Building Safety Bill

Earl of Lytton Excerpts

2nd reading
Wednesday 2nd February 2022 Lords Chamber

[The Earl of Lytton (CB)]

My Lords, all these wonderful speeches are a hard act to follow. I declare that I am a fellow of the Royal Institution of Chartered Surveyors, a valuer and a patron of the Chartered Association of Building Engineers, so this is familiar territory. I very much welcome the Bill and the opportunity that it presents to discuss the issues. I thank the Minister for his comprehensive introduction, his engagement, his openness and above all his vigour. However, I believe the Bill needs improvement in scope and function.

First, a bit of advice. The Minister’s letter of 20 January suggests that the department will investigate the governance of RICS. With respect, that ship has sailed. Following a report by Alison Levitt QC, the noble Lord, Lord Bichard, was asked by RICS last December to look into its governance and purposes—so, as ever, we should wait for that report.

The Government should be wary of criticising insurers, managers and valuers for overreaction to safety risks. Proportionality is based on good information and consistent technical advice, so the withdrawal of the consolidated advice note and its replacement with PAS9980 does not necessarily put the genie back in the bottle. Perceptions of risk pervade the property sector. Valuers reflect but cannot uninvent market sentiment. RICS sets standards for consistent analysis and reporting but cannot override the market, which is why, with full support from valuers and the wider industry, it retains the application of EWS1, including low-rise buildings with cladding, and has published a detailed justification.

Noble Lords may recall that a low-rise modern block of flats in Worcester Park was completely destroyed by fire in September 2019—unrelated to cladding, I understand, and, thankfully, nobody was injured. While human life is of first importance, instances of total loss of buildings influence insurance risk. Cladding apart, as we have heard, compartmentalisation, fire stopping and so on are issues regardless of building height, so it is self-evident that low rise does not of itself negate the risk to buildings and occupants, which is why the scope of the problems has grown.

The Bill will create the role of “accountable person”. Dame Judith Hackitt’s recommendation that there be a single individual is logical in administrative terms, but people are now nervous about taking on that responsibility. Residents’ management companies are often populated by volunteers, few with knowledge of building construction and maintenance. Collective freehold ownership and commonhold do not resolve this issue, so management professionals are extremely concerned about this.

My next point is about accreditation, particularly of those who have reason to design, specify, supervise or carry out works to residential properties, most especially those forming part of larger buildings. That certainly needs to be tightened. As HSE is now to have oversight of responsible persons, it should be working with all professions and accreditation bodies to ensure consistent standards without excessive cost.

My main point, however, is about financing the remediation of dangerous cladding and other fundamental defects in construction. I welcome the Government’s announcement to protect leaseholders from remediation costs. However, the details and scope are as yet unclear. Without a range of mechanisms for raising the necessary funds quickly, leaseholders may well continue to live in unsellable, risky and high-cost buildings.

The Government demand that industry steps up to the mark and voluntarily pays for its mistakes, but I remain concerned about reliance on that. Whatever welcome pledges of support are made, the Government need to ensure that they are bankable at an early date, so that any necessary fallback measures can be enacted in the Bill.

It is obvious that remediation of unsafe buildings must proceed with redoubled urgency, and unaffected buildings need to be signed off rapidly, so scaling up the inspection capacity is vital. Innocent leaseholders of all types—I make no exclusions—must be protected from the costs of remedying critical construction defects. They have purchased in good faith on the basis of fitness for purpose, and I do not exclude social landlords.

We need to concentrate minds. Responsibility for serious defects in original construction or refurbishment rests squarely with those who designed, specified, constructed or supervised the works, or who made false claims for construction products. Those responsible should not be allowed to collectivise their liability through an overall levy and thus avoid individual blame, or the culture will simply persist. The taxpayer should not fund this, other than to ensure a legislative framework, robust administration and the early generation of remediation funds, and to provide a fallback where all else fails. Funds already allocated should be for bridging and safety-net purposes and not deplete other areas of departmental funding. Protracted legal proceedings and justice according to bank balance must be avoided. This should be overseen by an independent national entity, although the joint inspection team may have a role in assessing buildings and collecting evidence.

These are the principles behind what is known as the polluter pays amendment, which has been gathering momentum for some months. I pay tribute to the Minister for his engagement with this and to those whose persistence has developed the concept to an advanced stage. I hope the Government will adopt it. Polluter pays would create strict liability where it is found that buildings did not meet relevant standards at the time work was carried out. That liability would cover interim safety measures and insurance premium increases. Once defect and involvement are known, liabilities towards owners would be established on a joint and several basis, so blame would not need to be apportioned. It would provide a relatively simple appeals system via the First-tier Tribunal to prevent leaseholders facing an unequal contest with large corporations. These liabilities need to be taken on the chin: no tax breaks, side deals, concessions or sweeteners—just the same transparent rules for everybody.

Successive Governments may have failed to regulate adequately after the Building Act 1984, but that Act did not remove anything from the principles of the building regulations, the British Standards Institution, codes of practice and other documents. Since 1965 the requirements have been clear, but elements of the construction industry have simply evaded obligations and everyone knows it.

We cannot allow the responsibility of the neglectful few to burden society at large or damage the wider industry reputation, or we will never deal with the perverse incentives to cut corners long term. The human toll is acute and practical imperatives need high standards of corporate ethics, shouldering of responsibility to rebuild sectoral confidence and, above all, speed. This need has never been greater. I look forward to working with the Government to seize the opportunity for real and lasting change under the Bill for the relief of freeholders, for national credibility in construction and in the interests of justice.

Building Safety Bill

Earl of Lytton Excerpts

Committee stage
Monday 21st February 2022 Grand Committee

[Lord Crisp (CB)]

My Lords, I will speak to Amendment 4. In doing so, I thank the noble Lords who have put their names to the amendment. I am very grateful to the noble Lord, Lord Young of Cookham, who is in his place but who I know cannot stay for the whole debate, and to the noble Lord, Lord Blunkett, who I believe is probably somewhere on the M1. I am grateful to the noble Lord, Lord Stunell, who will bring his great experience and insight to bear when he speaks.

As the awful tragedy of Grenfell revealed to us, and as those working in the industry already knew, the construction industry is in a very poor state on a number of different fronts, from quality and basic standards of all kinds to the supply of housing and the prevailing culture. Whether we worked in the industry or not, we were all deeply shocked by the Grenfell tragedy, and it is this that is the origin of the Bill. I recognise, therefore, that priority must be given to the immediate issues arising from Grenfell and that the Bill cannot address everything that needs to be done to tackle the problems in the construction industry. But it cannot ignore them either.

The Long Title says that the Bill makes

“provision about the safety of people in or about buildings and the standard of buildings”.

The Bill indeed picks up some of this, addressing the golden thread and cultural change, for example. Other noble Lords have addressed this in other amendments, including my noble friend Lord Lytton in his amendments on what is now called the perpetrator pays principle, on which I hope to speak later in Committee.

I originally wanted to press for a set of broad-based standards in construction, brought together around the aim of promoting health, safety and well-being. However, given the imperative of addressing the issues directly related to Grenfell—I am sure the Minister will appreciate this—I and the other signatories have gone for a deliberately simple amendment that makes only a start in that direction. Indeed, I hope that the Minister and the Government will welcome this amendment and see it as a contribution to their wider goals of levelling up and driving cultural change in the sector—something that I hope the Government will build on in levelling-up legislation and elsewhere.

Turning to the specifics of the amendment, it clarifies the meaning of “safety” to include health and well-being. It makes clear that the building safety regulator should consider human health and well-being in discharging its building functions. In practice, this means that the regulator, being part of the Health and Safety Executive, needs to consider health and well-being as part of safety when it exercises building functions under Clauses 4, 5 and 6 of the Bill and its functions under the Health and Safety at Work etc. Act 1974 and the Building Act 1984.

Even without our experience of Covid, there was growing evidence that showed that people’s homes and neighbourhoods have a direct impact on their physical and mental health. Cold, damp, overcrowded and cramped conditions, pollution and inaccessibility for older and disabled people all directly impact on mental and physical health and well-being and constrain opportunity. The quality of our homes and neighbourhoods is one of the foundations of our life and our life chances. The experience of Covid has simply dramatically reinforced all these points.

This is about opportunity for people, life chances and social justice. It is about enabling the people of this country to thrive. The way we organise and design our built environment matters to people and to a series of the Government’s policy initiatives, not least those dealing with health inequality, net zero and levelling up. These conditions also matter in considering our resilience as a country in the face of resurgent and indeed future pandemics. The problem is that the way we regulate homes now fails to secure the minimum standards vital to people’s well-being. This, as the Government’s levelling-up agenda recognises, is a major issue in securing social justice. People on the lowest incomes often suffer the poorest and most insecure housing conditions and live in neighbourhoods with the worst pollution.

