Committee (2nd Day)
Relevant document: 20th Report from the Delegated Powers Committee
Clause 38: Breach of building regulations
13: Clause 38, page 39, leave out lines 21 to 23
My Lords, I rise to move Amendment 13 and to speak to Amendments 14 and 15 standing in my name. First, I declare a personal interest in that I am a leaseholder in a block of flats near here which qualifies for remediation work; we may have wooden balconies and other bits and pieces not technically covered.
Quite simply, I have tabled these amendments because I believe that the penalties for big building corporations are ridiculously light. I accept that for the single trader plumber, electrician or brickie, the magistrates’ court might suffice, but I say to my noble friend the Minister that it is preposterous to permit the Persimmon or Berkeley Homes of this world to be taken to a magistrates’ court for breaches of the law and fined a mere £200 per day that the breach continues. Theoretically, a magistrates’ court could impose an unlimited fine for breaches of the amounts imposed, but those amounts are trivial. Contrast that to the Health and Safety Executive, where last year the average fine was £140,000 and it fined the National Grid £4 million. Not a single person was killed in that incident, but the HSE believed that the National Grid’s records were inadequate and fined it £4 million.
In 2019, the Competition and Markets Authority fined three construction firms £25 million, £7 million and £4 million for indulging in a concrete pipe price-fixing ring. In 2021, another two firms were fined £15 million for fixing groundworks contracts—and these companies were not the large, mega housebuilding firms we all know and love. If the CMA can impose those levels of fines on small and medium-sized companies which have not compromised safety, why on earth should we even countenance four construction monoliths—which, in 2020, posted profits of £3.8 billion—getting a fine of £200 per day for breaching building regulations? That is why I believe we need to hit them hard, and the penalty in my amendment is the construction cost of the building they broke the law constructing, and that cost would double for each month that they fail to remedy it.
Let us emulate the CMA, which says:
“In calculating financial penalties … the CMA takes into account a number of factors including the seriousness and duration of the infringement, turnover in the relevant market, any mitigating and/or aggravating factors, deterrence and the proportionality of the penalty relative to each company’s individual circumstances.”
I simply suggest, in conclusion, that if that is the modus operandi of the CMA, it should be the modus operandi when we are tackling huge building firms which have breached building regulations. The big corporations need to be hit hard. Our penalties at the moment may be appropriate for the single plumber and electrician but not for the Berkeley Homes of this world, to name just one. I beg to move.
In the absence of others, I rise to speak to Amendments 94A, 94B and 97A, which seek to strengthen the hand of the new homes ombudsman. At Second Reading, I congratulated the Government on introducing this new dispute resolution service. I noted just how important it was for consumers to have an accessible and effective means of handling their numerous complaints against shoddy workmanship, building defects and appalling service in rectifying these problems, not least by the oligopoly of volume housebuilders.
My concern has been that the new homes ombudsman will not have sharp enough teeth to deal with these powerful players, and at Second Reading I posed a number of questions to the noble Lord the Minister accordingly. He was able to give me some reassurance on the independence of the new ombudsman from the industry. The housebuilders will be required to fund the ombudsman’s costs and will have a major say on the New Homes Quality Board, which will oversee the ombudsman service and agree the code of practice to be used, but the Minister assured me that the independence of the ombudsman will be preserved.
Subsequently, I have received a lengthy and extremely helpful briefing from the chair of the New Homes Quality Board, Natalie Elphicke MP. From that it is clear that considerable effort has gone into ensuring the genuine independence of the new arrangements from the influences of the housebuilding industry. I am grateful for those reassurances and for other details of the work that has been going on behind the scenes, which I hope will now receive the publicity it deserves.
Only Parliament in statute can endow the ombudsman with legal powers, and two of my amendments before the Committee today are intended to bolster the ombudsman’s jurisdiction to achieve better behaviour by the housebuilders. At present, the Bill makes provision for the ombudsman to make “make recommendations” about changes that developers and housebuilders should make to improve standards of conduct or standards of quality of work where,
“following the investigation of a complaint the ombudsman identifies widespread or regular unacceptable standards of conduct or standards of quality of work”.
This is good stuff, and making recommendations to this end is an admirable task for the ombudsman. However, making recommendations is not the same as placing requirements upon the builders to up their game. Amendments 94A and 94B add a power for the ombudsman to go further and place “improvement requirements” on the members of the scheme—that is on all the builders and developers selling homes, where widespread unacceptable standards of conduct or quality of work are found.
Amendment 97A seeks to strengthen the ombudsman’s hand in another way. At present, the remit of the ombudsman only covers any faults, defects, snagging problems and so on during the first two years after a new-build home is purchased. Certain defects that emerge after two years would be the subject of a claim under the 10-year warranty, which is a compulsory part of the sales process. The trouble with this cut-off of two years for the ombudsman is that the warranties thereafter do not cover all kinds of issues that may not be catastrophic defects but are, none the less, aggravating problems that can cause endless anxiety, annoyance and cost to the purchaser.
One example is that roofs are not covered when properties are converted into new homes. A more commonplace example might be a buyer trying to get a French window repaired or replaced who raises this with the builder within the first few months but does not take it to a formal complaint to the ombudsman until after the two-year time limit is up. Or the buyer has a plumbing problem that gets fixed but returns, gets worse and finally leads to an ombudsman complaint, only to discover that the issue is now too late to be considered.
Amendment 97A would enable the owner to take a complaint to the ombudsman up to six years after the property was first purchased, where the complaint cannot be dealt with under the warranty. It will not be possible to complain about the warranty to the Financial Ombudsman Service, which handles redress in relation to warranty providers, because these warranties do not cover snagging and minor defects. Most warranties are pretty tightly drawn and some are worse than others. There is a strong case for giving the ombudsman the power to insist upon all warranties satisfying proper quality standards.
But specifically in relation to the housebuilders, what the consumer needs is for their complaint about the multiplicity of things that the builder gets wrong to be handled by the new homes ombudsman without the buyer being told that they are out of time. The purchaser may simply have been giving the builder the benefit of the doubt, or the particular defect may not have emerged immediately, or the buyer was just not sure of their rights. Two years is simply not long enough. Six years matches the traditional time for liability in other circumstances, as in the Defective Premises Act. The Legal Ombudsman, for example, will investigate claims up to six years after a relevant incident is reported.
While not detracting from my congratulations to the Government on bringing forward the proposals that will create a much-needed new homes ombudsman service, I believe that these amendments—which would place requirements for better behaviour on all house- builders and support the consumer for six years, instead of two, after their purchase—would sharpen the ombudsman’s teeth and help ensure that the new arrangements can make a real difference to the performance and behaviour of this industry.
Sorry, my Lords, I am just learning as we go, as they say. I really admire this House because, obviously, this is the day following the night when Ukraine, a sovereign state, was invaded by Russia, and yet the serious business of government continues, as we consider this group of amendments. I always distil groups of amendments into three words or fewer, and I can do this one in two: these are “technical amendments”—it is not that hard really.
Before introducing the government amendments, let me start by saying that I have listened to speeches from two of my favourite speakers—everyone should have favourites. I have known the noble Lord, Lord Best, for some time; let us say that I was in my prime when we first met—a young man, with a future ahead of me—and we went off for a retreat in Windsor Castle, where Richard—the noble Lord—and I thought about big thoughts. I have a lot of sympathy for what the noble Lord said, but I shall read out my speech. However, the bottom line is that he has raised important points about how we can strengthen the new homes ombudsman—indeed, we need to make sure that the complaints process works across all types of housing and all type of tenures.
I should say to the noble Lord that we are probably going to look at this in a different way, so if I come across in any way negative, it is not because I do not agree with him, but we need to find the right vehicle to do this, which is probably, as I said before, through improved warranties. It is an absolute shocker that the warranty system for housing, which is the single biggest expenditure for an individual, is so poor—a point that the noble Lord, Lord Kennedy, has brought up on a number of occasions—and I have met with the warranty providers. We need to ensure that we extend the period of coverage that is available when you buy your own home. The period is slightly longer for public or social housing, where it is 12 years, but it is 10 years for private housing—and that in itself is odd, as these are still homes, whether they are social homes or private homes. So I thank the noble Lord, Lord Best, for his thinking.
My absolute favourite rhetorical speaker is my noble friend Lord Blencathra. To be honest, I always remember to declare my interests because he always starts off by declaring his interests, so I declare all my interests—residential and commercial property interests—as set out in the register. I follow my noble friend in doing that. Also, I love the passion with which he says that, actually, it is important that people who break the law are penalised. Effectively, he is saying that what they have done is a crime and they should pay a lot of money for it, and I completely agree with those sentiments. If I in any way seem to be resisting in my speech, he will know—he has been in government and understands these things—that I am with him in spirit.
I will now speak to my amendments, which are government Amendments 17, 18, 19, 20, 22, 27 and 29. These technical amendments make changes to Clause 41 and Schedule 5, to create an information sharing gateway between the regulatory authorities of the building control profession in England and Wales. The information sharing gateway also extends to a person to whom the regulatory authority has delegated registration functions under new Section 58Y.
Some registered building control approvers and building inspectors will operate in both England and Wales. These amendments will ensure that, if the regulatory authority in one nation identifies that a cross-border registered building control approver or building inspector has breached professional conduct or operational standards rules, it can share this information with the regulatory authority of the other nation, if appropriate. The regulatory authority of the other nation may then wish to take investigatory action to discern whether similar breaches are taking place by the same registered building control approver or building inspector in their jurisdiction. These amendments will therefore ensure that regulatory bodies can share information with one another to effectively regulate the building control profession.
I turn to Amendments 23, 26 and 133 in my name. These are technical amendments to Clause 52, Schedule 5 and Clause 135. Amendment 23 is a drafting change—
I am sorry; I will slow down. Amendment 23 is a drafting change to Clause 52 and should be read alongside Amendment 26, which amends the same section of the Building Act 1984. Amendment 26 is a tidying-up amendment and is consequential on the repeal of Section 16 of the Building Act 1984, provided for by paragraph 20 of Schedule 5.
Amendment 133, to Clause 135, relates to the requirement for a regular, independent review of the building and construction products regulatory system, which must cover the effectiveness of the building safety regulator. This minor amendment defines the regulator’s functions to be covered by this review, using the same definition of those functions as in Part 2 of the Bill.
I turn to government Amendments 21, 25, 30, 41, 42, 61, 138 and 146. They do three things. First, they extend the application of the Building Act and building regulations to work on Crown buildings and by Crown bodies. The Government believe that the ownership of a building should not determine whether the new building safety regime, or building regulations requirements, should apply. There should be a consistent approach in how building safety legislation operates across the whole life cycle of a building.
Parts 2 and 4 of the Building Safety Bill apply to the Crown by virtue of Clause 137. The arrangements during the design and construction stages are being implemented by way of changes to the Building Act and, in due course, through building regulations. To apply the requirements for gateways and the golden thread to Crown buildings, the Building Act and the building regulations will need to be applied to work on Crown buildings. This new clause does that.
There is an uncommenced provision in Section 44 of the Building Act which would allow the substantive requirements of building regulations to be applied to the Crown. The drafting of that section has limitations, however, so we consider it better to start afresh by repealing and replacing Section 44. There are also some necessary exclusions to reflect that the Crown cannot be subject to criminal sanctions.
Secondly, the amendments make provision about the application of the Building Act and building regulations to work on the Palace of Westminster and other buildings on the Parliamentary Estate. At Second Reading, the right reverend Prelate the Bishop of Winchester asked in his valedictory speech that the building regulations should apply to the restoration of the Palace of Westminster. This change to the Building Act will ensure that happens.
Finally, this new clause provides that if, in future, a building on the Parliamentary Estate came within scope of Part 4 of the Bill, that part would apply, subject to equivalent exclusions to those which affect how the Building Act and building regulations are being applied to the Crown and Parliament. These new sections of the Building Act and the Bill therefore ensure a consistent approach to building safety for Crown and parliamentary buildings.
Finally, I turn to government Amendments 90, 91, 95, 96, 97, 98, 99, 100, 101, 102, 103, 104, 105, 106, 142 and 143, which relate to the new homes ombudsman provisions and expand them to Northern Ireland. These provisions have already been expanded to Scotland and Wales, so this ensures that new-build home buyers will have improved protection when things go wrong, no matter where they live in the UK.
Amendments 97 and 98 enable the provisions to work practically in Northern Ireland as a consequence of extending the scope of the provisions. Amendments 90, 91, 100, 103, 104, 105 and 106, include consultation requirements so that the Secretary of State must consult the relevant department in Northern Ireland designated by the First Minister or Deputy First Minister acting jointly before exercising powers concerning the scheme, or consult the Executive Office in Northern Ireland when a department has not been designated. The Secretary of State must consult the Northern Ireland Executive before making arrangements for the scheme, before making regulations requiring membership of the scheme, and arranging for that requirement to be enforced, and before a developers’ code of practice is issued, revised or replaced, either by the UK Government or by a third-party scheme provider with the Secretary of State’s approval.
Amendment 99 confers a power on the relevant national authority in Northern Ireland to add to the meaning of the term “developer” in the new homes ombudsman provisions in relation to homes in Northern Ireland, through regulations as appropriate, and following consultation with the other relevant national authorities. Amendments 95 and 96 include provision so that any externally run new homes ombudsman scheme involves the provision of information to the department in Northern Ireland designated by the First Minister and Deputy First Minister acting jointly.
I hope that your Lordships will be pleased that the government amendments in my name today will help to deliver the effective implementation of the new regulatory regime, as well as providing redress for homeowners across the union.
After that rapid run-through of about 40 amendments in this group, I shall respond to all of them as follows.
The first three amendments are in the name of the noble Lord, Lord Blencathra, and I have to say that I have a lot of sympathy with what he said. Too many times, when new homes are built in the ward where I live and which I represent—and I declare again my interest as a councillor in Kirklees—roads are not completed to adoptable standards, because that is a good way of saving money. You sell the homes and move on quickly, and it is then really hard for enforcement to be effective, especially when the fines imposed are paltry in relation to the costs of enforcement. So I have a lot of sympathy with what the noble Lord, Lord Blencathra, has said, and I hope that the Government could look again at that element of the building safety regime.
The next amendments referred to are those in the name of the noble Lord, Lord Best, Amendments 94A, 94B and 97A, about the new homes ombudsman. I agree completely with what the noble Lord, Lord Best, has said—and the Minister is nodding, so I assume that he does too, and will make changes at Report. That is excellent. It is especially about the issue in relation to Amendment 97A, about extending the time limit to six years. People buy a new home, starry-eyed, and move in—excited, obviously—then one or two snagging issues arise; they try to get them resolved, they fail to do so, time runs out, the two years has gone and they have nowhere to go. So it is an excellent move to extend that to six years.
In my capacity as a local councillor, I have had to try to help people, and I have to say that I have failed, because we did not have these powers in place at the time, to do with people for whom simple things like plumbing was not done adequately. Their kitchens were being flooded out, and nobody would take on the responsibility because their time had run out. So I totally endorse the views expressed, and the hope expressed by the noble Lord, Lord Best, that the timeframe for the new homes ombudsman should be six years.
I heard what the Minister said before he introduced his great long list of amendments: that the Government were considering extending the warranties for new homes from 10 years. The trouble with warranties, unless they are really tightly worded, is that developers can find a loophole. You end up with a new home owner on their own trying to get recompense from a powerful business—often a David and Goliath situation and, in this case, David often does not win. That is why I support the move of the noble Lord, Lord Best, to give the new homes ombudsman—him or her; would it not be good if it was a woman?—power to deal with defects in new homes.
That brings us to the many government amendments that the Minister introduced, which he called technical. I always worry when Ministers call amendments technical. It is like saying, “Don’t worry about these. We will rush them through, nobody will notice and you might regret what we have to say.” I am pleased that he was very clear that the building safety regime will apply equally—I hope this is what I heard—to all buildings, regardless of where they are in the UK, be they Crown buildings or, indeed, the Palace of Westminster. I would love to have a discussion about the impact that will have on the restoration project.
Extending the scope of the Bill to include the devolved Governments has been rather rushed over. I have here the Welsh Government’s legislative consent memorandum on the Bill, in which the Senedd says that its consent is required to Clause 126, to which the Government have an amendment, about remediation and redress. I seek from the Minister some explanation that the Government will not ride roughshod over the powers of the Senedd. We have devolved Governments in three parts of the UK, and we need to respect their powers and work with those Governments. I am sure they would work with the Government as long as they do not try to act quickly, not get their consent but try to rush over them. That is no way to work.
I have here a long paper, which I am sure the Minister has seen, which outlines exactly what the Senedd hopes the Government will do. I am sure his civil servants will be able to give him a form of words which will enable me to reassure those of my colleagues who are concerned about Welsh affairs that the Government do not intend to intrude on the powers of the Senedd. With those words, I look forward to the Minister’s response.
My Lords, I will just pick up on one or two things. Before I do so, hearing other people’s declarations of interests, particularly that of the noble Lord, Lord Blencathra, makes me realise that mine on Monday was perhaps a little light, although it is in the register. I am a co-owner of let residential and commercial property, but nothing of the nature of long-leasehold flats—they are all individual houses.
The noble Lord, Lord Blencathra, raises an absolutely crucial point: the magistrates’ court is too small a threat. It does not have the technical knowledge, and I do not believe it has the capacity either, to deal with it. This threat will simply be laughed at. It really has to have much more meat than that, whether it is through the court process—which I am always a little reluctant about—or through what is proposed in the third group of amendments later on, and in particular my amendments, which obviously take a different tack on how to establish liability. I very much support what he said there.
I pay tribute to the noble Lord, Lord Best, for what seems like a lifelong battle to get this new homes ombudsman into place. I really think that he deserves every credit for having done that. He is right to say that the risk is that an ombudsman does not have the teeth and the powers to deal with the matter. As a recent example—this is nothing to do with building but is a matter of planning procedure—my wife decided to complain to the local authority, and the thing finally ended up with the ombudsman. Would you believe it? The ombudsman said they had no jurisdiction to deal with the matter because she personally had not suffered an injury—but the fact that this was a piece of sleight of hand at the expense of society within that district makes me realise that there are some serious loopholes. Look at some of the other regulators and ombudsmen who are supposed to protect us, the citizens; they do not have the powers.
I am concerned with a little thing referred to as industry standard. Industry standard in housebuilding has gone up in certain respects—for instance, on insulation, conservation, heat and power, and that sort of thing—but in other respects it has significantly deteriorated. I had an old friend staying the night before last. He told me about something near where he lives, on a very large estate on the outskirts of a city down in the West Country, where complaints about quality—about the tinsel and cardboard with which these things have been constructed—are reaching epidemic proportions.
I really worry about that, particularly on issues such as noise. Noble Lords would not believe the number of people who complain about acoustic interference. They are in a flat and can hear the chap’s toaster pop on the floor above or the music from the person down below. These things should not happen. There are regulations in force in relation to noise, both percussive and airborne. It is not being dealt with. Part of it is a management attitude to dealing with complaints and getting it right. You kick it down the road until it has gone past the two-year period, and hopefully—heigh-ho—you get away scot free. That must not persist.
The noble Lord, Lord Best, is absolutely right that the warranty period is inadequate. He used the analogy, I think at Second Reading, that you get a better warranty with a car. Yes, indeed. You get a 10-year bodywork warranty with most of them nowadays, never mind anything else. With the greatest respect to him, six years is absolutely the rock bottom that it should be.
I was interested that the Minister touched on this business of people who are lawbreakers. They are: they are gaming the system, they are profiteers and market fixers. These are not people who are going to rightly comply with soft-touch regulation and controls. These very substantial companies make large profits, often on things such as Help to Buy, and in many instances they parcel out eye-watering bonuses to their senior executives. Meanwhile, those whom they have short-changed in the market for housing have a warranty that I am inclined to refer to as being less useful than the one you get with a pop-up toaster. They are living in comfort while, out there in the rest of the world, hundreds of thousands of people have to put up with serious defects.
These provisions really want tightening up. I am glad that the Minister recognises that this is a problem, because I think we are all on the same hymn sheet here. We want to sort this out. There are people producing a product and people who are consumers of it, and it just so happens that in a large number of cases they are people in their own homes. We need to get this sorted. That is why I support the amendments in the name of the noble Lords, Lord Blencathra and Lord Best. I will not say anything about the Minister’s amendments because that would take me too long. On the whole, they appear to be technical and tidying-up amendments, and I am happy with that.
My Lords, it has been a very interesting debate so far. I do not intend to prolong it at all but, in relation to the technical amendments, I notice that the Bill is 244 pages long and the Government have published 37 pages of amendments. The Explanatory Notes for the Bill were 250 pages long, but there are none for those 37 pages. The explanation we had today, as I understand it, forms the explanatory notes for these provisions, so I appreciate the Minister jamming in all the information in his speech. It was short in time though obviously heavy in content. I just make the plea that we are doing some really hard stuff here, which has implications, but we have no impact assessment which covers the very substantial matters covered by the Government’s new clauses.
