Building Safety Bill

Baroness Pinnock Excerpts

Committee stage
Monday 28th February 2022 Grand Committee

[Baroness Neville-Rolfe (Con)]

I support the noble Lord in his Amendment 45. He has described the issue very well—and given his huge contribution to the House, I shall look up his maiden speech.

I worry that unless we can find a way out for leaseholders who are also owners, no leaseholder in their right mind would contribute to the management of a building jointly owned by leaseholders. This has been a direction of travel in recent years, which I support. I believe it to be particularly valuable for smaller housing developments, of which we need more. As my noble friend Lord Young of Cookham said in Committee on 24 February, successive Governments have encouraged leaseholders to buy their freeholds. Indeed, he himself played an important part in that process. As I understand it, the leaseholders who have enfranchised and bought their freeholds are excluded from support under the Bill. That seems very unfair.

I know from direct experience in my own family that it is already very difficult to secure volunteers to run leaseholder-owned buildings, given the onerous duties involved and the time requirement. The Bill, with its additional duties and tensions, will, I fear, make it impossible. Here we have yet another perverse effect. I agree with the noble Lord, Lord Best, that a solution must be found by Report, either by accepting his amendment or, if need be, in some other way. This is an unintended consequence that nobody wants.

[Baroness Pinnock (LD)]

My Lords, this is such an eminently sensible amendment, in the names of the noble Lord, Lord Best, and the noble Baroness, Lady Neville-Rolfe, that I think that the Minister will struggle to counter the arguments that have been made. What we are asking in this amendment is to avoid a situation involving resident management groups, or leaseholder-controlled companies, where the stringent expectations required to fulfil the duties under the Bill are put on the volunteers.

I already have concerns about the accountable person and how that role will fit in with those of the managing agent and building safety manager. We are beginning to create a fairly bureaucratic approach to safeguarding leaseholders and tenants, which has the risk of not fulfilling the simplicity and clarity that the Hackitt report required of new building safety measures.

I just think that the arguments cannot be countered. I look forward to what the Minister has to say, but this is such an eminently sensible proposal that I hope that the Government will find ways of bringing forward their own amendment on Report to fulfil the aims of this amendment.

[Lord Khan of Burnley (Lab)]

My Lords, I rise briefly to speak to Amendment 45, in the name of the noble Lord, Lord Best, and well supported by the noble Baroness, Lady Neville-Rolfe. I reiterate that this amendment is about looking at leaseholder-owned or leaseholder-controlled companies appointing an external professional to discharge the functions of the accountable person or principal accountable person. The amendment also talks about costs and maybe looking at service charges.

I want to ask this of the Minister. On these Benches we have a big concern about the actual level of service charges at the moment. These charges are already quite high and they are passed on to leaseholders and tenants. Have the Government looked at the aspect of service-charge pricing and whether leaseholders will be able to bear the cost of having this expertise, as detailed in the amendment? We absolutely recognise the importance of the amendment and we are supportive of it. We are equally concerned about using service charges in order to fund these kinds of important, necessary steps. The impact on leaseholders and tenants is a big concern.

On what was discussed previously in Committee, I will add something in relation to professional expertise and skills, and having the opportunity to pass on these responsibilities to somebody who can take care of this important role, focusing on the function of the accountable person or principal accountable person. I will not talk about this at length, but it calls for a debate about the current situation and whether the Government are fulfilling the needs of leaseholders and tenants. I will finish by saying that there is a big concern about service charges overall, about pricing and about how this will have an impact subsequently on leaseholders.

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[Lord Thurlow (CB)]

I support the very interesting comments of the noble Baroness, Lady Fox—most interestingly, it is immensely refreshing to listen to an amendment that is driven not only by cost savings for leaseholders but by common sense. In many cases, the sub-contracting of services on multi-let buildings is appointed through external managing agents, who apply a levy; they will charge, let us say, 10% on the fee for the work being done. In the £60,000 example, another £6,000 goes on to the tenants’ bills at the end of the year.

I simply support this proposal. It will be a difficult one for the Minister, but common sense is short in the Bill because of the layers of bureaucracy. This will save money for tenants.

[Baroness Pinnock (LD)]

My Lords, I am very grateful to the noble Baroness, Lady Fox, for raising this issue about the necessity for a building safety manager in every block—this is of course in relation only to higher-risk buildings. However, residents in higher-risk blocks will have a managing agent, to whom they pay a fee—a service charge—who appoints an accountable person, for whom there will be an additional cost, and possibly a principal accountable person, if that is necessary. On top of that, each block will have to have a building safety manager. As the noble Baroness, Lady Fox, pointed out, adding on those roles considerably adds to the costs for each of the leaseholders; their service charge will rise considerably as a consequence.