This amendment is important because safety is currently undefined in the Bill, so it is simply not clear whether what I would call these common-sense aspects of safety relating to people’s health and well-being should be considered by the building regulator. This lack of clarity is unhelpful because the safety of people is generally defined as an absence of health risks or harms. I note that health and well-being have definitions in UK legislation, so their insertion into law would not be novel. It is also important to note that these issues are not covered by planning or other existing regulations; put simply, planning legislation has no legal obligations of any kind that relate to the health and well-being of people.

I will make one final point on cultural change before I sum up my argument. There is a problem with all regulation when it is written too tightly that people deliver on the specific and do not address the bigger issues—hitting the target but missing the point, if you like. I am sure there are people associated with Grenfell who are arguing that they followed the letter of the law while of course missing the far bigger point. We must not miss this opportunity to take a holistic view on safety. Do we want a future where we have regulated appropriately for fire but, to take just one example that the Committee will address, let people fall down unsafe steps, even though we know what can be done to prevent it? I believe it is necessary to make it clear that this wider definition will inform the decisions of the regulator. I believe that knowing that attention has to be paid to wider concerns of health and safety will also help drive cultural change in the sector as a whole. What I am proposing is about not more regulation but better regulation. Indeed, I believe that, in the longer term, going further and requiring developers to build homes that promote health, safety and well-being will help bring together some of the contradictory elements of the planning and building regulations. That, however, is for another time.

In conclusion, I well understand that the Government cannot make the level of change to the construction industry that is necessary within a single Bill or set of regulations, and I commend them for what is in the Bill. This is why I said at the beginning that we have deliberately added only this simple amendment. This definition allows for the consideration of people’s basic and common-sense needs such as freedom from pollution and damp; safety; access to green space and natural light; accessibility, including safe stairs; heat requirements; and security.

While the amendment is limited to clarifying the scope of the responsibility of the building regulator, it enables the beginning of a new approach to regulation in which human health and well-being are core to the delivery of building safety. I very much hope that the Minister will see this as a contribution to the Government’s goal of making appropriate provisions in the Bill about the safety of people in or about buildings and the standard of buildings.

I have heard it said that we are building the slums of the future. Here the Government have an historic opportunity—very sadly created by this dreadful tragedy—to reverse that trend and help create homes, buildings and neighbourhoods that we can be proud of. I hope that the Government will accept this amendment as an important step on that journey.

[The Earl of Lytton (CB)]

My Lords, as this is the first time that I have spoken at this stage of the Bill, I declare my interests as a chartered surveyor and member of various property-based organisations. I am also a patron of the Chartered Association of Building Engineers.

The noble Lord, Lord Foster of Bath, is absolutely right to say that, while the preservation of human life must be front and centre, by the same token buildings must be designed to retain their fundamental integrity for specified periods of time, at the very least—as set out, half an hour for this, one hour for that and so on. Noble Lords know this only too well. There are of course many reasons why this is necessary. The total destruction of a building was so graphically illustrated by the fire in Worcester Park, the downstream effects of which were described by the noble Lord, Lord Foster, in its destruction of livelihoods, life chances and, in particular, people’s confidence in their homes—I think this is the point the noble Lord, Lord Crisp, was getting at in his amendment. It casts a shadow across families and down the generations. Anybody who understands the concepts of trauma theories knows that; I am no expert, but I know that it happens. Beyond the utter undesirability, the cost, the insurance risk, the potential risk to firefighters and the general spread of contagion, there are compelling reasons why buildings must retain their integrity: structural, compartmentalisation, spread of flame and so on.

The building regulations, going back to 1965—which were the set of regulations in force when I was at the College of Estate Management studying what has become my lifelong trade and calling—include mandatory standards. There is a secondary aspect in parallel with those, which is the advisory approved documents and guidance. It is really important to understand that there were two different streams running in parallel.

One of the industry failings that has occurred—accompanied, I must say, by a failure of regulatory oversight—is on the part of those who were entrusted to make sure that buildings were constructed in accordance with the mandatory requirements and the best practice set out in the advice. The failing has been to assume that everything you needed to know was contained in this advisory guidance that went in parallel with the regulations. That is wrong. I can do no better than refer to, as I understood them, the opening remarks of counsel for the Government in the final stage of Sir Martin Moore-Bick’s inquiry, when he made precisely this point.

If you follow slavishly the approved documents under part B of the building regulations, which is principally to do with fire, you will lead yourself astray, because it says “should”, “could”, “might” and all those sorts of things. You are dealing with advisory documents concerned with how you may be able to do it this way, or you may be able to do it that way. In other words, the regulations produce the mandatory test first and foremost, but all these other advisory documents then provide suggestions on how you might achieve it.

I strongly support Amendments 1 and 4 because this is about people and the security of their homes. It is about inclusion, decent design and, ultimately, outcome-based policies. The noble Lord, Lord Crisp, kindly gave me a quick trailer on the “perpetrator pays” amendments, of which more anon. However, I finish by again following the noble Lord, Lord Foster, in saying to the Minister—who I know has really driven this policy forward; I give him great credit for producing this Bill—that I will do everything I can to assist him in making wise choices and accepting appropriate amendments when they are moved.

Building Safety Bill

Earl of Lytton Excerpts

Committee stage
Thursday 24th February 2022 Grand Committee

[Baroness Pinnock (LD)]

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.

[The Earl of Lytton (CB)]

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.

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[The Earl of Lytton (CB)]

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.

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[Baroness Hayman of Ullock (Lab)]

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”

rests squarely

“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.

[The Earl of Lytton (CB)]

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.

[Baroness Hayman of Ullock (Lab)]

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.

Building Safety Bill

Earl of Lytton Excerpts

Committee stage
Monday 28th February 2022 Grand Committee

[Lord Young of Cookham (Con)]

My Lords, the instructions on the sheet of paper in front of me are not “crescendo” but “diminuendo”—some gentle accompaniment on the bass to the forte soprano that we heard from the noble Baroness, Lady Fox. But seriously, I want to add a brief footnote to the excellent speeches made by the noble Baroness, my noble friend and the right reverend Prelate.

I make the point that they all underline the need for the next stage of leasehold reform which the Government have promised, which does away with this feudal system of leasehold which exists nowhere else in the world. Once we have done that, all these problems that we have been talking about this afternoon will disappear: there will be an identity of interest between the freeholder and the leaseholder because they will be the same person. At some point, perhaps the Minister can shed some light on the next stage, confirming that that is indeed the Government’s objective and that they want to move in that direction as fast as possible.

I add a brief footnote to the excellent speech the right reverend Prelate made on Amendment 50A. In particular, I draw attention to the radical proposal in subsection (3)(a) of the new clause proposed in his amendment, which places an obligation on the landlord for

“where there is no recognised tenants’ association in existence before the coming into force of this section, creating a recognised tenants’ association and consulting with it about building safety”.

Because of the Long Title of the Bill, the right reverend Prelate had to confine it to building safety. However, it is a radical proposal. It places the obligation for establishing a tenants’ association not on the tenants, which is the position at the moment, but on the landlord, evening up the terms of trade. As I said, it is a very radical proposal indeed. An indifferent landlord does not want a residents’ association or a tenants’ association with whom he has a statutory obligation to consult, although I happen to believe that it is in his best interests to have such a dialogue. So the terms of trade are dramatically altered by the right reverend Prelate’s amendment.

In an earlier incarnation, I recall helping establish an organisation called Tpas—the Tenant Participation Advisory Service—I see the noble Lord, Lord Best, nodding sagely; he has a similar vintage to myself when it comes to housing legislation. That was focused primarily on tenants of social landlords, but I believe it has subsequently expanded into the private sector. It would be very well placed to advise landlords and tenants on how to set about establishing such an association, were the right reverend Prelate’s amendment to be accepted.

Finally, on this group of amendments, I reread chapter 4 of the Hackitt report last night, entitled “Residents’ voice”, and it has a whole series of recommendations about enfranchising the resident and the tenant in exactly the way that we have underlined. So, as I said at the beginning, I add a small a complement on the double bass to the excellent speeches that have been made on this group of amendments—or perhaps I am a tenor.

[The Earl of Lytton (CB)]

My Lords, I will try to be brief here. This is an extremely valuable group of amendments, and I entirely relate to the point made by the noble Baroness, Lady Fox, and the noble Lord, Lord Blencathra.

I will comment on something that the noble Lord, Lord Young of Cookham, said. He introduced the question of, if I paraphrase him right, the undesirability of the long-term continuation of conventional long leasehold, and I understand that. For some years I chaired the Leasehold Advisory Service when it was first set up, which was in response to a ministerial commitment that it should be put in place and that there should be advice to leaseholders.

--- Later in debate ---

[The Earl of Lytton (CB)]

My Lords, I will try to be brief. I will just pick up on the last point made by the noble Baroness, Lady Pinnock, who has been a doughty campaigner on all this. We have the problem that this Bill creates a bureaucratic and quite complex situation. That can only weigh in favour of those who hold the real money here, which are the developers. We must try to focus on rebalancing that so that the leaseholders are on some sort of even playing field.