In later groups, I will want to raise some points about what seem consequential circumstances arising from the proposed changes to the legislation in the government amendments. I am just logging the fact that we are quite short of what the Government’s assessment is of the impact of the various changes, both technical and more substantial, which will come before us in our consideration of the remainder of the Bill.
I will comment briefly on the amendments of the noble Lord, Lord Best, which I strongly support. In fact, I would have put a longer limit than six years. I had a case in my last year as an MP of a terrace of three low-rise houses which burned down, and the fire brigade quickly determined that it was because there were no cavity barriers in those properties. That fire took place 10 years and one month after they had been handed over to the owners, so the company was actually out of its warranty period—never mind whether it could be appealed to any ombudsman or whoever. The Minister is looking at his watch; I agree that it should be longer than 10 years, but I am not proposing to speak for longer than 10 years.
My Lords, this debate has been really interesting and slightly longer than I was expecting, so it is great to have had so many contributions. I agree with the noble Baroness, Lady Pinnock: we have a lot of sympathy with the amendments of the noble Lord, Lord Blencathra, and his introductory comments were excellent. As we know, non-compliance with building regulations has been a criminal offence under the Building Act for nearly 40 years now. The Bill heavily extends the scope of available power to enforce compliance and/or impose penalties for contraventions, placing much of that power in the hands of the Health and Safety Executive as it establishes the building safety regulator.
We would hope that the building safety regulator takes a more proactive stance to the broad scope of enforcement measures available to it under the Bill, as Dame Judith Hackitt’s public statements have suggested that it will. Perhaps the Minister can confirm that that will be the case. But it also has to have the resources and funding to be able to do so; otherwise, the new and extended measures may have a lot of bark but little actual bite. Again, that is why the comments of the noble Lord, Lord Blencathra, are so important. Furthermore, the key to ensuring building safety going forward will not rest just on sanctions and enforcement; as has been said in the previous debates and at Second Reading, we need a change of culture and attitude.
So, I think the noble Lord, Lord Blencathra, has brought about a really important discussion with his amendment on enforcement. I was particularly struck by his comments on the differentiation of fines for big corporations—I think he mentioned a fine of £140,000 for a breach—compared to that of millions for the National Grid on a breach that would not likely have had the impact on life that the breaches of the building corporations could have. To me, that really strikes at the heart of this. It is an extraordinary anomaly, and I hope the Minister will look at that, because we have a very different reaction to different kinds of breaches of law.
Again, the amendments in the name of the noble Lord, Lord Best, have had a lot of support in the debate today. I add our support too, because these are really important things to speak about, and he did so very eloquently at Second Reading when he talked about the need to confront housebuilders’ defective workmanship and the dreadful consumer or customer service we too often see when they are responding to entirely justified complaints by home buyers. So, along with him and others, we think it is good news that, with this Bill, the Government are bringing in an ombudsman to whom the home purchaser will be able to turn. That is long overdue.
However, the noble Lord, Lord Best, drew attention in his introduction and his amendments to the fact that there is no point having an ombudsman unless it is genuinely going to make a real difference. As he said in his introduction, customers and purchasers need an accessible means of redress. Too often it is too difficult to jump through all the different hoops you need to go through in order to get any kind of response or result from ombudsmen. We also agree with his concerns that the new ombudsman may not have enough teeth. I am particularly interested in what the Minister has to say on this area; it would be extremely helpful if he could give us reassurance on this, because we need to make sure that the ombudsman’s jurisdictions are going to make a proper difference to this.
I think it was the noble Lord, Lord Stunell, who referred to when he was a Member of Parliament. When I was a Member of Parliament, this kind of issue used to come up pretty regularly, unfortunately—and pretty regularly with certain developers, who I will not name in Committee today. For them to have had this kind of redress would have been hugely helpful.
Moving on to the government amendments, I first thank the Minister for agreeing to slow down, because an enormous number of government amendments landed in our laps after 10 February while we were in Recess. It is a lot to take in and get your head around in quite a short amount of time. I wanted to listen carefully to the Minister’s introduction on this because of that point, so I thank him for slowing down and taking that time.
I just wanted to make a few small points. We very much welcome the amendments around information sharing. It is really good news that it will be easier for people to share information about those who commit serious breaches in building safety. That is important.
Another matter relates to the different amendments on the devolved Administrations. To reiterate what the noble Baroness, Lady Pinnock, said, it is important that we respect and work closely with those Administrations when we bring forward legislation. It is therefore good to see those amendments and that the Government are doing so. It would be good for that to continue as we deal with other new amendments during the passage of the Bill. It was also interesting to get clarification on what is happening with the Crown Estate and to know that this building and all the repairs will be part of this new system.
However, as the Minister said in his introduction, these amendments are mainly technical and I appreciate his time in introducing them. I hope that he will be sympathetic to the points made regarding the amendments of the noble Lords, Lord Best and Blencathra.
Forgive me butting in at the end but before the Minister responds, I thought that I should make a further point in connection with the amendments of the noble Lords, Lord Blencathra and Lord Best.
It is a reminder that the property development industry, when undertaking projects of blocks of flats or groups of houses—projects of medium size upwards—used to employ a clerk of the works. I am not sure whether it has been a mandatory appointment within the chain of building command, but the clerk of the works was defined as someone onsite who inspected workmanship, its quality, the safety of the work being done and, importantly, reported to senior managers and clients.
Inevitably, lack of mandatory appointment requirements and fewer and fewer clerks of works on projects led to shortcuts and poor workmanship. A clerk of the works might cost between £50,000 and £100,000 a year. For the employer, that could be significantly more, given all the on-costs. On many projects, that adds up to millions of pounds,. So of course those appointments became redundant in the eyes of the bean counters. That simply underlines the importance of the ombudsman’s role, its independence from the industry in absolute terms and the period of time limitations within which claims can be brought.
My Lords, I had not thought that this debate would take quite so long, but it has been worth listening to every second of every minute. I thank the noble Lord, Lord Thurlow, for that late intervention because we have unlearned a lot of the practices that led to a higher quality of build. We would not be in the mess we were in if we had not unlearned some of the things that we did so well during the Victorian period, when there was a way of building using pattern books. Everything was essentially a process, which the Edwardians developed further. Somewhere along the line we have lost that desire to build quality. Just imagine if the Romans came back from the dead to look at what we were building over the past 30 years in the 90s, the noughties and the 10s. They would be absolutely appalled at the standard of build. They did not build their temples to last 10 or 15 years but centuries. We have got to learn that quality of our built environment matters. I thank noble Lords for raising some of their points.
One of the objectives of the Bill is not just to create a regulatory system that works but to raise the competence of an industry that has cut corners and, as the noble Earl, Lord Lytton, said, effectively gamed the system. We have to get back to the culture around quality, competence and professionalism. That will take not just legislation but an attitude of mind.
I start by responding directly to the noble Lord, Lord Stunell, around impact assessments. He is absolutely right. The government amendments came thick and fast. My entire weekends have been ruined since the beginning of the year, working at pace as we approved a plethora of amendments. It is fair to say that the sheer pace of this has meant that it has not been possible to look entirely at the impact. We just know that they are the right lines, and the impacts will be looked at in due course—my response says, “We are looking at the impact of the government amendments and will publish an assessment in due course.” We have been working very fast to get this right in the time we have, and we thought it was very important that we were ready to have these discussions in Committee of government amendments before we get to the even more serious business of Report.
I shall respond to the noble Baroness, Lady Pinnock, supported by the noble Baroness, Lady Hayman of Ullock, about Clause 126 and intruding on the powers of the Senedd. We have worked closely with the Welsh Government across all areas of the Bill to develop and agree measures that work for England and Wales. The Welsh Government have agreed the measures applying to Wales and we expect legislative consent in due course.
I have had a number of ministerial meetings with my counterparts in the devolved Administrations, and there are lessons to be learned from the Welsh approach to the building safety crisis—and, indeed, from my Scottish and Northern Ireland colleagues—on this issue. It affects all our nations in this great United Kingdom, and we have a constant dialogue as we grapple with it, but it is fair to say that the lion’s share of the problem lies in our big cities here in England. That is not to say that we are not learning from the Welsh and others, and of course we will not ride roughshod over them. I hope that gives the noble Baronesses, Lady Pinnock and Lady Hayman of Ullock, some reassurance.
I thank my noble friend Lord Blencathra for bringing forward his amendments, which are clearly aimed to impose greater punishment on those who breach building regulations. I thank the noble Baroness, Lady Hayman of Ullock, for mentioning a breach of the regulations, probably around the time when my noble friend Lord Young was the Housing Minister. I do not know whether he was responsible for the 1984 building regulations—he was. We have the living history in the Room, in the person who brought them forward. Do you know what I was doing in 1984? I was doing my A-levels, and here we have the Minister who brought forward the building regulations in 1984. That is the kind of place we have: people with decades of understanding of these issues.
It is a crime to breach building regulations. If you commit a crime in this country, there is no statute of limitations—I know that from being Deputy Mayor for Policing and Crime—so people can go after you after any period. I have huge sympathy for the intent behind there not being a short period of time, and it is important that we recognise that breaches of building regulations are criminal; that cannot be said often enough. I thank the noble Baroness for raising that again, and the Government have sympathy, but I fear we are unable to accept my noble friend’s proposals, as I intimated in my opening speech.
Looking first at Amendment 13, we consider that the changes are unnecessary for a couple of reasons. First, for some years now, the magistrates’ courts have had the power to impose unlimited fines—and fines are, of course, the principal punishment available in respect of corporate bodies, which are most likely to be in a position to commit the offence of breaching building regulations.
Secondly, it will not have escaped your Lordships’ notice that significant backlogs have developed in the Crown Court over the past two years as Covid protocols have been introduced. The costs to the courts service, the prosecution and the defence are also far higher in the Crown Court.
As was raised by the noble Baroness, Lady Hayman of Ullock, it is quite possible for the building regulations to be breached in a relatively minor way. In such cases, it would be entirely appropriate for the case to be dealt with by the magistrates. It is, of course, also possible for breaches to be extremely serious, which is why the Bill for the first time allows cases to be dealt with in the Crown Court, in the same way as crimes are dealt with: sometimes in the magistrates’ court, sometimes in the Crown Court. However, we do not consider that it would be sensible to require all breaches of the building regulations to be dealt with in the Crown Court.
Turning to Amendment 14, I say to my noble friend that I agree with increasing the daily rate of fine for ongoing offences. Indeed, the Bill already increases the daily rate from £50—where it has been since 1984, when I am sure it was set by my noble friend Lord Young, when £50 was a considerably greater sum of money than it is today—to £200, which is the current rate for a level 1 fine. However, we consider that increasing it further to £2,500, as my noble friend proposes, “would be disproportionate”—that is what it says here, anyway.
The principal aim of the prosecution must be to impose an initial fine commensurate to that particular offence; any further fine should merely encourage work to be put right, rather than imposing huge additional punishment. We consider the potential maximum of £5,600 for the month of February is likely to be significantly more proportionate on top of the fine imposed on conviction, rather than the £70,000 proposed by my noble friend.
On Amendment 15, imposing a sentence according to a mathematical formula raises a number of issues. First, the cost of the work done will not always be clear; there may be disputes about the cost in the invoice or the value of the work actually done, and resolving this would take up the court’s valuable time. Secondly, the court might consider that, in a particularly egregious case, a significantly higher fine is required than one that would be arrived at from the calculation. The amendment would preclude the court from imposing that higher fine. Finally, the provision in the amendment to enable the court to impose rapidly escalating further fines, if the breach remains unresolved, has the potential to lead to significant unfairness—as, for example, a £10,000 initial fine could total up to £70,000 if a breach remained unresolved for just two months after conviction.
As I said at the start of my remarks, while I am supportive of my noble friend’s amendments, I hope that with this explanation he will be content not to press them. I reiterate that I absolutely sympathise, and want to go with the nature of this—but that is the response to the amendments as tabled today. I thank my noble friend for laying the amendments for us to think them through and debate them extensively.
Before turning to the comments from the noble Lord, Lord Best, about strengthening the teeth of the new homes ombudsman, it is important to reflect that there has to be a little bit of work done to tidy up the whole approach to the ombudsman’s service for people in housing. I asked my colleagues behind me to list the number of people who provide a complaints service for people in different types of homes and tenures. We have the new homes ombudsman, which will be unleashed for new build, but we also, as the noble Lord, Lord Best, will know, have the Regulator of Social Housing and—my old colleague at City Hall, Rick Blakeway—the Housing Ombudsman Service, and we have the Local Government and Social Care Ombudsman. Homes are homes, and we need to think about how we get a complaints service that works for homes in the round. I know that we can categorise social housing as being over here, and people in private renting over there, but these are people’s homes. We need to recognise that, at the moment, it is a patchwork quilt of services that provide that whole ombudsman service, and that is not ideal. I wanted to put that forward—that, when discussing this subject, we are talking about new-build private homes and not housing in the round.
I turn to the amendments tabled by the noble Lord, Lord Best. I thank him for raising this important matter, but I am afraid that the Government will not be able to accept these amendments, as the intention can be achieved elsewhere. The Bill sets out requirements for the ombudsman scheme to include provision about what home buyers can complain to the ombudsman about in individual cases, and making improvement recommendations about scheme members’ quality of work and conduct in general. The developers’ code of practice allows the standards of conduct and standards of quality of work expected of members of the scheme to be set out.
The noble Lord’s amendments would provide the ombudsman with powers to make general requirements of the scheme’s members, duplicating provisions already in the Bill. It is unclear how they could be enforced or appealed against, and we must be careful that the ombudsman does not duplicate the role of regulators, the scheme provider or Parliament. The Bill includes provision for complaints to the ombudsman within two years of the first acquisition of the new-build property, which aligns with the developer liability period under most new-build warranties. I was shocked to find out that within a warranty it is for the first two years that developer liability is covered; the rest is covered through some form of warranty or insurance scheme to 10 years in private housing or 12 years in social or public housing. It is in this period that issues are much more likely to be raised in relation to snagging or the home-buying process. We believe that the proposal to extend this to six years would be unnecessary and would introduce a new unknown burden on members of the scheme. But I assure noble Lords that home buyers will retain their existing rights to seek redress in law and elsewhere in this Bill. With this reassurance, I hope that the noble Lord will be content not to press his amendments, and the Government will continue to consider how and where practices in this area could be improved.
I did say—if I may go a little bit further on that note —that we need to think about warranties, but we should also remember the Defective Premises Act, which has a statute of limitations of only six years. We are proposing to extend that prospectively to 15 years, hoping that there will be a culture change and a stronger regulatory environment, and 15 years is a reasonable timeframe to expect to seek redress—and then, retrospectively, 30 years. I am having those discussions and debates with my colleagues and the noble Lord, Lord Stunell, because I consider breaches of regulations, even going back 25 or 28 years, as a crime. It is a crime to breach building regulations, and there should be no statute of limitations for some of the crimes that we have seen, where we are putting flammable materials on the outside of the buildings, not having compartmentalisation, and having inadequate fire stopping, or fire doors that do not act as fire doors. All that I consider to be essentially breaches of building regulations, and we need to go after the perpetrators. But that is for another group of amendments—for the perpetrator pays or polluter pays—in due course.
My Lords, as an aside, I was going to say that we are sitting in a bit of a chilly draught here, but then I reflected on what it is like for those people in blocks of flats which have had all the external cladding ripped off, leaving nothing between them and minus 5 degrees outside but a thin plasterboard wall. That is why it is important to get this Bill through and tackle that problem as soon as possible.
I am in complete agreement with my noble friend the Minister on the quality of Roman architecture. My favourite place to visit in the border country is the Housesteads military fort on Hadrian’s Wall, where the best-preserved part is the latrines in the bottom corner. To see that the Romans, 2,000 years ago, had running hot water in their toilets and latrines is an eye-opener—for many buildings in this country, we have still not caught up with hot running water in the toilet facilities.
I floated my amendments to suggest that corporate developers should in all cases be tried on indictment, with massive fines for infractions. We have all heard the expression “damned with faint praise”, but never in all my experience in Parliament have my amendments been damned with such lavish praise. My noble friend basically said, “Blencathra, you’re an absolute genius; your amendments are wise and right. We’re with you all the way; let’s hit them hard—but I still ain’t going to do it.”
I accept that there will be cases where the magistrates’ courts should have a say. I was putting in a more absolutist position. However, if the magistrates’ courts continue to have a role—as I accept—proper guidance must be issued to them through the judicial standards board, or whatever it is called. Massive fines should be imposed in those circumstances where they are deserved. As I have said, the HSE and the CMA seem to have managed to persuade courts to slap on big fines. Perhaps for local authorities it is a culture thing or, for the magistrates’ courts, breaching building regulations does not matter so much—there may be some cultural problems there, but we must cut through them and, if we keep the magistrates’ courts, make sure that guidance slaps on heavy fines.
My amendments are not as important as those from the noble Lord, Lord Best. I was impressed by his speech; I would accept my noble friend rejecting my amendments, but I think he is wrong to reject the noble Lord’s amendments, because what he asked for is eminently sensible and should not cause the Government any problems. What is the point of having a power to make recommendations if they can be ignored? Placing an obligation on builders to make improvement requirements is the only logical step. As he said, it must be beefed up—and if you beef something up, then it needs more teeth.
I also like his Amendment 97A. He made an impeccable case for it and I fail to see why the Government have rejected it—it just moves it from two to six years. Five years into my brand-new block of flats, I found a leak in the plumbing where the washbasin was. Eventually, I managed to separate the very posh fake marble frontage from it and found, in my inexpert experience, that a one-and-a-half-inch pipe had been stuck into a two-inch pipe and sealed with a bit of silica. I thought, “This ain’t right”. The developer said, “That is how we do it in the trade—nothing to worry about.” I thought, “I’m not having this”, so I hired at my own cost a plumbing expert consultant, who came in, looked at it, sucked his teeth and sent me a report saying that it should be a special reduction joint XYZ. I went back to the developer, served a notice that I would go to the county court with £200 of my own legal costs, and gave them the consultant’s report and the repair I wanted.
Because it was me, and I had the muscle and clout to do it, the developer coughed up immediately, refixed the whole thing and paid all the cost. But I have a unique position as a Member of this House, with the ability to make that threat. Most leaseholders cannot. That is why they go the ombudsman, who must have a longer period than two years to sort out these problems. I am not sure whether the noble Lord will bring it back on Report, but I say to my noble friend that there is no skin off the Government’s nose in conceding the noble Lord’s amendments.
However, returning to my Amendment 13, I will not go back to this on Report and beg leave to withdraw it.
Amendment 13 withdrawn.
Amendments 14 and 15 not moved.
Clause 38 agreed.
Clauses 39 and 40 agreed.
Clause 41: Regulation of building control profession
15A: Clause 41, page 41, line 29, at end insert—
“(4A) Conditions under subsection (4)(b) must specify standard qualifications and compulsory and regular training for registered building inspectors.”Member’s explanatory statement
This amendment makes provision for standard qualifications and compulsory and regular training for registered building inspectors.
My Lords, in his response just now the Minister talked about raising the competence of the construction industry and improving the quality of the built environment. This set of amendments, in my name and that of my noble friend Lord Stunell, does precisely that. The focus is on improving consideration of the independence, qualifications and training of those with the critical responsibility of certifying that construction is in compliance with both building regulations and the approved plans. You would think that concentrating on this element of reform of a failed system would be given importance but, unfortunately, in the clauses we have in the Bill it has not been given the prominence it deserves, which has resulted in the amendments I am speaking to now.
Amendment 16 seeks to finally end the changes made by the Building Act 1984 and the approved inspectors regulations. This Act established approved inspectors. Prior to the 1984 Act, all building inspectors were local authority employees. Of course, there were failings with that system; I am not here to say that having all building inspectors under the aegis of the local authority was perfect—it was not. What was introduced—although with good intention, I am sure—has developed into what can be an unhealthily cosy relationship between constructor and inspector. It permits development companies to appoint their own approved inspector, who has to notify the local authority initially and then submit a certification to the local authority when the building works are completed.
The removal of dangerous cladding has in some cases exposed serious defects in construction. Of course, these were because constructors failed to comply with building regulations and the approved plans. Nevertheless, building inspectors had certified these buildings as compliant when they were not. This Bill is the opportunity to make detailed changes to ensure that this situation, in which buildings are signed off as compliant when they are not, does not happen again.
The dual system of building inspectors that currently exists is a key issue. There is a lack of accountability for the decisions made by inspectors. This lack of direct accountability is the very issue that runs through the Hackitt report. At the moment, even if the local authority receives reports of problems associated with a construction site, local authority building inspectors are forbidden by law from investigating and providing an independent check. The simple fact that developers contract their own building inspectors provides a culture in which precise and exact compliance can be ignored.
Change is essential if this Bill is to achieve what it states are the aims, which we are all here to support—better building safety. The Minister has often talked about the tools in his toolbox. I want him to tell me that he will use one of the tools he constantly refers to: recovering the certification documents for the buildings where there have been breaches of building regulations at the time of construction. If he does, we will find out which building inspectors, or the companies to which they belong, have signed off as compliant buildings which painfully obviously were not. Building inspection companies have a liability in this building safety crisis, and they need to be held accountable as well as all the other elements of the construction business we are referring to.