I too have had discussions with some of the cladding campaign groups about the potential £60,000 role and the costs which will pass inevitably to them. They are very anxious that their lease will suddenly become unaffordable due to the piling on of costs from these roles.

The further issue in my mind is, as I think the noble Baroness, Lady Fox, said, that there is a duplication of roles. Equally, when there is a confusion about roles—each block might have three people who potentially have conflicting roles—building safety risks will fall between the three. I can find nothing in the Bill that says how each will be accountable. In the end, we come back to this: quis custodiet ipsos custodes—to whom are they accountable?

The Explanatory Notes gives us this as an example:

“The Building Safety Manager may be carrying out day to day functions, as set out in the agreement with the Principal Accountable Person, to assist the Accountable Persons in discharging their statutory obligations. However, the Building Safety Manager could choose to resign of its own volition, and conversely the Principal Accountable Person may find that the service provided by the Building Safety Manager is below standard and choose to dismiss that person. In both circumstances the Principal Accountable Person would need to replace the Building Safety Manager as soon as reasonably practicable.”


I hope everybody understood that. That is my argument: it becomes confused.

One of the issues with building safety and fire safety is that it needs clarity and simplicity. This is not clear and simple. I believe I raised at Second Reading the issue of too many rules causing confusion. When nobody really knows who will do what, it is always a recipe for a potential disaster.

Those are the two points: costs and duplication leading to confusion. The question is this: to whom are they finally accountable—the accountable person or the managing agent? It is not very clear.

The other point is about the competencies—a horrible word—of potential building safety managers. I could not find anywhere in any of the clauses which set out what those should be. The Bill talks about standards but it does not say what they will be. What should be expected of these folk?

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[Baroness Scott of Bybrook (Con)]

My Lords, I start by going back to where the Bill came from, the tragedy of Grenfell Tower. The point of the Bill is to ensure the safety of residents, particularly, in this case, in high-risk buildings, and the building safety manager is the day-to-day eyes and ears. I do not know whether people realise, but I did two or three years’ work after the tragedy in Kensington and Chelsea. Before I did that, I spent a lot of time in high-rise buildings, not in London but elsewhere in the country, and it was quite interesting, on a day-to-day basis, when I went round with fire brigades and dealt with issues such as safety doors. People took them off and put B&Q doors on. Those things cannot be done every five years, or every year; they need somebody going in and out of that building, checking up.

There will be stairwells with stuff stuck in them that is stopping people going up and down. There will be holes between the sealed containment of flat against flat. All those sorts of things need somebody who is not at arm’s-length but is working day to day. Yes, they will need new competences, but those competences are out there, I would argue, within the community already, and we will have to work on those competences. As for cost, obviously, that depends on the building. Some of these managers will be able to do multiple buildings if it is felt, by their accountable person, that they will be able to do a good job on that. One building is not the same size or requires the same amount of work as another building.

I shall now go through the amendments of the noble Baroness, Lady Fox, and I thank noble Lords for their contributions. The crux of Clause 80 is the duty to appoint a building safety manager. The creation of the building safety manager role was recommended made by Dame Judith Hackitt in the independent review to ensure, I say again, that the day-to-day management of buildings is undertaken by suitably competent people. That is what she said and that is what we are delivering in the Bill. Clause 80 establishes the role and creates a duty for principal accountable persons to appoint a building safety manager and provide them with support and assistance to manage building safety risks, except where they have the capability to meet the duties without needing such support. So there will be times when principal accountable persons have the time and the competences to do it without appointing somebody else. The skills, knowledge and experience offered by building safety managers will help drive up safety standards and, we believe, deliver positive outcomes for residents.

While the building safety manager will hold responsibility for certain tasks, to be agreed in their contract, accountability for meeting the duties set out by the Bill cannot be transferred by accountable persons to the building safety manager or anybody else. I think that answers the question of the noble Baroness, Lady Pinnock, about who is ultimately responsible. Whether the building safety manager is an organisation or an individual, they must possess the necessary competence to deliver the role. If an organisation is appointed, it must have a nominated individual named and in place to oversee delivery, providing reassurance to residents that their safety is being maintained. The noble Baroness, Lady Pinnock, brought up the competence issue. Work is ongoing with the British Standards Institute to establish a competency framework for the role, which will be supported by further guidance.

Moving on, Clause 81 deals with the appointment of the building safety manager where there is more than one accountable person for the building. Despite the often complex ownership structures of many high-rise residential buildings, we are committed to delivering a system that ensures a whole-building approach. This was a central tenet of the findings and recommendations of the independent review.