I noted very carefully what the noble Lord, Lord Young of Cookham, said on the detail of the accounting process. I very much support what he said. There is an element of discrimination, which was brought out by the noble Lord, Lord Naseby. Why do we discriminate between different categories of person and what does anybody think that will result in in terms of some class action further down the road? This whole thing has to be robust against applications to some international court, to the High Court or for judicial review. There absolutely has to be proof against serial activity. I know into whose hands that will play, and it will not be to the leaseholders’ benefit. There are an awful lot of exclusions here. The noble Lord, Leigh of Hurley, made a potent point about those who have already paid up. What about them? A point has also been made about proportionality and risk.

I will cut my other comments really quite short and just pose a few questions. As I see it—I was in dialogue with the British Property Federation about this—only in the case where you have a non-cladding effect, where the developer does not exist or cannot be found, does that trigger the freeholder responsibility to make a contribution for remediation, and only after the cap liability of the leaseholder. The Minister does not need to reply to me now, but I would like to be absolutely clear that that is the scenario—one of several—that applies here.

Moving on to Amendment 67, I would like to make a comment. As drafted, does the amendment cover limited partnerships? They are not corporate entities and are different from limited liability partnerships, which are covered by the amendment. For instance, the effective owner of Waterside Park, where a lot of issues have arisen, is just such a limited partnership. Is it the Government’s intention that limited partnerships should be included in the definition of “associated persons”? If not, why not? Because that would create a gaping hole.

--- Later in debate ---

We are approaching 90 minutes on this group. I thank noble Lords for our spirited debate on this matter, which I know is close to the hearts of many on all sides of this Committee. I hope that I have provided the information and reassurance needed, and ask noble Lords to withdraw or not press their amendments.

[The Earl of Lytton (CB)]

The Minister answered a query I raised in connection with Amendment 72; I apologise for jumping a group. It was to do with commercial developers. I think I used the term “commercial developers”, but I intended to say “developers of commercial property”—that is, as opposed to commercial developers of residential property.

[Lord Greenhalgh (Con)]

Oh, I see. You said commercial developers?

[The Earl of Lytton (CB)]

I said commercial developers, but I meant to say “developers of commercial property”. However, I will leave that point for the next debate.

[Lord Young of Cookham (Con)]

My Lords, as the Committee enters its sixth hour of sitting, this is not the time for a comprehensive wind-up. However, I thank all those who have taken part in this debate.

My noble friend Lord Naseby made a valuable point about buy-to-let investors. Over the past 10 or 20 years, buy to let has become an alternative to a conventional pension for many people. I am grateful that my noble friend the Minister said that he is open to discussion on this; we count that as a win.

My noble friend Lord Blencathra had a series of amendments on the theme of protecting leaseholders. I am grateful for them.

My noble friend Lord Leigh of Hurley made a legitimate point about the freeholder who had not claimed the money he could have. I wrote down the solution that my noble friend the Minister arrived at. He said, “We will fix it at the political level.” The mind boggles as to what exactly that involves but I am sure that, with his robust physique and experience of government, he will come up with a satisfactory outcome on that.

The amendment in the name of the noble Baroness, Lady Pinnock, would remove the cap for leaseholders. I have a lot of sympathy with that. New paragraph 2(1), proposed by government Amendment 92, states:

“No service charge is payable under a qualifying lease in respect of a relevant measure relating to a relevant defect if a relevant landlord … is responsible for the relevant defect.”


That is fine, but then there is a whole series of exclusions, of which this is one. I find it difficult to reconcile the cap with the principle that the leaseholder is innocent and should not pay; I think we will have to come to back to that.

The noble Earl, Lord Lytton, made the same point as my noble friend Lord Leigh of Hurley: that the leaseholder should be able to apply. If the leaseholder could have applied in my noble friend’s case, there would not have been a problem and the freeholder would not have been in the loop, as it were.

I am grateful to my noble friend Lady Neville-Rolfe for supporting a number of the amendments. The noble Baroness, Lady Hayman, had her own, thoughtful approach to protecting leaseholders. She referred to the cascade. I hope that her many questions will be answered; perhaps we can all share in the letter that goes round. She also supported the request for an inquiry into compensation, for which I am grateful.

On the waterfall, the Government did not seem to appear in it. I thought that they were right at the end, but they have somehow been left out. I think that the Government are at the end of the waterfall if all else fails; my noble friend the Minister is indicating that this may not be the case, but what are the levy and fund for if not to help where the costs are not otherwise met by the freeholder, the leaseholder or the developer?

The noble Lord, Lord Stunell, asked how the cap was arrived at. It may well have been through a reverse process involving the Treasury.

Finally, my noble friend the Minister said that I thought he was a snake oil salesman. I believe that he believed what he said; my comment was about the pace at which he said it, which was like an advertisement where the terms and conditions are spelled out at an accelerated pace and one does not really have time to hear them. I think my noble friend said that enfranchised leaseholders are now within the scheme; I think he said that because I read his lips. I find that difficult to reconcile with what is in government Amendment 63:

“‘Relevant building’ does not include a self-contained building or self-contained part of a building … in relation to which the right to collective enfranchisement … has been exercised.”


If that should not be there, that is fine, but that is how I read it; I also made that point in an earlier contribution.

Building Safety Bill

Earl of Lytton Excerpts

Committee stage
Wednesday 2nd March 2022 Grand Committee

[Baroness Fox of Buckley (Non-Afl)]

My Lords, I was already feeling inadequate enough, but my inability to come up with a Latin phrase or joke on this particularly peculiar amendment of mine is nerve-racking. Clause 129 makes further amendments to the fire safety order and focuses partly on the risk of balconies. My Amendment 115A suggests tightening up the wording so that balconies should be considered a risk only if and where they can be shown to materially contribute to the spread of fire, flame or smoke.

I think this amendment is needed because I am concerned about unnecessary building safety work. I am not sure if this amendment is the right way to resolve the problem, but leaseholders who I have spoken to see emerging a widespread focus on alleged non-cladding defects, such as balconies. This can be a driver to carrying out unnecessary fire safety work, for which leaseholders must pay, with no existing government funding to help. We are all familiar with the “#claddingscandal”, but I want to avoid a scandal, or at least an injustice, emerging that is not to do with cladding. That is what this amendment probes.

Broadly, we now have a situation in which a block of flats can have a fire risk assessment that effectively determines that the building is sound but, because some notionally flammable material has been used, for example in the balconies, there are problems with valuations associated with EWS1 and a pre-emptive, rather than necessary, remediation approach. Leaseholders are then encouraged to think of their blocks with these balconies as unsafe and to believe that remediation work is necessary—and the costs will inevitably be charged to them as a fait accompli. This could be driven quite cynically by freeholders using building safety to do upgrades or carry out what otherwise would or should be regular maintenance, at leaseholders’ expense. To be less cynical and assume far more good faith, or at least to understand the pressures on freeholders and owners, I am worried that one of the unintended consequences of this Bill would be to drive up fears among owners, assessors, accountable persons and so on, under the weight of legal and insurance liability, that they would be blamed for any fires that occur, in any circumstances. As such, blame avoidance could mean stretching assessments of what is considered unsafe beyond credibility or credulity.

This seems to be partly the explanation to the rather panicky response to any building materials that can catch fire. At the moment, this is expressing itself as the almost default assumption that balconies with timber as a component are dangerous and should be replaced. This is in spite it being well documented that timber can outperform steel in a fire, depending on how it chars. An example of where this can lead is a block of flats in Castletown in Dorset. Leaseholders were shocked, at the start of the year, to receive a letter telling them that the timber-decked balconies of the 204 flats in their block had to be replaced by aluminium balconies, as some may be unsafe. Guess what? Leaseholders must meet the cost of this work estimated, on average, at £10,000 a flat.

In addition to that horrifying financial prospect, the Atlantic House Leaseholders Association raised some other issues pertinent to the Committee debates so far. For example, there was no consultation at all with the leaseholders on this decision about the balconies. Leaseholders are a tad suspicious that the contract for the work to replace the balconies was awarded to the block owner’s subsidiary company. The plan that was just announced, but not consulted on, is to carry out the installation inside people’s flats, instead of putting up scaffolding, regardless of the major inconvenience and intrusion this will cause in leaseholders’ homes. The other day I talked about whether you can call it your home if people can just come in, in the name of safety. This is really going to affect people’s home lives.

Also, if there is wear and tear on the timber decking on the balconies in question, it should actually have been the building owner’s responsibility to maintain them and keep them up to standard. Yet, despite them having failed to do so, leaseholders are now being forced to pay for the changes to the balconies, under the auspices of building safety and the threat of fire risk.

