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Homeowners: Cladding-related Costs

Volume 813: debated on Thursday 24 June 2021


Asked by

To ask Her Majesty’s Government what plans they have to protect homeowners from further costs as a result of unsafe cladding, in addition to the £5.1 billion investment in building safety

My Lords, I beg leave to ask the Question standing in my name on the Order Paper, and in doing so refer the House to my relevant interests as set out in the register.

The Government will fund the cost of replacing unsafe cladding for leaseholders in residential buildings of 18 metres and over in England. This will make homes safe and protect leaseholders from costs. There is no reason to suggest that there will be a funding shortfall for eligible applications to our remediation funds.

My Lords, the response from the Government is woefully inadequate. When will the noble Lord, the Government and the Prime Minister get a grip? The thousands of people trapped in this living nightmare need their Government to help and support them. When are we going to see action on the failures of the companies who built these buildings; the professional failures; the insurance companies not delivering on their obligations; the increased insurance premium costs levied on people; the building safety fund contract terms, which are not fit for purpose; the unrealistic bills being sent to innocent victims; the dangerous fire safety and building safety defects which have not been addressed; and the EWS1 form fiasco, which is making buildings unsaleable? What will it take to get the Government to make those responsible pay up, so that innocent victims get the justice they deserve?

My Lords, I think that extended beyond two points. In addition to the unprecedented sum of £5.1 billion towards the remediation costs, we recognise the need to strengthen redress mechanisms. That will come forward as part of the building safety Bill. We have also stepped forward to support the installation of many hundreds of alarms to ensure that people do not have to pay for a costly waking watch, with our waking watch relief scheme of some £30 million. We recognise that it is for the building owners to shoulder their statutory responsibilities to keep their buildings safe. We will continue to work with all levels of government to make sure that that happens and that the costs are not passed on to the leaseholders.

My Lords, four years on from Grenfell, one of the heaviest burdens being borne by those trapped living in unsafe buildings—whether due to cladding or otherwise—is simply not knowing when their plight will end. Will the Minister now urge Her Majesty’s Government to present this House with a clear timetable and deadline for resolving all outstanding issues, so that residents will know when they will be able to live in their homes safely and when they will be able to sell them for a proper price?

My Lords, we have made further progress on the remediation of all forms of unsafe cladding. Nearly 700 buildings have had their funding approved, and around £400 million has been allocated as part of the building safety fund. We recognise some people’s problems with regard to access to EWS1, but that is why we have the RICS guidance, which has been adopted by about 80% of lenders. I hope that it that will see a more proportionate approach.

Is my noble friend the Minister aware that there are instances where leaseholders have paid for recladding, mainly through their service charges, but freeholders, who are the only people who can claim for repayment, are withdrawing their applications because of onerous conditions imposed by the Government? Will he consider changing the legislation to allow leaseholders to claim for repayment of funds, rather than freeholders?

Unfortunately, we are aware of cases such as that my noble friend has raised with me; I thank him for drawing it to my attention. It is shameful that some building owners would rather refuse the Government’s offer of funding and push unaffordable costs on to innocent leaseholders than take responsibility for ensuring that their residents are safe. The conditions for government funding are designed to ensure that residents are protected from shoddy or delayed remediation works. As they are taxpayer funded, we require building owners to make reasonable efforts, claiming costs back from developers using warranties where possible.

One solution to funding remedial work following Grenfell is to take robust action against the French manufacturers Arconic and its then-parent Saint-Gobain, which supplied the defective panels. Following concerns over the safety of these panels in France, I read that they withdrew them from sale in their own country yet continued selling them in the UK. This is disgraceful and ethically dishonest. What action are the Government taking to demand compensation from Arconic and/or Saint-Gobain? It should not be a UK taxpayer burden.

My Lords, we have to let the inquiry take its course, but we recognise that deficiencies in testing have been thrown up, so the Secretary of State has commissioned an expert group to look at construction products testing. We are establishing a new regulatory regime as well.

My Lords, the Minister will remember that, when we had the emotional debates on this issue at ping-pong, he said that the Government would come forward with further measures to deal with a comprehensive settlement in respect of leaseholders. That was the argument why he was not prepared to accept the view of this House that we should impose a timetable. That was two months ago. Can he tell us precisely what measures the Government have come forward with in the last two months?

We have continued with the progress of the existing fund, which is now at over £5 billion. As I have said, nearly 700 buildings have had their funding approved for the remediation of other forms of unsafe cladding, similar to the type seen on Grenfell Tower. Obviously, further details around the financing scheme will be announced in due course.

On 24 May, I asked the Minister about the funding gap in remediating external wall cladding. The Government estimate that £15 billion will be required to fully remediate. The Government are putting in £5.1 billion and there is £2 billion from developers. That leaves a gap of £7.9 billion. In reply, he said,

“We need to watch this very carefully.”—[Official Report, 24/5/21; col. 807.]

Having cast his watchful eye over this matter, will he say whether these figures have altered, and how the gap will be filled?

My Lords, those are not official figures. There are a lot of estimates, and there is a great range in those estimates. We are carrying out some detailed research so that we can properly understand the incidents, particularly in lower-rise and medium-rise buildings, where remediation would be required. Then we will be in a position to know the burden that will potentially fall either on the taxpayer or on leaseholders.

My Lords, I welcome the substantial support that the Government have provided to deal with the cladding crisis but, on its own, it is clearly not enough to deal with the problem and with hardship. In February, the Government announced a new tax on future high-rise development, but would it not be fair to complement that with a levy on those developers who built these substandard homes?

Of course it is right that the polluter pays. That is why we have announced not only a building safety levy on future high-rise developments as part of the building safety Bill, but a tax on developers that is aiming to raise some £2 billion over 10 years.

My Lords, because of high demand on relatively few surveyors, the hazardous cladding on my home in London was only recently identified as needing to be replaced. We have been told that applications to the Government remediation fund closed in July last year. Leaseholders now face bills of up to £15,000 for something not of their making. How can the Government justify such a position?

Although the registration closed for the initial tranche of £1 billion, we have announced a further £3.5 billion. There is a process of registration for further amounts of money available. If the noble Lord’s building qualifies, he would be eligible for government funding and would be able to register. Further details will be announced in due course.

My Lords, this Government and previous Governments have encouraged essential workers to buy into shared ownership schemes. In the last week, various newspapers have reported that some shared owners who own as little as a quarter of the flat in which they live are receiving demands for up to £100,000. This includes teachers, nurses and laboratory technicians. Will the Minister please outline how the Government intend to work with housing associations to resolve this issue swiftly?

My Lords, there was media coverage of a medium-rise building where leaseholders and shared owners were facing demands of around £100,000. I was struck by that, not least because the building in question did not have unsafe cladding. There we have a medium-rise building without unsafe cladding, but with some building safety defects that refer to compartmentation. Talk about levying bills of £100,000 seems to be disproportionate, so I have met in that case with the housing association and talked it through with my officials, to encourage them to find a more proportionate approach to keep people safe in these sorts of buildings.

Sitting suspended.