Building Safety Bill

Baroness Neville-Rolfe Excerpts

Committee stage
Monday 28th February 2022 Grand Committee

[Lord Best (CB)]

My Lords, this group should not detain us too long, for three reasons. First, the group has only one amendment, this one. Secondly, the issue here is not of the same complexity or magnitude as the all-important matters that the Committee discussed last Thursday. Thirdly, I think that the Minister will not take too long to accept it. Amendment 45, in my name and the name of the noble Baroness, Lady Neville-Rolfe, concerns the impact of the Bill on the management of leasehold property, in particular the management by the leaseholders who live there.

The amendment has the backing of leaseholders and of bodies representing those managing leasehold flats, the Institute of Residential Property Managers and the Association of Residential Managing Agents. I declare an interest as chair of the Government’s regulation of property agents—RoPA—working group, whose 2019 report provides insights into the arrangements for managing blocks of residential apartments. Amendment 45 seeks to prevent the Bill from creating a major problem where residents of blocks of flats have responsibility themselves for the collective management of their homes. It covers the residents management companies, where the developer has handed over ongoing management to the leaseholders, and the right to manage companies, where residents have exercised their right to take control under the Commonhold and Leasehold Reform Act 2002, on which, incidentally, I gave my maiden speech 20 years ago.

These resident-controlled companies will have a board of unpaid volunteer directors. The directors will sometimes decide to employ managing agents to carry out the usual management and maintenance tasks, but the legal responsibilities for their company’s actions will remain with the directors. The Bill as it stands places a new layer of responsibility on these resident directors: they must, together, assume the role of the accountable person or principal accountable person responsible for building safety. This makes each individual director personally liable if things go wrong. They may engage expert help, but they cannot shed their accountable person status and the full liability remains with them.

The directors will now have to identify safety hazards, decide on the remedies and procure the necessary works. There are plenty of opportunities for mistakes and the new building safety regulator could discipline them, fire them or fine them, ruining their personal reputations. Fellow residents could sue them for mismanagement or misjudgment. Indeed, under Clause 131, if residents do not feel that the residents management company has done enough to recover money from third parties, they can take them to court.

The entirely predictable but unintended consequence of placing this serious new burden on resident directors is surely that no one will volunteer for the role. Already it is often a hard job to recruit and retain willing volunteers, who must not only give up their time but risk falling out with neighbours when taking decisions that cannot please everyone. It is commonplace for directors looking for a new volunteer to be economical with the truth: “It won’t be very time-consuming or onerous”, they say. How much more difficult will the recruitment of new and the retention of existing directors become if this Bill adds considerably to the obligations placed on anyone who dares to volunteer?

Amendment 45 seeks to resolve the problem. It has two parts. First, it would allow the residents management companies and right to manage company directors, if they wish, to pass on the functions and liabilities of the accountable person or principal accountable person to an external, competent, qualified third party with proper professional indemnity insurance, which the directors could never obtain. Secondly, it would enable the directors to pass on the costs of so doing to the residents via the service charges. With this amendment in place, a significant barrier to leaseholders managing their own affairs will be avoided.

Successive Governments have consistently encouraged residents to assume mutual responsibility for managing their blocks of flats. Indeed, moves are in the pipeline to relaunch the so far unsuccessful commonhold arrangements, whereby the occupiers own the freehold as well as handling the management. So I am sure that there is no intention to impose a huge disincentive for leaseholders to participate in residents management companies and right to manage companies. By enabling the duties imposed by this Bill to be transferred from the volunteer residents to professional experts, a potential exodus of volunteers can be avoided and the encouragement for more resident control can be sustained. I hope, therefore, that the amendment is helpful in correcting an unintended oversight and that it will appeal to the Minister. I look forward to the contribution of the noble Baroness, Lady Neville-Rolfe, and I beg to move.

[Baroness Neville-Rolfe (Con)]

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

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

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

[Baroness Pinnock (LD)]

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

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

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

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I thank noble Lords for suggesting this amendment but, for the reasons that I have set out, we are unable to accept it. However, I think that there is a wider question around residents leaning in and taking responsibility for buildings within our leaseholder reform policy and we will give this further thought within government. I offer those noble Lords who are interested a meeting before Report to discuss it further.