I am concerned about a climate in which there is a danger of failing to weigh up risks and assess matters objectively and proportionally. Sometimes, in the name of safety—I think that this was true in that instance in Dorset—leaseholders’ lives are being made a misery, and they are being made to pay a lot of money for remediations that do not necessarily mean that they are safer.

I do not know if noble Lords saw the story in the Manchester Evening News about social housing tenants in Salford suffering freezing conditions for months, since cladding came off their blocks. Having lobbied to get their concerns heard, they were recently sent a letter by Pendleton Together, which manages the nine council blocks, offering

“top tips for keeping warm”.

These included: “dress in layers”, wear “a hat and gloves”, keep “active” and consume “warming food and … drinks” —I thought that these might be handy in this Room, which has been rather chilly. This is another top tip:

“don’t drink alcohol to keep warm as it can give you a false feeling of warmth when you’re actually cold”.

If I were cold, I might still have a drink.

More seriously, I am glad to see that Salford council, which should, in general, be commended for its aspirational housing policies—I am not particularly having a go at it—has apologised for what has happened in its area and for the patronising and condescending message of the letter. But I was using it to illustrate that measures designed to keep people safe from fire can lead to home owners suffering freezing cold, for example, in the middle of an energy price crisis. Unfortunately, fire safety can trump common sense.

I will take noble Lords back to balconies and the Atlantic House block in Dorset that I was talking about. There is a similar perverse outcome in relation to balconies there allegedly being made safer, because, ironically, the decision to replace timber decking with aluminium might make them less safe. Luckily, the chair of the leaseholders’ association is a retired engineer from the construction industry, so he spotted that the use of aluminium might not be a safe option at all. Aluminium can be corroded by salty sea air—the block is near the sea—unless it is anodised. The truth is that those leaseholders might well be safer, and not facing a £10,000 bill each, if the balconies with timber decking remained.

My amendment is narrow and might seem a bit specific or even trivialising, but it is an attempt to probe whether the Government will consider adopting a broader cost-benefit analysis approach specifically to balconies to avoid more EWS1-type problems. It is also an attempt to encourage the Government to be wary of the zero-risk approach of a one-sided and overly precautionary culture of fear, with which the Hackitt review is imbued; there are lots of good things in it, but there are also a lot of things that I do not want to just endorse. Many of the leaseholder campaigners whom I have talked to say exactly the same: they warn that we should talk more to leaseholders, who of course want to be safe but do not want safety to lead to them having to pay for expensive and unnecessary remediation work, on balconies in this instance, when it is just not needed. I beg to move.

[The Earl of Lytton (CB)]

My Lords, I think the noble Baroness, Lady Fox, has done a considerable service, because she has highlighted quite a number of things. You might say balconies represent important facets in terms of building safety. The question of balconies may have been triggered by a fire—it may have been in Australia—caused by a discarded cigarette end on a timber-deck balcony. The circumstances, of course, of timber in high summer in New South Wales or wherever may be significantly difficult from in a typical English summer. I grant you that—and, of course, timber does not retain significant degrees of combustibility throughout the season, typically, in this country. I can certainly testify to disposable barbeques being a far more potent source of fire in such circumstances.

--- Later in debate ---

[Baroness Neville-Rolfe (Con)]

My Lords, as I was saying, the Committee will know that there has been a serious problem aggravating the difficulties that leaseholders have experienced in the post-Grenfell world. This is because insurance companies and mortgage lenders have required these external wall assessments to be made and the dreaded EWS1 forms to be filled in before transactions can proceed. However, not only are the assessments expensive—or they were—but the requirement to provide them implies, or implied, a very cautious view of the needs of fire safety in particular. Worst of all, there has been a crippling shortage of RICS professionals to carry them out.

I argued during the passage of the Fire Safety Bill that this process was over the top, as sometimes happens with professional-based regulation, and increased the numbers of unsaleable properties post Grenfell by hundreds of thousands. I was therefore delighted to hear the Valentine’s Day announcement of the Secretary of State, Michael Gove—in addition to the January comments quoted earlier by my noble friend the Minister —stating that:

“The provisions will protect leaseholders and encourage a more proportionate approach to fixing buildings. Currently, building owners can simply pass all costs on to leaseholders, with no incentive to hold back on unnecessary remediation work that has brought misery to leaseholders. Today’s package, alongside the duties in the wider Bill, will create an environment for tough, proportionate action on critical safety issues while preventing cost inflation and excessive work.”


“Today’s package” sounds good to me. However, I remain a little sceptical, knowing just how bad the gold-plating has been. For example, we were right to agree earlier on the need to be proportionate about balconies, as the noble Baroness, Lady Fox of Buckley, argued.

The purpose of this probing amendment is to invite my noble friend, who is of course the Minister at the Department for Levelling Up, to update us and agree to undertake a review of the situation in 12 months’ time. The review proposed would focus on the tall buildings that are in scope, but the whole sector would benefit from a review that assesses the position of smaller buildings as well as the interests of the consumer rather than just the surveyor—in this case, the leaseholders and property owners affected. I add that the right reverend Prelate the Bishop of St Albans asked me to say that he supports this amendment but had to be elsewhere. I very much hope that my noble friend will look sympathetically on this request, particularly given the helpful change of approach by the Secretary of State.

[The Earl of Lytton (CB)]

My Lords, I will probably disappoint the noble Baroness a little, but I hope that I can also give a bit of explanation. I say that with particular feeling because she chairs the Built Environment Committee, on which I have the privilege to serve.

I understand the irritation that has been generated in some quarters by the EWS1 scheme. I ask the Committee to bear in mind that this was prepared as something of an emergency measure to deal with the logjam of unmortgageable, and therefore unsellable, properties. It was set up at the instigation of government and occurred following discussion with insurers, lenders and valuation professionals. It is a creature of common creation and not the RICS alone, although the RICS put it out. That is quite important.

The unfortunate thing is that, as it was the only form of certification around, it has been latched on to in certain quarters as providing some reassurance for things that it was never intended to achieve. In other words, it was seen as something with a wider fitness for purpose than was ever intended, and that is part of the problem.

When one produces something of this sort, it is produced in collaboration with others, but there will always be people across the spectrum; the insurance world is such that certain sectors of it will top-slice the risk. There will always be some that—a bit like some of what I might call the more adventurous motor insurers—will insure only certain clearly de-risked parts of the market in risk generally. I do not know whether that is a problem here.

This EWS1 was just reviewed in December. The RICS—again in consultation, and again, I believe, with support and collaboration from government but certainly with all the relevant bodies—decided that even though its application in terms of the problems that it created was reduced to a very small proportion, it should be kept because that was the view of valuers, mortgage lenders and insurers. The RICS as a professional body cannot ignore what these people are saying or the commercial pressures that are set before it in dealing with that. The RICS also published its justification in December, which is available on the web. I am all for de-risking things so that assessments of all sorts do not grow horns and a tail. However, I am not sure that having the Government take control and ownership of this particular matter would necessarily reassure lenders or professionals or, for that matter, benefit the market sentiment.

In its evidence to the Levelling Up, Housing and Communities Committee, the RICS acting chief executive made it clear that there is already a process in hand to train up a cohort of fire risk assessors pursuant to the Bill’s objectives. EWS1 itself is probably destined to wither on the vine in a relatively short period of time. I therefore hope that I have given some sort of helpful explanation of why I am not sure that it is a good thing for the Government to take on this thing, even if they felt that they were willing to get their fingers involved in that particular pie, and why it is probably best that the matter continues on the critical path it is now and we see the outcome of this cohort of newly trained people. I am sure that other professional bodies will need to do training as well; we must try to make sure that it is rolled out as speedily as possible so that, hopefully, the problems will be put behind us.

[Baroness Pinnock (LD)]

My Lords, I thank the noble Baroness, Lady Neville-Rolfe, for raising an important issue. There is confusion and concern around these EWS1 forms and assessments. There is confusion—which I will come on to, following on from what the noble Earl, Lord Lytton, just said—and there is certainly concern from leaseholders. Either they wait for ever for these external wall structural assessments, or those who do them err on the side of caution because of the way that they were brought in as an emergency measure following the awful Grenfell fire.

--- Later in debate ---

I am very supportive of this amendment, because all it asks us to do is think about all of the issues and come back. Perhaps the Minister will commit to writing to all of us to put our minds at rest that the Government will create a lot of good fire risk assessors or de-risk some of the issues—this is the problem—that have been created by this emergency measure, although I understand why it was done. With those brief words, I hope that the Minister will respond positively.

[The Earl of Lytton (CB)]

My Lords, I should perhaps explain that, while I am a RICS member and fellow and a registered valuer, I do not actually deal with this particular thing. But, as a valuer, I understand constructs of risk and the attitude of lenders, because they so often dictate the process that is put in place by the valuers: they often set the fee for valuation and their form is used for this particular process. I say again that it is very difficult for a professional institution that tries to weigh up all these different bodies to get away from the big beasts of the mortgage lenders and the insurance world when it is dealing with this sort of thing. But I make no apology for that—there have been problems, and the noble Baroness is absolutely right that they have been visited, as she would say, on wholly innocent leaseholders. It is right that the whole thing should be kept under constant review.

