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Leaseholders and Cladding

Volume 808: debated on Wednesday 25 November 2020

Commons Urgent Question

The following Answer to an Urgent Question was given in the House of Commons on Tuesday 24 November.

“I congratulate the honourable Member for Sheffield South East, Mr Betts, the Chair of the Select Committee on Housing, Communities and Local Government, on securing the urgent question, which is of huge interest and concern to many of our constituents up and down the country.

The question of who pays for remediation works is key for the Government and many of our constituents. We have been clear that leaseholders should not have to worry about the cost of fixing historical safety defects in their buildings that they did not cause. Test have shown clearly that aluminium composite material—the kind of cladding found on Grenfell Tower—is the most dangerous form of cladding material. We continue to engage with building owners, regulators and the wider industry to ensure that it is removed from high-rise residential buildings as quickly as possible.

ACM remediation costs are being funded through several sources, including warranties, building owners and developers. We have provided £600 million to fund the removal of ACM where funding has been a key barrier to remediation and the Chancellor of the Exchequer has allocated a further £1 billion to be spent on removing other types of unsafe cladding over the current financial year.

It is important to remember that this is a multi-year problem. Remediation work cannot be done overnight and it must be done properly so that it makes buildings and residents safe. That forms part of the ongoing discussion that my right hon. Friend the Secretary of State has with other Departments.

However, I am clear, and I hope that the House is clear, that public funding does not absolve the industry from taking responsibility. We expect developers, investors and building owners who have the means to pay to cover remediation costs themselves without passing on costs to leaseholders, but we recognise that there are cases where that might not be possible, and cases where there may be wider costs relating to historical defects. The Government are determined to identify suitable financial solutions and remove barriers to remediation.

The Government have asked Michael Wade to accelerate his work with leaseholders and the financial sector to develop proposals to protect leaseholders from the costs of remediating historical defects wherever possible. However, we must also ensure that the bill does not fall wholly on taxpayers. We will update leaseholders on that work before the Building Safety Bill, which has just completed its prelegislative scrutiny, is introduced in Parliament.”

My Lords, I refer the House to my relevant interests, as set out in the register. We are clearly making some progress with this Statement, but we need absolute clarity that no leaseholder or tenant will face any cost as a result of this scandal. Does the Minister accept that tenants and leaseholders are the innocent victims here? Does he also accept that redress for this scandal has to be by the builders who built the unsafe buildings, the people who signed them off as safe, and those organisations which provided insurances, warranties, guarantees and protections? It is regrettable that some of these companies are now trying to wriggle out of obligations that they gave.

My Lords, the Government do accept that leaseholders are victims in this situation. We recognise that the £1.6 billion of public funding that has been put up so far to pay for the costs of cladding remediation go some way to protecting leaseholders from the costs they face. We also recognise that this public funding does not absolve the industry from taking responsibility.

My Lords, I draw the attention of the House to my relevant interests in the register. I echo what the noble Lord, Lord Kennedy, just said about the growing public concern over this issue. The Health and Safety Executive gave evidence to the House of Commons scrutiny committee on the building safety Bill, which includes some clauses on cladding and fire safety of buildings. It said in the committee’s report that leaseholders should not

“have to worry about the cost of fixing historic safety defects in their buildings that they did not cause.”

Does the Minister agree with the Government’s own Health and Safety Executive?

My Lords, with the greatest respect, the bill for remediation of historic cladding defects cannot simply be passed to the taxpayer. We expect developers, investors and building owners who have the means to cover remediation costs themselves to do so without passing on costs to leaseholders.

How many freeholders have been asked to pay for this remedial work on the buildings they commissioned on their land, and how many of those who built these dangerous dwellings, who all gain profit from the sale of leasehold properties? What legislation do the Government plan to bring forward to move from leasehold to co-ownership for multioccupancy buildings?

My Lords, in addition to other ministerial responsibilities, I am now responsible for looking at leasehold reform. This is not the place to opine on that, but just over 50% of private sector developers and freeholders with aluminium composite material in high-rises funded it and did not pass on the costs to leaseholders—a significant proportion stepped up to the plate and did the right thing.

My Lords, I declare a possible interest as someone who might be affected. One million leaseholders will still be ripped off by landlords, freeholders and agents who will carry out all possible so-called remediation works and gold-plate them to increase the value of their holdings and make leaseholders pay through the nose for them. Will my noble friend confirm that the Government will bring forward an amendment to the Fire Safety Bill stating that leaseholders will not pay a penny for remedial works but will deal with the genuine anomaly of wear and tear and service charges, for which they should pay? Will he also bring forward urgent legislation on leasehold reform and the full abolition of this iniquitous, prehistoric law which should have no place in a levelled-up society?

My Lords, I thank my noble friend—that will be about five minutes’ work. I agree that leaseholders must be protected from unaffordable costs, particularly if these are driven by unnecessary gold-plating. I agree that leasehold reform needs to be an absolute priority, and it is a priority for this Government.

My Lords, I am pleased to be able to follow my noble friend Lord Blencathra. The HCLG report published yesterday argued, correctly, that leaseholders should not be expected to foot the bill for failures not of their own making. Some property owners have taken the necessary steps, supported by the Government—and therefore the taxpayer—through funding, but sadly so many others have not. Can my noble friend tell me what I can say to Charlie, Rebecca and their baby, who bought their new build leasehold flat five years ago? The block failed the ESW1 process and the review found flammable cladding, combustible insulation, timber balconies and more. They are trapped in a flat that could go up in flames and have repair bills that could break them financially.

My Lords, my noble friend must point out to them that this Government have an iron resolve to make sure that developers step up to the plate. They have made significant profits on those developments and will want to make profits in the future. We need to make them pay; we need to reason with them and say that it is no good laying this at the door of the taxpayer. They will have to step up to the plate. I will ensure that this Government make every endeavour to make them do so.

My Lords, 36 years ago, when I had my noble friend’s job at the then Department of the Environment, I put on the statute book the Housing Defects Act 1984. In a nutshell, it compensated homeowners who found that their homes were unsaleable, through no fault of their own, and had no other form of compensation coming from the Government. Does my noble friend think that that legislation has relevance to today’s leaseholders? Would he welcome my advice on how to persuade the Treasury to pay for it?

My Lords, there is no problem in public life that has not been seen before. My noble friend makes a valuable point and I will indeed ask my officials to look into the ways in which the Housing Defects Act of 1984, when I was doing my A-levels, and the Housing Act of 1988, when I left university, were used to address the issues we face today.

Sitting suspended.