Then there needs to be a radical change to the accountability of building inspectors, both public and private. Private inspections can no longer expect to be free of public oversight, and it will be helpful to hear from the Minister how the accountability of the building inspection regime is expected to operate and how effective it will be.
So, I have covered the duality of the building inspection control system as it currently is and how I hope it will be improved. The other amendments in my name and that of my noble friend Lord Stunell seek to have on the face of the Bill agreed and standard qualifications with consequent and regular compulsory training to ensure that all inspectors have knowledge of new building materials and how these operate in connection with other construction elements. Again, this issue of the relationship of materials in construction and retaining the integrity of the building has been cruelly exposed by the Grenfell tragedy.
Finally, building safety absolutely depends on a highly skilled workforce. Over the years, various Governments have reduced resources to organisations that are able to train and improve the skills of the construction workforce. I will give just one example: further education colleges have had funding slashed and, consequently, courses closed down. This is a short- term approach, so my Amendment 136 will require the Government of the day to publish regular assessments of the current state of the construction industry workforce in order that the aims of the Building Safety Bill can be achieved. With those comments, I beg to move Amendment 15A.
My Lords, the noble Baroness, Lady Brinton, is taking part remotely, so I invite her to speak now.
My Lords, I declare my interests as a vice-chair of the All-Party Parliamentary Fire Safety and Rescue Group and a vice-president of the Local Government Association. I support all the amendments in this group in the names of my noble friends Lady Pinnock and Lord Stunell.
In his response to the previous group and to some groups on the first day of Committee, the Minister rightly said how shocking some of the revelations have been to him, to us and to many others as more systemic failures have been uncovered, and how far too many people were able to refuse to take responsibility for their role in the problems.
Along with other parliamentarians, I heard Dame Judith Hackitt speaking on a number of occasions during and after her review, and I have also read her Independent Review of Building Regulations and Fire Safety—both the interim and the final reports. Her foreword to the final report published in 2018, which she describes as a personal view, is extremely powerful as a summary to the cultural and regulatory structures in the built environment sector and explains exactly why the amendments in this group are so necessary.
She notes that,
“regulations and guidance are not always read by those who need to, and when they do the guidance is misunderstood and misinterpreted.”
“When concerns are raised, by others involved in building work or by residents, they are often ignored. Some of those undertaking building work fail to prioritise safety, using the ambiguity of regulations and guidance to game the system.”
She talks about:
“Inadequate regulatory oversight and enforcement tools – the size or complexity of a project does not seem to inform the way in which it is overseen by the regulator. Where enforcement is necessary, it is often not pursued. Where it is pursued, the penalties are so small as to be an ineffective deterrent.”
That last point was mentioned in the previous group. Finally, she concludes:
“The above issues have helped to create a cultural issue across the sector, which can be described as a ‘race to the bottom’ caused either through ignorance, indifference, or because the system does not facilitate good practice. There is insufficient focus on delivering the best quality building possible, in order to ensure that residents are safe, and feel safe.”
Dame Judith Hackitt really understood what is wrong and in her refreshingly blunt language leaves us with no ability to look away. She looks to government and Parliament to ensure that the regulatory loopholes are closed and for the sector and workforce to play their parts in overcoming the serious problems that have been allowed to creep in and build up. All the amendments in this group provide part of the Hackitt golden thread to remedy and prevent that race to the bottom.
The amendment, and Amendments 16A and 119A, provide some of the key structural elements required to provide the regulatory changes needed to ensure that key personnel, including building inspectors and fire assessors, have attended compulsory training, updated as required, to ensure that they cannot claim that they did not know or that it was not their role. Amendment 16 looks at the independence and impartiality of building inspectors and I endorse everything that my noble friend Lady Pinnock said. Amendment 116 requires a public register of fire-risk assessors. We need that accountability and transparency. Amendment 136, on a report on the built environment industry workforce, is also vital because if we do not have enough of the right training for people in colleges and the right number of qualified people working in the industry, we will not be able to deliver the safety changes needed.
One of the faults of many Governments of all colours over the past 30 years has been to proclaim that they will have a bonfire of bureaucracies. Such bonfires have given organisations and individuals the ability not to take full account of safety elements of their roles and have led, in part, to the mess that this Bill is trying to remedy. I hope that the Minister will agree that these amendments will start to change the culture and working practices of those involved in assessing fire safety. It is a fundamental building block.
My Lords, we will also hear from the noble Baroness, Lady Harris of Richmond.
My Lords, I will be brief and I, too, wish to speak to the amendments in the names of my noble friends Lady Pinnock and Lord Stunell. I strongly support them.
At Second Reading, I commented on the large number of people who are going to be accountable for the safety of buildings when the new regime comes into force. My main concern was around the person described as the “principal accountable person” because I felt that that person had just about everything to do with the safety of buildings and that that responsibility would rest on that person’s shoulders. I was interested in the comments of the Royal Institution of Chartered Surveyors and the Chartered Institute of Building, which stated that the industry did not yet have qualified individuals who could undertake such incredibly important and probably statutory duties that the position would necessitate. Perhaps I may therefore ask the Minister what the Government are going to do to help the industry find those people and how they propose to go about training them with the necessary skills that will be required.
My Lords, I obviously support what my noble friend Lady Pinnock said in relation to the training and independence of building inspectors. That is perhaps the most obvious of the necessities which we now know exist, as far as plugging the gaps in the current regime is concerned.
I want to focus my remarks on Amendments 116 and 119A, where mine is the lead name and which deal with fire risk assessors. We have never had before, in capital letters, something called “Fire Risk Assessors”. There is no such profession and this will clearly be a significant gap, which has to be filled very quickly if we are to achieve the aims of the Bill. We know that, right across the industry, there are shortages of skills, qualifications and competence. Above all, there is a shortage of capacity. One problem that I know the Minister has had to confront is that it has been difficult to get effective surveys of high-risk buildings because the people have not been available to do them. There are no such people, or at least insufficient people, with the right competences, skills and so on to do so.
I do not know whether the Committee will have seen the reports of the fire risk assessment that was done in advance of the Grenfell fire. The housing association had a fire risk assessor and he made a fire risk assessment. It turned out that he was a firefighter but not qualified in fire risk assessment. In order to secure the job, he had manufactured a set of initials which were accepted by the housing association as proof of his skill and capacity to assess fire risks. This is reported in the public evidence sessions of the Grenfell inquiry. It was further revealed that he was commissioned not just to assess the Grenfell Tower; he was commissioned by the housing association to be its risk assessor for the whole of the housing stock of that organisation.
That is where the importance of having a register becomes immediately apparent. You need a register of qualified people for two reasons, which overlap: first, you are not allowed to practise as an assessor unless you are on that register; secondly, as a purchaser of the skills of fire assessment, for instance a housing association, you need to be sure that the person who offers you a cheap deal to do some quick fire assessment work is somebody who is qualified, prepared and competent to do so. Amendment 116 is trying to establish clearly in the Minister’s mind the need to make this process of regulation transparent, with a publicly published register. We are obviously probing at this point, but I hope the Minister can give us some satisfaction that, if not in the Bill then in parallel with it, these matters will be dealt with.
What I have said about fire assessors may be the most dramatic and acute of the problems, but the building control function was of course also exposed as woefully insufficient in the case of the Grenfell Tower. Bearing in mind that it was a local authority building control function being exercised, it is also true that the person who was the responsible officer did not once visit that tower to make an inspection. It was purely from a desk study of drawings which had been provided to him. There is clearly a tremendous gap. Even when somebody is appointed to do a job, they may not have either the skills or competences, or they may not have the attention span or the time, to give effective service to the cause of fire safety. I hope very much to hear from the Minister that he takes these matters to heart and has in mind finding a way of establishing how this can be put right.
Our Amendment 119A is about training of fire assessors on the same basis as the noble Baroness, Lady Pinnock, moved on the training of building inspectors. Every one of the professionals engaged in this fire safety regime needs to be a qualified and competent person. That is so obvious that it hardly needs to be said, but at the moment we are woefully short of the number of people we need. Indeed, it has already been referenced that the RICS and others have pointed out that, at the moment, there are not enough people with the competencies to step forward if the Bill comes into force as the Minister intends.
My Lords, I am very sympathetic to this group of amendments, but I have a number of queries that perhaps the noble Baroness, Lady Pinnock, might address, just because I am not quite sure about them. One of the points just made is that a large number of people will be accountable —it seems to me to grow every time I look at the Bill. Although I understood what the noble Baroness, Lady Brinton, meant about the bonfire of bureaucracy, regulations and so on, there is always a danger that we are creating layer upon layer of bureaucracy and accountable people. I shall be moving some amendments later to this effect.
For now, it is obviously the case that we need qualified people involved in this, but, as has been described, there are so many new roles that the qualifications do not even exist. I am concerned about including in the Bill that you need to have the qualifications to do the role when the qualification does not exist. What does that mean? Will that hold up the process?
I am also concerned about saying that training is “compulsory”. I am concerned for the professional autonomy and integrity of those who are already involved in this area. I do not know whether legislation is the right way to go. However, it would be useful to understand from the Minister what he anticipates will happen. It cannot be, as it were, just any old Joe Bloggs given the role. Will attention be paid to talking to the professionals who already run practice qualifications in universities and further education? How will the Government manage the fact that they are creating all these new jobs with no attention, it seems, to how the qualifications will be awarded or who will give them? That is where I am very sympathetic to the noble Baroness, Lady Pinnock, in having a register, but I am not quite sure that the amendment does it.
I am nervous, perhaps because I used to be involved in education, about another government demand on education that ends up giving people a lot of work to do when there is no capacity to do it, so it will just be a shoddy box-ticking qualification that will not mean very much. That is my concern, while being sympathetic in general.
My Lords, I speak in particular to the amendments in this group in the names of the noble Baroness, Lady Pinnock, and the noble Lord, Lord Stunell, who have made excellent contributions. I intend to be concise and brief, because the noble Baroness introduced them in an eloquent and comprehensive manner, which was followed up by subsequent speakers.
These amendments are much needed, and it is disappointing that these matters have not already been taken into account by the Government in the Bill. The new clause in Amendment 116 would require building owners and accountable persons, about whom I shall ask a question shortly, to verify the competencies of fire assessors before appointing them to conduct the fire safety assessments required by the Bill. The noble Baroness, Lady Pinnock, talked about the 1984 legislation and, prior to that, local authority employees. The cosy relationship between building constructors, developers and inspectors is really concerning. That needs to change.
These are serious concerns. Look at Grenfell, where numerous people lost their lives, and subsequent fires in high-rise and other buildings. The system is broken. Serious construction defects are there, and there have been failures in not detecting bad buildings. Building regulations have failed. That is criminal, as my noble friend Lady Hayman of Ullock pointed out on the previous group. We cannot have buildings signed off as safe when clearly they are not. Developers choosing building inspectors—a point the noble Baroness, Lady Pinnock, mentioned—cannot be a way forward. We have to all be singing from the same hymn sheet; that is what Amendment 116 talks about.
The Hackitt review talks specifically about residents being ignored and the lack of consultation. You have to take the residents on a journey to make sure that they are part of the solution. The ultimate point I will focus on here is what the noble Baroness, Lady Brinton, talked about, which was also evidenced in the Hackitt review: a race to the bottom. The Minister previously talked about his broken tools. I am looking towards this Minister to ensure that she has all the tools possible to fix the broken system.
I will just add a few words on the amendments in the name of the noble Lord, Lord Stunell, and Amendment 136 in the name of the noble Baroness, Lady Pinnock. On training safety, as an educationalist and somebody who has taught at universities I say it is fundamental to ensure that we invest in people’s skills to save lives. That is the crux of these amendments: to stop the next Grenfell disaster, the next Richmond House fire or any fire across the country. Ultimately, we have to ensure qualifications for industry and that people undertaking statutory duties are up to scratch and up to a level where we all feel safe, whichever part of the spectrum we are on.
I finish by saying to the Minister that I know and understand that sympathy is there, but movement needs to be there. We need both; that is the crux of the matter. I know the noble Baroness, Lady Fox, mentioned her concern. I do not think it is a concern if we have to put money into education to save people’s lives or to change a system that is broken and needs fixing. I know that when the Minister introduced the Bill he talked about making significant change, but that culture needs to change. On these Benches, we view these amendments as significant and fundamental to ensuring that we send out a message to everybody in the industry, to residents, to everybody involved in delivering fire safety assessments and to building inspectors that we mean business. We mean saving people’s lives and high-quality buildings that everyone can enjoy.
My Lords, I will first respond to the noble Lord, Lord Khan, and say that I agree with absolutely everything he said. This Bill is about not signing off unsafe building as has happened in the past. It is about having a toolbox filled with tools to fix the issues we have in the building sector at the moment, particularly with high-risk buildings.
I also agree with the point from the noble Baroness, Lady Brinton. I have heard my noble friend the Minister say this over and over again: it is about not just processes but cultural change within the whole system. With those opening remarks, to begin with I will just go through a few specifics before I get into my speaking notes, which I have just been given to do and which I have to do.
The noble Lord, Lord Stunell, and the noble Baronesses, Lady Harris and Lady Fox, asked, rightly, where the approved inspectors and fire risk assessors will come from. Those inspectors are an established professional group; there are many already operating in the sector—but obviously, as things change in that sector, they will have to be retrained and updated to work within the new system. With the fire risk assessors, we are working in the sector already to help to improve their capacity and competences, and contributing at this moment to two industry-led workstreams that are working on this issue.
The noble Baroness, Lady Pinnock, talked about where you can check about the completion of certificates. It is a muddled system—we know that—and that is why we aim for all documentation for buildings, including all completion certificates from construction to occupation, to be in a golden thread of information. We have legislated for this in the Bill, and further details on that will come out in secondary legislation.
The noble Baroness and the noble Lord, Lord Stunell, also brought up the issue of registers. Details of approved inspectors’ final certificates must be placed on registers held by local authorities, but we are also looking at a proposal for a national register of those inspectors, which will help the system no end. It is going to cost money; we are going to retrain people with different skills. There is money from government—nearly £700,000 in funding—to train more assessors, because we know that we will need them, but also to speed up that system for valuers and the EWS1 forms required. Training will provide competent professionals with the skills that they need for the up-and-coming changes, particularly those outlined in the Fire Safety Act 2021. So we are looking at capacity to do all these things.
I shall go through and respond to each amendment. First, on Amendments 15A and 16A, I think we are all looking for the same outcomes—it is about how we do that, and which tools we use. So there will be some decisions, but what is important in these debates is that we are all learning from each other about what might be the best solution, and we will continue as a Government to look at what has been said in these debates.
We are introducing a new framework for oversight of the performance of building control bodies, and a new professional framework for registered building control approvers and registered building inspectors, for their work on all buildings. This framework includes the registration of both building control approvers and building inspectors. We expect the building safety regulator will specify relevant skills, knowledge, experience and behaviours as part of registration, and require continual professional development to be undertaken, but we consider it important to give it the flexibility to choose how to incorporate these areas operationally, rather than be restricted by having a specific requirement for standard qualifications and compulsory training set out in primary legislation. We are also concerned that standard qualifications may be read as examinations, which may make it harder to recognise and value experimental learning. On this basis, I would ask that the noble Lord does not press his amendment.
On Amendment 16, tabled by the noble Baroness, Lady Pinnock, the Government are introducing a new framework for oversight of the performance of building control bodies and a new professional framework for all building control bodies, including registered building inspectors, for their work on all buildings. The building safety regulator will drive improvements in building safety by overseeing the performance of building inspectors and building control bodies through a robust professional and regulatory regime. This will include setting codes of conduct and competence, including for registered building inspectors, and operational standards rules defining the minimum performance standards that building control bodies, which will employ or use registered building inspectors, must meet.
To achieve this, the building safety regulator needs the flexibility to frame such codes and standards in the way it thinks best, and to adapt them over time as required. This would be hampered by specifying part of the content of the code in primary legislation, as this amendment suggests. However, we expect future codes of conduct to address conflicts of interest explicitly, just as the existing code for approved inspectors does already.
I turn to Amendment 116 in the names of the noble Baroness, Lady Pinnock, and the noble Lord, Lord Stunell. I thank them for shining a light on the important issue of the competency of fire risk assessors, as they did when the Fire Safety Bill was being debated. However, I am afraid the Government will not be able to accept the amendment.
The fire safety order 2005 requires any person who has control in premises to take reasonable steps to reduce the risk from fire and make sure people can safely escape if there is one. The order applies to virtually all premises and covers nearly every type of building, structure and open space. To give noble Lords a sense of scale, this includes approximately 1.7 million residential buildings and all offices, shops, hospitals, schools, pubs, restaurants, factories and warehouses in England and Wales.
Given the scope of the fire safety order, it is important that we retain the ability for the responsible person to carry out their own fire risk assessment, particularly in small or low-risk premises, using the guidance and support available so that they can make their premises safe from fire. In some circumstances, the responsible person will be best placed to identify the potential causes of fire, the people and the risks and to take action. They can take ownership and have the ability to take quick action.
I will give noble Lords an example: a small gift shop with a simple layout, such as one floor, and a limited risk in relation to fire. With a small number of employees and visitors to the premises, a responsible person could undertake the fire risk assessment themselves—this is because there is no sleeping accommodation, no hazardous processes taking place and no cooking processes—using the published guidance to address fire safety measures.
If we require fire risk assessments to be undertaken in every case by a registered fire risk assessor, we risk two very significant downsides. First, on capacity, we know that there is a limited number of competent fire safety professionals, as we have spoken about, and that demand for fire risk assessors outstrips supply. A register would risk creating a bottleneck, which could result in a delay in responsible persons undertaking or updating a fire risk assessment. This could mean that fire hazards would not be identified or mitigating action taken. It could also distract competent professionals away from premises of higher risk.
Secondly, on cost, in some low-risk premises it will be restrictive to require responsible persons either to appoint a fire risk assessor from the register or to ensure that they themselves are on the register. It could mean that fire safety outcomes are reduced, where they could meet the responsibility of the requirements of the fire safety order themselves without the requirement to register or appoint a registered assessor.
It is vital to ensure that those appointed to undertake fire risk assessments are competent. I assure noble Lords that the Government’s intention to enhance competence has been met in the Bill with the amendment to the fire safety order to require that the responsible person must not appoint a person to assist them with making or reviewing a fire risk assessment unless that person is competent. That amendment will also include—
I thank the Minister for giving way. I have understood her line of argument very clearly, but she seems to be saying that it would still be lawful for that housing association in Kensington to have appointed an unqualified person. Is that exactly what she is saying, or not—or will higher-risk buildings have a more stringent requirement for fire safety assessors?
No, what I am saying is that a higher-risk building, or any building which has certain issues, will need a qualified fire risk assessment. What I am also saying is that those people cannot subcontract or have anybody working with them who is not competent as well. In the case of Kensington and Chelsea, and Grenfell, they would no longer be able to have somebody who is not competent and does not have the relevant qualifications to do that fire risk assessment. I have seen with my own eyes where that has been done in the past. Does that make sense? I shall make sure that the noble Lord gets it in writing, so that he is clear, and I shall put it in the Library.
That amendment will also include a definition of the competence that is required—which I think also answers the noble Lord—and we will issue guidance to support responsible persons in identifying a competent fire risk assessor. Significant work has been done by the industry-led Competence Steering Group, the working group for fire risk assessors. Industry continues to lead and develop the work in relation to competence for the sector and has developed a centralised list of professionals where a responsible person can identify a competent fire risk assessor to assist them in undertaking a risk assessment. There is also further work taking place by the sector to develop a fire risk assessor industry competence standard. Again, I think that is very important.
I move on to Amendment 119A. We have had a lot of interest shown in the training and qualification of fire risk assessors. The fire safety order requires that the responsible person must make a suitable and sufficient assessment of the risks to which relevant persons are exposed for the purpose of identifying the general fire precautions they need to take. A responsible person can undertake that assessment themselves using guidance to help them do so if they have the requisite level of competence, and this is generally what happens in relation to buildings that are simple by design. When buildings are more complex—and I think that here we are probably getting to a better answer to the noble Lord’s question—responsible persons will often choose to appoint a fire risk assessor to undertake the assessment on their behalf. Fire risk assessors come from a range of professional backgrounds, and it is quite often the case that they themselves need to seek input from other professionals with specialist knowledge when undertaking a fire risk assessment on more complex buildings.
When a responsible person does appoint a fire risk assessor to complete the fire risk assessment, it is of course vital that they ensure that person has an appropriate level of competence. That is why we are introducing a requirement, through Clause 129 in the Bill, to the effect that the responsible person must not appoint a person to assist them in making or reviewing a fire risk assessment unless that person is competent. Clause 129 also includes a definition of the competence that is required, and we will issue guidance to support responsible persons in identifying competent fire risk assessors. We are also working closely with the professional bodies in the fire safety sector to consider capacity and capability issues in relation to fire risk assessors, and work is already being taken forward through the industry-led Competence Steering Group fire risk assessor sub-committee to develop a fire risk assessor competency standard.