[Lord Khan of Burnley (Lab)]

My Lords, I rise briefly to speak to Amendment 132 in the name of the noble Baroness, Lady Neville-Rolfe. It is a little but very important amendment and, as the noble Baroness will appreciate, “Every little helps” in making sure we get this right. I admire what the noble Earl, Lord Lytton, who spoke with great expertise, said about ending the confusion and providing clarity. That was a very important point. As a Lancastrian, I have never agreed with somebody from Yorkshire as much as I have agreed with the noble Baroness, Lady Pinnock, during the course of this Bill. She is quite right: leaseholders should not bear the costs for issues they have no control over. It is not their fault. We need to end the logjam.

This is my final contribution in Committee. It has been a fascinating debate. I have a special message for the Minister in Latin, to continue the theme: “Da operam, si potes”, or “You can do it, if you try hard”. We have debated a lot of fantastic amendments during this Committee. I am sure the Minister can do it and make this landmark Bill even better, to help people, residents and leaseholders across the whole country.

--- Later in debate ---

[Lord Stunell (LD)]

My Lords, the noble Lord, Lord Aberdare, has certainly been energetic, forthright and determined on this issue, and rightly so. He has reminded the Committee that the Hackitt report made it clear that the withholding of money from second-tier, third-tier and fourth-tier contractors and suppliers put pressure on them, which made it much more difficult for them to deliver a proper and effective product or job on site. The downward pressure that they faced as a result of the withholding of that money was a major problem for them as functioning entities. That was the view expressed in Hackitt, based on the evidence that had already emerged from the Grenfell inquiry.

Of course, there is much wider evidence around the country. The collapse of Carillion is an example. I think that £140 million of retentions were held by Carillion and thereby lost from those on lower tiers in the pyramid. Whatever else might be said about it, that put a number of companies at risk of going out of business, and indeed a number of companies did so just because that money was lost to them. The evil impact of this is very clear.

Some of the impact is less clear but just as difficult. Such companies find that they do not have the resources to invest in skills, training and continuing professional development, simply because they do not have that cash in hand. So it has an impact. Under

“Matters which the review may consider”,


the noble Lord, Lord Aberdare, has sensibly listed in his amendment three important ones and then put “(d) other factors”. I would add investment and training as one of the other factors that suffer as a result of this.

I want to remind the Minister that it is government policy that all government contracts should be written in such a way that retentions are not in place. Unfortunately, not every government department has read the memo. I asked the Business Minister, the noble Lord, Lord Callanan, a Written Question and subsequently an Oral Question about how that was progressing. He was quite frank in admitting, and it is on the record, that the Department for Education had so far refused to implement the Government’s overall guidance that all public procurement should be without retentions built into the contract documents. I have no doubt that the noble Lord, Lord Callanan, is having a good go at the education department; I hope that I can add to that today and another Minister will have a good go at it, at the very least to make sure that the Government get their own departments to follow their own policy, which would be very much in the direction that the noble Lord, Lord Aberdare, is advocating. I have probably said enough, but I certainly hope to hear good words from the Minister in a moment or two.

[The Earl of Lytton (CB)]

My Lords, I support my noble friend Lord Aberdare. The matter of retentions comes right at the end of this series of Grand Committee sessions, but it is part of a culture. It is the race to the bottom, value engineering or cost-cutting. Construction contract architecture and the practices that have grown up with it are all part of the perverse incentives that have somehow been built up.

At one stage in my professional life, retentions of, say, 5% or 2.5% for limited periods, as the case may be, started as security for the proper completion of works as set out and to a required standard. However, I take the point made by the noble Lord, Lord Aberdare, that this has now gained the appearance of an informal and unconsented bankrolling of construction costs at the expense mainly of subcontractors and their suppliers. This has to stop. It is like all such situations: retentions have a legitimate use but have been subject to serial abuse. If we could keep our eye on one and render the other improbable, that would be all very well, but if the bad practitioners do not get the message, some brutal measures may indeed be necessary and better regulation and protection of sums due may follow from that. I cannot help thinking that the small and medium-sized enterprises that have dwindled and atrophied as a component part of the construction industry are the chief sufferers. They are unable to take on the big beasts of construction.

There is a real point behind this. If the memorandum that the noble Lord, Lord Stunell, referred to became a universal code of practice in the sense that you really had to justify yourself before stepping out of line, that would at least be a start. There is a lot we can do with what we know and the existing situation in terms of decent treatment, honest measures and taking care of the whole supply line we are dealing with. What the noble Lord, Lord Stunell, said about investment, training and that sort of thing is absolutely on point, and I certainly support the thrust of this amendment.

[Baroness Hayman of Ullock (Lab)]

My Lords, the noble Lord, Lord Aberdare, has raised a very important issue and certainly has our support. Something has to be done to resolve this, and others who have spoken have swung in strongly behind the noble Lord. I am sure the Minister has listened and is taking note.

We have heard that retention is the customary practice of withholding monies to cover defects and incomplete work, but it is also being used for so much more than that, as the noble Earl, Lord Lytton, and the noble Lord, Lord Aberdare, explained. Depending on the size of the project, it can be insignificant or very significant. Large construction projects can be worth £1 billion; huge sums of money can be affected. As the noble Lord, Lord Aberdare, said, reform of the problems this can cause is long overdue.

Retention is often a cause for complaint and quarrel. Subcontractors often find it difficult and can see it as a tool to be bashed with by the paying party, who can hold back payment whether there is good reason to do so or not. I guess that I ought to declare a past interest in that I used to work for a small business that was contracted into large infrastructure projects, so I am very aware of the kind of impact that retention of monies can have. We worked with a lot of other small businesses within large projects. If payment is held back through retention, often for many months, small businesses have a serious cashflow problem, often meaning they cannot pay their staff. This is about not just training but the basic running of the business. They can then become dependent on constant, rolling bank loans, which is not the way a small business wants to run.

All that could be solved if this was sorted out. We see signs everywhere about considerate contractors, but contractors are not always considerate to their subcontractors. We need to sort this out. As we have heard, it can be such a source of pain and concern when the party holding the monies goes bankrupt. Other noble Lords have mentioned Carillion, which is probably the largest example of that happening.

I will not say any more, because we are nearly there, and we are nearly at another vote, I think. The noble Lord, Lord Aberdare, very ably introduced his amendment, so I think the Minister will have heard his message loud and clear. The last thing for me to say during this Committee is that today in particular, and throughout, the Minister has been given an opportunity to slay a number of dragons, not just this one, so I look forward to his response.

Building Safety Bill

Earl of Lytton Excerpts

Lords Hansard - Part 2 & Report stage
Tuesday 29th March 2022 Lords Chamber

I do not think we can simply sit and wait. If the Government cannot accept this amendment, they must come up with an alternative proposal that ticks the box. Without such an assurance, this Bill simply will not live up to its name.

[The Earl of Lytton (CB)]

My Lords, as it is my first contribution in this part of the Bill, I must necessarily declare my interests as a practising chartered surveyor, a member of the RICS and a patron of the Charted Association of Building Engineers. I am also a member of the Built Environment Select Committee, chaired by the doughty noble Baroness, Lady Neville-Rolfe, who keeps us all in order. I think she is splendid and I do not say that for want of any favours. I also own residential rented property: no flats, no high-rise, thank goodness.

I pay tribute to the Minister for the meetings he has arranged, the dialogue in which he has been willing to engage and his untiring efforts and those of his Bill team. It is fair to say that we have come an enormous way in this Bill and that is in large part, if not solely, because of the drive the Minister has put into this. I am pleased that he has clarified the limited partnerships and provided the other clarifications in the amendments he has introduced. I also pay tribute to all noble Lords around the House who have stuck with the principle that the innocent should not be made to pay for the mistakes of the developers and constructors.

I will just deal, if I may, with Amendments 201 and 202, which are in my name and on which I will not be seeking the opinion of the House. They relate to a matter I referred to in Committee, which is insolvent landlords and their interests being escheated to the Crown. That means that potentially, there is no landlord as such to organise remediation work, leaving remediation in limbo and responsibility for costs uncertain. That follows on from what the noble Lord, Lord Young of Cookham, set out with, I may say, a degree of piercing clarity which I found unchallengeable. I will outline the differences between my further amendments and his, but not on these ones.

The sole purpose of my Amendment 201 is to clarify the Crown responsibility. Amendment 202 covers where a superior leaseholder defaults and as a result the liability potentially passes to others. This amendment would serve to prevent a lease being disclaimed, thereby creating another loophole and another piece of loose liability floating around the system.