[Baroness Neville-Rolfe (Con)]

A meeting would certainly be helpful. We also need to see this famous guidance. We know from other experience on buildings that there is an assumption that everything will be fine and dandy, but this is a very serious problem. We will lose those volunteers who are running buildings right across the country while waiting for Godot and a bit of guidance. If we are able to see the guidance and see that it works, we will be very happy. If it does not work, there will be time to do something. I am sorry to raise this point, but it is a practical matter for lots of people across the country, some of them in very inexpensive flats that they cannot even sell.

[Baroness Scott of Bybrook (Con)]

We absolutely understand the issue We are working on it. As I said, if we have a meeting, maybe we would have some ideas. I do not know about guidance yet, but we will make sure that we can have that discussion. I hope that we will get something better in place before Report.

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We already know there is a shortage of competent fire risk assessors; that was explored on the previous day in Committee. Clearly, these people will not be fire risk assessors. What building safety skills and standards will be required—and who will judge them? The building safety regulator? That would be a good starting point—but, so far as I can see, it is not in the Bill. There are a huge number of issues in relation to the building safety manager, and we want the Minister to be able to answer all those questions. We all want to find a way of making buildings safer, and we have to be convinced that creating this role will achieve that. I am not convinced. We will see what answers we get, and we may have to pursue this further on Report.

[Baroness Neville-Rolfe (Con)]

I hope that the noble Lord, Lord Khan of Burnley, will not mind if I ask for clarification on a related point. First, I will say how much I agreed with the speech of the noble Baroness, Lady Fox, on the worry one might have about a shortage of experts for this purpose, leading to an escalation of costs that will end up with the ultimate consumer: the leaseholder. Clearly, given the history, we do not want confusion in the Bill.

My question is about how the safety manager will operate in practice. How often will he or she be expected to visit the building? Obviously, I know a lot more about shops, and in shops the safety manager is often a treasured member of staff who may not be an expert in safety but is an expert in making sure that other members of the team behave appropriately. You do not need much expertise on safety if you have a very good system—one that includes sprinklers, for example, which will work well because all you have to do is make sure that the sprinklers and the water that supplies them are checked from time to time. My question, which it would be good to have clarified, is: what is the vision of what this person is going to do, and will they be doing it once every five years, once a day, or whatever? That will affect both the cost and the risk that there will not be enough people to do the important job of ensuring that we have safe buildings. Even in high-rise buildings, there will still be quite a bit of demand.

[Baroness Hayman of Ullock (Lab)]

My Lords, I want to say how much we agree with what the noble Baroness, Lady Fox, said about the importance of having adequate safety measures. That has to run through everything we discuss in connection with the Bill. The noble Baroness also raised the important issue of cost. My noble friend Lord Khan talked about high service charges, and the Minister said she would write about that. This debate has put a focus on ever-increasing service costs, and the fact that in many cases they are starting to become unreasonable. It is very difficult when they go up by 190%, as they have in some areas.

The noble Baroness, Lady Neville-Rolfe, asked one of the key questions that I was going to ask, about the operation of the managers. What exactly are they going to do, and how are they going to do it? Will they be paid, and if so, how much? There is not a lot of detail in the Bill. This comes back to the point made by the noble Baroness, Lady Pinnock, about accountability, and whether there will be confusion over the role. It is important that we all understand exactly what building safety managers are expected to do, how they will do it and how they will be rewarded for their work. Without that clarification, there are bound to be concerns that the cost of their work will be passed on through increased service charges, or possibly increased rent. None of that is clear. We would like more clarification about the role and the expectations.

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Perhaps I can encourage the Minister to think about that carefully before we start upsetting people. This Bill upsets quite of lot of people, I know—probably quite rightly—but the real people for whom it needs to meet these standards are those who are in their own homes, have purchased property and need to be protected because they are vulnerable. I do not want any wriggling out to be able to occur here, which is why I make these technical points, not as a criticism but as an observation of how the Bill might need to look at these issues before the next stage.

