Consideration of Lords amendments
[Relevant documents: Second Report of the Housing, Communities and Local Government Committee, Session 2019-21, Cladding: progress of remediation, HC 172; Fifth Report of the Housing, Communities and Local Government Committee, Session 2019-21, Pre-legislative scrutiny of the Building Safety Bill, HC 466; Seventh report of the Housing, Communities and Local Government Committee, Session 2019-21, Cladding Remediation—Follow-up, HC 1249; Seventh Report of the Levelling Up, Housing and Communities Committee, Building Safety: Remediation and Funding, HC 1063.]
Queen’s and Prince of Wales’s consent signified.
I must draw the House’s attention to the fact that financial privilege is engaged by Lords amendments 6, 17, 22 to 30, 103, 104, 111 to 113, 116, 120 to 127, 137 and 138. If they are agreed to, I will cause the customary entry waiving Commons financial privilege to be entered in the Journal.
Before Clause 117
Remediation of certain defects
With this it will be convenient to discuss the following:
Government amendment (b) to Lords amendment 93.
Lords amendment 94, and Government amendment (a) thereto.
Lords amendment 98, and Government amendments (a) to (c) thereto.
Lords amendment 107, and Government amendment (a) thereto.
Lords amendment 108, and Government amendment (a) thereto.
Lords amendment 109, and Government amendments (a) and (b) thereto.
Lords amendment 145, and Government amendment (a) thereto.
Lords amendment 184, Government amendments (a) and (b), amendment (e), Government amendments (c) and (d), and amendment (f) thereto.
Lords amendment 6, Government motion to disagree, and Government amendment (a) in lieu.
Lords amendments 1 to 5 and 7 to 25.
Lords amendment 26, and amendment (a) thereto.
Lords amendments 27 to 77.
Lords amendment 27, and Government consequential amendment (a).
Lords amendments 79 to 92, 95 to 97, 99 to 106 and 110.
Lords amendment 111, and amendment (a) thereto.
Lords amendments 112 to 144, 146 to 183 and 185 to 191.
I must start with a reminder of where this journey started: 72 people lost their lives in the Grenfell Tower tragedy, which was the largest loss of life in a residential fire since the second world war. All our thoughts are with those families who have lost loved ones. The Government are determined to ensure that such a tragedy never happens again.
I thank the Members of this House, noble Lords, cladding groups and industry stakeholders who have worked tirelessly on this landmark legislation. I remind Members that the Bill not only creates an improved building safety regulatory system but protects leaseholders, who have become victims in the building safety crisis. We have stuck to my right hon. Friend the Secretary of State’s principles on building safety, which are that we must make industry pay to fix the problems for which it is responsible; protect leaseholders; and restore common sense to the assessment of building safety risks, thereby speeding up the fixing of the highest-risk buildings and stopping buildings being declared unsafe unnecessarily .
I accept that a lot of what the Minister is saying is correct—that those who are responsible should pay and leaseholders should not—but he missed out one group that has been particularly affected by Grenfell: social housing tenants. Why is the Minister not prepared to offer them the same financial support as he is giving to leaseholders?
The Chairman of the Levelling Up, Housing and Communities Committee—the hon. Member for Sheffield South East (Mr Betts)—and I have been involved in the prelegislative scrutiny of the Bill and the whole process behind it. Is my right hon. Friend the Minister saying that not only can we pass the Bill today with the Government amendments but he will continue to look to revise the law and to embrace more people in the law through secondary legislation?
The Building Safety Regulator will continue to make sure that all building safety regulations are adhered to. Mention has been made of social housing tenants, social housing and affordable housing; we will consult on that further down the line so that we can be absolutely sure we have got this right. I hope that reassures my hon. Friend.
On 13 April, my right hon. Friend the Secretary of State wrote to Members to update them on the progress in the negotiations with industry. We will now see the vast majority of developers fix all the buildings that they had a role in developing or refurbishing in the past 30 years. My right hon. Friend announced last week that, in addition to the existing building safety fund, the Government will establish a new cladding remediation scheme, funded by industry contributions, to cover all other unsafe residential buildings of 11 to 18 metres that contain private leasehold properties but a developer has not accepted responsibility for fixing them or cannot be identified.
I thank the Minister for what he is saying. He will be aware that I have had significant issues in my constituency, with many affected developments. In respect of the Celestia development in particular, there have been long-standing challenges in getting answers to the questions that residents are asking. Redrow wrote to the Secretary of State to say that it will now take responsibility for paying, but it has not made clear whether that applies to Wales—the letter refers only to England. Will the Minister clarify whether he understands that such commitments are going to be UK-wide, given that it is a UK-wide issue? If they are not, what pressure will he put on Redrow to make sure that that commitment applies to Wales as well?
I do not know the specifics, to be really honest with the hon. Gentleman. He will know that I have picked this issue up lately, and if he does not mind, I will come back to him with a definitive answer.
The leaseholder protections that were introduced in the other place put our commitments into law. Qualifying leaseholders—defined as those living in their own homes or with up to three UK properties in total in buildings that are above 11 metres or five storeys—will be legally protected from all costs associated with the remediation of unsafe cladding, as will all leaseholders in buildings owned by or associated with the developer. Leaseholders in buildings above 18 metres are already protected by the Government’s £5.1 billion building safety fund for the removal of unsafe cladding. It is the Government’s expectation that developers will pay to fix buildings that they had a role in developing or refurbishing.
The Minister has been a breath of fresh air since he has come to the Department, and the discussions have been very productive. Will he clarify from the Dispatch Box that for leaseholders in buildings under 11 metres, who currently have no protections, the Department would be willing to look at those buildings on a case-by-case basis if support was needed?
My hon. Friend has invested a considerable amount of time in his campaign and I have enjoyed the opportunity to have those discussions with him. I will come to that point shortly, but yes, as a Department we will deal with those buildings on a case-by-case basis. I shall give more details as to why we have come to that conclusion.
We are protecting qualifying leaseholders from costs associated with non-cladding defects, including interim measures such as waking watches. Building owners and landlords will be prevented from passing on the costs to fix non-cladding defects if they are linked to, or are, the developer.
While the Bill was in the other place, the Government made a number of amendments to it that will restore fairness to the system and help those who have been unfairly impacted by building safety issues. I know that many Members wish to speak, so I do not propose to go through each of the amendments made in the other place. The Bill now not only provides for a new regulatory regime but provides an extensive set of tools, in law, to ensure that those who bear the responsibility for defects are made to pay and to protect leaseholders from crippling bills for historic defects. In response to concerns expressed by Members in both Houses and by stakeholders, we have changed how the building safety charge works and removed the legal duty to appoint a building safety manager.
The EWS1 form, which was brought about by the Royal Institution of Chartered Surveyors, has caused many problems for people trying to sell their properties. We now have PAS 9980, which will not replace EWS1, but could the Minister say that from his perspective he would rather people look at PAS 9980, as opposed to EWS1?
I pay tribute to my hon. Friend, who has also been heavily involved in all this work. Yes, I can confirm that. I will elaborate later in my speech.
Let me turn now to the Government amendments to the Lords amendments. Lords amendment 94 inserts a clause that sets out the meaning of “relevant building”. The clause defines the categories of buildings to which the leaseholder protection measures apply. The Government originally proposed to apply the leaseholder protection measures to buildings containing at least two dwellings above 11 metres in height, or with at least five storeys. Amendments made in the other place extended the definition of “relevant building” to buildings of all heights containing two or more dwellings. We will take a very dim view of freeholders who seek to exploit leaseholders to pay for unnecessary works. The Department is aware of a handful of low-rise buildings where freeholders have been commissioning such works and we are addressing such buildings, as I said a moment ago, on a case-by-case basis, but we must restore proportionality to the system. That is why the Government do not agree with the extension of the scope of leaseholder protections to include buildings under 11 metres. There is no systematic risk of fire with buildings below 11 metres. Low-rise buildings are therefore unlikely to need costly remediation to make them safe. Lower-cost mitigations such as fire alarms are likely to be far more appropriate and proportionate. Assessments carried out in accordance with the new PAS 9980 principles should produce more proportionate responses than costly and, ultimately, unnecessary remediation. The Government have been clear in their view that an EWS1 form should not be required for buildings below 18 metres in height.
I thank the Minister for his generosity in giving way again. What is his advice to leaseholders who believe that they have been wrongly charged for unnecessary works, or works that are not actually required in the way that he is describing? Many residents have raised concerns with me about what has been put forward and whether it was actually required. What should they do? What is the Minister’s practical advice?
My door is always open, so if the hon. Gentleman wants to raise specific cases with me I would be more than happy to take them up and make sure that we get relevant answers for him.
Freeholders and landlords should not be commissioning costly remediation in buildings below 11 metres except in exceptional circumstances, which is where there is no more proportionate option available. They certainly should not be pointing to old EWS assessments to justify those costs. Given the small number of buildings involved, a blanket legislative intervention bringing hundreds of thousands more buildings into scope to deal with an issue affecting just a handful of buildings would be entirely disproportionate. The Government amendments therefore reinstate the definition of “relevant building” as one that is at least 11 metres, or five storeys in height, and contains at least two dwellings.
I am extremely grateful to the Minister for giving way. In respect of the point that he has just made, have the Government made an estimate of the number of residential buildings below 11 metres where there may be a case for extensive remediation works? I am just trying to follow the logic of the Government’s position. They say that there is not really a problem with buildings below 11 metres, which is why they do want to include them, but if there is not a problem, surely the Government would not be having to do much in respect of those buildings, because there are very few of them—so the Minister says.
The issue is the proportionate measures that can be made in those buildings to ensure that they are safe. We want to make sure that we get this right, and we will be continuing to look at all of these. If the building safety regulator assesses that further work needs to be done, or that the Government need to look at what needs to be done, we will absolutely make sure that we do that, and I make that commitment to the House.
On that specific point, I am grateful that the Minister has said that he will look at this issue of buildings below 11 metres. As part of that, will he commit to focus especially on those buildings where there are many vulnerable residents—whether that is care homes, shelter buildings or perhaps even schools where there are children with special educational needs or disabilities who might find it harder to escape buildings? Will he commit to look specifically through that lens of risk to the vulnerable adults in those buildings?
I am grateful to the hon. Lady for her engagement, too. She raised this important point with me yesterday. Yes, absolutely, we have officials looking at that, but also, as I have said, the Building Safety Regulator will be assessing buildings such as those. If this becomes an area that needs further consideration, we will look at what measures need to be introduced.
I thank the Minister for giving way. He is being very generous, but these are important and quite complicated issues. There is a general welcome for the Government’s attempts to take a more proportionate approach and for moving away, albeit over a period of time, from EWS1 forms to PAS 9980, which can cover whole blocks rather than individual properties. The two questions that the Select Committee has not had answers to are, first, whether the Government will look at making the building regulator responsible for deciding which blocks need this new assessment rather than the building owners, who might have a particular interest in saying no; and, secondly, whether he will ensure that the professional indemnity insurance scheme also applies to assessors on the PAS 9980 assessments as well as to those on the EWS1 forms?
I know that the Department has been considering much of the Select Committee’s excellent work. We have moved a long way from the initial reports, and the responses will be going back to the Committee. Yes, I will take that away with me if the hon. Gentleman will allow, and I will write to him to give him further details.