I am clear that the initiatives I have set out represent the most effective approach to further professionalising the fire risk assessor sector at this time, and it is right that this work continues to be led by industry. I thank the noble Lord and the noble Baroness for raising these important issues, but I must ask them at this point not to press their amendments.
Finally, I thank the noble Baroness, Lady Pinnock, for her final amendment in this group, Amendment 136. I am happy to reassure her that the Government believe that this amendment duplicates many of the existing provisions in the Bill. Clause 10 requires the building safety regulator to establish the industry competence committee and provide support as necessary. The committee’s activities could include overseeing and monitoring the industry’s development of competence frameworks and training, undertaking analysis to understand areas that need improvement and working with industry to drive gap-filling. We expect the committee to provide reports of its work to the regulator periodically.
As a precursor to the statutory committee, the Health and Safety Executive has already established an interim industry competence committee, which is developing its strategy and work plan for supporting the industry’s work, including looking to understand its current competence landscape. It is for the industry to lead the work to improve competence, identify skills and capacity gaps and provide appropriate training to upskill its members for the new regime, and it has already started this work. Training and certification of competent professionals is not a function of government or the regulator under the Bill. We and the Health and Safety Executive will continue to monitor the industry’s progress and provide support where necessary.
Clause 135 legislates for the appointment of an independent person to carry out a periodic review of the system of regulation for building safety and standards and the system of regulation for construction products. The review will act to ensure the functioning of the systems and provide recommendations for improvement. The review must consider the building safety regulator and the system of regulation established by Parts 2 and 4 of the Bill and the Building Act 1984. However, the independent reviewer is not limited and may review connected matters at any time. An independent reviewer must be appointed at least once every five years, although the Secretary of State can appoint a reviewer more regularly if necessary. By ensuring that the report must be published, the Government have created a system of public accountability in building safety.
When defining “independent”, we have struck a balance that excludes those with a clear conflict of interest without overreaching and excluding everyone with relevant experience. This clause will help to protect the integrity of the system and ensure that it continues to create a safe built environment in future. Further reporting requirements risk duplication, complexity and additional bureaucracy, and I therefore ask the noble Baroness to withdraw her amendment.
Once again, in conclusion, I thank noble Lords for this interesting debate. I hope I have given the reassurances that will allow them happily not to press their amendments.
I thank the Minister for her very full response to the issues raised, particularly on Amendment 136 about workforce reporting. She has obviously had some support in going through all the clauses in the Bill to work out where the reviews and so on will take place. She spoke about competencies being reviewed regularly, and I will look again and read carefully what she said when it is reported in Hansard to see how that works. But on the face of it, it appears that this is covered in the Bill.
That brings me to the other issues that I raised. The first was about the building safety regulator overseeing the new roles of building control inspector and approved inspector. I understand that, but when I read the clauses, no details were given about what competencies and qualifications were required for those new roles. If we are determined to improve building safety, which we all are, some definition of what is expected of each inspector role should be in the Bill—not the detail; I totally accept that one would expect the building safety regulator to define those in detail. However, there should certainly be some indication of that, and it is not there. Hence, the amendments that I have tabled. Again, it may be that discussion with the Minister before the next stage could be of help in that regard.
I turn to the fire risk assessors. I remember the wonderful Fire Safety Bill. The issue of fire risk assessors came up at that stage and my noble friend Lord Stunell had amendments about them. He talked about a register, a lack of capacity, ill-defined qualifications and competencies, and we have not moved forward. That is the problem. We must move more quickly. The point is well made and I know that the noble Baroness has tried to explain and will put something in writing. We will look at it, but I must say that assessors and fire risk assessment is critical, particularly to some of these high-risk buildings.
Lastly, there is the issue of accountability, which was raised by the noble Baroness, Lady Fox. It is one of my themes that I come back to all the time. Quis custodiet ipsos custodes? Who guards the guardians? Who overlooks all this to make sure that people are accountable? Unless we do that, we get into the mess that we are in now, where so diverse is the golden thread of accountability that nobody understands who is going to take control. I am not sure that I totally accept the noble Baroness’s views on this part of the Bill, but I certainly do on the next part in terms of overseeing safety within already-constructed buildings. There is a good point to be made about it being so diverse and unclear who will be responsible for what that nobody will be responsible for anything and we will be in the same mess that we are now.
I thank the Minister again for a detailed response, which has been helpful. I shall read it carefully as we cannot take in all the detail—well I cannot, anyway. Perhaps in discussion with the Minister, we may make some progress before Report. With those comments, I shall withdraw or not move the amendments in my name. I beg leave to withdraw the amendment.
Amendment 15A withdrawn.
Amendments 16 and 16A not moved.
Amendments 17 to 22
17: Clause 41, page 51, line 21, at beginning insert “Section 58Z7A of this Act (sharing of information between regulatory authorities) and”
Member’s explanatory statement
This amendment and the next amendment, which are consequential on the Minister’s amendment at page 56, line 22, provide that new section 58Z7A of the Building Act 1984 applies to a person to whom the regulator has delegated registration functions under new Part 2A of that Act as it applies to the regulator.
18: Clause 41, page 51, line 22, leave out “applies” and insert “apply”
Member’s explanatory statement
This amendment is consequential on the previous amendment in the name of the Minister.
19: Clause 41, page 51, line 25, leave out from beginning to “as” in line 26 and insert “The following provisions of this Act apply”
Member’s explanatory statement
This amendment is a drafting change, with the omitted reference (to section 91B of the Building Act 1984) being inserted by the second amendment in the name of the Minister at page 51, line 28.
20: Clause 41, page 51, line 28, at end insert “—
( ) section 58Z7A (sharing of information between regulatory authorities);”Member’s explanatory statement
This amendment, which is consequential on the Minister’s amendment at page 56, line 22, provides that new section 58Z7A of the Building Act 1984 applies to a person to whom the Welsh Ministers have delegated registration functions under new Part 2A of that Act as it applies to the Welsh Ministers.
21: Clause 41, page 51, line 28, at end insert “—
( ) section 91B (cooperation and sharing of information between Welsh Ministers and other authorities);( ) section 131A (application to the Crown).”Member’s explanatory statement
This amendment, which is consequential on the first new Clause in the name of the Minister after Clause 57, enables a person to whom the Welsh Ministers have delegated registration functions (under new Part 2A of the Building Act 1984) to apply to the High Court under new section 131A(5) for a declaration that an act or omission of the Crown is unlawful.
22: Clause 41, page 56, line 22, at end insert—
“Information sharing58Z7A Sharing of information between regulatory authorities(1) The regulator may disclose information held in connection with a function under this Part to the Welsh Ministers for the purposes of—(a) a function of the regulator under this Part, or(b) a function of the Welsh Ministers under this Part.(2) The Welsh Ministers may disclose information held in connection with a function under this Part to the regulator for the purposes of—(a) a function of the Welsh Ministers under this Part, or(b) a function of the regulator under this Part.(3) Except as provided by subsection (4), the disclosure of information under this section does not breach—(a) any obligation of confidence owed by the person making the disclosure, or(b) any other restriction on the disclosure of information (however imposed).(4) This section does not authorise a disclosure of information if the disclosure would contravene the data protection legislation (but in determining whether a disclosure would do so, take into account the powers conferred by this section).” Member’s explanatory statement
This amendment provides that regulatory authorities under new Part 2A of the Building Act 1984 (the regulator in relation to England and the Welsh Ministers in relation to Wales) can share information with each other for the purposes of their respective functions under that Part.
Amendments 17 to 22 agreed.
Clause 41, as amended, agreed.
Clause 42 agreed.
Schedule 4 agreed.
Clauses 43 to 51 agreed.
Clause 52: Information
23: Clause 52, page 77, line 9, leave out “public body’s final certificates” and insert “plans certificates, final certificates”
Member’s explanatory statement
This amendment is a drafting change.
Amendment 23 agreed.
Clause 52, as amended, agreed.
Clauses 53 and 54 agreed.
Schedule 5: Minor and consequential amendments in connection with Part 3
24: Schedule 5, page 166, line 16, at end insert—
“32A After section 36 insert—“36A Removal or alteration of offending work in contravention of Fire Safety Regulations(1) If any work contravenes any fire safety requirements in the building regulations, or breaches any fire safety duty in any relevant enactment, the appropriate national authority or building control authority, without prejudice to their right to take proceedings for a fine in respect of the contravention, may by notice require the person responsible for the work by a date specified in the notice to—(a) pull down and rebuild the work,(b) remove and replace the work, or(c) effect such alterations in it as may be necessary to make it comply with the applicable building regulations.(2) If a person to whom a notice has been given under subsection (1) above (called a “section 36A notice”) is unable to do the work specified in the notice because the person has no power to carry out the required work to the building and the building manager will not facilitate the required work within a reasonable period— (a) the appropriate national authority or the building control authority may order that person instead to pay to it the amount of the expenses reasonably to be incurred to perform the work specified in the notice;(b) the appropriate national authority or the building control authority shall hold the amount so received to be used by the building manager to carry out the work specified in the section 36A notice; or(c) the appropriate national authority or the building control authority shall serve a section 36A notice on the building manager and subsections (3), (5) and (6) of this section shall apply.(3) If a person to whom a section 36A notice has been given fails to comply with the notice before the expiration of the date specified in the notice the appropriate national authority or building control authority may—(a) pull down and rebuild the work,(b) remove and replace the work, or(c) effect such alterations in it as may be necessary to make it comply with the building regulations, and recover—(i) from the person responsible for the work the expenses reasonably incurred by the authority in doing so;(ii) from the Scheme in whole or in part, on an interim or final basis, the expenses reasonably incurred or to be incurred by the authority in doing so; or(iii) from the person responsible for the work any amount paid to the appropriate national authority or building control authority by the Scheme which if recovered shall be paid to the Scheme.(4) A section 36A notice shall not be given—(a) in respect of work completed before 1 June 1992 or such earlier date as the appropriate national authority may specify in regulations, or(b) in the case of work completed after the coming into force of this section, more than 10 years from the date of completion of the work in question.(5) Work specified in the section 36A notice shall be carried out so as to—(a) reduce, insofar as reasonably practicable, the risk of noise, cold, damp and other hazards to residents while the work is carried out; and(b) maintain, insofar as reasonably practicable, the design, character and amenity of the structure as it existed prior to the notice being issued.(6) Where the person responsible for the work has been taking reasonable steps to complete the work but is unable to do so before the expiry of the date specified in the section 36A notice that person may apply to the person who issued the notice to request an extension of time which is reasonable in the circumstances.(7) Where a section 36A notice has been issued the person responsible for the work shall—(a) be liable for the costs of interim mitigation or safety measures and reimbursement of or compensation for increases in insurance premiums, in either case as may be specified in regulations made by the relevant national authority; and(b) reimburse qualifying tenants for any such costs that they have been or are required to pay, the amount of such reimbursement if not agreed to be determined by the appropriate tribunal.(8) Where the person responsible for the work has not complied with the section 36A notice before the expiry of that notice, or before the expiry of the extension of that notice under subsection (6), the appropriate national authority or the building control authority may—(a) order that person to pay to it the amount of the expenses reasonably to be incurred to perform the work specified in the notice; and(b) require that person to pay a penalty in respect of that failure to comply.(9) Notice of a penalty under subsection (8) must be in writing and specify the date before which the penalty is required to be paid.(10) In fixing a penalty under subsection (8) the appropriate national authority or building control authority must have regard to the length of time that has elapsed since the person on whom the penalty is imposed has known that the work was in breach during which the person has not remediated the work, the seriousness of the infringement concerned, and the desirability of deterring both the person on whom the penalty is imposed and others from failing to comply with notices under section 36A, and—(a) no penalty fixed under this section may exceed 10% of the turnover of the person responsible for the work (determined in accordance with such provisions as may be specified in regulations made by the appropriate national authority);(b) any sums received by a national authority in relation to a penalty are to be paid into the Consolidated Fund;(c) any sums received by a building control authority are to be set off against any expenses paid by that authority under this section, with any remaining balance paid into the Consolidated Fund.(11) For the purposes of this section “the appropriate tribunal” is—(a) in respect of a long lease of premises in England, the First-tier Tribunal; and(b) in respect of a long lease of premises in Wales, a leasehold valuation tribunal.(12) Any person subject to a section 36A notice may not pass on to any qualifying tenant any expense, in whole or in part, arising from—(a) the costs of compliance with any such notice; or(b) the costs of any penalty for failing to comply with such a notice.(13) The prohibition in subsection (12) shall have effect regardless of any provision to the contrary in any agreement made before or after the coming into force of this section.(14) In this section—“building manager” means the responsible person in relation to the building in question, as defined in Regulation 3 of the Regulatory Reform (Fire Safety) Order 2005 (S.I. 2005/1541) or any such other person that has the power to carry out the required work;“fire safety requirements” means any requirement in Part B of Schedule 1 to the building regulations in force as at the date of the initial notice or full plans application;“initial notice” has the same meaning as in section 47 of this Act;“full plans application” means the date of any application under section 16 of this Act or an application for building control approval under paragraph 1B of Schedule 1 to this Act, as the case may be;“long lease” has the same meaning as in sections 76 and 77 of the Commonhold and Leasehold Reform Act 2002; “parent undertaking” has the same meaning as in section 1162 of the Companies Act 2006;“person responsible for the work” means a person responsible for or a person responsible for commissioning the construction, erection or refurbishment of the work and, where that person is a company, any parent undertaking of that person;“qualifying tenant” means any tenant under a long lease;“relevant enactment” means section 1 or section 2A of the Defective Premises Act 1972.36B Disputes over section 36A notices given by building control authorities(1) The appropriate national authority must make arrangements with a body to establish a committee called the Technical Committee which, if established in accordance with the arrangements, has the functions given by this section.(2) If a question arises between the target of a section 36A notice and a national authority or building control authority as to whether work contravenes the fire safety requirements of the building regulations in force at a particular time, the Technical Committee has jurisdiction to decide that question.(3) The Technical Committee’s decision is binding on the building control authority and any potential target of a section 36A notice who was given an opportunity to make representations, unless the matter is referred to arbitration under section 36C.(4) The Technical Committee does not have jurisdiction to decide a question that has already been decided by a court.(5) A certificate by the appropriate national authority that a specified committee has been established in accordance with arrangements under subsection (1) is conclusive evidence of that fact in relation to the period for which the certificate is in force.(6) Arrangements under subection (1) must, in particular, include—(a) a presumption that the proceedings of the Technical Committee will normally be held in public;(b) a requirement that the decisions of the Technical Committee are freely available to the public;(c) that members appointed to the Technical Committee have appropriate skills to assess issues raised by section 36A notices; and(d) that members of the Technical Committee are independent of—(i) any party involved in the reference to the Technical Committee; and(ii) any other member of the Technical Committee, or panel of the Technical Committee, hearing that particular reference.(7) Arrangements under subsection (1) may, in particular, include requirements about—(a) the composition of the Technical Committee or the appointment of its members;(b) the right of the Technical Committee to form separate panels to give decisions on its behalf;(c) the Technical Committee’s procedure or how its procedure is to be determined (including requirements for its procedures to be approved by the appropriate national authority); or(d) review by the Technical Committee of its own decisions, including by a panel constituted of different members. (8) The Technical Committee’s procedure may, in particular, include provision imposing time limits for making an application for a decision or the taking of other steps.36C Challenging decisions of the Technical Committee(1) If the Technical Committee has decided any question under section 36B(2), any person on whom the decision is binding may, if dissatisfied with the decision refer the question to arbitration.(2) But a person may not refer the question to arbitration until any review process has been exhausted.(3) Any arbitration under subsection (1)—(a) shall be commenced by the person seeking arbitration requesting the President of the Chartered Institute of Arbitrators to appoint a single arbitrator to hear the dispute;(b) shall be conducted in accordance with the rules of the Chartered Institute of Arbitrators; and(c) shall not have the power to award any costs against the Technical Committee.(4) The Technical Committee need not, but may if so advised, participate in any arbitration proceeding under this section.(5) The relevant national authority or relevant building control authority must be given notice of any arbitration proceedings under this section and must be joined as a party to the proceedings if it so requests.(6) Arbitrations under this section are statutory arbitrations in accordance with the terms of the Arbitration Act 1996.(7) The relevant national authority may amend the identity of the arbitral body named in subsection (3) by regulation.36D Notification by person with an interest in the building(1) Any person with a property interest in a building may give notice to the appropriate national authority or building control authority that that person has reason to believe that a building has been constructed in a manner that contravenes any fire safety requirements in the building regulations.(2) Where a notice under subsection (1) has been given the appropriate national authority or building control authority must, before the end of the period of 90 days beginning with the day on which it receives the notice, publish a response stating how it proposes to deal with the notice, and in particular—(a) whether it has decided to take any action, or to take no action, in response to the notice, and(b) if it has decided to take action, what action it proposes to take.(3) The appropriate national authority must make regulations regarding notices under this section, in particular regarding —(a) the manner of giving notice;(b) the calculation of time; and(c) the designation of a proper officer or proper officers to receive the notices;and any notice under subsection (1) given in accordance with regulations made under this section shall be deemed valid.(4) In this section, “property interest” means an estate in fee simple or a term of years absolute (whether legal or equitable).36E Duty to provide information(1) Where an appropriate national authority or building control authority has received a notice under section 36D, or acting on its own initiative has reason to believe that a building has been constructed in a manner that contravenes any fire safety requirements in the building regulations, the relevant authority may by notice—(a) require the person the relevant authority reasonably believes to be the person responsible for the work by a date specified in the notice to provide copies of all such plans, documents or other information as the authority may reasonably require at a time and place, and in a form and manner, and to a person specified in the notice;(b) require any person to attend at a time and place specified in the notice to give evidence to the relevant authority or a person nominated by the relevant authority for the purpose;(c) require any person to supply the relevant authority with such estimates, forecasts, returns or other information as may be specified or described in the notice and at a time and place, and in a form and manner, and to a person so specified.(2) A notice under this section shall include information about the possible consequences of not complying with the notice.(3) The person to whom any document is produced in accordance with a notice under this section may, for the purpose of this Part, copy the document so produced.(4) No person shall be required under this section—(a) to give any evidence or produce any documents which he or she could not be compelled to give or produce in civil proceedings before a court; or(b) to supply any information which he or she could not be compelled to supply in evidence in such proceedings.(5) In this section “court” means the High Court of England and Wales.36F Fees to be paid to relevant authority(1) The appropriate national authority may by regulations make provision for the payment of fees to the appropriate national authority or building control authority in respect of—(a) any notice given under section 36A; or(b) any decision by the Technical Committee under section 36B.(2) Regulations under this section may in particular—(a) make provision as to when a fee or charge payable under the regulations is to be paid;(b) make provision as to who is to pay a fee or charge payable under the regulations;(c) make provision as to how a fee or charge payable under the regulations is to be calculated (including who is to make the calculation);(d) prescribe circumstances in which a fee or charge payable under the regulations is to be remitted or refunded (wholly or in part);(e) prescribe circumstances in which no fee or charge is to be paid; or(f) make provision as to the effect of paying or failing to pay a fee or charge in accordance with the regulations.(3) Regulations under this section may—(a) contain incidental, supplementary, consequential, transitional and transitory provision and savings;(b) in the case of regulations made by virtue of subsection (2)(f) or subsection (3)(a), amend, repeal or revoke any provision made by or under this Act or by or under any other Act.(4) A relevant national authority or building control authority determining the amount of fees or charges in pursuance of provision made by regulations under subsection (1) must secure that, taking one financial year with another, the income from the fees or charges does not exceed the cost to the relevant authority of performing the function or doing the thing (as the case may be).(5) For the purposes of this section, a financial year is the period of 12 months beginning with 1 April.36G Penalties: failure to comply with information requirements(1) Where the appropriate national authority or building control authority considers that a person has, without reasonable excuse, failed to comply with a requirement imposed on the person under section 36E (Duty to provide information), it may impose a penalty of such amount as it considers appropriate.(2) The amount may be—(a) a fixed amount at level 5 on the standard scale,(b) an amount calculated by reference to a daily rate, or(c) any combination of a fixed amount and an amount calculated by reference to a daily rate.(3) In relation to a penalty imposed under subsection (1)—(a) in the case of an amount calculated by reference to a daily rate, the daily rate may not exceed level 4 on the standard scale;(b) in the case of a fixed amount and an amount calculated by reference to a daily rate, the aggregate amount may be at level 5 on the standard scale.(4) In imposing a penalty by reference to a daily rate—(a) no account is to be taken of any days before the service of the notice under section 36E, and(b) unless the authority determines an earlier date (whether before or after the penalty is imposed), the amount payable ceases to accumulate the day on which the requirement concerned is satisfied.36H Power to make fire safety remediation regulations(1) The appropriate national authority may, for any of the purposes of securing the health, safety, welfare and convenience of persons in or about buildings and of others who may be affected by buildings or matters connected with buildings, make regulations with respect to the matters mentioned in subsection (2) below.(2) Those matters are—(a) when a section 36A notice may be made only by either the appropriate national authority or a building control authority;(b) where there is more than one person responsible for the work, the designation of a lead person responsible and the contribution to be made by other responsible persons;(c) where money is paid under section 36A(2) to the relevant authority, the manner in which that authority shall hold that money and the conditions applied to it.(3) Regulations made under subsection (1) above are known as fire safety remediation regulations.(4) The power to make fire safety remediation regulations is exercisable by statutory instrument, which is subject to annulment in pursuance of a resolution of either House of Parliament.”Member’s explanatory statement
This probing amendment is consequential on the Building Indemnity Scheme, expanding and improving existing enforcement powers under the Building Act 1984.
