Housebuilders' £100m offer after probe ‘definitely looks dodgy', Parliament told
Critics at Westminster suggested the developers made the offer to halt the investigation by the Competition and Markets Authority (CMA) 'into potentially illegal collusion … that could have inflated house prices'.
They argued the Government should insist on the watchdog completing its probe.
Assurances were also sought that the housebuilders at the centre of the inquiry would not be involved in building the affordable homes funded by the payout, which would see the firms 'simply get their money back'.
The CMA announced last week that Barratt Redrow, Bellway, Berkeley Group, Bloor Homes, Persimmon, Taylor Wimpey and Vistry had offered the payment as part of a package of commitments to address concerns following the investigation, which was launched last year.
The settlement, which is set to go into affordable housing programmes across the UK, would be the largest ever secured by the CMA through commitments from firms under investigation.
The CMA will now consult on the commitments until July 24 and, if accepted, it will mean the regulator does not need to rule on whether the companies broke competition law.
As well as the payment, the housebuilders have agreed legally binding commitments not to share commercially sensitive information with rivals, such as the prices that houses were sold for, except in 'limited circumstances', the CMA said.
They also agreed to work with the Home Builders Federation and Homes for Scotland to develop industry-wide guidance on information sharing.
The firms have said the offer of voluntary commitments does not mean they admit any wrongdoing.
Speaking in the House of Lords, housing minister Baroness Taylor of Stevenage said: 'The £100 million additional funding proposed for affordable housing will mean more families can benefit from a safe and secure home.'
But Liberal Democrat Baroness Thornhill, a vice president of the Local Government Association, said: '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?'
Responding, Lady Taylor said: 'The CMA is continuing its work on this, and on July 9 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 July 25, 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.'
Tory former housing minister Lord Young of Cookham said: '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'll simply get their money back.'
Lady Taylor said: '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.'
Liberal Democrat Lord Rennard said: '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?'
Lady Taylor said: 'This is the biggest settlement ever achieved by the CMA.'
She added: 'We have to consider what is appropriate in these circumstances. I am sure the CMA has done that.'
A CMA spokesperson said: 'Our year-long study of the housing market found that the complex and unpredictable planning system, together with the limitations of speculative private development, was responsible for the persistent under-delivery of new homes in the UK.
'It was also clear that concerns about sharing of confidential information, while important, were not the main driver of the undersupply of housing.
'The £100 million payment we have secured for affordable housing would provide immediate benefits across the UK, without a lengthy further investigation.
'It is in line with fines levied in similar cases that have taken many years to conclude and comes alongside a set of commitments which fully addresses our competition concerns.'
Bellway, which has agreed to pay £13.5 million, said: 'Bellway's offer of commitments does not constitute an admission of any wrongdoing, and the CMA has made no determination as to the existence of any infringement of competition law.
'Bellway welcomes the CMA's consultation on the voluntary commitments and will continue to work constructively with the CMA throughout the process.'
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