has the requisite training and technical competence, financial probity and liability insurance, and complies with health and safety laws. To succeed, the report goes on, the mark must become a consumer brand, like ABTA. Firms will be accredited either through trade bodies, or by companies (the Building Research Establishment, perhaps) that set up a special service. The report suggests that the United Kingdom Accreditation Service could check the accreditors.
Merricks also wants the quality mark to be backed by warranties, with a minimum level of £100. That will cover homeowners against the failure of major repair work or extensions.
Finally, the report calls for fair trading legislation to be strengthened, and for both the level of VAT on repair and maintenance to be cut and the threshold lowered. Whitehall sources say there is a growing lobby to persuade the Treasury to cut VAT on R&M to 5%, which will help reduce the crippling price differential between bona fide firms and the tax-evading cowboys.
All these measures will promote the businesses of reputable firms, and help to ostracise cowboys. But the Merricks package will not wipe out the black market. If Raynsford really wants to protect consumers from the charlatans – and from their own weakness for a cheap deal – he must also legislate. It must be illegal to dupe homeowners into buying services that you are not qualified for or capable of performing.
What needs to be done1 Compulsory registration of builders There needs to be legislation to make it illegal for builders to carry out domestic work unless they are registered. Builders will have to prove they have technical competence and insurance warranties. The system of registration needs to be initially funded by a small, one-off levy on the whole industry. Such legislation won’t be easy to draft or quick to enact – and it will certainly be unpopular. But it works in Australia, and it can here. cowboys’ ability to trade here, too. 2 Appoint a construction tsar The government needs to appoint a tsar – along the lines of the water industry regulator – who can quickly resolve disputes and has the power to strike off builders. 3 Launch a multimillion-pound advertising campaign Building asked top advertising agency Black Andrews to come up with a plan. It recommends a £5m-8m campaign to sell the idea to the public with a series of television, newspaper and poster ads.
How Building’s plan to outlaw the cowboys works1 Compulsory registration There needs to be legislation to make it illegal for any builder or tradesperson to carry out domestic works unless they are registered. Companies that meet the required technical and financial standard will be required to carry a registration card, including details of where and how homeowners can check their credentials. The charge might be £100 a year. They will also be required to issue a 10-point charter, detailing the kind of service homeowners can expect – and what payment provisions builders expect in return. Although it will be impossible to prosecute homeowners for employing cowboys, the law must make it illegal for professional architects and surveyors to appoint them on domestic contracts. However, even if such a Domestic Construction Bill were possible in the next session of parliament, it would still take a couple of years – possibly until after the next election – to become law. As an interim measure, senior industry figures such as Bovis chairman Sir Frank Lampl suggest a voluntary register, with a simpler accreditation system than the one proposed in the Merricks report. Sir Frank says local authorities can give prospective builders a written assessment and ask them to face an interview panel, possibly including a representative from a leading contractor. “I am quite convinced that the majors would supply people for the panel. Why not? It’s not a full-time job,” Sir Frank says. Instead of erecting a huge bureaucratic accreditation edifice, the checks should be random, as in Australia. Even so, the cost of running a registration system will run into millions. Who pays? The industry is reluctant. As Kier chief executive Colin Busby points out: ”I am concerned about the image of the industry, but I doubt whether there will be wholehearted support for a levy. If it’s £1000, the majors will pay, but that’s a hell of a lot for a small builder – £200 is a week’s wages.” Building believes that the only option is a one-off, blanket levy of the industry’s 200 000 contractors, based on turnover. Assuming that only half pay, a £100 levy would raise £10m. Ultimately, the system needs to be self-financing, with firms paying to register. 2 A construction tsar Even if registration is mandatory, there will still be disputes between builders and homeowners. They need a respected, independent figure they can turn to. This ombudsman – or tsar, in the current Blairite parlance – would be a respected, independent figure with a knowledge of construction, but someone not seen by the public as too close to the industry. Who? An ex-construction minister such as Tony Baldry, perhaps. The tsar will answer directly to Raynsford. He or she would have the power to order the prosecution of a builder, or to strike the firm off the national register, which they would own. In other cases, they might back the builder in a claim against the homeowner. The tsar must be backed by a small secretariat and a part-time panel of expects. The panel’s job will be to sift through complaints, pass some on to the body that accredited the builder in the first place and advise the tsar on how to resolve the most serious cases. Again, the tsar’s operation will be expensive, perhaps £1m a year, including salaries and office rent. This cost should be borne by the government, as the ultimate consumers’ protector. 3 A multimillion-pound advertising campaign With emotions running high over cowboys, a registration system that protects homeowners from unscrupulous builders would resonate well with the public, says advertising executive Jim Andrews. Building asked Andrews, director of advertising agency Black Andrews, to produce a strategy to promote a register of bona fide builders and an accompanying quality mark. The agency has also designed an advertisement. Andrews says the government would be applauded for getting behind the issue, but that the key to success is that the product is seen as “believable and credible”. The first thing the government must do, says Andrews, is sell the idea of a register to the industry, convince builders of the benefits of joining it and point out that they could lose trade if they don’t. “There need to be regional registers for public use,” he says. The government also needs strong branding for the quality mark and a strategy for making it available to registered firms to use on stationery and so on. “I’d also like to see a 10-point charter manifesto guaranteeing standards under this hallmark,” says Andrews. A freephone helpline should be set up, whose number would appear on all the ads, and there should be free leaflets explaining the new system. In terms of advertising strategy, Andrews believes a £5m-8m multimedia campaign geared to the mass market would be needed to kickstart the scheme. The ads – spread over television, newspapers and posters – would run for three to four months. Television and cinema ads to register the symbol in people’s minds would need to be compelling and shown at peak times for maximum coverage and to create emotional awareness. “To do it justice would initially require one-minute-long commercials. These could be reduced to 15 seconds after a few weeks.” Newspaper ads should talk about the benefits of registered builders and run in both broadsheets and tabloid newspapers, with a different treatment. Andrews says television and newspaper ads should be backed by a poster campaign and ads on local radio, as well as by an across-the-board PR campaign. Other suggestions are to get DIY stores on board so that they allow only qualified builders to put up cards in their stores, and a large-scale door drop.
Labour’s first registration planA law to compulsorily register contractors has already been proposed by a Labour minister – nearly 30 years ago. John Silkin, who was minister of public works in Harold Wilson’s first Labour government, proposed a Construction Industry Contracts Bill in April 1970 in response to mounting public anxiety over the activities of the lump. These were labour-only subcontractors, thought to include 200 000 workers, who evaded tax and were widely blamed for shoddy workmanship. Silkin wanted to make all construction firms register, not just subcontractors. Under the bill, firms would only be eligible to register if they paid tax and National Insurance and took out adequate liability insurance. The charge was to be £5 a year – about £44 in today’s money. According to Building, contractors backed the plan because they were worried about falling standards. Silkin’s bill was due to become law in April 1971. It never materialised. Labour was defeated in the 1970 general election and Edward Heath’s Tory government dropped it.