Let me move on now to collectively enfranchised and commonhold buildings. The Government’s original proposal included an exemption from the leaseholder protection provisions to leaseholder-owned buildings—those in which the leaseholders have collectively enfranchised and those which are on commonhold land.
In a collectively enfranchised building, the freehold is owned by some or all of the leaseholders, so there is no separate entity with which the costs can be shared. The leaseholders are the freeholders. The amendments made in the other place seek to apply the protections to these buildings. The Government recognise that the amendments are well intentioned and driven by a desire to protect these leaseholders, and they share these aims. However, I must emphasise to the House that these amendments will not have the intended effect of protecting leaseholders living in those buildings. Those leaseholders who have enfranchised would still have to pay—but in their capacity as owners of the freehold rather than as a leaseholder. Indeed, it could make things worse. Where some leaseholders have chosen to enfranchise and others have not, the enfranchised leaseholders would have to pay for remediation of the whole building in their capacity as owners of the freehold—including the share of remediation costs that would otherwise have been recoverable from those leaseholders who have not enfranchised, once they have paid up to any cap. That is why the Government amendments reinstate the exemption for leaseholder-owned buildings. Enfranchised buildings are eligible for the £5.1 billion building safety fund in the same way as other buildings.
The other protections that we have introduced will also apply. The recent commitment from many developers to fix their own buildings will apply equally to enfranchised buildings, and the measures and powers that we have added to the Bill to pursue and compel developers and cladding manufacturers to pay will be available. I know that Members will still be concerned about how we can protect leaseholders in leaseholder-owned buildings, which is why I am announcing today that the Government will consult on how best leaseholders in collectively enfranchised and commonhold buildings and other special cases can be protected from the costs associated with historical building safety defects. The consultation will allow the Government to understand fully the position regarding leaseholder-owned buildings with historical defects and identify whether further measures are appropriate to address specific circumstances in which leaseholders may unintentionally be exposed to disproportionate costs.
I am grateful to the Minister for giving way. He has, to some degree, covered the concerns that I was going to raise about those people who have exercised the right to manage. Yesterday, in a letter to us, he and the Secretary of State acknowledged that Lords amendment 117 identified a real problem. Frankly, at this stage, a consultation will give very little comfort, but could he try to assure leaseholders in that position by saying how long that consultation will be undertaken and when they might expect some conclusion?
I appreciate the hon. Gentleman’s point. I want to ensure that we get the consultation under way as quickly as possible. I accept that people have deeply held concerns, so we will do our best to get that done speedily, but we do need to consult. We need to get the evidence and know exactly what the picture is, in order to know how best to deal with that situation.
Lords amendment 184 inserts a new schedule 8, titled “Remediation costs under qualifying leases”. It sets out the circumstances in which costs cannot be passed on to leaseholders. The Government’s original proposals set out that where the building owner is, or is linked to, the developer or can afford to meet the costs in full, they would be prevented from passing costs on to leaseholders.
It is worth stressing just how wide these proposed protections are. If a building is still linked to the developer, that building owner and the landlord will be liable for the costs associated with non-cladding defects and their leaseholders will pay nothing. If the building owner or landlord is not linked to the developer, but has the wealth to meet the costs in full, their leaseholders will pay nothing. If a leaseholder property is valued at less than £175,000, or £325,000 in London, the leaseholder will pay nothing and, if the leaseholder has already met interim costs that exceed the contributions cap, they will pay nothing.
Based on that “waterfall”, the Government’s assessment is that the vast majority of leaseholders would pay less than the caps and many would pay nothing at all. However, it is important to remember that not all landlords are evil. Where the building owner or landlord is not at fault, where they have no link to the developer who created those defects and they do not have the wealth to meet the remediation costs in full, and only in that situation, we propose that leaseholder contributions towards non-cladding defects can be recovered, subject to the fixed caps.
I apologise for not being able to be here since the beginning of the debate as I was at the rally with leaseholders.
Does the Minister agree that there is a conflict of interest issue? As I have seen in my constituency, which has many cladded buildings, it is often freeholders who do the assessments, which therefore do not have the necessary independence or checks and balances. Does he agree that it is worth having a building works agency, as Labour proposes, with independent assessors to do the work, so that residents can have confidence that there will be no more attempts to find ways to pass on the costs to leaseholders? We have had three fires in my borough since Grenfell, and it is vital that freeholders take the responsibility rather than passing on the bill.
The hon. Lady is absolutely right. Freeholders must ensure that their buildings are safe. We will have responsible people associated with each of those buildings to ensure that all the regulations are adhered to. The Building Safety Regulator will also ensure that buildings are safe. As ever, we want to learn as this process goes on, and I would be keen to continue to have dialogue with her as we progress with this.
My hon. Friend is being very kind with his time. On the point about the building cost thresholds, he will know that the London median house price is £515,000, but in Runnymede and Weybridge it is £475,000. In fact, house prices in my constituency are higher than or equal to those in 25 London constituencies. Many of my constituents will be adversely affected but will not get the same benefit as those in London, despite having equivalent or higher house prices. As he reviews the policy going forward, will he consider looking at house prices on a regional basis, as opposed to inside London versus outside London, which negatively affects constituents such as mine?
I thank my hon. Friend for raising that important point. He will be aware that we are trying to avoid any leaseholders having any contributions to make at all. The first port of call will always be the people who developed the building in the first place. I hope to come on a bit later to the valuation of properties, which might address some of his points.
Importantly, we proposed that those leaseholder contributions be subject to a firm cap and that costs paid out in the past five years count against the caps. The Government originally proposed that leaseholders’ contributions be capped at £10,000, or £15,000 in Greater London, and we believe that creates a fair balance. It is the Government’s assessment that the vast majority of leaseholders would pay less than the caps, and many would pay nothing at all. None the less, the other place voted to reduce leaseholders’ capped contributions to zero. I am afraid the Government cannot accept the amendments.
We believe that in those circumstances, setting the cap on leaseholder contributions to zero is not a proportionate approach. Placing the entire burden on freeholders and landlords in circumstances where they are not at fault and are not wealthy will only increase the risk that remediation that is needed to ensure that residents are safe will not happen at all. We are therefore restoring the caps at £10,000 outside London and £15,000 in London, as originally proposed, and have made a small number of other technical improvements to those measures.
I welcome the Minister to his position on this very interesting Bill that is going back and forth. The one group of people who took the money right at the start for the developers and builders was the insurance companies. The developers could not have built those properties without having the legal protection of insurance. Sadly, the Minister has not mentioned the insurance companies once in this situation, but that is where the burden should fall, instead of on the leaseholders. Does he agree?
Actually, the responsibility lies with those who built the building defectively in the first place. They are the ones we are chasing. I pay tribute— I should have said this right at the beginning—to officials in the Department, who have worked incredibly hard to get this new package of measures from the developers in place. It has not been an easy task, but they have done it with great passion and have been incredibly successful. As I say, it is the developers who should be paying, and we expect a minimal number of leaseholders to pay.
I am grateful to the Minister for giving way. I know he wants to get on. On insurance, which has been my bugbear as well, it is not just that many of the insurance companies insured the development beforehand, and therefore provided a warranty of sorts, but that since then they have increased premiums on leaseholders, sometimes by more than 1,000%. Does he have something to say about that particular activity from insurance companies?
Yes. My right hon. Friend the Secretary of State has asked the Financial Conduct Authority to look at that, because it is an area of great concern. I hope to update the House on further progress in the near future.
Turning to Government amendment (a) in lieu of Lords amendment 6, the Government have accepted the principle of the Lords amendment, requiring the Building Safety Regulator to conduct a series of safety reviews. We believe the new version provides clearer drafting and a more practical and pragmatic approach. The amendment inserts a new clause that increases the time available to the regulator from two years to three, reflecting the time needed for the regulator to develop the capacity to carry out those reviews alongside all its other functions.
The new clause aligns the reviews with building regulations to address safety issues, focusing on the costs and benefits of measures to improve safety. It sets specific priorities for the regulator to review while fulfilling its duty under clause 5 to keep,
“the safety of people in or about buildings”,
under review. The scope remains true to the intent of the original amendment, and it is important to assure hon. Members that the reviews will be conducted within the principle of proportionality placed on the operation of the regulator’s building functions by this Bill.
I now turn to a number of technical improvements that the Government are proposing to Lords amendments. Lords amendment 93 inserted a new clause called “Remediation of certain defects”, which provides an overview of the leaseholder protection measures contained within the Bill. Government amendments (a) and (b) to Lords amendment 93 make two minor and technical amendments to that new clause.
The first amendment, to leave out “under qualifying leases” at line 12, is a minor and technical amendment to reflect that some of the protections in schedule 8 apply to leases that are not qualifying leases. When the landlord is, or is linked to, the developer they will not be able to pass costs on to any leaseholders in the building, including non-qualifying leaseholders. The second amendment, at line 23, is a minor and technical drafting change.
I now turn briefly to Government amendments (a), (b) and (c) to Lords amendment 93 regarding trusts. I must take this opportunity to pass on my appreciation to the noble Lord Young of Cookham and Lord Blencathra, who raised this matter through their work in the other place. I acknowledge the concerns raised about the use of trusts and how their misuse could undermine vital leaseholder protection provisions. The Building Safety Minister, my noble Friend Lord Greenhalgh, committed on Report in the other place to consider this further. Government amendments (a), (b) and (c) amend clause 120 to ensure that a body corporate or a partnership can be regarded as associated with another if they are the beneficiary of a trust that has an interest in a relevant building. In other words, the existence of a trust will not enable a group of companies to evade their responsibilities under the leaseholder protections. We have also inserted wording into clause 130 so that beneficiaries of trusts can be considered for building liability orders—that is, can be required by the High Court to contribute to remediation. The remaining amendments to Lords amendments 107, 108 and 190 are consequential to the amendments I have described.
Government amendment (a) to Lords amendment 78 is consequential on Lords amendment 59, which removes a reference to the building safety charge as a separate charge. Previously, the ongoing costs of the new regime were to be charged via a stand-alone building safety charge. We are changing this so that the building safety costs are an identifiable part of the service charge. This will keep costs transparent while allowing them to operate as part of the service charge system, which is familiar both to landlords and leaseholders. The amendment responds to the feedback that we have received from leaseholder groups. We recognise the concerns that the building safety charge as envisaged in the previous drafting of the Bill would have created additional bureaucracy for landlords and leaseholders alike, and we have listened to those concerns. In making this change, we have simplified how the costs of the new regime are managed. The service charge regime is well established, and the amendment reduces the bureaucracy of an entirely separate mechanism for building owners and leaseholders.
Government amendment (a) to Lords amendment 145 is a minor correction to reflect that there is no longer a regulation-making power at paragraph 4 of schedule 8. The Government amendments to Lords amendment 184 are minor and technical amendments clarifying that no service charge is payable under a qualifying lease where the landlord at the qualifying time was responsible for the defect.
Again, I thank all Members, particularly my hon. Friends the Members for Worthing West (Sir Peter Bottomley), for Stevenage (Stephen McPartland) and for Southampton, Itchen (Royston Smith), for their work on this. I also thank my hon. Friend the Member for Kensington (Felicity Buchan) for the very many helpful discussions that we have had recently.
We are discussing measures that the Government are introducing for England only. I know the Minister cannot answer for the Welsh Government, but what discussions has his Department had with them about policy in Wales? Does he expect the Welsh Government to follow the measures that he is introducing today for England, and does he have a timeframe for when such policy might be announced?