My Lords, in moving Amendment 24 in my name and that of my noble friend Lord Blencathra, I will also speak to Amendment 130 and touch on my noble friend’s amendments. I begin by welcoming the fact that he and Michael Gove have made substantial advance on the Government’s initial response to the cladding crisis. I am very grateful for that and for the role he has played.
For the leaseholders involved, this group of amendments is probably the most important in the whole Bill. The object of my amendments is to deliver the Government’s policy that, so far as historical defects are concerned, the polluter should pay and not the leaseholder. I begin by reminding the Committee of the explicit commitments given by the Secretary of State that underpin that policy. In his Statement on 10 January, he said:
“We will take action to end the scandal and protect leaseholders … We will make industry pay to fix all of the remaining problems and help to cover the range of costs facing leaseholders.”
When pressed by an opposition MP, the Secretary of State said in reply:
“She specifically requested that we provide amendments to the Building Safety Bill to ensure that there is statutory protection for leaseholders. That is our intention—we intend to bring forward those amendments—and I look forward to working with her and colleagues across the House to provide the most robust legal protection.”
Later he clarified what he meant by statutory protection:
“First, we will make sure that we provide leaseholders with statutory protection—that is what we aim to do and we will work with colleagues across the House to ensure that that statutory protection extends to all the work required to make buildings safe.”—[Official Report, Commons, 10/1/22; cols. 284-291]
Finally, in his evidence earlier this week to the Select Committee in another place, the Secretary of State said:
“The approach that we have put forward is one that provides them”—
that is, the leaseholders—
“with the maximum available level of protection.”
We need to build on the substantial advance that I mentioned earlier, because the amendments tabled by the Government so far do not deliver the policy I have just quoted: statutory protection that
“extends to all the work required to make buildings safe.”—[Official Report, Commons, 10/1/22; col. 291]
The amendments proposed are not “the most robust”, and nor do they provide
“the maximum … level of protection.”
Why is that? It is because not all relevant buildings, leaseholders and defects are covered. The object of my amendments and those of others is to deliver the policy, fill in the gaps and make the protection more robust.
I have one other objective. I believe that in cases where the Government are unable to persuade those responsible to do the work voluntarily—I suspect there will be many—remedial work should commence promptly, without waiting for the proceeds of the levy to come in or for people to be fined after protracted litigation. It is crucial to make the buildings safe sooner, to lift the blight on sales and to let people get on with their lives. Under the current government proposals, where the developer will not fund the work, nothing happens until all the money is in place, including the contributions that the Government expect leaseholders to pay, which many will not be able to afford. We cannot wait that long.
My amendments are designed to provide a speedy and efficient route to getting buildings remediated at the cost of the person responsible and, when that is not possible, by a levy on the industry. I claim no exclusivity as to how this is done. We may need to pick and mix with some of the other proposals in this group, particularly those in the name of my noble friend Lord Blencathra and the noble Earl, Lord Lytton, who brings to this issue the wealth of professional expertise. I am grateful to Sue Bright and Liam Spender, who have given me advice in a personal capacity, and to the Leasehold Knowledge Partnership, which services the all-party group on this subject.
My proposal would operate by inserting provisions into the Building Act 1984 and, as my noble friend reminded me, in an earlier incarnation I put that on the statute book. At some point, I hope that the statute of limitations will kick in and hold me not responsible for all the things I may have done in the past. That amendment, however, would enable an appropriate authority, either the Secretary of State or the building control authority, to serve a notice on those responsible for fire safety defects that are in breach of either building regulations or the “fit for human habitation” requirements in the Defective Premises Act 1972, which I did not put on the statute book. Leaseholders can also start that process and request a relevant authority to act. When the polluter no longer owns the building, the relevant authority can recover the money from the polluter and require the work to be done. If the polluter cannot or will not pay, the resources to do the work come from the building safety indemnity scheme established under Amendment 130.
The amendment also proposes an absolute prohibition on any of these costs being passed on to long leaseholders through variable service charges, filling in one of the gaps I referred to earlier. There are penalties on the polluter for noncompliance with a remediation notice; they are also liable to pay the costs of mitigating measures in the meantime. These provisions incentivise prompt action rather than protracted delay. In the event of a dispute as to whether the work contravenes building regulations, this will be decided by a technical committee, the decision of which will be binding. Any challenge to its decision can be referred to arbitration. I believe this is quicker and cheaper than the complex dispute process in government Amendment 108.
These changes to the Building Act will require money to pay for remedial works while the authorities step in, which brings me to Amendment 130. This would create a comprehensive levy scheme to be established. Contributors to the scheme would include all applicants for building control approval and suppliers of construction products. Leaseholders and a relevant authority, acting under Section 36A, would be able to apply for grants under the scheme. I cannot claim authorship of this part of the proposal; it simply mirrors the Government’s own idea of linking future building control approval to payments into the scheme. The amendment proposes that anyone who does not pay a levy when due cannot receive building control approval for any works.
Those are my proposals, and I turn now to the Government’s amendments, covering some 24 pages of legal text. The Government’s objective, although not spelt out in these terms, is to create what has been called a statutory waterfall. The waterfall is intended to work as follows: develops and cladding manufacturers are expected to pay first; for cladding remediation, government funding then kicks in through the building safety fund, then freeholders are expected to pay next. Finally come the leaseholders, who are expected to pay only a capped amount towards non-cladding costs.
Each layer of the waterfall has to be put in place before you get to the next one. Its aim is to ensure that any contributions from leaseholders become, legally, the last resort. This addresses the conflict of interest inherent in the current leasehold system. At the moment, landlords can spend leaseholders’ money without any effective control. The fact that freeholders will be on the hook to pay will concentrate their minds on the question of cost-benefit analysis. Are the works that they deemed necessary really necessary when they did not have to pay? Are they still necessary when they do?
The current Bill and the government amendments do not have adequate measures to ensure that the developer responsible for the defects must pay. With no voluntary settlement, the only route to recover would be through costly and risky litigation, with the leaseholders or freeholders responsible for pursuing a well-resourced developer through the courts, potentially delaying remediation for years and incurring higher insurance premiums and, in some cases, waking watches. Amendment 24 avoids this.
There are a number of other problems with the Government’s approach. I start with putting freeholders in the firing line. Where the developer is the freeholder, that is wholly understandable, but resident-owned buildings are excluded from the Government’s proposed protection by Amendment 63. That is because leaseholders in those buildings are also the freeholders—they have enfranchised. It is then up to the residents to sort out their claims against those responsible. When there is no one to claim against, this may mean that those residents must finance all the non-cladding remediation costs themselves. This is plainly wrong. Many leaseholders have used legislation—which, I confess, I put on the statute book—encouraging them to enfranchise and buy the freeholds. This is a welcome step away from the feudal system of leasehold, which the Government have pledged to abolish, and towards commonhold. However, those leaseholders who have enfranchised are every bit as innocent as those who have not, yet they are excluded from the support in the government amendments.
Other freeholders now find themselves in the line of fire. Freeholds are often owned by housing associations, charities, local authorities and pension funds, which have bought freeholds and their ground rents—in the case of pension funds, to match their liabilities on annuities. They have found themselves exposed to major costs, although they were not responsible for the defects. It is not clear why pension savers should pay if they did not pollute. These freeholders, like the leaseholders, bear no responsibility for causing building safety defects, and they should not bear the cost. In some cases, the costs of remediation will outweigh the balance sheet of the freeholder, threatening insolvency. Has this all been thought through? A solution would be for the Government to propose to meet any costs not met by the developer, including cladding repairs in particular.
Under the government amendments, a developer must pay only if it is still the landlord. If it has sold the building, it is off the hook, under Amendment 76. If the polluter is to pay, it is not clear why there should be these exclusions, and there must be a direct route to hold polluters responsible that does not depend on leaseholders bringing claims under the Defective Premises Act. Even if the developer is the landlord, it can recover costs from all leaseholders who are not capped by the capping provisions—another important deviation from the policy of protecting the leaseholder. This is the case even though the developer is responsible for the defect and has, for example, failed to install cavity barriers. That is likely to be a common scenario.
There are other important exclusions which breach the policy that the polluter, not the leaseholder, should pay. Where a building has non-cladding defects and is more than 11 metres tall, leaseholders have to pay up to £10,000 outside London and £15,000 in it. Under Amendment 92, these payments can be spread over five years, but that conflicts with the requirement for all funds to be in place before the work can commence. Who will fund the difference? There may be buildings where there are only non-cladding defects. If the bill for remediation is £10 million and there are 250 flats, leaseholders must pay £40,000 each. They are subject to a cap of £10,000, but where does the missing £30,000 come from—£7.5 million for the whole building? I see that I have already caused some consternation on the Front Bench.
A further important exclusion is for buildings under 11 metres. Leaseholders in those buildings, or buildings with fewer than five storeys, get no assistance for cladding or non-cladding remedial works and are exposed to unlimited costs. The Government’s view is that such buildings are not at sufficient risk to justify remediation, but this will be a bitter disappointment when leaseholders in those buildings who are not responsible for the defects face costs. It is incompatible with the principles I set out earlier.
Another exclusion is for those who have invested in buy to let who have more than one such property. The press release that the Government published on 14 February, along with the amendment, said:
“New clauses will also enshrine in law the commitment the Levelling Up Secretary made in the House of Commons last month that no leaseholder living in their own home, or sub-letting in a building over 11m, ever pays a penny for the removal of dangerous cladding.”
Amendment 64 contradicts that assurance for those buy-to-let landlords who own more than one such property, the majority of whom are individuals and not property barons. They bear no responsibility for the defects. I think that Amendment 65 addresses that issue in a later group.
Finally, when the leaseholder is in a block owned by a social landlord, non-cladding costs above the level of the cap are to be met in full by the social housing landlords, whether they are the landlord or developer. But what if they cannot afford it or simply pass on the costs? Noble Lords may have received a substantial document entitled Dereliction of Duty: How Housing Associations Failed Leaseholders Trapped in the Building Safety Crisis, by End Our Cladding Scandal. What happens if, as is happening at the moment, housing associations simply pass on the costs to the leaseholder? Contrary to advice from Ministers, housing associations are doing exactly that: passing on remedial costs and service charges, often unaffordable. What steps are the Government taking to deal with that?
To conclude, we have come a long way but we are not there yet. There is a gap between what the Government have promised and what they are offering. I want to help them to bridge that gap and freely admit that, while I believe my proposals to be workable, there may be variations that improve them or alternative solutions. I hope in his reply that the Minister will exhibit some flexibility and indicate a willingness to engage with me and others before Report to remediate the defects in the Bill as it stands. I beg to move.
My Lords, the noble Baroness, Lady Brinton, is taking part remotely, and I invite her to speak.
My Lords, I wish to speak briefly to the amendments in this group, particularly in relation to the issue of perpetrator pays for fire hazard remediation—work that must be carried out speedily to ensure the safety of the inhabitants of the building. Amendment 24 and others, introduced by the noble Lord, Lord Young of Cookham, sets out the removal or alteration of offending work that contravenes fire safety regulations. It is interesting to note that he joins a group of former Ministers who are now trying to remedy the problems that were around during their time as Ministers. I think we should thank them not just for their humility but for their acknowledgment, through their amendments, that change is needed even more urgently than ever.
The noble Lord is right that his and other non-government amendments in this group are critical to delivering what the Government want to achieve, despite their own proposals being inadequate. I echo his point that if the Government think that things can be done more effectively to achieve the objectives that he outlined, I suspect that the Grand Committee would want to hear them.
The Minister spoke earlier of his surprise about the mechanisms of current building work guarantees and the role of insurers and warranties. Insurers have, rightly, made it clear that they are not responsible for this crisis. Insurance is not eligible in the event of defective work, and insurers never sign off work; they rely on the assurances of the companies they are insuring that the work is safe. The practical problem is that too many companies have relied entirely on their insurers. In my former professional life as a Cambridge college senior bursar, I have been that client who has sat in the middle and watched arguments about who should pay for defective work on blocks of flats, including works on a fire hazard in a medium-rise building.
The problems we faced as a college, even though they were with student accommodation, were absolutely nothing compared to the problems that leaseholders and renters in blocks of flats face. Talk to any of the current leaseholders living in blocks known to be unsafe: even with waking watches overnight, families are constantly on edge, and too many face the threat of worthless homes that are unsaleable until the perpetrator pays principle is fully brought into effect. I think “perpetrator pays principle” will be one of the next speech therapist phrases that people have to articulate; it is quite difficult to get your mouth around. The current government proposals do not take into account too many leaseholders who, like those in high-rise cladding buildings, are also not responsible for the defective work done by others.
Amendment 118 makes it clear that those who should pay, in the event of a block of flats having fire hazards, are those who did the work itself. The Government’s current proposals do not go far enough and still leave too many loopholes for those living in unsafe flats. This is the moment that legislation can and should make it absolutely clear that the perpetrator is responsible and must effect the remediation work and pay for it. In the event of a gap between that work being necessary to be carried out and it being agreed that the perpetrator should pay, the Government should indeed step in to help out.
My Lords, before I get my bearings, it is always good to have a few Latin phrases. “Quis custodiet ipsos custodes?”—well, I am just going to say, “Res ipsa loquitur”.
This is the “PP” group of amendments: “polluter pays” if you are my noble friend Lord Young, or “perpetrator pays” if you are the noble Earl, Lord Lytton. Although I will respond formally at the end— I am now speaking to the government amendments—I honestly agree with the sentiment of working with noble Lords and that a pick-and-mix approach is the right way forward. I am very keen to do that between now and Report. That is not in my speaking notes. The important thing is that we need a practical approach. We need one that works in law and in practice, and of course we want the polluter to pay.
I have taken noble Lords’ amendments and sought external counsel opinion, off my own bat, from a leading QC who deals with these issues in the courts to get their opinion. While I know my noble friend has tremendous ministerial experience, he perhaps has not always been in the courts when these things go into dispute. I know the noble Earl has considerable professional experience, but, again, this has to work in law as well as in practice. As the Committee will all appreciate, any scheme that requires government funding is not just a matter for this department; it is a matter for the Government and, in particular, needs Treasury approval.
I have always accepted that, in order for the polluter to pay, we have to have something that establishes liability at the building level. It is not an either/or. That is not to say that the Government’s approach is wrong; I think the Government’s approach is right. We have to have a waterfall effect that goes down the list of the polluters but recognises that not all freeholders are equal—some are “more equal than others”, to quote George Orwell—and that perhaps assignment of liability can be varied in regulation to reflect that. But all that detail is something that happens at later stages of the Bill, as my noble friend will know. Perhaps we will tease out some of those points in due course.
Clearly, if you are a developer like Ballymore that retains its freeholds, it is very easy. But if you are a developer like Berkeley, which often sells off its freeholds to a freehold investor, it becomes slightly more complex. But the intention of the Government is certainly not to let the Berkeley Group off the hook because it took another £20 million or £30 million by selling its freeholds off to another group to manage. It is still in the frame for the buildings that it built. I mention those developers just as examples, because we are obviously talking about a crisis that affects all the major housebuilders, as they freely acknowledge—not just the large ones but the medium and small ones, which have all contributed to a crisis that has brewed up over decades.
Let us move to the government amendments. Following my 11 January repeat of a Statement to this House, we have been clear on our expectations that developers should commit to self-remediate all unsafe high and medium-rise buildings for which they are responsible. They should agree contributions to fund the remediation of all cladding on buildings of 11 to 18 metres. The department has been in discussions with industry leaders on this matter and is making good progress towards a solution. I have had discussions with the medium-rise developers and have been alongside the Secretary of State in all those substantive discussions. However, should we need to take action against those unwilling to make these commitments, amendments tabled in my name will make it possible to impose a solution in law and make sure that developers and manufacturers take responsibility for rectifying building safety defects. I will now outline these important government amendments.
The first measure we are proposing as part of our package to ensure that the burden of paying for fixing historical building safety defects does not fall on leaseholders or taxpayers is a group of amendments to the building safety levy. They are an important part of the solution as they allow the building safety levy to be imposed in relation to building work going through the building control process on all residential buildings, not just buildings over 18 metres or seven storeys. This will enable the Government to raise funds to remediate cladding should the industry fail to step up and pay for the problems it has caused. It is our intention to set out in secondary legislation the levy rates and the details of who the levy applies to. By then negotiations with industry should have been concluded.
I now turn back to the package of government amendments and outline the further amendments that we are proposing to ensure that developers and manufacturers take responsibility for rectifying building safety defects. This package of amendments addresses many of the concerns highlighted today. They introduce measures to allow us to distinguish between companies that commit to shouldering their share of the blame and those companies that do not. The measures will incentivise industry actors to take responsibility in resolving issues with unsafe buildings, through firms committing to remediate buildings with which they are associated, and to contribute towards the funding of remediation of other unsafe buildings.
The first two amendments in this package would give the Secretary of State a power to establish a scheme or schemes for the building industry. This would act as a means of identifying which industry actors, including developers, and cladding and insulation manufacturers, have done the right thing and committed to act responsibly. Regulations will set out which persons in the building industry may be members of the scheme. In the first instance, the Government are minded to focus this measure on major developers of residential buildings and manufacturers of cladding and insulation. We are keeping this under review as talks with industry continue. Industry actors will be considered “responsible” if they meet published membership criteria for a scheme for which they are eligible. The membership criteria for a scheme will be set out and will include a commitment to rectifying building safety defects. The distinction between responsible actors and actors who have failed to do the right thing will be taken into account by the Government and regulators in their interactions with firms that are eligible for inclusion in a scheme.
The third amendment would give the Secretary of State a power to block developers that have failed to act responsibly from carrying out development for which planning permission has been granted, and to make sure that any breach of this block would be subject to enforcement action. The amendment would also allow the Secretary of State through regulations to require a developer to serve a notification of proposed development commencement and to prevent the grant of certification of lawful development for affected developers, should they seek it.
The fourth amendment would give the Secretary of State the power to prevent developers that have not committed to act responsibly, as set out in regulations, obtaining building control sign-off on their developments. This will make selling developments difficult for these developers, as building control approval is in most cases a prerequisite to occupancy and sale. The building control prohibitions will be imposed by regulations that will also set out details such as prescribed documents.
These new measures will help to make sure that while responsible industry actors can go about their business freely and with confidence, others will face significant legal, commercial and reputational consequences. They align with two of the principles set out by the Secretary of State: that the industry must pay for remediation and that the burden should not fall on leaseholders or the taxpayers. These measures will ensure that the burden is shared among the relevant industry actors while protecting leaseholders and the taxpayer. We cannot continue to allow those who are unwilling to commit to resolve the building safety crisis to have a role in building homes of the future. These amendments are being tabled to ensure that we have the legislative provision to help us to do this. I beg to move.
My Lords, as your Lordships will know, I have three amendments in my name in this group. I will speak first to Amendment 115 and then to Amendments 118 and 119, collectively now branded the “perpetrator pays” amendments. I was very pleased to hear the Minister’s prefatory comments, because he is absolutely right. The amendments in the name of the noble Lords, Lord Young of Cookham and Lord Blencathra, and mine come from fundamentally the same hymn sheet. I impress on the Minister: never mind the differences in approach, there are core, fundamental principles that lie behind them all and which, I would like to think, we hold in common. Those principles must be carried forward into the Bill. At the very least, the Minister must come back, not later than on Report, with a version that will hopefully attract some consensus.
I was very glad that we agreed on the earlier point that non-compliant construction is simply unlawful. It is just a real shame that this has been going on for 30 years. One of the problems is that building inspectors are not on site full-time but call to check at certain stages only, so nearly the entire process of receiving good, compliant construction is based on the trust placed in those who direct matters on the site, plan the work, procure materials and labour and oversee standards. I am so glad that my noble friend Lord Thurlow referred to clerks of works. I totally agree with him. The progressive decline in their use is part of a cost-cutting philosophy.
According to the fire chiefs’ council, whose representative was, I believe, giving formal evidence to a parliamentary committee in December, the failings are still ongoing, so the matter is urgent. It appears that many of the approved inspectors are in far too close association with those whose works they oversee.
The problem we have here is one of weak claimant and powerful defendant, and it is that fundamental imbalance that prevents things such as acting against defective workmanship that may amount to unlawful activity. That is why we have to do something to redress that.