Where there are multiple accountable persons, the principal accountable person will be responsible for appointing the building safety manager. The building safety manager should play a key role in delivering a whole-building approach, drawing on the duty placed on all accountable persons to co-ordinate and co-operate with each other.

Before the appointment is made, the principal accountable person must consult on the proposed terms and costs with their fellow accountable persons. We expect agreements to be reached so that the scope of the building safety manager’s functions and the method of delivery of the whole-building approach are agreed by all. If an agreement cannot be reached, we are providing a process for resolution through applications to the First-tier Tribunal. This approach protects the rights of accountable persons and holds them to account for ensuring residents’ safety.

Clause 82 ensures that building safety managers hold their position through the contractual arrangements agreed with the principal accountable person. If either party wishes to end the contract, they may do so by giving notice to the other party in writing. When the contract ends, a new building safety manager must be appointed by the principal accountable person as soon as is reasonably possible. If a building is not being managed appropriately and is placed into special measures, which is the last resort for taking control of buildings with significant failings, the building safety manager’s contract will end.

I mentioned earlier that there is an exception to the principal accountable person’s duty to appoint a building safety manager. Dame Judith’s review was right to point out that many building owners already operate and successfully manage their buildings through competent in-house teams. Where the principal accountable person’s existing management arrangements deliver safe outcomes for residents and this can be demonstrated to the building safety regulator, their mode of delivery will not need to change. The competency requirements for qualifying for this exception are of course the same as those expected of any other building safety manager.

This approach is likely to be favoured by organisations such as housing associations or local authorities, which potentially have many buildings that fall under the scope of the new regime. Residents of these buildings will rightly expect to be able to identify individuals who play an important role in maintaining their safety, and the clause requires the identification of the individual responsible for overseeing delivery. This person will not be expected to carry out every task alone, but they will be required to provide oversight such that a holistic and systemic approach to managing safety is achieved.

The exception to the duty to appoint a building safety manager also applies where there are two or more accountable persons for the building. The competency requirements remain consistent. As in the case where they would appoint a building safety manager, the principal accountable person must, as I said, consult their fellow accountable persons and seek to reach agreement on the proposed arrangements. We expect the consultation process to follow the same route as already explained for appointing a building safety manager where there are two or more accountable persons.

Safety has to be our main priority and the building safety manager plays an important role in delivering this. The Government will reflect further on all the points raised today. However, at this point we maintain that Clauses 80, 81, 82, 83 and 84 should stand part of the Bill.

[Baroness Pinnock (LD)]

I thank the Minister for responding. I wonder whether she could explain something. I am still confused about what appear to be the conflicting roles of the accountable person and the building safety manager. I am looking at page 106 of the Explanatory Notes, where the accountable person is defined. It states:

“The Independent Review”—


the Hackitt report—

“identified that there should be a clear dutyholder during occupation who will have statutory obligations”—

this is the definition of “accountable person”—

“to maintain the fire and structural safety of the building.”

So we already have somebody who is being appointed to have those responsibilities. That is why I cannot see why there has to be a further role to undertake those duties. The duties are very important, but why should there be two people?

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[Baroness Neville-Rolfe (Con)]

The noble Earl, Lord Lytton, is a great expert on landlord/tenant matters. I agree with him that changes to the leasehold system are not for this Bill; indeed, I do not think that my noble friend Lord Young was suggesting that they should be in it. We have quite enough to do in this Bill. I am grateful to my noble friend the Minister for his description of the new clauses and his willingness to listen, as I think that the new clauses may need some more work.

Like the right reverend Prelate the Bishop of St Albans, I am passionate about consultation, as my record elsewhere shows. Obviously, I am very concerned about bad practice. However, we cannot have a system where an unco-operative resident or two could prevent appropriate safety arrangements being agreed—that is a concern of mine—or encourage the use of too many expensive lawyers, with the cost ending up with the leaseholder.

We also need to think about the enforced requirements for a residents association, as suggested by my noble friend Lord Young in one of the amendments. It may be worth considering in high-risk cases, but it could complicate matters needlessly in some areas.

I shall speak to my Amendment 147 in this group. It would delay the commencement—that is, the coming into force—of the new provisions on the remediation of certain defects and building liability orders until an impact assessment has been published. Noble Lords will know of my passion for impact assessments; I thank my noble friend the Minister for the original assessment on the Bill. I emphasise, with my experience as a civil servant, a business executive and a Minister, that this is not simply a bureaucratic exercise. The discipline of drafting forces the executive authorities to reflect more deeply on the consequences, including the second, third and even fourth-order effects. It encourages good administration and identifies perverse effects and problems. All this matters more—not less—when the measures are ones of great complexity, especially if they are being rushed through.