The hon. Gentleman is right that it would not be appropriate for me to speak on behalf of the Welsh Government, and I do not think they would like that either. What is important is that all buildings across the United Kingdom are safe. I hope that we will all learn from each other to ensure that we achieve that objective, because the safety of the residents is paramount in this instance.
I hope that hon. Members will welcome all the changes that the Government have made, which I firmly believe address the key concerns that have been raised in Parliament. It is in all our interests to see this crucial Bill become law as quickly as possible. I hope that all hon. Members across the House will support the Government amendments, and look forward to seeing the Bill implemented so that we can get these buildings into a safe position and give the residents the reassurance that they need.
This Bill has been a long time in gestation. First published in July 2020, it was subject to extensive pre-legislative scrutiny and was examined in exhaustive detail over five long weeks in Committee in the autumn of last year. Then, in January this year, the Government accepted that the approach they had taken to the building safety crisis over a period of more than four years following the Grenfell fire had not worked, and they announced that it would change. We raised a series of questions and concerns about what that change of approach would mean in practice, but we welcomed the fact that it had finally happened. It is of course right that we seek to ensure that those who profited from the sale of unsafe buildings and construction products pay their fair share when it comes to putting things right, that every developer and freeholder who can shoulders the financial burden of fixing their own buildings, that we restore common sense and proportionality to the assessment of building safety in general, and that leaseholders are properly protected from the costs of remediating all historical cladding and non-cladding defects. Labour has urged the Government to act on all these fronts, and more, for years, and we are pleased that we are now finally making progress toward some semblance of a comprehensive solution to the building safety crisis.
However, the manner and the pace at which this already complex and technical Bill has been overhauled to reflect the Government’s belated change of heart has been deeply problematic. Large sections of the Bill have been completely rewritten on the basis of hundreds of Government amendments tabled in the other place that the noble Lords had relatively little time to consider carefully or properly scrutinise. We welcome many of those amendments, particularly the removal of the building safety charge and the abolition of building safety managers, and we also welcome the important concessions the Government made in the other place in response to Labour amendments—for example, to exempt social housing providers from the levy. But that does not detract from the fact that this is no way to make good law, and I want to put on record the Opposition’s serious misgivings about the way the Government have gone about revising the Bill. As a result of the way it has been modified, it is now, by all accounts, something of a mess, and the five pages of complex Government amendments tabled yesterday afternoon, which again provided hon. and right hon. Members in all parts of the House with little time to properly consider them, do little to remedy that fact.
Nevertheless, the Opposition have always maintained that we want to see a version of the Bill on the statute book as soon as possible. As such, our focus is now on ensuring that its most glaring remaining defects are addressed so that it can be passed in what remains of this Session. To that end, there are five specific issues to be considered today: the duties placed on the Building Safety Regulator with regard to reviewing safety and standards, protection for leaseholders in buildings below 11 metres in height, protection for leaseholders in enfranchised buildings, the issue of buildings held in trust, and the proposed leaseholder cap.
The first can be dealt with very quickly. As well as having the resource and capacity to perform all the complex tasks assigned to it, it is critically important that the new Building Safety Regulator within the Health and Safety Executive be clearly tasked in the early years of its operation with assessing the benefits and costs of a range of measures in relation to safety and standards. Lords amendment 6 specified four—fire suppression systems, the safety of stairways and ramps, the certification of electrical equipment, and provision for people with disabilities—and we supported it. Having maintained in the other place that the amendment was entirely unnecessary, the Government yesterday tabled an amendment in lieu of Lords amendment 6 that almost entirely mirrors its provisions. On that basis, we will support that Government amendment.
The second issue is protection for leaseholders in buildings below 11 metres in height. As I argued on Report on 19 January, 18 metres was always a crude and arbitrary threshold that not only failed to adequately reflect the complexity of fire risk but was an entirely unsound basis for determining which blameless leaseholders were and were not protected by the state from the costs of remediation. The same argument applies to the 11-metre threshold. The blameless leaseholders who are trapped living in unsafe smaller buildings deserve the same protection as those in mid and high-rise unsafe buildings. As the Earl of Lytton argued in the other place:
“There seems no good reason for height exclusion on any moral, economic, safety or practical ground.”—[Official Report, House of Lords, 29 March 2022; Vol. 820, c. 1508.]
The Government maintain—the Minister said as much again in his remarks—that there are no systemic building safety issues with buildings under 11 metres, yet we know from the devastating incident at Richmond House in Worcester Park in 2019 just how dangerous to life defective buildings under this height threshold can be. The Government further maintain that buildings under 11 metres in height that are dangerous are few in number. I suspect that is almost certainly the case, but all the more reason, then, to provide financial support to those blameless leaseholders who find themselves living in them rather than leaving them without protection. I noted what the Minister said when he gave a commitment that the Government would review such buildings on a case-by-case basis, but it begs the question: why will the Government not act by amending the Bill to cater for the exceptional circumstances that he spoke about?
On that point, does my hon. Friend agree that if the Government do not act to safeguard such blocks, the people who live in those kinds of accommodation will find it very difficult to be insured and to get mortgages? This is a short-sighted response, when the Government could address these issues in the round.
My hon. Friend is absolutely right, and it has been a consistent position of ours that we ensure that all leaseholders affected by the building safety crisis are protected irrespective of circumstance, including what height their building happens to be. For that reason, we will oppose Government amendment (a), tabled yesterday to Lords amendment 94, and seek to ensure that the Lords amendment remains unmodified.
I turn to the third issue we are considering this afternoon: enfranchised buildings. Under the Bill, enfranchised leaseholders will, in effect, be treated as freeholders when it comes to the costs of remediation. That cannot be right. Buildings that have exercised a right to collective enfranchisement, or those on commonhold land, may be few in number, but it has been the policy of successive Governments to encourage leaseholders to enfranchise and to promote the right to manage. Indeed, the Government have promised legislation in the next Session to make it easier and cheaper for leaseholders to buy the freehold of their building, yet the Government have put forward no solution whatever to the issue of enfranchised buildings in the Bill as it stands, and they are seemingly content, at least until this afternoon, to see such leaseholders completely excluded from the protections enjoyed by those in buildings that remain unenfranchised. We vehemently disagree with that position. It is imperative that such leaseholders are afforded the same protection as those who do not collectively own or manage their buildings. As Lord Young put it in the other place,
“it would be perverse if the legislation before us today put enfranchised leaseholders in a worse position than leaseholders who are not enfranchised”.—[Official Report, House of Lords, 29 March 2022; Vol. 820. c. 1509.]
It is essential that the service charge protections set out in schedule 8 to the Bill apply clearly to enfranchised buildings and buildings where the right to manage has been exercised, which is another reason why we cannot support Government amendment (a), tabled yesterday to Lords amendment 94, and why we will seek to divide the House on it. The Minister is right to say that pressing the amendment to a vote is not enough, and that at some point the Government will have to go further than simply accepting Lords amendment 94 or a version of it, because the Bill in its current form would not prevent resident-owned companies from making unlimited demands on leaseholders in their capacity as shareholders, to cover the costs that they would be unable to pass on via service charges if the Lords amendment, or a version of it, were to remain part of the Bill. So the Government will have to act.
I noted what the Minister said about a consultation, but I have to say that I agree entirely with my hon. Friend the Member for Sheffield Central (Paul Blomfield). It is too late in the day to consult on this matter. Four and a half years after Grenfell, the Bill needs to be amended to reflect and deal with this issue.
I turn to the fourth issue we are considering this afternoon, which is buildings held in trust. As it stands, buildings held in trust on behalf of a third-party investor, where the landlord is a professional depository or custodian regulated by the Financial Conduct Authority, or buildings owned on trust by what I can only describe as ground rent grazers—almost invariably based offshore—do not meet any of the association tests or the net wealth test in the Bill. Unless the Bill is revised to capture such trustee arrangements, they will escape the so-called waterfall system as set out in schedule 8, and the leaseholders will find themselves picking up a proportion of the costs of non-cladding remediation. The Minister is right to say that, in the other place, the Government accepted that the Bill needed to be so modified, and yesterday they tabled an amendment to Lords amendment 98 as a result.
Let me be clear that the inclusion of Lords amendment 98, as amended in the way the Government propose, would make for a better Bill than one that has no provision addressing the trustee loophole whatever. However, the Government amendment tabled yesterday afternoon has serious deficiencies, which are almost certainly the result—I make no charge against the officials involved—of the hurried timescale in which it has been drafted and tabled. Let me take the two most obvious problems with it. First, the Government amendment covers only partnerships or bodies corporate that are a beneficiary of a trust; private individuals are entirely excluded. That cannot be right, and they must be brought within the scope of these arrangements.
Secondly, the Government amendment makes no distinction whatever between types of trusts. A local authority pension fund, for example, will be liable under the waterfall system in precisely the same way as an offshore ground rent grazer. We believe that that is wrong and that the Government should think further about how they might better protect trusts where there is a clear public interest in doing so. We will not oppose Government amendments (a), (b) and (c) to Lords amendment 98, but I urge the Minister and his officials to go away and consider whether the flaws in the Government amendment as currently drafted can be rectified as the Bill progresses.
I turn to the fifth and final issue under consideration: the proposed leaseholder contribution caps. On the issue of leaseholder liability, Labour has consistently argued that all blameless leaseholders should be protected from the costs of remediating historical cladding and non-cladding defects, and associated secondary costs, irrespective of circumstance. Although we fully acknowledge that the waterfall system now set out in schedule 8 provides leaseholders with a far greater degree of protection than the Bill as originally drafted proposed, it does not protect them fully. Just as importantly, the Bill does nothing to provide redress for the countless blameless leaseholders across the country who have already been hit with huge bills and have paid out significant sums of money as a result. That is why we support Lords amendment 184, which seeks to reduce leaseholder contributions to zero, and why we call once again on the Government to think again about how leaseholders who have already paid to fix historical cladding and non-cladding defects can be provided with retrospective financial redress.
The Government’s position is that leaseholder contributions are fair in principle because they will apply only in a limited number of cases. By the Minister for Building Safety’s own admission in the other place, leaseholders will pay only up to the cap or a proportion of the cap in a “minority of circumstances”, but that statement begs the obvious question of why the Government are so determined to force this minority of leaseholders, some of whom will be able to meet the costs of the cap whereas others will not, to pay, particularly given that the amounts raised by capped leaseholder contributions will almost certainly never cover the full costs of non-cladding remediation works in any given building, and that other sources of funding will have to plug the gap.
In responding to Lords amendment 184—or 155, as it was in the other place—the Minister for Building Safety seemed to suggest that if leaseholder contributions were set to zero in cases where there is no clear party that can pay, the full costs would be transferred back to the freeholder or the landlord. The Minister said as much in his remarks earlier, yet there is nothing on the face of the Bill that provides for that to be the case. Indeed, it is entirely unclear precisely how the funding shortfall will be made up in such cases, and the same issue arises in the case of buildings with significant numbers of buy-to-let landlords. It surely cannot be the case that the Government ultimately intend to force local authorities to carry out remediation works on this minority of buildings, so one assumes that the necessary funding shortfall will, in the end, be made up from some form of Government grant, using the funds raised by the expanded building safety levy and the residential property tax, but we cannot be certain, because the Government have not told us. This matters, because the real risk is that remediation works on such buildings simply never get done, with the leaseholders trapped in perpetuity.