Amendment 229 in my name is another probing amendment; I hope it is self-explanatory. It attempts to deal with a perceived problem of delay by landlords and agents in accepting first funding agreements for remediation. The matter was highlighted in a recent edition of Inside Housing. Reference was made to the logjam created because managing agents were reluctant to sign off on remediation contracts without knowing who would be paying for the work or, indeed, when. That effectively stalled the first funding offer acceptance.

It was thought that the matter had been resolved; according to the Inside Housing article, the Minister confirmed in December that the logjam had been cleared. Notwithstanding this, the article said, the problems persist. It reported cases in St Albans, London and Manchester; in other words, all over the country. It is known that there are few enough contractors ready and willing to take on the—quite demanding in some cases—work of remediation, which this Bill addresses. Delay will simply cause contractors to go elsewhere and opportunities to be lost. This prejudices both leaseholder and, ultimately, I suspect, freeholder. It makes no sense. There may be many reasons for this—usually, I suspect, surrounding the landlord’s own tactical and financial advantage—but none can justify the excessive delay that this amendment seeks to avoid.

There seems to be a bit of a blame game going on between the department on the one hand and block management interests on the other. I am reluctant to take sides on that. This amendment intends to treat the symptoms by setting a time limit on acceptance of the offer so that things cannot be spun out. I hope that it will have the effect of concentrating minds and will be conducive to good order for that reason.

I now turn to Amendments 234 to 237 in my name. I make it clear that, subject to what I may hear from the Minister, I may need to test the opinion of the House on these amendments. They would have a similar effect to Amendment 233 in the name of the noble Lord, Lord Young; namely, to relieve leaseholders and freeholders of what many of us feel is an unjust imposition. Much of what we have been discussing arises because the Government believe, as I do, that, given the 30 years during which certain bad practices have taken root in construction quality, not every defect will have an identifiable perpetrator or associate currently in existence, solvent and with sufficient assets to make a claim a practical possibility. The Government seek to ensure that, if a construction defect exists which does not fall within their scheme of financial support for remediation and there is no perpetrator to be found, the public interest that buildings are made safe will persist. In their view, the only other possible sources of remediation funding are the freeholders and leaseholders.

I think it is fair to say that the noble Lords, Lord Young and Lord Blencathra, and I have been in a sort of huddle since Grand Committee. We all believe that the fallback should be the perpetrator of the situation. The amendment in the name of the noble Lord, Lord Young, proposes falling back on the local authority or the Secretary of State—AKA the taxpayer. I am aware that the Treasury has said, in fairly blunt terms, “We have made an allocation of £5.1 billion and that is it.” That means no more money unless it comes out of the departmental budget, impinging on other important work that the department might wish to take place. I take it that this is one reason, among many, why the Secretary of State has taken the initiative to protect the departmental budget by seeking voluntary contributions from the construction industry for a further £4 billion for other defects—good on the Secretary of State for doing that.

The first question I have for the Minister is: can he update us on how things are progressing on that voluntary scheme? Certainly, the industry’s initial response was not very fulsome, and the Secretary of State made what one might describe as a somewhat sterner demand— and very rightly too. The Minister’s answer is pivotal to how likely it is that property owners will have to fork out for these defects and thus require the protections he seeks to build into this Bill.

If the perpetrator, as defined, cannot be found, then it becomes a test of what is “just and equitable”—to use the words in the Bill—in apportioning the orphaned responsibility and cost between two groups of property owners, who, in the main, are likely to be completely innocent of the construction-related defects and for whom arguably it is neither just nor equitable that they should bear that responsibility and cost at all. Of course, that circumvents what I understand to be meant by the perpetrator pays principle, and results in the passing back of both responsibility and cost—the two are not exactly the same—to the innocent.

Given the Government’s insistence on this approach, I conclude that the deficit between what can be claimed from extant, solvent and legally liable developers on the one hand, and the true remediation cost on the other, is likely to be significant; otherwise, why would we be here? Meanwhile, I sense the industry is telling us, in the blunt cant of the trade, that we can whistle for it.

The Government’s remediation model of liabilities, exemptions, cost controls, means testing, tiered contributions by property value, appeals to courts and much chasing of tails withal is certainly not straight-forward. Any one of the procedural steps is contestable to some degree and contested they will undoubtedly be. So, while the many leaseholder protections are welcome, such as cladding on buildings over 11 metres, building safety levy backstops on cladding costs, exemptions for sub-£175,000—or £325,000 in London—properties, and non-cladding remediation where the landlord is or was connected to developer.

These are very welcome, but the model is incomplete and there remain significant exclusions. Properties under 11 metres are certainly one of them, but we will have to wait until we get to Amendment 115 in a later group to discuss that. There is also the question of buy-to-let landlords with more than three properties, but we will have to wait until we get to Amendment 123 to consider that. There is no backstop for non-cladding remediation costs. Leaseholders in enfranchised or commonhold blocks, as discussed in Amendment 117, may get some support for cladding remediation from the building safety fund, but I question whether they will get everything they are due under a true perpetrator pays principle.

Some issues have not necessarily been eliminated, despite what the Government claim. The noble Lord, Lord Young, referred to the waterfall, so I can skip my explanation as he has explained it much better than I would. Establishing cost liability does not of itself generate funds for remediation if those liable to pay are broke. It is a very important principle, because if the guys made responsible have no assets or cannot get at their assets because they are mortgaged up to the hilt and there is no equity, then what is the purpose of placing this onus on them in the first place?

The Government are taking a substantial risk in leaving it to the courts to decide whether it would be “just and equitable” as regards their various proposed orders. That seems to be tantamount to an invitation for further litigation, delay, uncertainty, risks, and so on. There will be applications for remediation orders, remediation cost orders, building liability orders, and litigation under the Defective Premises Act—my mind freezes over when I see that list.

There is no bridging funding facility in any of this, so unless the Secretary of State steps in or some other funding is levered in, remediation cannot take place. People cannot simply buy in on spec some large amount of a contractor’s time and substance; it is just not going to happen. Some of those who might, I suppose, be in line to be contributors to this just and equitable approach to splitting it between innocent parties—and I am sorry to go on about that—are not going to be there. Some buy-to-let investors will be denied any protections, and some landlords will fail the cost contribution test; I tried to make that clear when we were dealing with this in Committee. If you multiply the number of properties that they hold by £2 million per property, you will very often find that the total figure is greater than their capitalised worth—ergo, they drop out of responsibility.

--- Later in debate ---

[Baroness Bennett of Manor Castle (GP)]

My Lords, I rise with pleasure to follow the noble Baroness, Lady Neville-Rolfe. I agree with almost everything she said and very strongly back her amendment. The political spread we have just achieved across the House in that regard is interesting.

I sat through the previous group, and I am indebted to the noble Baroness, Lady Pinnock, for counting the 70 amendments in it. I listened to the detailed and informative contributions, particularly from the noble Lord, Lord Young of Cookham, and the noble Earl, Lord Lytton. I learned a great deal about waterfalls. I am still not entirely convinced that there is a solution to the “if no one’s left to pay who’s going to pay?” problem. None the less, it is very clear that this is an unusual Bill and that we have very broad agreement on what we are trying to achieve; that is, that the perpetrator pays to ensure that innocent leaseholders and home owners who through no fault of their own have found themselves trapped in awful, incredibly stressful, dangerous circumstances are not the ones who ultimately suffer and that the people who create the problem pay for it.

However, given the complexity of everything we have just done, we cannot be sure that the Bill will deliver and that there will not be unexpected hitches and problems along the way. I agree with the noble Baroness, Lady Neville-Rolfe, that five years is just too long. The noble Baroness, Lady Fox, spoke about the personal experience of being stuck out of a home, and some people are stuck in homes in awful situations. Two years is the right time to look at this in the round.

This may be where I slightly part company with two earlier speakers. I think there is broad agreement that we have a huge cultural problem in the building industry. I should perhaps declare a historic interest as the daughter of a builder. I knew quite a bit about the Australian building industry and lots of the problems that I saw in that situation have been magnified and intensified by economic developments over the past few decades. We have mass housebuilders that are far better at being cash cows than at producing homes. We are trying to change this situation and the whole culture of the industry. We are trying to get homes that are produced so that people have a secure, stable, affordable place to live. It is such an enormous change that we cannot wait five years to review this, so I commend the amendment tabled by the noble Baroness, Lady Neville-Rolfe.

[The Earl of Lytton (CB)]

I, too, commend the noble Baroness, Lady Neville-Rolfe, on this amendment. Given the circumstances of the Bill, the number of variations in it and the sheer number of moving parts involved, a review is essential for precisely the reasons she said, and I support the amendment.

[Lord Greenhalgh (Con)]

My Lords, I am grateful to the noble Baroness, Lady Fox of Buckley, and my noble friend Lady Neville-Rolfe for this insightful debate.