I have reflected on this further in the light of our important debate on Amendment 24 in Committee last Thursday, 24 February. I have reread it carefully in Hansard, and I thank the noble Baroness, Lady Pinnock, for mentioning that an impact assessment, as well as an Explanatory Memorandum, before Report would be helpful to our debate. As she said,

“blocking developers, even when they have planning consent … is a really radical proposal”,—[Official Report, 24/2/22; col. GC 184.]

and we need to know how it might work and have an impact assessment. We need to understand all those who would or could be affected, including cladding suppliers and manufacturers, architects and surveyors—and, indeed, the planning and building control authorities, which may need to change their practices.

I was struck by the complexity of what is proposed, and the certainty that there will be hidden and unnoticed effects. The right reverend Prelate the Bishop of St Albans, in an excellent speech, was right to point out that any levy paid would inevitably be passed on to consumers and tenants in large part. He was also right to remind us of the chronic shortage of supply of homes in the UK. Indeed, in our report Meeting Housing Demand, the Built Environment Committee found a shortage of homes of all tenures, including social housing. We need to ensure that that does not go backwards, and that the whole building industry, already short of skills and resources, is not needlessly diverted—while, of course, doing the right thing on safety. A decent home is so important to all and we now need to cater for yet more arrivals as a result of the desperate situation in Ukraine.

I was therefore disappointed by the approach of my noble friend Lord Blencathra, who until recently chaired—very well, if I may say so—the Delegated Powers Committee. I believe it is irresponsible to give yet wider powers for bringing in and punishing, or penalising—effectively fining—new groups, when we have not thought through how they might be involved during our scrutiny of the Bill. I am afraid I have the same hesitation about engagement with residents, which is the subject of today’s group of amendments, which include a widening of powers. I regret to say that I think those amendments go too far.

More importantly, all this discussion has reinforced my view of the need for my amendment. I hope the Government will consider it carefully, as it might go some way to assuaging the fears that there may be about the proposals before us, and any decision by the House to widen their application. Wide powers are being taken in the Bill, which will set a precedent for the future. I would like to support the Government in finding a way through, but I would also like to understand the impact.

[Baroness Pinnock (LD)]

My Lords, this group covers three big issues—residents’ engagement strategy, access to properties, and the third part, relating to government amendments, some of which have not been moved today, on construction products and liabilities. My noble friend Lord Stunell will wind up this debate, using his expert knowledge of many of these issues, so I shall restrict my comments to the amendments about residents’ engagement, access and a little bit about construction products.

I completely agree that there has to be a residents’ engagement strategy. One of the learning points from the terrible Grenfell Tower fire was that residents wanted a voice and tried to make their voice heard, but it was not listened to. Their voice may have been heard, but it was certainly not listened to—and it was certainly not acted on.

As the noble Lord, Lord Young of Cookham, has pointed out, there is a big part of the Hackitt report which references the importance of the residents’ voice, and of listening to and acting on what they say. They are the folk who live there. They are the people who daily see what goes on. Their voice must be heard so, whatever else we do, I hope that we will strengthen those clauses about resident engagement. Picking up on the point made by the right reverend Prelate the Bishop of St Albans, we need residents’ associations to do that. We cannot force them to exist, but we can put the onus on the freeholder or the accountable person to ensure that there is some method for the residents’ voice to be heard.

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[Lord Leigh of Hurley (Con)]

My Lords, with some trepidation after that, I rise to speak to my Amendment 94ZA, as advertised by my noble friend Lord Young of Cookham. I welcome the Government’s clear commitment that no leaseholder in a medium or high-rise building will have to pay to remove dangerous cladding, so I therefore support the significant legislative changes being introduced in this Bill. I am also pleased to see that legislation is coming forward to identify the beneficial owners of freehold and leasehold properties, because without that I am not sure how this Bill would work in its entirety. We need to know who owns property in the UK.

However, there is a small group of leaseholders who have fallen through the Government’s net of protections. They are leaseholders who have already paid for the removal of ACM Grenfell-type cladding from their buildings through an exceptional service charge imposed by their landlords, but whose landlords have unilaterally decided not to pursue available government remediation funding because they have no incentive to do so, given that the leaseholders have already borne all the costs. No encouragement by or pressure from their leaseholders or the Government has resulted in any change in their position, particularly in one specific case of which the Minister is aware.