Assuming that the Government believe it is critical that all unsafe buildings are remediated at pace, they need to tell us, plainly, what happens in cases where funding for historical non-cladding defects cannot be extracted from the developer or building owner, and where capped leaseholder contributions alone would not be sufficient. I hope the Minister can provide the House with some clarity on that point, because it is one of the critical unanswered questions provoked by the Government’s recent change of approach, and the Bill at present simply fails to engage with it. In such cases, when all other options have been exhausted and there is no clear party that can pay—I remind the House again that the Government themselves assert that these cases will be small in number—the Opposition believe that grant funding should be provided, because that it is the only morally justifiable solution. We want to see that backstop commitment written on the face of the Bill.
In sticking rigidly to the position that a minority of leaseholders will have to pay sums that, although capped, are still significant, to resolve a scandal that they played no part in causing, the Government are not acting equitably and will not ensure that the most vulnerable leaseholders are protected, as they claim. For that reason, we will oppose Government amendments (c) and (d), tabled yesterday to Lords amendment 184, and we will seek to divide the House on them, with a view to ensuring that all leaseholders are fully protected.
I would like to end by paying tribute to each of the noble Lords and Baronesses who worked so constructively, and on a cross-party basis, to strengthen the Bill. I also thank all the resilient and determined individuals, many of whom have travelled to Westminster today to make their voices heard, whose unceasing campaigning has helped us to arrive at this point.
In no way does this Bill represent a comprehensive solution to the building safety crisis—not least because that will depend on a range of non-statutory Government interventions and the agreement, voluntary or otherwise, of banks and insurers—but it has been strengthened in important ways in the other place. Instead of seeking to unpick a number of those improvements, the House should vote to retain them. I urge Members on both sides of the House to join us in the Division Lobby later today to ensure that that is the case.
I thank my hon. Friend the Minister for the way he introduced the amendments, and I thank the Labour spokesman, the hon. Member for Greenwich and Woolwich (Matthew Pennycook), who spoke in a non-party way about the matter. I pay tribute to those on both sides of the House who have been working on the Bill, often without proper recognition. Among them I include the hon. Member for Sheffield South East (Mr Betts), the Chair of the Levelling Up, Housing and Communities Committee. Its first report on the leasehold disaster was critical to getting Government and some people outside to pay attention.
If anyone from a major media organisation is listening, I urge them to make sure that they have a housing editor who can pay attention to this issue and provide continuity. During the four or five years since Grenfell, several people have taken up the issue of the fire itself, but no one has provided the necessary continuity when it comes to television and radio programmes. Institutional memory is required if we are to understand how we got to where we are, and where we need to get to. For residential leaseholders, fair, detailed, expert housing coverage matters as much as coverage of health, economics, defence and other things. I commend to media organisations the idea of having a housing editor and a team who can help us to do our work better, because without media reflection of our efforts, we will not go as far or as fast as we ought to.
Bluntly, the thinking in the Treasury has been the cause of much of the delay. The tragic deaths at Grenfell, where over 70 people died unnecessarily, were a spur to action. For too long, however, people said, “Look at the Royal Borough of Kensington and Chelsea; this is all its fault.” Most of the blocks affected are not in Chelsea or in Conservative-controlled areas, so we all have a responsibility to accept that we got things wrong.
What was needed to get this right? It was best put by Ted Baillieu in Victoria, Australia, who said that it was necessary to find the problems, fix the problems and fund the problems, and then get after the people who are responsible. If we had done that, for the last four years many more innocent residential leaseholders would have been able to live in homes that they knew to be safe and saleable, and we would be many steps further forward.
I hope that my hon. and right hon. Friends in the Department for Levelling Up, Housing and Communities want to make sure that no block is left unremediated—in plain English, to make sure that every block is made safe—and then go after the money, but the Treasury is blocking that.
I put this question to my hon. Friend the Minister. Who will take claims against those other than the developers—the architects, the surveyors, the component manufacturers, the people who set the building standards and the people who did building control, whether in the public or private sector—who were involved? I am not saying that they are all responsible, but some are. In any other field, lawyers would be coming forward with a class action to put them all in the dock and claim from them the costs that would otherwise fall on innocent residential leaseholders.
For those who are new to this, I repeat that the only people who are totally innocent—the only people who do not own a single brick in the building—are the residential leaseholders, and yet they are being left with some of the costs. If it comes to Divisions, I will vote in a non-party way to try to keep the intentions of the House of Lords going on most of the issues.
I do welcome and accept what the Minister said about extending to three years the responsibilities of the Building Safety Regulator. That makes sense, given the timescale, but what is controversial is leaving residential leaseholders with some of the costs. I draw the House’s attention to the fire at Gibson Court in Woking in 2011. Six years later, those responsible were fined more than £300,000 because their fire protection work had been clearly inadequate. In that case, part of reason for the spread of the fire was the fact that lofts went right across the buildings.
I also draw the House’s attention to the point that the hon. Member for Greenwich and Woolwich made about the fire in 2019 at Worcester Park, where 23 other blocks had to be made safe because one block went up in smoke in 11 minutes. If a fire can spread so far in that many minutes, the idea that it could be contained within one flat is not realistic; those who are vulnerable would have no chance of getting out safely.
I hope that this Bill has the power, under secondary legislation, to extend provisions on remediation costs to buildings below 11 metres, especially for the vulnerable, although I would prefer it to go as far as the House of Lords wanted, so that leaseholders do not have to pay.
Remember that a few years back, Government appeared to be thinking that costs of £15 billion could fall on these residential leaseholders, who did not have the money. I am not talking about people who live in big, expensive, multi-million-pound apartments looking out over the Thames. I ought, by the way, to declare an interest, as I have a small flat in Worthing, which does not even look out over the sea. Six of us bought the freehold and we have had no problems with this, or even with managing agents or insurance companies. I will be buying a leasehold on another property in London in time, and I hope it will not be affected either. I put that on the record, just in case someone says that I am talking from self-interest.
I am speaking in the interest of people who are poorer than I am, who live in homes that are less valuable than mine, and who have been lumbered with all the disadvantages of being a residential leaseholder—and now with this fire safety defect issue as well.
I reinforce what other hon. Members have said about insurance. Premiums are unreasonably high; I hope that the Competition and Markets Authority and the Financial Conduct Authority will quickly produce a report, and that publicity will make insurance companies bring rates down to market rates—that is to say, rates that are justified by the risk, not by what the market can be made to pay in a crisis. I also hope that all commissions, rebates and douceurs—sweeteners—paid by brokers or insurance companies and received by managing agents or landlords are disclosed. That ought to be out in the open.
For too long, too many people have got rich on the back of residential leaseholders. There are many more things that I would like to say, but I suspect that, given the amount of interest in the subject, I ought to stop now. As well as thanking those from both sides of the House who have worked on this, I thank the National Leasehold Campaign. Without it, we would not have had Victoria Derbyshire’s interest, which has been important. I thank the cladding groups, in all their manifestations. At great expense to themselves, and having given up some of their other responsibilities, they have brought these issues to the attention of Parliament.
I also thank officials in the Department, because after a very slow start, a group of people has been brought together to support Ministers in their legitimate aim of making sure that those who are responsible pay, and those who are not responsible do not have to.
It is a pleasure to be able to speak in this debate. I thank the Father of the House, the hon. Member for Worthing West (Sir Peter Bottomley), for his kind words about the Select Committee. He certainly encouraged and prodded us to do the first report on leasehold reform. It was, as he said, a first step towards what we hope will eventually be much more significant reform, which I think the Government are committed to.
Since the tragedy of Grenfell, the Select Committee has produced five reports. I am pleased that the hon. Member for Harrow East (Bob Blackman) is in his place, because he has been with us right the way through those reports, all of which were agreed unanimously by the Select Committee. We have repeated over and over again that leaseholders who are not responsible should not have to pay, and neither should social housing tenants; they are no more responsible, and the two should be seen together and treated equally.
I am pleased with what the Minister said today. I hope it was not just a way to get the debate over with, without pushing away too many difficult questions, and that he is still prepared to look at broadening the scope of the Government’s offer to leaseholders and to social housing landlords and tenants. If that was a genuine offer and he is keen to work on it, that is welcome.
We clearly have come quite a long way since the first offer of a £400 million package to deal with ACM cladding. That was going to solve everything, but obviously it was not, even when the Chancellor stood up and offered in his Budget the £1 billion building safety fund and said that was going to give everything the Select Committee had asked for, which it was not and did not. We have moved on since then, so it is welcome that we have now got to a better place, although it is still not quite good enough.
I notice the Department contacted the Select Committee officers today and asked whether it was okay if it replied to two of our reports at the same time, which it was. One of them was in March this year, and it will be a very good and quick response from the Department—we are waiting for it. The other report was in April last year. That has taken 12 months; it is supposed to take two months. That is rather a long time, Minister, and I think it does indicate that things have been grindingly slow on some of these issues. We are still talking today about matters that really could have been resolved with a bit more urgency in the past, and that is why we are still coming to the further discussions and further considerations that the Minister has promised.
This has already been outlined very clearly—in the report from the Select Committee, so we hope we are going to get responses—but why are leaseholders in buildings of below 11 metres not covered? If a building falls out by 1 cm, it is going to be the most expensive 1 cm in history for those leaseholders, who again get the full costs, rather than all the costs paid. On the cap, why do we need the cap just for non-cladding costs? That has not really been explained, and some of those leaseholders will not be able to pay even the relatively small amounts of money. Why are those leaseholders who have paid already for the work to be done excluded from any help? That really is unjustifiable. Just because some people have got on with it, often because they have had to—to make their homes safe, to be able to sell them, to move on with their lives—why are they being penalised? Again, there has been no proper explanation at all. We do need answers to those as well as to many other questions.
I completely concur with the points about the insurance industry. It is the one group of people who have actually made money out of this crisis, is it not? We asked those from the Association of British Insurers, when they came to the Select Committee, if they could tell us not merely the level of the premiums going up, which everyone can see, but how much extra compensation they have paid out to justify the increase in premiums. The answer was that they could not give us the figures, but they were having to put that into capital reserves in case claims arose in the future, when actually buildings are safer now than they were before. So this is a nonsense, and I welcome the investigation that is going to be carried out into that particular issue.
To come back to the issue of social housing, which is a big issue, the Committee has been very clear in all its reports that social housing tenants should not be treated any differently. Why? How can it be right that, in one block of flats, a flat where the leaseholder has bought their property from the social housing landlord is going to be covered by the Government scheme and that leaseholder is going to pay nothing—that is absolutely right; no rejection of that at all—and, next door, the tenant is going to see the rent they paid—so, they hoped, their flat would be improved, with maybe, if we get a better decent homes standard, a new kitchen, a new bathroom and the sort of things people look forward to as tenants—spent on building safety work? How can that possibly be right?
I go back to Grenfell itself. After Grenfell, the then Prime Minister made some telling and very appropriate comments about social housing. She said:
“Our friends and neighbours who live in social housing are not second-rate citizens. They should not have to put up with second-rate homes.”
She also said:
“For too long residents have been overlooked and ignored.”—[Official Report, 22 June 2017; Vol. 626, c. 168.]
This is one of the few issues where the previous Prime Minister and the current Prime Minister actually agree, because the current Prime Minister said in the social housing White Paper:
“We’re levelling up this country, making it fairer for everyone—and that includes making sure social housing tenants are treated with the respect they deserve”.