[Baroness Neville-Rolfe (Con)]

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

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

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

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

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

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

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

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

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

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

[Baroness Pinnock (LD)]

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

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

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

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I make it clear that these Benches very much want this legislation to succeed in its primary objective of delivering safe buildings at no additional cost to their existing occupants. However, we also want to see mechanisms and provisions in place that are realistic and deliverable, where any unintended consequences are clearly identified and then mitigated—or, better still, avoided altogether.

[Baroness Neville-Rolfe (Con)]

Does the noble Lord think this construction product schedule includes such things as wood? The thing about fire safety is that it is not just to do with whether it is a plastic tile of some sort but with where construction products are used. In a case that I am aware of, there is an argument that things made of wood—as they have been for a thousand years—are not safe and should be replaced by something else. I am not quite clear how the construction products link into that. This may be a question for the Minister, but I ask the noble Lord, Lord Stunell, because he has obviously been studying this.

[Lord Stunell (LD)]

The noble Baroness is certainly right that there are materials that have been used in one way, safely and successfully, for thousands of years, and others that are intrinsically safe, such as bricks—presuming they are made of clay rather than straw. I will not try to give the full range, because I think the Committee would get bored quite quickly and my pool of knowledge is quite shallow, but she has raised an important point: it is not just about having a product but about what you do with it. I am sure the High Court would want to put both components together before issuing any building liability orders, which seem to be the nuclear weapon that the Government believe they have in their hands.

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[Lord Greenhalgh (Con)]

My Lords, I was caught mid-sentence so I will go back to the beginning of that particular sentence. The noble Baroness suggests that we require detailed requirements on contravention notices to ensure the proper use of these powers, but that is better suited to regulations. Indeed, the balance between what is reasonable to expect of an accountable person, the urgency of building safety risks and protecting residents from potential misuse of powers is crucial. That is why we believe that this detail should be set out in regulations, developed in consultation with residents and accountable persons and subject to public consultation.

Amendment 52B would allow residents a reasonable time to remedy any alleged contravention before an application to the court; indeed, the Bill provides that the accountable person must specify the steps that the resident should take and a reasonable time for taking them. The court is very unlikely to issue an order before that time has expired.

Amendment 55C would require the building safety regulator to consult on and issue a statutory code of practice regarding powers of entry. Subsequently, Amendments 53B, 53C, 53D, 54B, 55A and 55B would require the accountable person to comply with a statutory code of practice and ensure that the right of entry into homes applies only in urgent cases or emergencies. In respect of Amendments 52A and 54A, the Government are closely listening to these points; however, the noble Baroness’s intention is already being achieved, as the resident would be notified of the application from the accountable person as part of the court process.

I would like to reassure the noble Baroness that there are already safeguards against misuse in this Bill. Under Clause 86, we will prescribe principles under which the accountable person must operate. These have been published in draft and include the requirement to consider the impacts on residents within the building.

In addition, the clause provides that accountable persons have a right of entry to a resident’s home with an order awarded by the court. The courts will apply established principles when considering any such application for entry and will grant access only when they consider it just to do so. This provides an effective safeguard against misuse. As noted in response to the points raised by my noble friend Lord Blencathra, we would expect the accountable person to seek to resolve issues directly with residents in the first instance to gain entry where it is needed.

The building safety regulator will issue guidance to accountable persons, which will set out the expectations for their system for handling residents’ duties and enforcing them. It is important to note that these powers are necessary for the accountable person to be able to discharge the legal duties we are placing on them. Although their use covers emergency cases, access may be needed where a resident refuses to allow the accountable person to discharge their duties. Indeed, the provision is designed for the discharge of day-to-day duties and not for emergency situations, which would require calling the emergency services.

As such, we must again strike a balance between protecting residents and affording the accountable person the tools needed to keep their building and residents safe. We believe that this balance is correctly achieved in the Bill. I understand the noble Baroness’s intentions with these amendments but, for the reasons I have given, I ask her not to press them.