Amendment 26 from the noble Baroness, Lady Fox, would require a review of the financial impact of the new regime. I reassure the noble Baroness that a review is already required by Clause 152, which provides that:

“The Secretary of State must appoint an independent person to carry out a review of”


the system of regulation of building safety and standards and the system of regulation for construction products. Importantly, the reviewer is not limited and may choose to review connected matters, including the matters mentioned in the noble Baronesses’ amendments.

Similarly, Amendment 246A in the name my noble friend Lady Neville-Rolfe would require a review of the impact of the Act. I apologise for the mix-up that resulted in my addressing this amendment in an earlier group. I will repeat for the record that we believe that this further replicates Clause 152 in the Bill and therefore we believe this is unnecessary.

What I do say to my noble friend is that the Secretary of State has to appoint someone to carry out the review within five years, so that is a long-stop date. I am very happy to meet my noble friend to ensure that we get going with this review at the very earliest opportunity to make sure that that long-stop date is comfortably met. We also need to make sure that this review is substantive and learns the lessons of a new regime in the broadest possible sense and addresses the points raised by the noble Baroness, Lady Fox of Buckley, as well those raised by my noble friend Lady Neville-Rolfe, who has had tremendous Front-Bench experience as well as experience as a distinguished civil servant.

With those explanations, I kindly ask the noble Baroness, Lady Fox, to withdraw her amendment and my noble friend Lady Neville-Rolfe not to press her amendment.

--- Later in debate ---

Moved by

[The Earl of Lytton]

115: Clause 120, page 127, line 27, leave out from “dwellings” to end of line 32
Member’s explanatory statement
This amendment extends the cost protections in the Bill to leaseholders in buildings of all heights containing two more residential dwellings.

[The Earl of Lytton (CB)]

My Lords, this amendment is leading the charge here. I refer noble Lords to Grand Committee, when the noble Lord, Lord Blencathra, in particular, questioned why only buildings of a certain height benefited from the cost protections in this Bill. This is a matter on which I feel very strongly—and, indeed, both my cosignatories feel strongly—and I give notice that I may well press the amendment to a Division.

I reminded the Grand Committee at the time that building safety is not governed by building height alone or, possibly, at all. I refer to the fire at Worcester Park in September 2019. The Minister went on to give us a graphic description of the circumstances. However, despite that the Minister stuck to his text in suggesting that lower rise buildings do not have the same risk profile. I have probably paraphrased him, and that may not be the precise form of words that he used, but that is the drift of what he was saying. If, as he recounted in the circumstances of the Worcester Park fire, it was so well alight after nine minutes that the fire and rescue services concluded that the building could not be saved, that represents to me an existential risk to occupiers who may be asleep, confused of mind, infirm, pregnant, disabled or otherwise particularly vulnerable, especially as regards the speed with which an inferno can evidently develop.

A block of flats without adequate separating walls to me is just as dangerous above ground-floor level as a high-rise block without decent fire doors. I do not make a distinction in terms of risk; they are both equally perilous, as far as I can see. Be that as it may, I have received emails from occupiers of identical buildings in the same development in the Worcester Park building, telling me that the developer was remarkably reluctant to address basic issues and shortcomings, many of which may have accelerated the fire in the building that was actually destroyed. Furthermore, they said that they could not sell their flats and that insurance had gone through the roof, and interim measures were costing a fortune—exactly the same problems and privations as with taller buildings.

I will just say—other noble Lords will be able to elaborate—that the Government have not made the case for excluding these, other than giving the impression that this is driven, dare I say it, by a degree of Treasury parsimony and a departmental inclination to go no further than it absolutely has to. There seems no good reason for height exclusion on any moral, economic, safety or practical ground. I beg to move.

--- Later in debate ---

[The Earl of Lytton (CB)]

My Lords, I will test the opinion of the House on Amendment 115 in a minute. However, before I do so, I will say how much I appreciate the contributions from all noble Lords. It has been an absolutely fascinating debate. As others have said, we are really getting into the core philosophy of what sits behind this Bill. I feel slightly like the skinny fly-half who, having got hold of the rugby ball and made a dash for the opposing side’s try line, finds himself up against a veritable wall of the opposition. It is only seconds later that he finds that a substantial number of heavyweights from his own side have propelled him over the line and applied him and the rugby ball into the mud to score a try. We have not scored a try yet. That, of course, depends on noble Lords—the referees.

I thank the noble Lord, Lord Young, for his summary of this and the other amendments—I found him to be wholly convincing. I will not go into a great deal of detail, given the well-rounded debate we have had, but Amendment 117 seems to address an issue which actually borders on discrimination on the grounds of tenure, and it is a really perverse outcome for commonholders as a tenure. It is a tenure to which the Government should be giving support—we all know that. Excluding them cannot be right.

Various noble Lords have spoken about extending the number of buy-to-let properties. That would rely on their accepting the basic premise of a charge to the leasehold and freehold properties as a default mode—I shall come back to that in a minute.

Amendment 126 is necessary because, unless the benefits under the Bill inure to the benefit of the buyer as a signee, the Bill would simply act to the prejudice of the seller, which would remain and lead to unfair loss, cost, worry, delay and disadvantage—and we cannot have that. A reduction to zero charge would be beneficial and I would support it, but, again, I go back to the question whether I would start from this point.

I welcome a lot of these amendments and would welcome some of those from the Government if I was not troubled by their basic premise of deciding that orphan cost liabilities must be spread between two categories of the innocent. It is a matter of policy; it is not a matter of human rights. I listened carefully to what the noble Lord, Lord Marks, and the noble and learned Lord, Lord Hope of Craighead, said on that, and I found it absolutely fascinating. The fact remains that freeholders as we know them very often have a minority interest by value, so the questions remain: where do you find that real, available hard cash to fund the remediation, and after what degree of litigation, delay and cost?

Despite what the Minister said, and I admire his tenacity, I remain unconvinced by the arguments. On sub-11 metres, I do not see that the argument has been made for the quantifiable difference under the Bill that the Government are trying to achieve, bearing in mind that the Worcester Park building was a four-storey building. I wish to test the opinion of the House on Amendment 115.

--- Later in debate ---

Moved by

[The Earl of Lytton]

234: After Clause 136, insert the following new Clause—
“Building safety cost orders
(1) The Secretary of State must by regulations make provision for the Building Safety Cost Panel to make building safety cost orders on the application of an interested person.(2) A “building safety cost order” under this section is an order requiring a specified body corporate to make payments to a specified person, for the purpose of meeting costs incurred or to be incurred in remedying relevant defects (or specified relevant defects) relating to a relevant building.(3) An order may—(a) require the making of payments of a specified amount, or payments of a reasonable amount in respect of the remediation of specified relevant defects (or in respect of specified things done or to be done for the purpose of remedying relevant defects);(b) require a payment to be made at a specified time, or to be made on demand following the occurrence of a specified event;(c) provide for payment in services or money’s worth.(4) The regulations must make provision for the Building Safety Cost Panel to issue a warning notice to a person before determining whether to make a building safety cost order under this section against that person.(5) The regulations must make provision requiring that a building safety cost order under this section—(a) be made in a prescribed form; (b) contain prescribed information.(6) The regulations may make provision about service of a building safety cost order under this section including—(a) how an order is to be served;(b) when an order is to be taken as having been served;(c) the persons on whom an order must be served.(7) The regulations must make provision in relation to—(a) enforcement of a building safety cost order made under this section (including enforcement by the Secretary of State or the tribunal);(b) powers of the Secretary of State to order a person served with a building safety cost order to pay any costs incurred by the Secretary of State under section (Building safety cost order: determinations) in respect of a building safety cost order under this section.(8) The regulations may make provision for persons to apply to the Secretary of State for a review of a building safety cost order under this section.(9) The regulations must make provision for appeals to the tribunal in relation to—(a) a decision of the Building Safety Cost Panel to make or not make a building safety cost order under this section;(b) a refusal by the Building Safety Cost Panel to review a building safety cost order under this section;(c) the outcome of a review by the Building Safety Cost Panel of a building safety cost order under this section.(10) The regulations may in particular include provision suspending a requirement to pay an amount due under a building safety cost order under this section pending the determination of a review.(11) The Secretary of State must make regulations under this section within a period of three months beginning with the day this section comes into force.(12) In this section—“associated”: see section 123;“interested person”, in relation to a relevant building, means—(a) the regulator (as defined by section 2),(b) a local authority (as defined by section 29) for the area in which the relevant building is situated,(c) a fire and rescue authority (as defined by section 29) for the area in which the relevant building is situated, or(d) a person with a legal or equitable interest in the relevant building or any part of it;“prescribed” means prescribed by regulations under this section;“relevant building” means a building consisting of or containing one or more dwellings;“relevant defect”: see section 122;“specified” means specified in the order.(13) This section comes into force on the day this Act is passed.”Member’s explanatory statement
This new Clause confers a regulation-making power for the Secretary of State to provide for making of building safety cost orders by the Building Safety Cost Panel.