Yet currently this Bill discriminates against social housing tenants. The National Housing Federation has said that up to £10 billion could be needed to remediate social housing. The G15 group of social housing landlords has said that, for their properties alone, it could be over £3 billion. Either that is money that will not be spent on building new social homes for the future as part of the Government’s commitment to get to 300,000 homes a year, or it will be money that is not used to upgrade and improve the social housing itself. That cannot be right, and I hope at some point the Minister will confirm not merely that the Government are considering it, but that they do accept the principle that social housing and social housing tenants should be treated equally and fairly—otherwise, what was the point of the then Prime Minister’s comments after Grenfell about fairer treatment?
Does my hon. Friend agree that, if the Government do not invest in improving social housing, there is a real risk that some of that housing could become unsafe and could create fire risks, so it is incredibly short-sighted to divert funds from investing in improving social housing? I have seen that at first hand in my own constituency and how that can create risk.
Absolutely. It is important that the money is available to make sure that all buildings are safe, that everyone is safe in their home, whether they be a leaseholder or a social housing tenant, and that the money provided to make those buildings safe comes from the various funds the Government have identified, and is paid fairly and equally to blocks, whether they are in the private sector or the social housing sector. I hope the Government will listen to that view, which has been expressed by the NatFed and the Local Government Association, to which I am grateful for helping with my amendments today. Just to declare that I am a vice-president of the Local Government Association and very proud to be so, and I think its campaign, along with the NatFed’s on this issue, is fundamentally right.
What an awful long way we have come with this Bill. On the previous Bill, the Fire Safety Bill, we were told categorically that that was not the right vehicle for the sorts of remedial help people needed in all our constituencies and that this was the Bill. To be fair to the Minister and his civil servants, there has been huge movement—huge movement—compared with where we were when there was considerable unrest on the Conservative side of the House as well as around the House. One of the reasons this Bill has been changed so much is that there was general unrest across the Floor of the House as to what the Bill was actually saying and doing. Can I pay tribute to my colleagues on this side of the House? With a majority of this size, the Government could have ignored us, but they could not because there was too much unrest on this side of the House and the campaigning went on. I want to pay tribute to my colleagues on that point.
Is the Bill perfect? No, it is not going to be perfect. But do we need this Bill on the statute book in this Session? Yes, we do. That is why I will personally be supporting all the measures, and not voting for any of the amendments to send it back to the other place. I think a lot of the work can be done through secondary legislation. The Minister has indicated that. More work could be done, particularly in my opinion—I have said this on Report and Third Reading, and the Father of the House, my hon. Friend the Member for Worthing West (Sir Peter Bottomley), has touched on it, as have all of my colleagues here—with the insurance companies. The Father of the House cited how all the professional bodies that were responsible for building these properties—all of them—were insured, yet the insurance companies have got off scot-free.
I know that those in the Department will say—I have said this before, but let me just repeat it—that it would be very difficult to get the insurance companies to retrospectively pay for this work. That is what they said about mesothelioma, where companies had gone bust and people were dying and suffering from that horrible asbestos disease, but the Government actually brought the legislation forward so that we took a levy from the insurance companies to cover those missing employers, and we could do it with the missing companies. We could do it if we wanted to really do it, and I hope—I am going to go on and on to everyone in this House—that this can be done. Look at the way the Department for Work and Pensions did that Bill. I know a lot about it because I took it through the House, so I am slightly biased. It can be done.
I want to pause for a second, and I declare an interest as a former firefighter. I have nothing but admiration for our firefighters and emergency services who went into Grenfell, when others were quite understandably coming in the other direction. They saw things they never dreamed they would see in their careers. We do not want to see that again, but fires do recur, and our emergency services do a fantastic job. I hope that they are getting the psychiatric support for what some of those sights will have created in their lives. That will affect their lives going forward, and I have asked this question before of several Ministers.
However, the key to this Bill today is that we get it on the statute book. We can do more work through secondary legislation. I think it is absolutely imperative for our constituents that we get it on the book today, so that the other House listens to us and we get this on the statute book before the Queen’s Speech.
Like many Members have already done, I begin by acknowledging the progress that the Government have made. I think the House would like to thank the Secretary of State and the Minister for Housing for effecting the transformation from the laissez-fair approach that the Government took previously to a really hands-on approach now—I also pay tribute to the civil servants for the work they have obviously done advising Ministers—and for asking themselves, “What are all the levers we can pull and the legislation we can enact to force people to live up to their responsibility?” I also thank Members on both sides of the House—it has been a team effort—but echo the point made by the right hon. Member for Hemel Hempstead (Sir Mike Penning) that, given the Government majority, dissent on the Conservative Back Benches has been really important in getting us to this point. I pay particular tribute to the hon. Members for Stevenage (Stephen McPartland) and for Southampton, Itchen (Royston Smith).
The reason above all others that we have got to this point, however, is the leaseholders’ refusal to give up. They looked at the situation they found themselves in through no fault of their own and basically said, “We’re not having it, because it’s not fair.” The House now acknowledges that and recognises it, so we should, above all, applaud their determination and persistence and that of all the cladding groups, including the Leeds Cladding Scandal group in my constituency, where, like many speakers today, I have constituents who are affected. It shows what can be done if people do not give up, which is a really important life lesson.
Having said that, our constituents have lived with years of uncertainty and it is not quite over yet—a point to which I shall return. Reference was made to a video of one of the fires. We all saw what happened at Grenfell, but there was also the fire at The Cube student accommodation in Bolton, and we saw how quickly it went up. I think the official report said, in effect, “The building did not perform according to expectations”. If that is not understatement, I do not know what is. The truth is that we are dealing with a load of buildings that were badly built and unsafe, and people got away with it for far too long. Let us try to put ourselves in the position of those who live in those buildings. Never mind the fear of a bill arriving which they have no hope of paying; there are the waking watch costs, the insurance, the uncertainty, the inability to get on with their life or to sell, and going to bed every night thinking, “Well, if there were a fire, would I get out if the building went up in 11 minutes?” It is a scandalous position that people have been put in through no fault of their own.
I have a few brief points to make. The first is that I stick to the principle that I and many other Members have advocated from the start, which is that leaseholders, because they are not responsible, should not have to pay anything. My hon. Friend the Member for Greenwich and Woolwich (Matthew Pennycook), who spoke so clearly a little earlier, was absolutely right when he said that they should not have to pay. A cap is better than an uncapped bill, but why should they have to pay anything at all?
Secondly, we have discussed the position of buildings under 11 metres this afternoon, and I think the local case for including them is extremely strong. Replying to interventions, the Minister for Housing said that he is prepared to look at them on a case-by-case basis, but it seems to me that he could do that even if the Government chose to include them in the scheme.
Thirdly, I seek clarification on a point my hon. Friend raised about what happens if leaseholders have already paid up to the £10,000 cap but there are further costs. What if there is a continuing need for a waking watch? If the bill is not paid, the fire service may say to leaseholders, “You’re going to have to leave the building. We’re shutting it down because you don’t have a waking watch still in place.” What happens in those circumstances? It would be scandalous if leaseholders who have already paid the £10,000, or £15,000 in London, were to suffer that for want of someone to pay the bill.
Fourth is a point that has not been raised in the debate so far, but some constituents have contacted me about it. The Government have decided to limit the number of leaseholders who are not resident—buy-to-let landlords—who can benefit from the scheme. Morally, I do not see how anyone can argue that they are more responsible for the failings of others than residential leaseholders. Also, if a building has a lot of buy-to-let properties and the buy-to-let landlord leaseholders cannot come up with their share of the money to fix the building, that has an impact on the residential leaseholders living in the building, and the net result could be that the building does not get fixed and they continue to bear costs that they cannot bear. I say “cannot bear” because ultimately that is the reason the Government have had to move. It was a fantasy to think that leaseholders would come up with sums of money they simply do not have—ridiculous. It was never ever going to happen.
Lastly, although I paid tribute to the Government, they have created a highly complex edifice, which has been described, I think by the Leasehold Knowledge Partnership, as a waterfall, because lots of things have to happen in the right order for the scheme to work. I understand why the Government have done that—because they are determined to go after the people who are in fact responsible for the scandal—but it means that uncertainty will continue for our constituents while they wait for all this to work.
The right hon. Gentleman mentioned the Leasehold Knowledge Partnership, which I should have included in the list of those to be thanked. I think that representatives of the partnership and the National Leaseholders Campaign have had time to get from the rally to the Gallery, so I repeat the thanks to them. I include with them Lord Greenhalgh, who has engaged with all the voluntary groups. I can think of no better aim for a campaigning charity than saving residential leaseholders from a situation from which they could not otherwise escape.
I am delighted to echo the Father of the House. The partnership has been brilliant in its analysis of what has and has not been done, what the problems are and what the solution ought to be, and it has also been persistent.
I know the Minister will appreciate my final point, because he has worked very hard on this. Our constituents have waited long enough, with their lives on hold, and the sooner we can made all these bits work, the better. We have to enable them to wake up in the morning and think, “D’you know what? I don’t have to worry about the nightmare I’ve been living in for the last five years and I can get on with the rest of my life.” We owe it to them to bring the day they dream of around as soon as possible.
It is a pleasure to follow the right hon. Member for Leeds Central (Hilary Benn). I refer the House to my entry in the Register of Members’ Financial Interests, in particular as chairman of the all-party group for fire safety and rescue. As I mentioned in an intervention, I have been involved in prelegislative scrutiny of the Bill from its beginning and in the various reports the Select Committee produced in the wake of the Grenfell fire. The eye-watering aspects of building safety across this country really only came to light with that terrible tragedy at Grenfell, nearly five years ago. We have all learned a lot.
I congratulate my right hon. Friend the Minister for Housing, who is new to the job and to the Bill, on the rapid progress that has been made since he was appointed. I also congratulate my right hon. Friend the Secretary of State, who has dramatically changed the whole approach taken in this Bill. The Opposition spokesman, the hon. Member for Greenwich and Woolwich (Matthew Pennycook), is no longer in his place, but I think he recognises the dramatic changes that have taken place during the passage of the Bill through the other place.
When preparing for today’s debate, I thought of one or two ironies. The first was that the Second Reading debate was so shortened that we all got three minutes to speak, but today, although we have a reasonable amount of time to debate the issues, the business managers are encouraging us not to go on too long. That seems suitably ironic.
There are several issues to address. I thank the Minister for making it clear that this will not be the end of the process. Secondary legislation will come along on the back of the Bill, and that will be the detail that really matters to the people we represent—the leaseholders, who are the one party in all of this who are completely innocent and should not be penalised in any way, shape or form. It is a contradiction that we are asking leaseholders to make a contribution to fire safety costs and cladding remediation for which they have no responsibility.
I welcome the cap, but I do not see why that cap has been set at a particular figure. Many of the people we are talking about are not wealthy. They may have bought their leases a long time ago, and they are often living on fixed incomes and have no disposable income to put towards the costs, because they are paying the other bills for their properties. They are not able to stump up huge amounts of cash. As has been said, many of those people have been presented with eye-watering bills, such as £250,000 or more, to fix fire safety issues that are definitely not their fault, are clearly the responsibility of the developer in the first place and should have been put right since.
Also in preparation for this debate, I had a look at the Select Committee’s first report on prelegislative scrutiny of the Bill—the Chairman of the Committee may recall it. If the Government had accepted our proposed changes, we probably would not be here today discussing Lords amendments. Almost all the proposals in our report are now in the revised Bill. That is a significant change and demonstrates that when we are dealing with issues of such a technical nature, prelegislative scrutiny is the right way forward. I commend its use to Ministers in the future.