My amendments were reworded with “the perpetrator pays” on the advice of the parliamentary clerks—I am very grateful to them for that, because it is a much snappier title than “polluter pays”. Amendment 115 inserts a new schedule, which outlines a remediation scheme. I use the word “outlines” advisedly, because my amendments do not seek to drill down into the administrative detail; that is a job of work for the department to take forward. The amendment tries to set certain principles.
Amendment 118 sets the principles of “the perpetrator pays”, and Amendment 119 is simply consequential. I am indebted to parliamentary counsel Daniel Greenberg for his unstinting efforts in drafting them. With respect to the Minister’s comment, I am indeed a chartered surveyor and no lawyer, but this has come not from my pen, as it were, but from that not only of Daniel Greenberg but of leading construction counsel. They have checked both the construction contractual arrangements and ECHR law and tried to proof the amendments against the risk of sequential legal action and, in particular, judicial review— all of which could effectively unseat the entire process and render anything that we might try to achieve of no effect simply because of the costs that would be faced by anybody trying to exercise it.
I also thank the huge number of leaseholders, who have been appallingly affected, for their patience and stoicism—but also those who have written to me, expressing their support for this group of amendments. I am especially glad that the noble Lord, Lord Blencathra, added his name to Amendment 118. I thank him for that, because this is not a partisan matter but a question of morality and justice, preventing contagion from irreparably damaging a market sector. That is the other piece of the equation at risk here. This is not anti-developer; my belief is that there are many conscientious developers, but a number of significant players have allowed standards to drop. It is those latter that I wish to single out and attach responsibility to, where it properly lies.
I say to all those responsible in that respect that, with all the plethora of information about cause and effect, the advice and case studies and their long experience and their own knowledge of the contracting world, what is it that they did not understand about all this? It really beggars belief that we have got to this stage. My purpose is to make the developer strictly liable for demonstrable failures to meet the regulatory standards at the time of works. I seek to deliver on the sentiments voiced across the House at Second Reading and expressed by Ministers in parliamentary proceedings and elsewhere that leaseholders should not pay the remediation costs arising from fundamental construction failings—and in connection to my amendment, that relates to fire safety. I am holding the Minister to that express promise.
Just to go into the amendments in a little more detail, noble Lords will of course note the salient characteristics set out in principle. I shall run through it as a summary. Leaseholders should not be responsible or liable for fire safety remediation costs, not even to the extent of Florrie’s law capping. It just is not appropriate. They have been led to believe that they would be relieved of paying for things for which they were wholly innocent—points consistently made by the noble Baroness, Lady Pinnock, and points still ringing in our ears from the passage of the Fire Safety Bill onwards. Secondly, the taxpayer should not foot the bill, other than as an extremely limited last resort—and I mean extremely limited—and for interim funding to get a remediation scheme in place, as bridging finance. The fallback under my amendments is not the taxpayer but the industry that allowed these practices, and what amounts to a gross breach of trust, to take root. The burden should fall on those with involvement in these practices, directly or indirectly, and not attach to wholly innocent and diligent operators. That is a matter of straightforward fairness.
The amendments are tightly focused on originating fire safety hazards in residential blocks—not any wider construction faults or building types. This is deliberate, because of the sudden, unplanned and catastrophic nature of building fires, especially when occupants are off-guard and possibly asleep, with the custody of minors and even with disabilities, and thus at their most vulnerable. It follows the thread set in place by Dame Judith Hackitt. Expanding beyond that focus would be unhelpful at this juncture.
The proposal covers residential buildings of all heights. As I observed at Second Reading, when a low-rise building in Worcester Park burned down in 2019, as was referred to last time, it could so easily have cost lives. Building height is not the sole determinant factor of high risk.
I intend to attach blame firmly to the perpetrator in a manner that is inescapable liability following the establishment of defect as fact. The perpetrators may be numerous, but the claim will be made against the developer or lead contractor on a joint and several basis, leaving them to pursue the wrongdoers in satellite litigation, if they choose, after making the payout or fixing the defect. These liabilities should not be a wider industry or societal collective responsibility; that is what bad people like to achieve—spreading their risk among the rest of us. I say no to that, and no to any amendment to this Bill that has that effect. I consider it also as a factor that leads to uncertainty and unconstrained risk response in insurance terms. In other words, it allows the contagion to spread where it should not.
The parties should be on even playing field, not one where there is trial by bank balance or a gravy train for litigators. A scheme has to be straightforward and transparent, not mired in complicated process, even less labyrinthine administrative hurdles. It should be operable by individuals or their agents on a per-building basis, and I was pleased that the Minister referred to the per-building approach. It should not discriminate between types of owners, for reasons we have already heard. It is indefensible that liability for defects should depend on the status of the injured party or the nature of their tenure, as if wrecking somebody’s pension pot or a social landlord’s finances is in some way acceptable, when for the homeowner it is not.
Landlords have moral obligations towards their tenants as well. There is that trickle-down effect of responsibility, so I say no, not even by reference to supposed wealth nor by dint of some anti-freeholder prejudice. You either subscribe to the rule of law for all or you deny credibility and confidence in government, and potentially an entire market sector, as well as evading the proper exercise of justice. I would make only one slight exception: my amendment would also protect housing associations which have purchased in good faith. The only situation where that might not pertain is where the housing association was itself the developer. However, I defer on any of that to my noble friend Lord Best, because I suspect that there are different structures within housing associations that deal with the development on the one hand and the housing association function as a quasi-charity on the other.
Just to make sure that everybody is focused on matters, the idea in these amendments is to propose a public register of determinations so that everybody knows what is going on. I hope that, going forward—this is critical—it should serve to eliminate the perverse incentives and poor culture in the race to the bottom on cost-cutting and safety, which the noble Baroness, Lady Brinton, referred to.
I think it will be found that the amendments are clear, written in plain English and perfectly understandable. As I say, they do not set in place detailed definitions or administrative schemes but seek to establish principles. I consider that they would greatly simplify what I and, I believe, other noble Lords and the Government are seeking to achieve. They would, I hope, minimise the administrative burden on government and the attendant risks of action on defects and their enforcement, but a clear statement of principles must come first.
I do not think I have ever received such a volume of correspondence on any matter in which I have been directly involved in this House as has happened here. This has come in personal emails from innumerable leaseholders and from residents’ groups, management groups, mortgage lenders, property consultants, professional bodies including the RICS and ARMA, and the British Property Federation. Even a former Australian state premier, Ted Baillieu, who now heads that state’s cladding taskforce, thinks this is a game-changer that it will look to as well. The eyes of many people in this country and elsewhere are on us.
In particular, I had an email yesterday from a Mr O’Connell, vice-chair of the Lancaster West Estate Residents’ Association—the estate that includes Grenfell Tower—in support of this. The Mayor of London has also indicated his support. I thank them all, and the social media have been absolutely buzzing. I hope the Minister will be able to repeat his previous support for the principle and that we can move on with this. I would like to make one or two comments on some of the other amendments in this group, if I may be given the time to do so.
Amendment 24, in the names of the noble Lords, Lord Young of Cookham and Lord Blencathra, is one that I would have contemplated tabling, because I felt it was so important for the debate. I am very glad that the two of them have tabled it. I understand that it was drafted by Professor Susan Bright and her husband. I have had the opportunity and the pleasure of meeting both of them virtually, at an online meeting. Professor Bright is an academic of absolutely unimpeachable principles and a stalwart campaigner for leaseholder justice, so nothing I say about this amendment or anything else should detract in any way from the high regard in which she is rightly held. I feel that both she and the noble Lords are very much on message about the necessity of freeholder redress. If there is a divergence, it is on methodology rather than on the principle, as I have said.
The amendment places remediation in the hands of either
“the appropriate national authority or the building control authority”.
The former would need to be created; if the Secretary of State does it, the question is: what does that mean in terms of additional bureaucracy? I thought that one of the things the Minister was heavily against was bureaucracy, so how to make that bureaucracy-light would be a key factor. As my own amendment would mean the vesting of the administration of a redress or remediation scheme in some body or other, which I do not specify, we are effectively on common ground there. Something needs to be done.
As to the second, we diverge a bit. I am not sure that local authorities have the financial or manpower means to deal with this; I tend to suggest that they do not. They would require the necessary resources up front, and the question is how they would achieve that and over what timeframe. Would that import a delay? They are certainly not likely to want to venture into new and contentious territory without a secure backstop to protect their budgets. More crucially, in a number of cases they are likely to have ongoing relationships with the very developers they may be trying to hold to account. Even their local authority building controllers may have signed off works that the authority might theoretically be pursuing.
The Lancaster West Residents’ Association, which I referred to earlier, wrote to me saying that it is
“very concerned about the ... section 36 amendment”—
that is, Amendment 24—
“and its reliance on Local Authorities to go after builders to recover the costs of remediation. There is a massive conflict of interest as they are the people who signed off the buildings in the first place. There certainly is no confidence here in our council the Royal Borough of Kensington, as they were the authority which certified Grenfell tower as safe”.
On the detail of the insertions into the Building Act 1984, I think that proposed new Section 36A(1) should clarify that it refers to the regulations in force at the time of construction and not some other time. I fear that proposed new Section 36A(3) makes unrealistic assumptions about a local authority or Secretary of State undertaking the works, and the reimbursement provision seems potentially inconsistent with the disbursement statement limitations in Amendment 130.
I had to take some advice on proposed new Section 36C(1) because, although I am a member of the Chartered Institute of Arbitrators, I am not a practising arbitrator. Daniel Greenberg tells me that it is commonly helpful to deploy arbitration as a means of alternative dispute resolution to resolve a dispute before a binding decision has been rendered, but that it is difficult to see that it has a role after that point, as appears to be suggested in the amendment. More fundamentally, he says, in this context we are dealing not with disputes about how particular contractual or statutory provisions are to be applied, in which context arbitration can be helpful, but with cases where there will already have been repeated refusal by those who have created a hazard to accept responsibility for remedying it. In that context, what is required are enforceable rights for leaseholders. Arbitration is not a substitute for enforceable rights; it may simply perpetuate delay and encourage failure to accept responsibility, as well as creating additional delay and obstruction in the form of satellite or subsidiary litigation further on down the line.
In proposed new Section 36D(2), no provision for appeals against a local authority or Secretary of State decision is specified, and my concern is that this might lead to judicial review.
I suggest that proposed new Section 36H(2)(b) opens up the need to apportion responsibility, which my amendment specifically sets out to avoid as it is one of the failings of the Environmental Protection Act that you had to apportion the liability. Here we are not trying to do that; these amendments would insist that those primarily responsible sort that out among themselves on a strict liability basis.
The government amendments in this group relate to issues around the levy. The need for this and the application will to some extent depend on the success or otherwise of a perpetrator pays amendment. It appears to encapsulate the moral hazard of failure to target and thus potentially lets poor practitioners off the hook. Will this levy be ring-fenced for a purpose connected with remediation and its administration? If not, it is just another tax. In addition, what will it cost to set up and administer? I confess to being against the blunt instrument of indiscriminate levies, because they apply to those with culpability and those with none. I am quite keen that those with culpability get stuck with the levy as part of their atonement.
I will stop there. I had a comment or two on the amendment from the noble Lord, Lord Blencathra; his proposed new subsections (2), (3) and (4) have the same apportionment problems as the Environmental Protection Act. I want to avoid that. All these things may sound like criticisms, but they are all capable of being sorted. I do not think there is any disagreement on that.
My Lords, since it seems de rigueur to start with a quote, I suggest we start with Jean-Baptiste Alphonse Karr:
“Plus ça change, plus c’est la même chose”—
the more things change, the more they remain the same. However, we simply cannot have that quote for this Bill; we do not want things to remain the same. That is why I prefer the quote from Heraclitus the Obscure of Ephesus: “panta rhei, ouden menei”—all things change, nothing remains. That, I suggest to my noble friend, should be the strapline of this Bill, if he cannot put it into the Long Title.
As my noble friend Lord Young of Cookham said, this group contains probably the most important amendments in the whole Bill, along with government Amendment 114 on the cost schedule. That is why we will probably spend more time on it than any other. We have four major groups of amendments here, and we are all seeking to do the same thing. We have the Government’s amendments, my noble friend Lord Young’s amendments, those of the noble Earl, Lord Lytton, and mine. I am sorry that I have about half the amendments in this group. The sets from us Back-Benchers are all complementary. We are all in the same boat; we may have slightly different strokes, but we are all rowing in the same direction as we seek to toughen up the Government’s position, which is a very good start.
First, my noble friend the Minister said on Monday—when I was unable to be present—that he found my speeches priceless. I take exception to that. He is wrong; they are not priceless. If the Government accept my amendments, they will have a huge cost attached, starting at £15 billion. Every penny will be paid by the builders and developers, and that sum is just the excessive profits they have made in the last few years. They are not priceless—there is a good cost attached.
I am very pleased to be able to support my noble friend Lord Young of Cookham’s amendment and the excellent way he has introduced it today. I will not repeat his arguments, since I cannot improve on a single word of them. I also commend Amendment 115, in the name of the noble Earl, Lord Lytton. He is also an expert in these matters, as we heard just now. I particularly like his introduction to the amendment:
“The purpose of the FHRS must be to ensure that residential blocks of flats with fire hazards are made safe … speedily, efficiently, effectively and proportionately … without recourse to lengthy and expensive legal proceedings … without cost to leaseholders or occupiers, and … in accordance with the perpetrator pays principle.”
He replicates those principles in Amendment 118, which I am also pleased to support.
Now that your Lordships have heard from the experts, this enthusiastic amateur will attempt to explain his amendments in this group. Like my noble friend Lord Young of Cookham, I agree that my noble friend and the Minister, Michael Gove, have transformed the landscape of fire remediation works, and the government amendments to this Bill go a very long way to delivering on the pledge that no leaseholder will pay a penny and that the perpetrators will pay. But as my noble friend Lord Young of Cookham pointed out, not all relevant buildings are covered, not all leaseholders are covered and not all defects are covered. The object of my amendments—and of others—is to deliver the policy, fill in the gaps and make the protection more robust.
Two weeks ago, a noble Lord following a speech I made in the main Chamber said that I had, in my usual way, set out an absolutist position, but that I was nevertheless right to raise the issue, et cetera. So, like the noble Earl, Lord Lytton, I have attempted in my Amendment 148 to set out some key building safety objectives to which the Secretary of State and everyone else exercising functions under the Bill must have regard to when making regulations.
I do not like these EU or UN regulations which begin with dozens of meaningless “whereas this” and “whereas that”, et cetera, and our Office of the Parliamentary Counsel does not like declaratory objectives which do not actually make substantive law. Nevertheless, when I was chair of the Delegated Powers Committee, I and my committee heavily commended my noble friend’s boss, Michael Gove, on the Fisheries Act—which has now passed—because it began with a series of objectives, which we had never really had before in legislation. We said that it was a wonderful way to start the Act, and that got universal approval from all the countries of the union. My noble friend should go back to his boss and say that, if it was good enough for the committee and I to commend him then on setting objectives at the start of the Bill, he should adopt either the Lytton principles or the Blencathra objectives and put them at the start of this Bill, setting the scene for what we want to do in future. I invite colleagues to look at my Amendment 148, and I promise then that I will not read it out to them. I will read out my other amendments, however.
The concept behind my Amendment 34 is very important since it relates to Clause 57, one of the most important clauses in the Bill. But the clause has a weakness, in my view, in that it gives the Secretary of State various regulation-making powers to create a levy or levies but does not set a maximum limit on what the levy might be. From my experience in the Delegated Powers Committee and the legal advice we received, any general levy-making power in regulations is highly vulnerable to judicial review and challenge unless the Secretary of State is operating within maxima parameters. It does not matter what those maxima are so long as they are in the primary Act. That means that any levies set by the Secretary of State under that maximum cannot be challenged on the grounds that they are unreasonably high.
The big building companies have already promised— I think I read this in an article last week—to challenge Gove and throw millions at lawyers to sabotage the whole levy system and claim that regulations setting the fees are ultra vires. The levels I have set out in my amendment may seem excessive; I doubt that the Secretary of State would ever need to set a levy at that rate, but it legitimises any levy he sets under that maximum parameter.
My Amendment 39 simply states that
“‘person’ includes bodies corporate including a holding company or special purpose vehicle”.
In reading the Bill and the government amendments, I think that where the Government have used “person”, it includes bodies corporate, so I will not labour that point. I would just like an assurance that in every circumstance where the Bill talks about the obligations on a person or a levy on a person, it would include bodies corporate.
My Amendment 78 seeks to insert a new clause into the Bill setting out what I call the “Fire hazard remediation objectives”. As I said about my Amendment 148, these objectives may not be perfect, but I am adamant that the general concept of them is.
This very important Bill started as a bit of a dog’s breakfast, amending various Acts and introducing the idea of a regulator—not a coherent Bill in itself but one that amends this, that and the other. However, since the Bill left the Commons, the Government have rightly—I approve of it—hijacked their own Bill by introducing all these amendments, which give the Bill a whole new importance. But they are scattered around it, and there is no coherence. That is why I repeat my Second Reading plea that the Bill team and the Office of the Parliamentary Counsel reorder this Bill for Report and put all the new clauses relating to leaseholder protection measures and perpetrator pay measures into two new parts at the front of it. It would not just be window-dressing; it would make a statement to all the companies involved in building construction that we, the Government and this Parliament, are taking very seriously all aspects of making the perpetrators pay and protecting leaseholders. I suggest that it would also make the Bill a dashed sight easier to read.
This is where my second list of objectives comes in. We should kick off with clauses on fire remediation work, followed by the government clauses, as toughened up by the amendments from my noble friend Lord Young of Cookham and the noble Earl, Lord Lytton—and possibly even some of mine.
In Amendment 78, I set out the objectives. I listed 11 of them. On the perpetrator pays objective, it says:
“The perpetrator pays objective means that those who have built as the main contractor or a sub-contractor or supplied materials for the construction of any building which is now assessed as being not fit … for purpose because of a fire or other risk should be responsible for all aspects of the remedial works.”
The strict liability objective means
“that responsibility for serious defects in the original construction or refurbishment of buildings should rest with those who designed, specified, constructed, or supervised the works or made false claims for construction products and they should be liable without any requirement for an individual assessment of their relative culpability.”
The joint and several liability objective means
“that all and any companies or businesses involved in the flawed construction should each be liable for the full costs of remediation works and it should then be up to each company to seek redress from their co-constructors, contractors or suppliers.”
That is a terribly important concept, as we do not want individual leaseholders to have to go after individual companies who will say, “It wasn’t me, guv, it was the other one—it was the subcontractor, the electrician, the plumber.” They should be able to go after any single company or organisation, whether it is the architects or anyone else, to recover the full money, then leave the other companies to fight it out among themselves. That is joint and several liability.
The holding company pays objective means
“that any company which set up a subsidiary or special purpose vehicle in order to construct buildings should be liable for remedial works even if that subsidiary or special purpose vehicle has been wound up and irrespective of whether the holding corporation or special purpose vehicle is based in the United Kingdom or not.”
The subcontractor pays objective means
“that a subcontractor should not be able to escape liability”,
as referenced by my joint and several liability proposal,
“merely because that company was not the main developer, and the construction contract was not in its name.”
The taxpayer as interim remedial works funder objective —horrible terminology—means
“that in order to get remedial works underway as quickly as possible the government should, where desirable, provide funding for those works and recover it from those who are liable for the remediation later.”
The taxpayer as last resort objective means
“that when it has not been possible to find or collect payments from construction companies, their sub-contractors and suppliers, and if there is no other source of funding, the government should be responsible for the remediation costs.”
The no retention objective means
“that in situations where remediation is involved main contractors should not be able to hold back payments to their subcontractors or suppliers until such time as those subcontractors or suppliers undertake more work for the principal contractor.”
The mandatory information objective means
“that if any freeholder, landlord, or managing agent of a property conducts any safety study whether fire or otherwise on the whole or any part of the property then it should be a requirement that that study is shared with all those with an interest in the property including leaseholders.”
The managing agent cost control objective means
“that those who manage properties on behalf of freeholders or landlords should be prohibited from charging excessive fees for undertaking fire safety studies or applying for fire remedial work funding.”
The final objective, the regulator assistance to lease- holders objective, means
“that the regulator should, where desirable, take up cases on behalf of leaseholders either individually or collectively who are in dispute with freeholders and landlords over the nature, extent and costs of any remedial works.”
These objectives are not perfect—they are technically flawed and so on—but I submit to your Lordships that the concept is the right way to go.
My Amendment 79 creates what I call a fire risk assessment authority. I will not spend any more time on it because there are better alternative suggestions in the amendments other noble Lords have proposed today. However, my Amendment 80 suggests that an appeal board be set up. My format here may not be perfect but the Government need to create such a board because, otherwise, every decision of a panel or body of wise men and women stating that a building or parts of it are a fire risk will be challenged in court, and long delays will ensue. It is our experience that where there is an appeal body, one can head off judicial review, and that is better than the arbitration proposed by my noble friend Lord Young, if I may say so, or the complex procedures in the Bill. A separate independent appeal body can cut off judicial review.