[The Earl of Lytton (CB)]

I wish to test the opinion of the House.

Building Safety Bill

Earl of Lytton Excerpts

3rd reading
Monday 4th April 2022 Lords Chamber

[Lord Young of Cookham (Con)]

I thank my noble friend for his very kind words, and, in return, I commend him for the progress which he has made with the Bill, with his statement on 10 January, the amendments he tabled on 14 February and the further amendments he tabled last week on Report. I also commend him for his engagement with those who have sought to improve the Bill; he engaged with patience and humour despite, from time to time, considerable provocation from two former Chief Whips.

I will make two very brief points. First, I hope the amendments that were carried last week will not be overturned in the other place: amendments protecting those in buildings under 11 metres; amendments protecting leaseholders from making any contribution; and amendments that seek to protect the position of enfranchised leaseholders and put them on a par with unenfranchised leaseholders.

Secondly, there is still some unfinished business. We need to make progress on so-called orphaned buildings. I know my noble friend recognises the problem, which he believes, I think, can be dealt with administratively, and in an exchange on Report he pointed to the funds available, but it remains to be seen whether those funds will be sufficient and who will take on the responsibility of remediating these buildings given that the leaseholders —at the bottom of the waterfall—will not have the resources to do this, particularly if they are expected to litigate first.

I hope that, in the other place, some thought might be given to this and, in what is entirely a matter for the other place, I hope they recognise that they have never seen these clauses at all and therefore allow adequate time for consideration of Lords amendments.

[The Earl of Lytton (CB)]

My Lords, your Lordships will of course know that I have one principal abiding fear about this Bill, which is exactly the point that has been made by the noble Lord, Lord Young—who I regard, along with the noble Lord, Lord Blencathra, as my co-conspirator on this Bill.

To put a little more flesh on that bone, in a case where the original developer or builder cannot be identified or is identified but has gone bust, the question is about getting the remediation cost from these defunct individuals. Given that we have effectively removed the liability of leaseholders for remediation costs—and rightly so, in my view—what then happens when those freeholders and leaseholders are faced with no other option going forward? That is my abiding fear about the overwhelming financial odds that might face these occupiers.

Whether is it possible for the Minister to clarify that, I do not know. However, I add my voice to those of others who have expressed their appreciation for what the Minister has done: he has tackled this with a real sense of purpose, with an open-door policy to talking with those who have concerns, and I appreciate that very much. Behind him is the Bill team, to which I pay tribute as well.

I pay tribute to my co-conspirators, and also all those across the House, on all sides, who have supported me in Divisions—I appreciate that very much indeed. I particularly pay tribute to fellow Cross-Bench Peers, the noble Baronesses, Lady Finlay and Lady Grey-Thompson, and the noble Lord, Lord Best, who, on individual aspects, have campaigned tremendously effectively to have this Bill altered, very much for the better.

Beyond this House, I pay tribute to the efforts of organisations such as the Leasehold Knowledge Partnership, which has been very helpful in many respects. Most of all, I thank the perpetrator pays team, Steve Day and Daniel Greenberg; as far as I am concerned, their input has been absolutely fantastic and totally indispensable.

My last point has to be for all those who wrote to me: the couples who had put off having a family, or even getting married; the distraught pensioners; the families with their hopes and finances on hold, whose children have had their education disrupted and who have been unable to move because their properties were unsaleable for work or for any other purpose; and those facing bankruptcy and repossession. They have been my driving force. In all my years of experience as a chartered surveyor, I do not think I have had so many people write to me, and I hope that I have been able to give a voice to the voiceless in that respect and some glimmer of hope that, at the end of a really long dark period for them, there might be a little bit of light. I remain committed to the principles that I have held to throughout the course of the Bill.

Building Safety Bill

Earl of Lytton Excerpts

Consideration of Commons amendments
Tuesday 26th April 2022 Lords Chamber

So I hope that, in the next parliamentary Session, we will have a chance to discuss leasehold in more detail and to reform it, and have more initiatives that mean that more houses are built, but in collaboration with people such as leaseholders, who can advise on some of the pitfalls of building too quickly and put forward safety concerns.

[The Earl of Lytton (CB)]

My Lords, it is always a pleasure to follow the noble Baronesses, Lady Neville-Rolfe and Lady Fox. I pay tribute to the efforts of the Secretary of State and the Minister to achieve significant changes in the face of a very difficult situation. That should never be understated. If it has been too slow for some seriously challenged individual households, the Bill is undoubtedly immeasurably better than when we started. Obviously it was a disappointment to me that several key elements were rejected in the House of Commons, and I remain concerned by the sub- 11 metre exclusion, buy to lets, enfranchised blocks and orphan buildings, about which so much has been spoken. Although the point that the perpetrator should pay was not before the House of Commons, the problem remains a real one: the problem of funding does not go away.

On the 11-metre cut-off, it has been consistently said that with the measured and proportionate response that the Government say they have adopted, there is no systemic risk for low-rise properties. I do not know whether this means that other mitigations, such as alarms, smoke detectors or sprinklers, may be appropriate, but the claim seems to lack a basis in data. The point was well made in the seventh report of the Levelling Up, Housing and Communities Committee of the other place and followed by an Answer to a Question for Written Answer of mine: without data, assertions regarding risk, mitigation options and cost-benefit lack foundation and create doubt.

If the Government are saying that adding sprinklers, smoke detectors and alarms to such buildings is an acceptable means of overcoming an initial failure in construction, I ask the Minister to be aware that there is a reputational and moral hazard here. If those are seen as workarounds to deal with essential, original compartmentation in buildings, I would really worry about how that will be taken forward and potentially abused in the future. I just do not want to go there; this one has been bad enough. So we rely heavily on government assertions that they will have the powers to deal with these issues.

I acknowledge that the Secretary of State has made considerable progress on the developer pledge but, as the British Property Federation observes, it does not cover sub-11 metre buildings and, in several aspects, as the noble Lord, Lord Young of Cookham, said, it may be inconsistent with the Bill. But if, as I am led to understand, this will be enforced by denying developers planning consent, apart from the questionable basic legality of such an intervention in planning and development laws, it should be noted, as I have said to the Minister before, that planning consent runs with the land, not with the applicant, and even less with whoever happens to be the current owner. That is a matter of law, not of debate.

I was also led to believe that one of the reasons why the perpetrator-pays approach would not stand the test is that it means backdating to a previous era, beyond what would normally be covered by the provisions of the Limitation Act. If I am right and a fundamental failure to meet the mandatory provisions of building regulations from 1965 and at all times since is, in fact, an offence, time cannot run against the commission of an offence in favour of the perpetrator. I am a bit fearful that aspects of the Bill could be regarded as arbitrary and discriminatory as between classes of owner and the nature of liabilities, touched on by other noble Lords. In a sense, that might lead to its own legal trajectory in another area.

I hope the Government have a constant process of rolling review of what is going on here, because if we do not deal with ongoing market turbulence, lack of confidence, economic attrition and the victims in all this simply concluding that they have been hung out to dry in some way, that will really be a system failure and we will not have delivered on the promise given by Ministers in the other place and here that leaseholders should be kept free of these costs, for which they were entirely blameless. I am absolutely sure that the noble Baroness, Lady Pinnock, will say just that in a minute.

I finish by paying tribute to noble colleagues with whom I have worked and particularly to the many leaseholders and their groups. They have campaigned for justice and proper defect remediation. My arguments here have been fuelled by their plight, and I intend to keep reminding the Government that this matter, until it is all put to bed, will have to remain in their line of sight.

[Baroness Bennett of Manor Castle (GP)]

My Lords, it is a great pleasure to follow the noble Earl, Lord Lytton, and to hear that he intends to keep a close eye on this, because that will clearly be needed well into the future.

I rise to offer Green support for Motions D1 and H1 and to make a single point about how I see these fitting together. The noble Baroness, Lady Hayman, and others said that the leaseholders are the absolutely innocent parties here—but, more than that, it is important to say that they are the injured parties. They have been injured over years and years of stress and worry, both financial and about their physical safety, given where they are forced to live. Think about going to bed every night fearful about what is going to happen. They are the victims of the policies of successive Governments who have allowed the building industry to act as a cash cow rather than a provider of secure, affordable, decent homes.

There are still a lot of steps down the road, but if we pass Motions D1 and H1 we give those leaseholders and owners the clarity and certainty that they will be looked after, whether or not their building is under 11 metres, and that they will not be hit with a bill that they still cannot afford to pay, as the noble Baroness, Lady Hayman, said.

I was tempted to say that your Lordships’ House should put one last heave behind the Building Safety Bill, but then I thought that was a slightly unfortunate metaphor in the context we are talking about. I will pick up what the noble Baroness, Lady Hayman, said: the campaigners have done so much work and have fought so long and hard on this. Let us buttress that and put in the final supports they need to get the Bill we should have.