I have a couple of points to make about where we are now, to put them on the record so that we can get through this phase in the secondary legislation. I would like clarity from the Minister on the position of housing associations when pursuing developers who have developed social housing that is clearly not fit for purpose.
I agree with my right hon. Friend, but let us make it clear that it should not be housing associations paying for the costs of remediation—it should be the developers who did the work in the first place, under instruction. If the developers are no longer in business or have retired, will housing associations have access to the building safety fund? That will be important, because—as Opposition Members have said—the cost will fall on those paying rent in housing association properties, and that is unfair.
Will the Minister make sure that proper protection is given to the affordable homes programme? Otherwise we will not get the new properties developed that we all want to see to enable more social rented accommodation in this country.
One change in the Bill is that from 18 metres in height to 11 metres. In reality, the lower height properties do not have the compartmentalisation that high-rise flats have. As a result, there is a greater inherent fire risk in lower level designs. If a fire breaks out in one of those units, it is likely to spread rapidly across a broader range of properties. That is a serious fire risk and it needs to be remediated. I welcome the move from 18 metres to 11 metres, but it does not design out the original problem. We need to make it clear in the future that designing out such risks has to be paramount.
Another issue is disabled access. One concern is that when disabled people have to leave a property to flee a fire, disabled access is not always available. That has to be taken into consideration. From my reading of the Bill, that does not appear to have been given proper consideration and we need to look at it in the secondary legislation.
Since Grenfell and the publication of the original draft Bill, a raft of new high-density, multi-storey blocks of flats have been erected. Most of them now need fire remediation. I find it bizarre that developers would ignore all the suggestions of what needed to be done, but they have. We had an example earlier this year of a developer putting in a planning application for a 44-storey tower block in east London with only one stairway. It was outrageous, but it was only the intervention of the fire brigade and local residents that prevented that planning application from being approved.
Another issue is the commonhold versus leasehold model. I believe that more people should exercise common- hold, because I want to see more people enfranchised. The Bill appears to suggest that they would be penalised for doing so, but that cannot be right and the Minister needs to correct that.
I shall mention two other issues briefly. What happens to overseas ownership of buildings? Will we pursue those people to the nth degree or will they get away scot-free? My right hon. Friend the Member for Hemel Hempstead (Sir Mike Penning) referred to the insurance companies. To me, they have not so far put their minds to the problem.
The Bill is vastly improved compared with when it left this place. I will support it wholeheartedly today on the basis that we will not draw a line under it and that will be the end of it; secondary legislation will be required to amend it further. The evidence that was presented to the Select Committee suggested that we still do not know exactly how many buildings need fire remediation, how many need cladding remediation, and what the cost of that work will be. Until we have that data, we will not be in a position to say what the total cost will be to the Treasury and the Department, and how it will be funded.
I declare an interest as I am a vice-chair of the Local Government Association. I add my voice to those who have paid tribute to the extraordinary building safety campaigners who have shared their stories, put this issue on the national agenda and shamed the Government into several significant concessions. We are in a better place than we have been over the past couple of years, but the situation is still not good enough. There have been, from the beginning of the debate, a very few principles that the Government should have followed—that homes should be fixed as quickly as possible, that the innocent should not have to pay for the mistakes of the guilty, and that the Government should use their weight to go after those responsible. It is a sorry state of affairs that those principles have not been upheld two pieces of legislation later.
On Lords amendment 184, many of us are in agreement that innocent leaseholders should not have to pay a penny, end of. But the costs cap undermines that principle. Two years ago, when I tried to introduce that principle for the first time in the Fire Safety Bill I was told time and again by Ministers in Committee that it was not the right place, or that it would not work as intended. If we ever needed confirmation that that is code for “we don’t want to do it”, we get that from this Bill.
By arguing for the costs cap, the Government are opening themselves up to legal challenge. It cannot be fair, or in keeping with natural justice, that in some cases the single determinant of whether someone has to pay £10,000 or £15,000—and someone else does not—is the arbitrary fact of whether the Government can find another party to carry the can.
The Government have said that by their calculations the vast majority of leaseholders would not have to pay, so I would like the Minister to respond to these questions in his remarks. He says the vast majority. How many? Where is the Government assessment? Will he publish it and put it in the Library? Where is the web page for every leaseholder to find out whether they will be in the camp that might have to pay?
Linked to that issue is the flawed valuation system. If the system of caps goes ahead as the Government would wish, leaseholders are desperately worried about the potential for unfairness in meeting the thresholds. The valuation of properties could leave one flat liable for £10,000 or even £15,000, while an identical flat in the same block could be exempt. I was grateful that in our meeting yesterday the Minister said that his officials would look at this issue and work to find a solution, but will he commit today to say that he will launch a consultation on this specific issue as well? I believe the valuation method is flawed and will open up the Government to legal challenge.
Then we have the issue of leaseholders who have become freeholders. I agree with many of the other comments that have been made, including by the hon. Member for Greenwich and Woolwich (Matthew Pennycook). We are in a better position, but it is simply not good enough. The Government have said they might open this up for consultation, but after two pieces of legislation and two years of scrutinising legislation, that is really not good enough.
Then we have those who are living in buildings below 11 metres. I was grateful that in his opening remarks the Minister said he would be looking at this issue. I was grateful again that he provided an assurance to me that he would be looking at the vulnerability of residents as part of that particular assessment. Will there be a formal consultation? Can he say when it will start, how long it will take and what basis the outcomes of the consultation will have?
Finally, on social housing, again it cannot be right, as the hon. Member for Sheffield South East (Mr Betts) said, that this is effectively a form of discrimination. It is really disappointing that social housing tenants, who are at the blunt edge of feeling the crippling cost of living crisis, will probably see their rents and service charges raised to pay for the shoddy workmanship of unscrupulous developers. I ask the Minister to provide another assurance today that that issue will be looked at again.
We all recognise that we are in a much better position now than we have been over the past couple of years, but so many questions still remain. Not only is there going to be a slew of secondary legislation, but how many leaseholders will have to pay? How do they find out if it is one of them? How will valuation disputes be resolved? On the freeholders who have become leaseholders, where are the details of that consultation? For those living in apartments below 11 metres, where are the details on that? For social homes, how many families will not be given a new home to live in because associations and councils will have to spend their money remediating rather than building new homes?
I have to say that after five years since Grenfell and two pieces of legislation, this is a really shabby Bill. It is a very shameful state of affairs that so many issues have not been addressed. I know the Department is under new management and I know they have taken a new approach to the Bill, but the way it has been forced through the House with so little time for scrutiny is really shameful. I hope the Government listen to my points, which have been made on all sides of the House, and ensure that after the next Queen’s Speech this kind of performance is not repeated.
It is a great pleasure to be able to speak in this debate. I am very grateful to the Minister and the Secretary of State for the great work they have done since they have taken up their roles in working with us to get to a position where the Government accept that leaseholders are the innocent victims who are not responsible and should not have to pay.
I will come on to the waterfall in a few moments, but I want to pay tribute to a number of cladding groups: UK Cladding Action Group; End our Cladding Scandal, Leasehold Knowledge Partnership; Cladiator groups up and down the country; the millions of leaseholders who have put their lives on hold; and a lot of my colleagues on both sides of the House, in particular my hon. Friend the Member for Southampton, Itchen (Royston Smith) who helped me coin the McPartland-Smith amendment all that time ago, which we both found very humbling. We were very pleased that we were able to help to move this process forward and give leaseholders hope.
We have gone from being offered £400 million to £9.2 billion. The Government are still negotiating, and were talking to me and other Conservative colleagues this morning. The Minister himself said from the Dispatch Box during the debate that for leaseholders in properties under 11 metres, issues in those buildings will be looked at on a case-by-case basis. It is clear that the Government have listened. It is clear that the Government are trying to work with us and are trying to find solutions. I accept —we all accept—that we did not want to be in this place. The Government themselves want to fix the problems.
We need to reintroduce some proportionality into the debate. We need to ensure that leaseholders feel that the buildings they are in are safe and are not fire risks. One thing that has disappointed me throughout is that although it has been very cross-party, we have to ensure we keep it cross-party and that we reassure people. A lot of leaseholders out there feel that they and their children lay their heads down to sleep in unsafe buildings. They have just come out of the covid pandemic where they were told to stay at home because going out was unsafe, but staying at home was unsafe. These people have severe mental health issues and financial insecurity. It is our job and our responsibility to reassure those leaseholders that we are trying to resolve this problem, that we are going to try to find a way through and that we will ensure their buildings are made safe.
That is what I want to do as the Member of Parliament for Stevenage. I want to represent the leaseholders in Monument Court in my constituency who at the moment—I will speak to the Minister about this—are being sent bills by Higgins Homes for 50% of costs. How is that even possible when we have been clear that leaseholders are not going to pay? We have Vista Tower—the iconic Sophie Bichener, my constituent, got me involved in the campaign originally, all that time ago—and even with all the measures going through, because the tower is effectively owned by trustees they may be exempt and the waterfall may pass directly on to the leaseholders. They are already getting £10 million from the building safety fund, and they need to find £5 million from leaseholders. It is going to be very, very difficult.
We have to finish the primary legislation and get the Bill through to Royal Assent so that leaseholders have some reassurance. Once the Bill has achieved Royal Assent, we need to work together to get the secondary legislation, vast quantities of which are needed to make the Bill work, right. We then need to start, over five years on from the terrible and tragic events at Grenfell, to make these buildings safe. How will we make people feel the buildings are safe? Finishing this debate in the Chamber today does not make any building safer than it was yesterday or five years ago. We need to focus on identifying those buildings and making sure they are safe. That is my priority. I will be supporting the Government today, because they have shown a massive willingness over the past few months to sit down and negotiate with us, and to do everything they can to try to ensure that leaseholders are not held responsible.
On the waterfall and the cap, we need to ensure that the waterfall works in practice so that developers are held on the hook, then freeholders and then other organisations, with leaseholders being the last resort. In my constituency, leaseholders who are affected would not pay a single penny, because the Secretary of State gave a commitment from the Dispatch Box in a previous debate that waking watch costs that had already been paid over the past five years—extended to 10 years, which we are very pleased about and did not even ask for—would contribute towards the £10,000. The reality is that the leaseholders in my constituency would not be paying a single penny towards the cost of remediating the building. We need to find a way of ensuring that the building still gets remediated. We have gone from the issue being just cladding to the Government’s accepting both external building safety defects and internal building safety defects. We have won the campaign. Leaseholders have won. Up and down the country millions of leaseholders have won, but we must turn that victory into reality. We must ensure that those leaseholders live in protected buildings.
Obviously we would all like the cap to be at zero. However, one of the issues, which I asked the Secretary of State about only yesterday, is that there are leaseholders who cannot move, take a new job or move on with their life because they cannot sell their flat; the flats have no market value and are worthless. In response to a letter that we sent, the Secretary of State has asked the lenders whether they will provide consent to let for affected leaseholders so that they can rent out their property and move on with their life somewhere else. As we know, at the moment millions of them are trapped.