I apologise to noble Lords since I have plagiarised or simply copied some of their drafting in Amendments 81 and 82 in this group. I had drafted the new clauses on a fire risk assessment authority but when I saw a draft of some ideas on what should be in notices of failure to comply, I thought “I cannot improve on that so I will just pinch it”. Where I have differed is to include a wider group of people and corporations that may be liable, such as: the principal developer, contractor or constructor—we all agree with that; any subsidiary or special purpose vehicle created by the person or company, even if it has been dissolved; and any architects or designers, because it is a major flaw that they are not included. They are the ones who designed the things and said, “Use Joe Bloggs’s faulty cladding”. They should be equally responsible and liable, and they have deep pockets. I also include any other subcontractors involved and the suppliers of materials.
I also stress joint and several liability so that every person or company on that list is liable for the full cost of remediation works. That is very important. The leaseholders only need to get money from one of them and they can then fight it out among themselves. My amendment also states that, in addition to external walls, the fire risks for which the companies are liable should also include such things as: internal walls and the materials inside any walls; fire doors; balconies; lack of sprinklers, fire detection and control systems; and inadequate escape routes. Again, the Secretary of State would have the option to make regulations on these matters; he is not compelled to do so but it is better to have the provision there in any case.
I do not want my noble friend the Minister to say, “Oh, we can’t do that”. Most of my amendments use the formula “regulations made”. The Secretary of State may, if he is so minded and if circumstances permit, do these things in the future. Wearing my former hat as chair of the Delegated Powers Committee, I would totally condemn all these excessive “regulations made” provisions. There have been many times when we have heard the Government say, “The Minister is not going to use these powers but we are taking them just in case”. I suggest to my noble friend that he can take these powers just in case.
Getting industry to pay will be a challenge and take time. That is why my Amendment 83 creates a system of interim relief whereby the Government would advance the money needed for remedial work and then recover it all from the contractors, developers and those that I have already listed. If the Government do not like that, they will dislike Amendment 84 even more, since it says that if the Government cannot find a single person to pay, then the taxpayer will be the payer of last resort. That will happen in any case. It has to, but I hope that, if we can get the money from the developers and the guilty people—the perpetrators—the burden on the taxpayer will be lessened.
Finally, noble Lords will be relieved to know, I wish to comment on my noble friend Lord Young of Cookham’s Amendment 130, which I have also signed. I particularly commend it because he has inserted figures for the maximum amount of levy that companies will be able to pay, such as 15% of their turnover, 50% of their pre-tax profits or 80% of their dividends. When companies have been paying their shareholders hundreds of millions of pounds in dividends, taking an 80% slice out of their dividends first, to remedy their construction failures, should concentrate minds rather wonderfully. I really like Amendment 130 because it has put those sanctions in there. It is not the Government suddenly inventing a concept that will be challenged in judicial review. If the maximum payments are in the Bill, it stands a good chance of weathering any legal challenge.
I am sorry that I have taken so long on so many amendments, but this group is the most important to the Bill. Of course, many of the amendments are technically flawed, but we are trying to draw attention to the gaps in the Government’s amendments and suggesting different, competitive solutions, but we are all rowing in the same direction. I urge the Minister to acknowledge honestly that there are gaps in his legislation and that the amendments proposed by noble Lords today, or parts of them, will allow us to plug those gaps.
I will probably not retable my amendments at Report but, if my noble friend does not bring in government amendments to fill those gaps, I hope that all noble Lords here today can agree some joint amendments which cover the lacunae identified today. I suggest to my noble friend that that will get universal support in the House, and I suspect that even the Commons, with the Government’s theoretical majority, will agree and vote for our amendments, even if the Government do not like it. I commend my amendments to the Committee.
My Lords, I shall speak to Amendment 35. I was expecting others to speak to it first, but I shall address it briefly. I declare my interest as a vice-president of the Local Government Association. I, too, am an enthusiastic amateur and rise with great hesitation. I also apologise for arriving fractionally late and going in and out, but I have amendments about to run on the Judicial Review and Courts Bill, so I have been trying to balance things in two places.
Whenever a new tax is applied to an industry or business, it is extremely rare that a given organisation simply chooses to absorb that additional cost. In the overwhelming majority of instances, the tax will be passed on to the consumer as a price rise. Businesses rarely undermine their own bottom line when there is little competitive advantage for doing so and where the cost can be simply passed on to the consumer without hurting the demand for their product.
The market is such that there is a massive, chronic shortage of supply of homes in the UK. This undersupply means that, in reality, developers know that demand will not greatly suffer as a result of the building safety levy. They will not absorb the tax. I fear it will simply be priced on top of the cost of new properties. After all, this is the free market, and we cannot escape the fact that that is likely to be the consequence of the levy.
I am not at all opposed to the levy in itself. The aim as outlined by the Government is to recoup money from the industry to part fund the hugely welcome grants that the Government have provided to fund cladding remediation. It is morally right that developers contribute via this charge for their past mistakes. What I am concerned about and object to, which is why I put my name to this amendment, is the idea that social housing providers will also have to shoulder the building safety levy, if I have understood it correctly.
As I said, taxes rarely get simply absorbed. The majority of social housing providers, as in housing associations, are non-profit, so the question is: where will they shift the cost to? As they do not make a profit, they are unlikely to tap into their capital reserves to subsidise the tax. Even those for-profit social housing providers are unlikely to allow it to eat up their presumably slimmer profits compared to those of private developers. So where will it go? As already alluded to by previous speakers, it could be passed on to tenants in the form of increased rents, which would somewhat undermine the purpose of social housing—to have an affordable place to live. Although that alone is a worrying prospect, what concerns me is the effect it could have on the supply of social housing. We already have a major social housing deficit. The homeless charity, Shelter, estimates that more than 1 million households are waiting for social homes. A building safety levy will leave social housing providers with the option of building fewer homes, due to the increased construction costs, or building out at the same rate with the same costs, but shifting the burden of the levy on to construction costs, the result being a lower quality of social housing.
Imposing this levy on councils means council tenants could, in effect, be subsiding the failure of private developers and paying the cost of remediating both council housing and private housing. We desperately need more social housing, and we need it now, which is why we ask the Government: what assessment have they made of the impact of this levy on social housing providers, the supply of social housing and the rental costs faced by social housing tenants?
Finally, I add my support to Amendment 118 proposed by the noble Earl, Lord Lytton, and Amendment 24 in the name of the noble Lord, Lord Young, both of which are supported by the noble Lord, Lord Blencathra, along with the corresponding Amendments 115, 119 and 130, which aim to solve the issue of leaseholder remediation to ensure that the polluter indeed pays. I would also like to pay a huge tribute to Steve Day, whom many of the Committee know. It has been partly down to his tireless campaigning, as well as people from other cladding groups, that the debate has entirely shifted to there being almost unanimous agreement that the polluter must pay, to such a point where we have two amendments aiming at this end. If I may say so, I know the Minister has also been instrumental in shifting the Government’s position in the huge progress made since last year on this matter. I am grateful to him for his tireless efforts in delivering the Government’s much improved and very welcome offer to leaseholders.
I know both “polluter pays” amendments are highly technical and do not pretend to be a legal expert, which is why I felt it prudent not to explicitly add my name to either. I do, however, understand the general thrust of what they are trying to achieve. I hope the Minister can assure me that the Government’s lawyers are looking carefully at these amendments with a view, I hope, to bringing forward their own amendment that captures the essence of these proposals. In the meantime, I thank him very much for what he is doing. I am glad to think that everybody, from all sides of the House, is trying to work to move this forward with urgency.
Then I will speak to my amendment, as I stood up first. As noble Lords have said, this has been a really important group of amendments to debate. I will speak first to my Amendment 35 and I thank the noble Baroness, Lady Pinnock, and the right reverend Prelate the Bishop of St Albans for their support.
Clause 57 gives the Secretary of State powers to impose a new building safety levy in England that will contribute towards the Government’s costs for remediating historical building safety defects. This will apply to developers making an application to the building safety regulator for building control approval, which of course is the new gateway 2 process that we have debated throughout discussion on the Bill. The problem we have, which is why I tabled this amendment, is that it will also be imposed on councils—the social landlords. Councils of course already face additional financial pressures, due to the Covid-19 pandemic.
We should not forget that the key role of local government is to serve communities—the Minister will completely understand this—and provide essential services. They are not the same as developers, so the purpose of this amendment is to make social housing providers exempt from the additional financial burden of the Government's proposed levy, to prevent council and social housing tenants subsiding the failures of private developers and paying the cost of remediating both council housing and private housing. We are concerned about what may be the unintended consequences of the Bill as it stands, because if the levy is imposed on local authorities, it will increase the cost of building or refurbishing social housing, or increase rents, as the right reverend Prelate said. Yet the benefits to funds will not be available to the tenants, who would otherwise have benefited from lower rents or better housing.
The money to fund remediation must come from somewhere. Inevitably, it will be at the expense of another critical service, either in housing or through increased rents. To ask for that does not seem the right way forward. Does the Minister recognise the potential impact of the levy on social housing supply? Again, the right reverend Prelate the Bishop of St Albans talked about our desperate shortage of housing in this area. We do not want anything that will negatively impact that. It is important that we do not pit the objective of providing for those in housing need against the objective of making buildings safe, when both must be delivered.
I turn to the other amendments in this group, looking first at the amendments in the name of the noble Lord, Lord Young of Cookham, which he introduced clearly and comprehensively. To us, they seem eminently sensible and practical, and the right way forward. As he said, Amendment 130 proposes that the Government establish a comprehensive prospective levy scheme on all developers, the money from which would go towards remediating the defective buildings. As I understand it, his Amendment 24 is consequential on the establishment in Amendment 130 of the building safety indemnity scheme. That means that the removal of building work that contravenes fire safety regulations could be carried out, if his Amendment 130 were accepted.
What came through in both the noble Lord’s introduction and how other noble Lords introduced their amendments is the fundamental principle that it is right that the person who is responsible for breaches and poor building work should be made to put it right. This is a simple, basic principle that I think we all agree with. It should not be that difficult for the Government to accept it; to me, the Bill already accepts it. Why not work with noble Lords who have put forward such important amendments today, take them forward and give us much more robust statutory protection for leaseholders, extending it to all work, as the noble Lord said, that contravenes regulations? We would strongly support any amendment that makes buildings safer and protects tenants properly.
I was also struck that the noble Lord, Lord Young, referenced freeholders. They have not been talked about enough in debate on the Bill, so I thought it was very important that that reference was made and that they are not forgotten.
The noble Lord, Lord Blencathra, has a number of amendments looking to make protections more robust. We strongly support his zeal in what he is trying to achieve. His objectives are really important; as he said, they are not exactly perfect in every way, but we are not about perfection here. This is about putting forward the issues that need to be considered to improve the Bill. He has done that very clearly. His aim to pull the “perpetrator pays” and protections for leaseholders together is important, because it makes the objectives and the direction we need to go in really clear.
The noble Earl, Lord Lytton, was right when he said that his amendment and those from the noble Lords, Lord Blencathra and Lord Young, come from the same point of principle—an important principle that we support. He is right that this is quite simply a matter of justice. As the amendment says,
“responsibility for serious defects in the original construction or refurbishment”
“with those who designed, specified, constructed, or supervised the works or made false claims”—
and that is not the leaseholders. It is important that leaseholders feel that their position on this is fully understood and that we are moving forward in this way.
The principle that the perpetrator pays is also really important, but I should like to ask the Minister something, because I am getting a bit confused. What is the difference between a perpetrator and a polluter paying? It has got a bit confusing to have these two phrases.
I put this amendment forward originally to your Lordships’ wonderful team of parliamentary clerks, who did not like the term “polluter”. They felt that pollution as a term of art meant something different—if you like, involving a release or deposit of something, rather than sticking something together wrong. But they said that they would accept “perpetrator pays”, so I said, “Okay, all right, so be it.” But actually I think it is a better term, so I give them due credit for that. That is the origin of the phrase.
Perhaps someone should table some amendments to change the word “polluter” in the Bill to “perpetrator”, so we can all be in the same place.
Very briefly, I turn to the government amendments in this group. At earlier stages of the Bill, it was disappointing that what it contained fell significantly short of the action that was needed to protect leaseholders, so I put on the record how warmly we have welcomed the new amendments that the Government have proposed to address a lot of the urgent issues raised through debates on the Bill so far. However, there are a number of key questions that I shall put to the Minister for clarification today on the amendments that we have debated. I shall not go into detail, because we have heard an awful lot of discussion around them today—so I shall be brief.
How strongly committed are the Government to using their proposed enforcement mechanisms to ensure that industry plays its part and pays the funds that it has been asked to? How will the Government continue to play their part and pay the funds needed to end the crisis while ensuring that funding for affordable housing supply is protected, regardless of the contribution of funds from industry? How can leaseholders who have already paid remediation costs recover those costs retrospectively? I do not think that that has been properly dealt with so far. How will the Government ensure that new funding responsibilities for social landlords will not undermine their role in providing housing supply? That references back to my amendment.
I am sure that we will revisit some of those questions later in debates on this Bill. I ask a brief question about the new clauses in Amendments 74 and 75, which give the Secretary of State power to make regulations that
“prohibit a person of a prescribed description from carrying out development of land in England”,
and/or imposing a building control prohibition in relation to persons of a prescribed description. Those powers would be for any purpose connected with building safety or building standards. I should like clarification, because it is unhelpful that a
“person of a prescribed description”
is not defined in the amendments, which simply state that it means “prescribed by the regulations” under the clause. This is what I am slightly confused about; does it apply to persons who have been found to be in breach of building safety, or is it the means by which government would prohibit those who do not contribute to the extra £4 billion fund? Some clarification on that point would be really helpful.
I hope that the Minister has listened very carefully to the important points that have been made by noble Lords in this debate, and I end by saying to him, in the spirit of what has been going on earlier, acta non verba.
I know we have a fuel crisis, but it is bracing in here; I should be used to it, coming from Yorkshire.
We have come a long, positive way since we debated these issues on the Fire Safety Bill. Moving from one or two voices across the House pushing the concerns of leaseholders to reaching a place where there is agreement that there must be a government-led solution to their trials is hugely welcome. I pay tribute to the cladding campaigners, who have never given up and have pushed us all into the position where we are debating this today.
I have a couple of process points first, before I comment on some of the issues raised. First, I agree with the plea from the noble Lord, Lord Blencathra, that on Report we perhaps have a new part to the Bill that puts all these amendments relating to the remediation of defects in one place. That would be hugely helpful, now but definitely in future, as the industry has to respond to whatever is decided. It would create clarity.
The second point to make is that we have again had welcome but last-minute amendments from the Government without a written Explanatory Memorandum. It would be really good to have something we can all have a look at before Report. An impact assessment would help as well. In particular, a very brave amendment is proposed by the Government about blocking developers, even when they have planning consent, if they do not pay up. That is a really radical proposal, and I should welcome an explanation of how it might work and an impact assessment.
The final process question is that we have had before us today three key proposals to try to tackle the question of who pays for the 30 years of fire safety defects and building safety defects. The series of amendments from the noble Lord, Lord Blencathra, tackle the same issue. There surely has to be a better way of trying to find a common, workable solution that we could agree to than debating it in a formal way. If we are all agreed that this is the direction of travel, let us work together to try to find it rather than have a formal debate. I leave it to others who know processes much better than I do to decide how that might be.
I want to make a few comments on what has been proposed. The noble Lord, Lord Young, reminded us that in January the Secretary of State finally made a dramatic change to the debate we have been having and said that leaseholders should not pay. I want to keep to that, as the noble Lord, Lord Young, was intent on doing. He pointed out that there are gaps in what is being proposed. As I have consistently said, the leaseholders are the wholly innocent victims of this debacle. On this side, we will back proposals that can guarantee that leaseholders do not have to contribute a penny piece to fire safety and building safety defect remediation.
I thank the noble Lord, Lord Young of Cookham, and the noble Earl, Lord Lytton, for their valiant attempts to seek a means of achieving the justice we are all looking for by providing alternative approaches. The very fact that the amendments have had to be tabled indicates that the Government’s attempt—though it is a huge step forward; I acknowledge that—does not succeed in achieving the aim that I espouse, which is that leaseholders pay nothing. That is going be my new phrase: leaseholders pay nothing. The noble Lord, Lord Young of Cookham, and the noble Earl, Lord Lytton, pointed out the gaps in the Government’s amendments, and we ought to listen very carefully to that because, as I say, we are all trying to get to the right place here.
The key question is: how do we extract the money from the people who have caused the problem? Unfortunately, we have no indication from the Government whether the levy system and the penalties for failing to pay will, first, raise sufficient funding to pay for it all. Secondly, we have no indication whether it will be watertight. We know that developers are already seeking legal advice as to how these levies and responsibilities can be circumvented, and material manufacturers are going down the same route, as will contractors and subcontractors. Litigation will ensue and the risk is that the work fails to be undertaken because no money is raised. That is unfortunately where this might lead if we are not careful.
I cannot remember if it was the noble Lord, Lord Young of Cookham, or the noble Earl, Lord Lytton, who said that time is of the essence for these folk. Some of them have already got cladding off and sheeting up in this awful weather, and the building replacement work has stopped because the funding and who will pay is not clear. Leaseholders have already suffered five years of their lives being on hold and their property having no value while those who caused the problems could well be left to fight it out in the courts. I thought the amendment in the name of noble Lord, Lord Young, dealt quite well with that. Maybe that is something the Government can pick up.
I accept that this is a very complicated issue to resolve, which is why, with my zero technical expertise, I have not tried to resolve it through detailed amendments to this Bill. I am full of admiration for those who have spent time trying to find a way to make perpetrators pay. In the end, I fear that the Government may have to step in, fund the remediation so that we get something done and then use their might to extract the funding from those who caused the problem. I look forward to what the Minister is going to say in response to these critical amendments. I want to hear from him on how the Government will ensure that remediation work will be completed within a tight timescale, whatever that is. “Shortly” is a key word that the Government use, and I always worry about it. “In due course” is another.
Yes. “Drectly” is what they say in Cornwall, which means “This year, next year, some time never”. I should like a bit of clarity. Timing is key. I should like to hear what the Minister is going to do about trying to get it done. How will we stop the developers and all those who we are going to try to get the money from through a levy wriggling out of their obligations? That is one of my fears in all this. Then there is the rate of the levy. Can we be given assurances that the rate will be of a sufficient level to pay for the remediation? That is key. I know that the Minister cannot give us a figure, but a broad brush assurance that the levy is going to do it would be good.
Retrospective compensation for those leaseholders who have already paid out should be considered. Some folk have gone bankrupt because of this. That is because it took time to get everyone together to deal with the problem. I know that retrospective compensation is hard to do, but we are putting back the clock 30 years in looking at these defects. If we can do that, we can look at retrospective compensation.
Leaseholders should pay nothing—that is where I am. We on this side support an amendment that gets there. As I say, I am full of admiration for people who, with their expertise, have tried to bring the Government to the place where they need to be. If the Minister is going to say yes to all these things, we will all leave happy.
My Lords, this has been a very good debate. I have enjoyed listening to virtually every speech, including that of the noble Baroness, Lady Pinnock. I am not going to pick out any speech that I did not like, but the contributions were very good. I am reminded of when I met someone who worked for Senator Cory Booker when he was mayor of Newark, which is a deprived part of the United States. Apparently, at a Democratic National Convention he came out with a phrase that sticks with me. He said:
“If you want to go fast, go alone, but if you want to go far, go together.”
When it comes to making sure that we get the polluter to pay, this Government are not proud about picking the best ideas that people have put forward today and putting them into the toolbox to ensure that we do precisely that.
I think of my noble friends Lord Young and Lord Blencathra, to whom I will add the noble Earl, Lord Lytton, as the three wise men. I was Faith Minister, so that description is appropriate. I have to say that the prize for the wisest of the wise goes to my noble friend Lord Blencathra, who seems to have that intellectual agility to change his position based on circumstance. He is someone who was a distinguished chair of the Delegated Powers and Regulatory Reform Committee one week, and the next week says, “Well, that was last week and this is this week. Come on Secretary of State—think about these ‘just in case’ powers”. We will think about them, but I thank him for providing us with that breadth of thinking.
I also pay tribute to my noble friend Lord Blencathra for suggesting that we look at reordering the Bill or setting objectives, as the Fisheries Act does. He also gave some advice; I will read out a note about why there needs to be a maximum for the levy. These are all great tips. To the noble Baroness, Lady Pinnock, I say that we will look at whether we can produce a written Explanatory Memorandum and of course we need to do impact assessments. These are all jobs of work and we will see how quickly we can get those things done. This is all in the spirit of wanting to be helpful and to have a better Bill, so I take all those points on board.