This was not the intent of the well-meaning government cladding remediation scheme, as it assumed that landlords would behave appropriately. The scheme required applications to be made by landlords. Leaseholders had no right to do so directly, nor could they force landlords to seek funding. As a result, these leaseholders remain without reimbursement for the considerable sums that, in some instances, they have expended on removing dangerous cladding to live safely.

This behaviour has been described in the other place as outrageous; my noble friend the Minister described it as unacceptable in his Written Answer to me on 26 January. However, the Government’s proposed legislation does not expressly address this inequitable situation. My O-level Latin was even worse than that of most Members of the Committee, so to provide some balance I will quote from my coat of arms the Hebrew “Im low achshav aymarthie”, which, as the right reverend Prelate the Bishop of St Albans, who is not in his place, would explain, means “If not now, when?”

Paragraph 8 of new Schedule 9 prohibits a service charge being payable under a qualifying lease in respect of cladding remediation if the tenant was resident at the qualifying time, as we have heard. This does not help resident tenants who have already paid up by way of service charge before the Bill becomes law. My proposed amendment extends paragraph 8 of Schedule 9 to include situations where resident tenants have paid for cladding remediation at any time during the five years before the commencement of the Bill. This will leave the landlord with the choice of applying for available qualifying remediation funding or having to reimburse relevant resident tenants out of their own funds.

I appreciate that this will be relevant in only a small number of situations but that is not a reason not to have legislation. There is a glaring hole in the legislation, and we have the opportunity here to correct it. I can see that some might argue that this is retrospective, but it is not because the amendment covers only situations where the lessees have paid and the freeholders will not act as they should. It is up to the Minister, inspired by the call to arms, to widen this amendment—on Report if not here—to cover future situations where lessees pay for recladding as they are fed up with waiting for landlords, knowing that, if this amendment passes, the freeholders will be forced to apply for reimbursement.

[Baroness Pinnock (LD)]

My Lords, I will speak to my Amendments 93 and 94. I thank the Minister for explaining the many amendments relating to the costs of remediating cladding and other fire safety and building defects, including who will pay and how.

However, my amendments are to his Amendment 92 and are about my favourite issue, which is that leaseholders should not pay a penny. It is not their fault. The Government and everybody else accept that, and therefore, they should not pay anything. The easiest way of ensuring this is to amend the government amendment to change the maximum amount—that is, the cap—to £15,000 or £10,000, be it in London or outside London, to a peppercorn; in other words, to zero, zilch, nothing. This would achieve the aim I started with two years ago.

There are reasons for this. The Minister may not want to do it, but I certainly do. He said, “Of course”, so I assume he will now accept my amendment. However, if it helps the Minister, I am willing to exclude paragraphs 6(4) and 6(5) of the new schedule proposed by Amendment 92. They relate to properties with a value of £1,000,000 or £2,000,000 or more.

I appreciate that the Minister and others in the Government have laboured long and hard to reach a more just outcome for leaseholders. However, as we have heard from the noble Lord, Lord Naseby, the letter we received said that the Secretary of State had stated on behalf of the Government that leaseholders must not be required to pay anything. That is what my amendment would achieve. The building failures were not theirs. As we have all agreed, those who made the failures, who put up flammable cladding and failed to put in firebreaks, are the ones who have to pay.

In his introduction to his amendments, the Minister said that cap will be offset by costs already being paid for waking watch, fire alarms and other such things, which will reduce the final liability. In that case, why on earth are we pursuing it? Let us say that the amount liable is £7,000. If it is paid over a period of five years, that is less than £1,500 a year. What bureaucracy will be set up to collect that? The cost of collecting it will almost certainly outweigh the benefits. So there is a practical reason as well as a reason of justice, and I guess that the Minister will therefore accept my amendment. We will have a whole new bureaucracy for nothing very much. It is not a practical proposal at all, and it is not a just one.

The amendment is straightforward, but there are one or two things I want to ask the Minister to explain and to give some very straightforward answers to some very easy questions. Some things are not clear from all this. There are good intentions in all these clauses to try to solve who pays for remediation, but what happens if nobody pays up? Who takes on the liability? Secondly, if they all go to litigation—which is my guess about what is going to happen, and we heard earlier that there are already moves in that direction—that could take a long time. So what happens then when buildings are not safe? Who will pay for the removal of the cladding and putting right the fire safety defects? Are we expecting leaseholders, shareholders and tenants to remain in those unsafe buildings for all that period of time? So who will pay, and what about the timing? If we do not get the cash, what happens and, with that timing, what happens—peppercorn rents excepted? My noble friend Lord Stunell will wind up for us on these Benches.