The Government are working with us all the time. Because we know that the most that any leaseholder will ever pay—technically, in theory—is £10,000, we have created value again in every single one of those properties. We have got the market moving again, because everybody knows that they will not have to face what in the case of Vista Tower is a remediation bill of £180,000 or £200,000 on a £180,000 flat. That is how far we have moved—that is the size of the victory that we have won. Leaseholders up and down the country have won, and we need to ensure that we take that victory to the next level and help them to get their buildings made safe. I am grateful to the Minister and will support him in the Lobby today.
In June, it will have been five years since the devastating Grenfell fire. I did voluntary work in the community when I was in my late 20s, so I know the area well. The fire destroyed lives and tore families and communities apart; again, I offer the survivors my condolences in memory of those they lost. Since then, thousands of leaseholders have been forced to live with the anxiety of being in unsafe buildings through no fault of their own. It has to be said that although we are where we are today, the Government have acted far too slowly to put right the most serious situation. Residential leaseholders are panicking about costs that they never envisaged and are worried about who will pay for the work to remedy the situation.
The Bill has the opportunity to right those wrongs. I put on record my appreciation for all the building safety campaigners and for their work and their efforts. At the beginning of this year, the Secretary of State announced that
“leaseholders…are blameless, and it is morally wrong that they should be the ones asked to pay the price.”—[Official Report, 10 January 2022; Vol. 706, c. 283.]
I absolutely agree. Nevertheless, I am in contact with my constituents and they are concerned that the Government’s proposals will still leave most leaseholders facing unaffordable costs. I therefore support Lords amendment 155, which reduces to zero the maximum amount that leaseholders could be liable to pay for fire remediation works, as we have heard from my hon. Friend the Member for Greenwich and Woolwich (Matthew Pennycook). That is important, because people who have done nothing wrong should not have to pay a penny for remediation work, for other fire safety work or for additional work that may arise.
The residents of Parkside in my constituency have endured years of uncertainty about who will pay for the work to put right the unsafe cladding on their building. My constituents, residential leaseholders, have been given a tentative commitment by Peabody, the housing provider, that the full cost for their remediation works will be met by Peabody, Ardmore and Rydon, the developers. However, the developers have not given my constituents the outright reassurance that they need; instead, they are keeping them dangling on the end of a string. My constituents desperately need to know that no additional cost will be passed on to them. It is deeply disappointing that they have not been given that reassurance.
Leaseholders who have shared ownership and socially rented residents have been left in limbo in unsafe buildings for far too long. Promises are being broken, works have yet to begin—they have been delayed and delayed—and commitments are not being met. If the families or friends of Peabody, Rydon and Ardmore were in that situation, they would want it put right. It is not fair that leaseholders and socially rented residents continue in these situations. Leaseholders cannot sell, cannot re-mortgage and cannot increase their share of ownership. They cannot decide to extend their family, because they will end up in an overcrowded situation. For Parkside, there is still no policy for sub-renting. Furthermore, the building is vulnerable to the risk of fire.
My constituents need to know the timeframe for when remediation work will begin and end. They need reassurances that they will not be paying for anything. They need to be treated with the utmost respect and consideration. I ask the Government what they will do to follow through, ensure that there is a time cap on when remediation work begins and ends, and ensure that leaseholders and socially rented residents are treated with the utmost respect when remediation work takes place. Every decision needs them at the forefront. After all, as we have already heard, it is they who are vulnerable. They are the victims and they need to be protected.
I urge the Government to accept the Opposition amendments and always to put the residential leaseholders and socially rented residents in this situation first.
I refer hon. Members to my entry in the Register of Members’ Financial Interests.
I thank the Secretary of State, the Minister and the Department for what they have done to get us to this stage. I also pay tribute to the cladding groups, which have acted with great integrity and determination. If they are not completely content today, at least they are in a much better place than they were during the passage of the Fire Safety Bill.
That Bill now seems quite a long time ago, but that is nothing compared with how long it has felt for the leaseholders who are still caught up in this awful scandal. We were promised at the time that the Building Safety Bill would deal with the issues of leaseholders having to pay. It seems that the Government have been as good as their word and have made sure that at least leaseholders will not be held responsible—we all know that they are the only people in the entire situation who are not responsible. I was cynical when the Government said that they would deal with the issue in the Building Safety Bill, so I am particularly happy. Of course, I was not nearly as cynical as the leaseholders who were facing bills for tens of thousands of pounds and were wondering whether the issue would just be kicked down the road and into the long grass. I am pleased that at least we are now somewhere that we can all be a lot happier.
The Bill is infinitely better than what we have seen before and is definitely a move in the right direction. I have mentioned to the Minister, who has made himself available numerous times now, my concerns about buildings under 11 metres. I think it was the Chairman of the Select Committee on Levelling Up, Housing and Communities, the hon. Member for Sheffield South East (Mr Betts), who said that if a building were 1 cm lower than it needed to be, that could be the most expensive centimetre in history. That is exactly the point: some of these numbers are a bit arbitrary.
What the Minister has said at the Dispatch Box has given me some comfort—enough comfort, as it happens, to support the Government today. Going forward, however, we need to make sure that we are all as good as our word. If we say that things will be assessed on a case-by-case basis, they must be. When I remove myself from the national picture, which I never intended to be involved in, and go back to representing my constituents first and foremost, although perhaps not exclusively, I hope that each time an issue comes up and I take it to the Government, they will be as accommodating as they suggest they will.
I know that everyone is talking about the insurers, which I spoke about in one of my first speeches on the Fire Safety Bill. In a way, I am really pleased that we are all fed up with talking about the insurers, because if we are all talking about them, hopefully the Government will hear us. We think—and it is not an unreasonable position—that insurers should be part of this. As the Chairman of the Select Committee said, when the ABI was in front of the Committee it said that some of these premiums were helping them to put money aside in the event that they would need to pay in future. The way I look at it, they think they will have to do something anyway, so let us make sure that they are involved.
May I suggest that it would be a good idea if the Government had a roundtable with the insurers about what informal provision they are making in case there are successful actions, and about whether they would like voluntarily to contribute, say, £4 billion to £5 billion? No residential leaseholder would then carry the cost, and the insurance company would know that it would not be chased with legal claims that were likely to succeed.
That is an excellent suggestion. The Government have been very successful in talking to developers and persuading them to sign up voluntarily, and there is no reason why they could not have similar conversations with insurers.
I do not want to make a case in defence of developers. I have made the case throughout that they should pay, but we need to be a bit careful about the possible unintended consequences of only going after them. I am pleased to note that they are taking responsibility for their own buildings, although they should have done that in the first place and they are a bit late to the party. Asking them then to remediate buildings that are not their responsibility will have all sorts of effects, not least in making them think about whether they will want to be in that particular market any more. I doubt that they will ever withdraw from the house building market, because it is their business, but if we want to ensure that we can build 300,000 homes a year—a proportion of which would, I am sure, be high-rise—we should bear in mind that some developers will now be saying, “This may not be for us in the future.”
I promised that I would not speak for too long, because we want to get through this business as quickly as possible, so I will end my comments by thanking the Minister again for what he has done and welcoming the changes that have been made. Given the Minister’s assurances today, I will be supporting the Government.
It is a pleasure to follow the hon. Member for Southampton, Itchen (Royston Smith). I pay tribute to him and to the hon. Member for Stevenage (Stephen McPartland) for the work that they have done in this regard.
As others have said, we have made considerable progress, but it is a disgrace that, so long after the Grenfell tragedy exposed the scandal of cladding and fire safety issues, the Government have yet to provide the comprehensive response that would address all the issues faced by the thousands of leaseholders caught up in that scandal across the country. This evolving Bill—it was clearly still evolving yesterday, with a body of new amendments tabled by the Government—and, indeed, the Secretary of State’s announcement in January were significant steps, but they still fall short of the Prime Minister’s promise—and I think we all know how much that is worth—that no leaseholders should have to pay for the remediation of problems that are not their responsibility. Moreover, there is still too much uncertainty surrounding the Government’s proposals, which in itself is frustrating progress on making buildings safe.
Let me give just one example. Mandale House, in my constituency, faces a range of problems, and has secured £3.4 million from the building safety fund towards the necessary remediation. However, that falls short of what is needed, and Mandale House is left with £7.4 million to find in order to complete the work. The building’s original developer is one of many to have gone into liquidation, so the building management are on their own. The builders who had been scheduled to carry out the remediation works have now pulled out because of the uncertainty over whether they would be paid. That leaves no foreseeable prospect of the building’s being made safe. The building management are now worried that if the money they have been granted from the building safety fund is not used promptly, it may be withdrawn. I understand that that has happened in respect of other buildings, and I would welcome the Minister’s confirmation that it will not happen in this case—as well as his advice on how Mandale House leaseholders should now proceed to make their building safe.
The second point that I want to make concerns enfranchised buildings. I urge the Government to think again about Lords amendment 117, and I hope to persuade them to do so by citing the case of Wicker Riverside, another building in my constituency, whose residents were evacuated just before Christmas 2020 because of safety concerns.
It is not good enough for the Secretary of State to write to us, as he did yesterday, saying that the amendment highlights a real problem which must be addressed, but then to reject it without putting anything else in its place. I welcome his late announcement today of a consultation, but it should have been possible four years on, and after all the months of knowing that this remained a problem following the Government’s January announcement, to include an amendment that addressed the concerns and provided a solution that the Government felt was robust, along with the bundle of amendments that were added yesterday.
Let me illustrate the problem. In 2019, Wicker Riverside leaseholders took their freeholder to court after years in which building maintenance had been neglected, with the freeholder also failing to provide proof of whether the money collected through service charges had actually been spent on the building. The freeholder did not even turn up for the court case. The leaseholders then exercised their right to manage, and took over responsibility for the building. Now they are being penalised for doing so. By treating right to manage companies in the same way as institutional freeholders, the Government are excluding them from the protections that exist for other leaseholders, such as the remediation bill cap. I would like us to go further and provide zero liability for leaseholders, but the fact remains that the cap is there for some and is not there for those in Wicker Riverside. They should qualify for the same protection as others, because without it they will face unmanageable costs, and as a result the building will not be made safe.
The Government must set out their plans. If they will not accept Lords amendment 117, I respect their concerns, but the Minister needs to explain—and I hope that he will, in his closing remarks—exactly what they intend to consult on to ensure that right to manage leaseholders are protected. I hope the Minister will also give a clear guarantee that the outcome of the consultation will be that those leaseholders will have the protection that is being provided for all others.
Like many Members on both sides of the House, I welcomed the Secretary of State’s assurances to Parliament earlier this year that leaseholders
“are blameless, and it is morally wrong that they should be the ones asked to pay the price.”—[Official Report, 10 January 2022; Vol. 706, c. 283.]
However, despite the progress that the Secretary of State and Members across the House have undoubtedly made on this issue, there are still inadequate legal protections in the Bill to ensure that residents and leaseholders do not bear the costs of a crisis that they did not cause. I therefore support Lords amendments that seek to widen the scope of the Bill, including the amendment to reduce leaseholder contributions to zero, tabled by Baroness Hayman, and the proposal for an extension of leaseholder protections to buildings of all heights, tabled by the Earl of Lytton and supported by Lord Blencathra and Lord Young. I thank Members of this House for their hard work, and I thank all the cladding campaign groups, many of whose members are present today. I want to mention in particular Manchester Cladiators, which has supported residents throughout Greater Manchester through rain and shine in their hour of need.