Where I push back, with all respect, is that one of the things I was passionate about was to have a cap on liability, and the Florrie’s law thing is not to be knocked. It is separate to “polluter pays”; it is a protection in law to stop those Section 20 notices flying in. Leaseholders are given these bills, sometimes even in draft form, and suddenly feel they have to pay. It is important to understand that the cap works as a cap—a maximum. It also applies to the money already spent by a leaseholder on interim costs. We are talking about retrospective compensation. If they have spent £7,000, £8,000 or £9,000 on interim measures, they are already approaching the liability cap.
It is very important to see the cap as a way of stopping it exceeding that amount over time. That is not to say it is a panacea but, as I have said to my noble friend Lord Blencathra in discussions in person, we should see protections as one thing and “perpetrator pays” as another. Let us not knock the idea of a cap. It was put in regulation as Florrie’s law by my noble friend Lord Pickles, who I consider my mentor. It is a good idea to have that cap and I hope it gets the Committee’s support, but that is not to say we do not need to find the best possible tools to get the polluter to pay.
I have the words ringing in my ears from my noble friend Lord Young: “We are not there yet”. I think he has said that in every single speech so far since I became Building Safety Minister. What an enormous job of work we have done, and it is always greeted by “We are not there yet” —but I happen to agree with him. Rome was not built in a day. All I hope is that we do not take as long as building the great wall of China, which took some 2,000 years, but with his help and others’ we will get there.
I want to respond specifically on whether a developer is off the hook if he sells the building. I was struck by that, to the extent that I wanted to get a response. Developers are expected to fix their own buildings. The developer may be liable under the Defective Premises Act. Cladding manufacturers may be liable via our new course of action in Amendment 108. We are also extending the reach of civil liability to remove the protections that SPVs offer—that is piercing the corporate veil.
In response to the noble Baroness, Lady Pinnock, the way to get stuff done quickly is not to have a government programme then outsource it to a project management company, but to get the developers to fix their own mess. They can go off and do that. They have the engines to do that—they are builders, for God’s sake—so, yes, they have to go out and fix their buildings. The problem is the orphaned buildings where you cannot find someone who is responsible. The industry collectively recognises that it needs to make a contribution to those orphaned buildings as well. Negotiations are going very well; I have been in those negotiations and it recognises that we need to do this.
This is where I get to the point about the impact on supply. Although they are different, I do not make a distinction between public and private housing. If we have to fix a problem that exists in both social housing and private housing—and we recognise, collectively, that we need to fix that problem—I am afraid that, as the Minister for Building Safety, I probably will have an impact on supply. You have to put effort and energy into fixing a problem. It may be that there is an impact on supply. It is not for me or the Government to say what level of impact that will be but, crumbs, we have to get this right. It is right that we get the housing that we have today right.
We need to build new homes, of course, but to say that we can build the same number when we have to fix so many is a commitment I cannot make, although I am just the Building Safety Minister. We have to look at these things and recognise that there is a job of work to do to manage our existing asset base, but we also have a duty to build new housing and it will be difficult to do both. That is what both the registered social housing providers—registered social landlords, as they are called—and the developers have to do. They have to manage their existing base and add to new-build housing, and that is the problem.
In response to the noble Baroness, Lady Hayman, there is a total commitment to enforcing the law. That is why the strategy is to raise voluntarily and, if not, to impose in law. There is also absolute clarity that, if we put some £11 billion towards affordable housing—more will be social rented housing—there is a total commitment to protecting that money to ensure that we deliver the new homes that we so badly need. But let us recognise that there is a shortage of homes of all types and tenures. As a proportion of housing, social housing stayed broadly the same over the last 10 years. We have seen a massive increase in private rented housing, which is effectively providing a lot of the housing that would otherwise be social housing today. There has also been a decline in home ownership so we need more housing, including social rented housing. Supply is important for all types and tenures. I am sure that the noble Baroness would agree with that.
It will be difficult to do that when we have such a mess to fix. I do not want to resile from the fact that it will be difficult but we are asking the people out there who manage their assets, and who wanted to build new homes to meet the demand, to walk and chew gum. We have to think about doing those two things together.
I love the right reverend Prelate the Bishop of St Albans because he is so passionate. He has been a massive campaigner on this, and I appreciate that. But I just do not agree about the sanctity of social housing providers that have built rubbish—and I will give an example. A registered social landlord who owns a piece of land will have, to use the phrase in the amendment,
“designed, specified … or supervised the works”,
and they will have brought in a construction company. There are examples of that in the area where I used to be council leader. They will have done exactly what the noble Baroness, Lady Hayman, said when she described a developer, and got a construction company to build on their land. In this case they built homes of various sizes, wrapped in aluminium composite material or high-pressure laminates, without compartmentalisation. Then they are going to people with narrow shoulders and saying, “You pay for the mistakes that we oversaw if we can’t get the funding from government”. That is just wrong.
If you a polluter—it does not matter whether you are a social housing or a private housing polluter—you have to step up and take responsibility. I was a council leader for six years. If a council oversees its own land and builds rubbish it should do something about it, as it has broader shoulders than these leaseholders and shared owners, and the bailout should not just come from the taxpayer. That happens to be my opinion; it is not in the speaking notes. We have to be consistent about this. The levy should apply to people who have polluted, irrespective of whether they are a council, a social housing provider or a private developer, because they oversaw and built rubbish. As we know, if what you do does not meet building regulations then you contravene them, irrespective of whether an inspector of some description whom you selected signed it off. That is why we have things like the perpetrator pays provision and the polluter pays provision. I feel that very strongly.
I believe we have to be consistent about this, as hard as it is and irrespective of the noble objectives of a council. I was a councillor for 16 years, so I know what it is like to serve a community—it was amazing to serve mine, in the ward where I lived, for 16 years—and of course I understand that. But as a council leader, I would be ashamed of building rubbish. I would say, “I’ve got broader shoulders than some of those leaseholders”, and not run to the taxpayer to bail me out. I would try to fix it, as best I could, and go to the taxpayer only if that were not possible.
The noble Earl, Lord Lytton, raised resources and said that he was not sure that local authorities were up to it. I completely disagree. When I ran a small local authority in London, we had 5,000 people working for us—these are big entities. We have 300 authorities in the United Kingdom, and they are relatively big entities. I know that small district councils might be small, but even that of the noble Baroness, Lady Pinnock—Kirklees—is big. It has massive turnover and a huge payroll, I am sure. I believe that local councils do have the heft to contribute to the quality and safety of the built environment, so do not underestimate the ability of local authorities to be part of the solution.
I am being told to wrap up very quickly—in five minutes—because we want to get through to the next bit. I have lots of speaking notes, but I think I have responded to the noble Baroness, Lady Hayman of Ullock. We will resist exempting social landlords, for some of the reasons I pointed out. I think I explained that in my preamble.
I say to my noble friends Lord Young and Lord Blencathra and the noble Earl, Lord Lytton, that I am very much in listening mode. I would love to get something in the toolbox that helps us get the polluter to pay where building regulations have been contravened —which is a crime, as the noble Baroness, Lady Hayman of Ullock, pointed out. Let us get the best thinking to work and, like a mélange, pick and mix to see what we can do. Noble Lords know how government works, but I really appreciate the work and effort that have gone into this. I pay tribute to all the campaigners, and I know the legal brains behind both amendments are considerable. I am sure we can get something to add to the toolbox. That is all I will say at this stage. I will not comment further specifically on the three ideas pooled today, but I pay tribute to the three wise men.
I have some briefing on fire risk assessment authorities, on Amendments 79 to 84 which my noble friend Lord Blencathra tabled. I am afraid the Government cannot accept these amendments as they would interfere with our fire safety regime and the wider reforms we are delivering through the Bill. I am happy to meet my noble friend outside the debate to say why we are resisting them, but their spirit is right. That is the point—I understand why he has tabled them and I am with him in spirit. As the Opposition would say, acta non verba—I am giving him a lot of verba, but maybe not an acta on that one.
On Amendment 148, on the inspection of the Act and the building safety objectives, I again thank my noble friend and assure him that the Building Safety Bill already delivers on his objectives, as outlined in his amendment. I also welcome the intent of his amendment, which I believe is already captured in the government amendments tabled to the Bill. Again, I am afraid it is more verba than acta, but I thank him for raising this.
This has been an extremely good debate, with everybody wanting to stand shoulder to shoulder with leaseholders and shared owners—who have even narrower shoulders than some leaseholders—and wanting to protect them and deliver for the campaigners who have fought inveterately for some months to ensure that we recognise, as we all do, that they are victims of this crisis and need to be protected, and that we must get the polluter to pay. This group of amendments and all the thinking here today has been incredibly helpful. I thank everybody for the spirit in which this debate has been carried out.
My Lords, I am grateful to all those who have contributed to this long and important debate. I notice that what was the awkward squad last time has now been transformed into three wise men, so we are obviously making progress. On a more serious note, this debate is of enormous interest to thousands of leaseholders, many of whom have bills they cannot afford to pay on the mantelpiece. We have thousands of leaseholders who would like to sell but cannot, because their property is blighted. We have all wanted to come up with a solution this afternoon; I think we are making progress, as I will come on to in a moment.
One issue the Government will have to face is that leaseholders do not read 24 pages of legalese amendments to a government Bill. They remember the soundbites that I mentioned right at the beginning—the polluter should pay, not the leaseholder; the leaseholders are innocent; we have statutory protection. There is a risk that the exclusions in the small print will erode the good will that the Government have generated so far in the progress they have made. We need to do a little more to address those exclusions, which stop us achieving the principle to which the Government are committed—the polluter should pay, not the leaseholder.
The other thing I take from this debate—I hope the Minister will agree with this—is a point that I, the noble Earl, Lord Lytton, and the noble Baroness, Lady Pinnock, made, which is that we have to make an early start. We simply cannot wait until the money has come in from the levy to do the work. I will come back to this in a moment, but there was a suggestion from both the noble Earl, Lord Lytton, and my noble friend Lord Blencathra that the Government should provide the bridging finance—I think that was the word the noble Earl used—in order to get the show on the road and make an early start, rather than wait for the money to come in after long and expensive litigation.
The good news from this debate has been what my noble friend said at the beginning and again at the end. Right at the beginning, he said that what we need is a mixed approach—in other words, not total reliance on the approach that the Government have come up with so far but an approach that adopts some of the ideas that have been shared this afternoon. I very much welcome that and the spirit in which he said it.
The other bit of good news was that my noble friend said, again earlier on, that there are different types of freeholders. The ones I was particularly concerned about were the leaseholders who were enfranchised and are the freeholder. The noble Earl, Lord Lytton, came up with other freeholders, and my noble friend said at the beginning that we will need to subdivide freeholders. At the moment, they are all lumped in together. I am not sure we can leave that entirely to secondary legislation. I hope we can have some clarity between now and Report on exactly which freeholders are in the frame and which should not be.
I am very grateful to the noble Earl, Lord Lytton, who agreed that we both share the same objectives. I agreed with the point he made that we should avoid judicial review; there is a real risk that we could end up there. This may not be the place to drill down into the details of proposed new Section 36A(1). I am very happy to do what Ministers sometimes do and offer to write to the noble Earl to address some of the issues he raised.
My noble friend Lord Blencathra added his own suite of solutions in his own inimitable way, and I will look at Hansard tomorrow to see how they coped with the Greek quotation at the beginning of his speech.
The right reverend Prelate and the noble Baroness, Lady Hayman, focused on social housing, housing associations and local authorities. I had not envisaged that they would pay the levy, and I am not sure whether that is the Government’s position. They obviously may apply for building control and planning consent. I had not envisaged them being caught by the levy; perhaps we need a bit of clarity on that.
Despite what my noble friend the Minister said about housing associations bearing responsibility, they are in a slightly different position from local authorities in terms of the resources that have been made available. Even if local authorities have to pay for their own defects being put right, at some point somebody is paying for that. It is either some social housing that was not built or a reduction in social care. They can put it right, but there is a cost—
I think we had better move on from that.
My noble friend mentioned a group that we have so far not mentioned at all: shared owners. I think we need to bear that in mind.
My noble friend Lord Blencathra had a veiled threat that if there was not an agreed solution with the Government, there would be a conspiracy of either the wise men or the awkward squad. I think my noble friend the Minister needs to go back to his Secretary of State and say, “Look, everybody was really grateful for what we have done so far, but, Michael, I am afraid that it’s not going to take the trick. Either we can do a deal and take the credit for making the last step, or we don’t do a deal and we go down in flames”. I think my noble friend could put that proposition in more colourful language than I have used this evening.
Next time I speak, I hope that instead of saying we are nearly there, I can say that we are there, but it is down to my noble friend to enable me to say those words. In the meantime, and in the spirit of amity, I beg leave to withdraw my amendment.
Amendment 24 withdrawn.
Amendments 25 to 30
25: Schedule 5, page 166, line 28, leave out paragraphs 38 and 39 and insert—
“38_ Omit sections 44 and 45 (and the heading before section 44).”Member’s explanatory statement
This amendment is consequential on the first new Clause after Clause 57 in the name of the Minister.
26: Schedule 5, page 168, line 11, at end insert—
“47A_ In section 56(3) for the words from “, public body’s final certificates” to the end substitute “and public body’s final certificates.””Member’s explanatory statement
This amendment is consequential on the repeal of section 16 of the Building Act 1984 provided for by paragraph 20 of Schedule 5.
27: Schedule 5, page 170, leave out lines 34 and 35
Member’s explanatory statement
This amendment removes the definition of “the data protection legislation” from new section 91B of the Building Act 1984 with a view to this being inserted into section 126 of that Act (see the Minister’s amendment at page 176, line 8).
28: Schedule 5, page 175, line 32, at end insert—
“(ea) section 105C;”Member’s explanatory statement
See the statement relating to the first amendment to Clause 57 in the name of the Minister. This amendment provides that references in inserted section 105C of the Building Act 1984 to work include a material change of use and may include any other specified matter.
29: Schedule 5, page 176, line 8, at end insert—
“““the data protection legislation” has the same meaning as in the Data Protection Act 2018 (see section 3 of that Act);”;”Member’s explanatory statement
This amendment, which is consequential on the Minister’s amendment at page 56, line 22, inserts a definition of “the data protection legislation” into section 126 of the Building Act 1984 (general interpretation).
30: Schedule 5, page 178, line 10, leave out paragraph 89 and insert—
“89_(1) The Sustainable and Secure Buildings Act 2004 is amended as follows.(2) In section 3 omit subsections (8) and (9).(3) In section 4 omit subsection (4).”Member’s explanatory statement
This amendment is consequential on the amendment of paragraphs 38 and 39 of Schedule 5.
Amendments 25 to 30 agreed.
Schedule 5, as amended, agreed.
Clause 55 agreed.
Schedule 6 agreed.
Clause 56 agreed.
Clause 57: Levy on applications for building control approval in respect of higher-risk buildings
Amendments 31 to 33
31: Clause 57, page 79, line 4, leave out from “on” to end of line 5 and insert “certain applications for building control approval etc”
Member’s explanatory statement
This amendment and other amendments of this clause extend the power to impose a levy to work other than higher-risk building work, if it relates to residential or mixed-use buildings, and to initial notices, amendment notices and public body’s notices (as well as applications for building control approval).
32: Clause 57, page 79, line 7, after “applications” insert “or notices”
Member’s explanatory statement
See the statement relating to the first amendment to this clause in the name of the Minister.
33: Clause 57, page 79, line 8, after “applications” insert “or notices”
Member’s explanatory statement
See the statement relating to the first amendment to this clause in the name of the Minister.
Amendments 31 to 33 agreed.
Amendments 34 and 35 not moved.
Amendments 36 to 38
36: Clause 57, page 79, line 24, leave out from “that” to end of line 31 and insert “, unless the building control authority is given a notification under subsection (5A) in relation to a relevant application or notice (or a relevant application or notice of a specified description), the authority—
(a) may not take a specified step in relation to the application or notice (for example, may not grant an application, accept a notice or give a specified certificate in relation to works connected with the application or notice), or(b) must take a specified step in relation to the application or notice (for example, must reject a notice).(5A) A notification under this section is a notification given by the Secretary of State or designated person—(a) that the levy payable in respect of the application or notice has been paid, or(b) that no levy is payable in respect of the application or notice.”Member’s explanatory statement
See the statement relating to the first amendment to this Clause in the name of the Minister.
37: Clause 57, page 79, line 37, at end insert—
“(7A) In this section “relevant application or notice” means—(a) an application for building control approval,(b) an initial notice,(c) an amendment notice, or(d) a public body’s notice,relating to a relevant building or proposed relevant building (including any such application or notice relating to work that causes a building to become a relevant building or causes a relevant building to cease to be such a building).”Member’s explanatory statement
See the statement relating to the first amendment to this Clause in the name of the Minister.
38: Clause 57, page 79, line 38, at end insert—
““amendment notice”, “initial notice” and “public body’s notice” have the same meaning as in Part 2 (see section 58);”Member’s explanatory statement
See the statement relating to the first amendment to this Clause in the name of the Minister.
Amendments 36 to 38 agreed.
Amendment 39 not moved.
40: Clause 57, page 80, leave out lines 3 to 5 and insert—
““relevant building” means a building in England consisting of or containing—(a) one or more dwellings, or(b) other accommodation,(and “accommodation” here includes temporary accommodation, for example in a hotel or hospital);”Member’s explanatory statement
See the statement relating to the first amendment to this Clause in the name of the Minister.
Amendment 40 agreed.
Clause 57, as amended, agreed.
Amendments 41 and 42
41: After Clause 57, insert the following new Clause—
In Part 5 of the Building Act 1984 before section 132 insert—“131A Crown application(1) The following provisions bind the Crown—(a) Part 1 except sections 35B to 37, 39A and 40;(b) Part 2;(c) Part 2A except sections 58I to 58K, 58U, 58V and 58Z4 to 58Z6;(d) Part 4 so far as it relates to a provision within any of the preceding paragraphs.(2) No contravention by the Crown of a provision within subsection (1)(a) to (d) makes the Crown criminally liable.(3) Subsection (2) does not affect the criminal liability of persons in the service of the Crown.(4) Subsection (5) applies where—(a) a contravention of a provision within subsection (1)(a) or (b), or of Part 4 so far as it relates to such a provision, occurs in relation to a building or proposed building for which a local authority is the building control authority, or(b) a contravention of a provision within subsection (1)(c), or of Part 4 so far as it relates to such a provision, occurs in relation to Wales,and the Crown would, but for subsection (2), be criminally liable under this Act in respect of the contravention.(5) The High Court may, on the application of—(a) the local authority (in a case within subsection (4)(a)), or(b) the Welsh Ministers (in a case within subsection (4)(b)),declare unlawful the act or omission constituting the contravention.(6) In this section a reference to a provision includes any instrument made under it.(7) For the application to the Crown of Part 3, and Part 4 so far as it relates to that Part, see section 87.”Member’s explanatory statement
This new Clause makes provision about the application of Parts 1 to 2A of the Building Act 1984, and Part 4 of that Act so far as relating to those Parts, to the Crown.
42: After Clause 57, insert the following new Clause—
“Application to Parliament
(1) The Building Act 1984 is amended as follows.(2) In section 95 (power to enter premises) after subsection (4) insert—“(5) This section does not apply in relation to the Parliamentary Estate (as defined by section 131B).”(3) After section 131A (inserted by section (Crown application)) insert—“131B Parts 1 and 2 etc: application to Parliament(1) In their application in relation to the Parliamentary Estate, Parts 1 and 2, and Part 4 so far as it relates to those Parts, have effect with the following modifications—(a) sections 35B to 37, 39A and 40 (enforcement etc) do not apply;(b) any reference to the owner or occupier of a building or of any premises is be read as a reference to—(i) the Corporate Officer of the House of Lords,(ii) the Corporate Officer of the House of Commons, or (as the case may be)(iii) the Corporate Officers acting jointly.(2) In the following provisions—“Corporate Officer” means—(a) the Corporate Officer of the House of Lords,(b) the Corporate Officer of the House of Commons, or(c) the Corporate Officers acting jointly;“relevant provision” means—(a) any provision of, or of an instrument made under, Part 1 or 2, or(b) any provision of Part 4 or of an instrument made under Part 4, so far as the provision relates to Part 1 or 2.(3) No contravention by a Corporate Officer of a relevant provision makes the Corporate Officer criminally liable.(4) Subsection (3) does not affect the criminal liability of relevant members of the House of Lords staff or of the House of Commons staff (as defined by sections 194 and 195 of the Employment Rights Act 1996).(5) Where a contravention of a relevant provision occurs which, but for subsection (3), would result in a Corporate Officer being criminally liable, the High Court may, on the application of the local authority, declare unlawful the act or omission constituting the contravention.(6) In this section “the Parliamentary Estate” means any building or other premises occupied for the purposes of either House of Parliament.””Member’s explanatory statement
This new Clause makes provision about the application of the Building Act 1984 to Parliament.
Amendments 41 and 42 agreed.
Amendment 43 not moved.
Clauses 58 to 61 agreed.
Clause 62: Meaning of “higher-risk building” etc
Amendment 44 not moved.
Clause 62 agreed.
Clauses 63 to 72 agreed.
Committee adjourned at 5.07 pm.