Those campaigners have to keep going, because the sad reality is that many residents in my constituency still fall through the gaps in the proposals that the Secretary of State has outlined so far. Indeed, a recent survey by End our Cladding Scandal of more than 2,200 properties and buildings over 11 metres tall shows that more than 64% of leaseholders outside London and more than 83% of leaseholders in London will not be protected from the costs of non-cladding fire safety defects. The recent pledges from developers to remediate the buildings that they have built over the last 30 years sadly do not go far enough, and there is continued ambiguity about the treatment of non-cladding fire safety defects. Leaseholders in buildings that are under 11 metres remain unprotected, and there is still no funding commitment from house builders for the £4 billion required for the remediation of buildings where the developer no longer exists. As we have heard today, there also remains a huge question mark over social housing.
Further to that, we still do not know what residents who have already received devastating demands for payment should do. There is no detail at all on how to recoup any sums of money already spent by residents, as sinking funds are depleted to catastrophic levels. For example, one development in my constituency has been unable to receive support from the waking watch relief fund simply because the residents acted proactively to try to reduce the cost of their waking watch by agreeing to fund the installation of a fire alarm system. Because they did this prior to the waking watch relief fund’s cut-off date of 17 December 2020, their application to the fund was rejected. Sadly, had they waited and incurred even more waking watch costs, their application probably would have been successful. The Minister must agree that that makes no sense at all, and this is just one case.
The Secretary of State informed Parliament in January that he would pursue statutory protection for leaseholders, and that nothing would be off the table. The Bill does not give that protection, and all I ask today is that the Government support the amendments that would protect leaseholders and go some way towards providing that statutory protection that they all deserve.
I pay tribute to Members from right across the House for their support as this Bill has passed its various stages. I have spoken on this Bill a number of times, and it is fair to say that it is a very different piece of legislation from what was initially proposed. My constituents in Vauxhall, like others in constituencies around the country, have a basic right to live in a building that is safe, and it is a shame that it has taken nearly five years after the Grenfell tragedy for Ministers to implement this new regime. I welcome the establishment of the building regulator and the other measures in the Bill to protect lives, particularly the overdue safeguards for disabled occupants of high-rise flats; that is an issue that is not referenced enough.
Sadly, this is not just about safety; it is about who should pay for the mistakes that led to these buildings being unsafe in the first place. For too long, that has been left to innocent victims, with leaseholders and social housing providers having to pay while the developers and builders who are responsible have had their profits protected. I pay tribute to the many leaseholder campaigns and groups caught up in this, including many of my constituents in Vauxhall who have worked tirelessly on this issue for many years. Without them, we would not have reached this point.
The simple fact is that this crisis will not end until leaseholders in buildings of all heights are exempt from all fire safety costs, but that is still not the situation. Leaseholders can still have to pay up to £15,000 if funds cannot be recovered from the developer or freeholder, and leaseholders in buildings under 11 metres are entirely excluded. I place on record my support for retaining the two amendments, referenced by many Members, that were passed in the other place and that would solve these problems. Sadly, they have not been accepted by the Government. It is neither right nor fair that some leaseholders should pay while others are protected, and I hope the Minister will address that when he responds.
Lords amendment 155, tabled by my noble Friend Baroness Hayman, would abolish the unfair cap and legally protect leaseholders from all remediation costs. The Government claim that it is unnecessary to protect buildings under 11 metres, but fire does not discriminate. It does not care if a building is 11, 15 or 18 metres. I have heard from constituents in low-rise buildings in Vauxhall whose mortgage lenders still require a fire safety inspection. If that inspection finds problems, guess what? Those leaseholders in low-rise buildings will have to pay.
We must not allow the technical details of this debate to obscure the fundamental moral principle at the heart of it. Either the leaseholders are responsible for this crisis or they are not. The Government have said for many years that they are not, and I agree with that. I hope that Members will vote today for the amendments that will deliver our responsibility to fully protect leaseholders from all of the costs of the problems they did not cause. In the name of fairness and transparency, I urge all Members in this House to do that.
Once again, I thank all hon. Members for their contributions. They have raised lots of very serious points and questions and have clearly demonstrated a long-standing commitment not only to their constituents, but to this wider issue. I am grateful to right hon. and hon. Members for acknowledging that this piece of legislation is vastly different from what it was, and I apologise to the shadow Minister, the hon. Member for Greenwich and Woolwich (Matthew Pennycook), for the necessity, I suppose, of the late amendments that we tabled. I hope that he agrees, however, that it is important for us to get the Bill on the statute book, and to start the process of making sure that people feel safe in their home. I was particularly struck by some of the contributions from my hon. Friends who mentioned that. I also thank all those who have been involved in campaigns; they have shown how hard-working campaigners can make a considerable contribution on a very serious issue such as this.
I will start by responding to some of the amendments that the hon. Member for Sheffield South East (Mr Betts) tabled. I thank him and the Levelling Up, Housing and Communities Committee for their prelegislative scrutiny of the Bill and their tireless scrutiny of the Government’s response since the fire at Grenfell Tower.
Amendment (e) to Lords amendment 184 states that no
“service charge is payable under a qualifying lease”
where the landlord is either a private registered provider of social housing or a local authority. It provides that funding to meet the costs concerned would come from the levy set out in clause 57. I reiterate the Government’s commitment to protecting leaseholders, but we will not be able to support the amendment. We are clear that those responsible for creating historical building safety defects need to pay to put them right. That principle should apply equally where the party responsible is a social housing provider or local authority. Social housing providers will not be subject to provisions that stipulate that building owners and landlords with a net worth of more than £2 million per in-scope building must pay all in-scope remediation costs. They will be required to pay in full only where they were involved in developing the building.
We are also introducing an ambitious toolkit of measures to allow those directly responsible for defective work to be pursued. Those measures include an extension to the limitation period under the Defective Premises Act 1972 to 30 years; a new course of action relating to product manufacturers; and provisions removing the protections afforded by special purpose vehicles and shell companies. We have been working closely with social housing providers to help them to understand the impact of these changes.
Amendment (f) to Lords amendment 184 provides that where
“the freeholder of a building is a local authority”,
remediation costs will be paid “in the first instance” by the developer of the building and otherwise through the levy set out in clause 57. Again, the Government will not be able to accept the amendment because developers are already expected to remediate their buildings, and as we have announced, developers have signed our pledge to commit to do that. We are also introducing the ambitious toolkit that I mentioned.
I committed earlier to continuing to work on the whole area of social housing, and I assure the hon. Gentleman that I am keen to deliver the ambitious affordable housing programme that we have announced. I do not want to see that affected in any way, so it is in my interest to ensure that we do everything we can in this area. I commit to our doing that.
I apologise for taking part in a bit of a pincer movement on the Minister. He mentioned the 30-year rule; there will be developers who say, “We built under the regulations that existed over those 30 years.” Are we going to say to those developers, “No. As a result of fire safety issues, you must remediate those buildings in line with the regulations that are now in place, not those that existed 30 years ago”?
Yes. I think I am correct in saying that. Yes, I am; I have just double-checked.
Colleagues have mentioned the 11-metre rule, and I reiterate that they should please write to my Department if they are aware of buildings under 11 metres that are facing costly remediation. We are clear that costly remediation should not be undertaken on buildings under 11 metres, and we would be glad to look into specific cases and to question freeholders on why they are insisting on commissioning costly and unnecessary remediation works.
In answer to my hon. Friend the Member for Worthing West (Sir Peter Bottomley), let me say that we are retrospectively extending the limitation period under section 1 of the Defective Premises Act. The duty under the Act applies to those taking on work in connection with the provision of a dwelling, which includes architects and contractors whose actions have contributed towards defects, as well as developers.
As I understand it, the difficulty is that a claim would need to be made on behalf of leaseholders by their landlord, who would insist on indemnity funding. The Minister and his advisers should get together with the Law Officers to find a practical way to ensure that claims to have a prospect of getting people to pay up, rather than people trying to resist. After Tony Pidgley sadly died, the new bosses resisted paying up to put right the defects in the Worcester Park block. That situation needs to be challenged.
It is always wise for a Minister answering the Father of the House to take his sage advice, and of course I will speak to my officials.
The hon. Member for St Albans (Daisy Cooper) asked about valuations. I am aware there has been a discussion about how the Bill proposes to assess the value and banding of individual flats. The process set out in the Bill—further detail will be set out in regulations—takes the last price at which a flat changed hands, which will be recorded at the Land Registry, and uprates it in line with the national house price data produced by the Office for National Statistics. We recognise that this may produce a value that differs from the flat’s current market value, but we are using this approach for two specific reasons. First, it uses publicly available data and so avoids any potential for gaming the system. Secondly, it avoids the need to value a large number of flats individually, which would likely be both expensive and time-consuming and could delay the needed changes and improvements to those properties.
Notwithstanding the Minister’s explanation that the valuation might not meet today’s market value, which he also gave to me yesterday, does he accept that, precisely because the starting point is the most recent sale price, the owner of a flat might have to pay up to the cap to get remediation done, whereas the owner of the identical flat next door in the same block might not because the two flats sold at different times for different sums of money? That is simply not fair.
I recognise the hon. Lady’s point, and I have committed to coming back to her after we have done further work in this area.
I am conscious that there will be a large number of Divisions in a moment, so I reiterate my thanks to hon. Members on both sides of the House. This is an incredibly important issue, and I am aware that my Department has a great responsibility to get it right. I hope that the direction set by the Secretary of State shows that we are determined to get it right for people who have been living in these worrying circumstances for too long.
Amendment (a) made to Lords amendment 93.
Amendment (b) made to Lords amendment 93.
Lords amendment 93, as amended, agreed to.
Before Clause 117
Meaning of “relevant building”
Amendment (a) proposed to Lords amendment 94.—(Stuart Andrew.)
Question put, That the amendment be made.
Amendment (a) made to Lords amendment 94.
Motion made, and Question put, That this House agrees with Lords amendment 94, as amended.—(Stuart Andrew.)
Lords amendment 94, as amended, agreed to.
Government amendments (a) to (c) made to Lords amendment 98.
Lords amendment 98, as amended, agreed to.
Government amendment (a) made to Lords amendment 107.
Lords amendment 107, as amended, agreed to.
Government amendment (a) made to Lords amendment 108.
Lords amendment 108, as amended, agreed to.
Government amendments (a) and (b) made to Lords amendment 109.
Lords amendment 109, as amended, agreed to.
Government amendment (a) made to Lords amendment 145.
Lords amendment 145, as amended, agreed to.
Government amendments (a) and (b) made to Lords amendment 184.
Government amendments (c) and (d) proposed to Lords amendment 184. —(Stuart Andrew.)
Question put, That the amendments be made.
Amendments (c) and (d) made to Lords amendment 184.
More than three hours having elapsed since the commencement of proceedings on Lords amendments, the proceedings were interrupted (Programme Order, this day).
The Deputy Speaker put forthwith the Questions necessary for the disposal of the business to be concluded at that time (Standing Order No. 83F).
Motion made, and Question put, That this House agrees with Lords amendment 184, as amended.—(Stuart Andrew.)
Lords amendment 184, as amended, agreed to.
Lords amendment 6 disagreed to.
Government (a) made in lieu of Lords amendment 6.
Lords amendments 1 to 5, 7 to 92, 95 to 97, 99 to 106, 110 to 144, 146 to 183, and 185 to 191 agreed to, with Commons financial privilege waived in respect of Lords amendments 17, 22 to 30, 103, 104, 111 to 113, 116, 120 to 127, 137 and 138.
Government amendment (a) consequential on Lords amendment 78 made.