I now turn to Amendment 107A in the name of the noble Lord, Lord Stunell, which seeks to probe whether the retrospective liability provisions in Amendment 107 apply only to higher-risk buildings. I reiterate the points I made earlier when outlining the intent of the Government’s amendments. This course of action will apply to all dwellings and all buildings containing dwellings. The Government’s position is that the ability to recover cost contributions from product manufacturers should not be restricted to those who live in multi-occupied high-rise buildings. While it is true to say that the amount of cladding on lower-rise buildings is likely to be lower, we do not think it appropriate to exclude these just because the building is not as tall. The crucial factor must be the safety risk.

We are not restricting this course of action to buildings over 18 metres because we intend to enable all individuals who have suffered a loss as a result of a dwelling being made unfit for habitation due to the mis-selling of a product, a product being inherently defective or a breach of existing building regulations to seek cost contributions for the losses they have incurred. This course of action protects leaseholders and home owners by ensuring that all construction product manufacturers are held liable for their part in the creation of building safety defects. The broad application of this course of action to include all dwellings reinforces this principle and delivers a proportionate approach. The scope of this course of action to apply to all dwellings will mirror the Defective Premises Act.

Finally, I turn to my noble friend Lady Neville-Rolfe’s Amendment 147. I assure her that the Government have considered the impact on business of the measures I tabled on 14 February. We are clear that the principle of protecting leaseholders is paramount. It is fundamentally unfair that innocent leaseholders should be landed with bills that they cannot afford to fix problems that they did not cause. These amendments will right this wrong, and the Government consider it critical that the provisions take effect as soon as possible. I must therefore ask my noble friend to withdraw her amendment.

[Baroness Neville-Rolfe (Con)]

Are the Government planning to produce an impact assessment on the new measures? My amendment was drafted the way it was on the advice of the Bill clerks, but obviously my main concern is to understand the detail of this promising package.

[Lord Greenhalgh (Con)]

I am sorry; with the sheer length of the debate, we are now approaching the two-hour mark, so I hope that my noble friend will forgive me if I did not address that specific point. However, I did address the point that the Valentine’s Day amendments, tabled on 14 February, were made in haste. The work around impact assessment was therefore not carried out at that time, but obviously we intend to update our impact assessment to reflect all the amendments that the Government have brought forward; that is the good practice my noble friend seeks, I think.

I thank noble Lords for this debate, which has been an important and necessary part of the scrutiny of this legislation. I hope that, with the reassurances given, noble Lords will be happy to withdraw or not press their amendments. This has been a feast of a debate so let us conclude it with the two words that we used to say in our formal hall: benedicto benedicatur.

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That “defect” is singular, so is this per defect or per agglomeration of defects—in other words, does the cap relate to the sum of all remediation works or do different caps apply to individual works? It is this whole process of clarity that needs to be sorted out. I would certainly be happy to sit down with the Minister and other noble Lords to try to work out some of these things and get them straight.

[Baroness Neville-Rolfe (Con)]

My Lords, some very good questions have been asked in this debate. I am grateful to the Minister for setting out his proposals. I rise briefly, as it is late, to say that I very much support two practical amendments; as noble Lords know, I am essentially a practical person. They are Amendment 56 in the name of my noble friend Lord Young of Cookham, on aligning building safety charges and service charges, and Amendment 94ZA in the name of my noble friend Lord Leigh, on the dilemma facing leaseholders who have already paid service charges.

[Baroness Hayman of Ullock (Lab)]

My Lords, I have two amendments in this group. Before I introduce them and talk about the things that we are perhaps not so content with in the group, I just want to say that we recognise that the Government have introduced some very important amendments here. We welcome the work they are trying to do to improve the Bill from its previous incarnation.

The first amendment in my name is Amendment 88. The reason we introduced it is that, looking at all aspects of the crisis that this Bill is trying to address, these Benches are concerned that the Government’s approach does not appear to have a central plan. This amendment was also tabled in the other place by my colleagues, so we are repeating their call for the Government to act across the piece to solve the crisis. We ask that the Minister considers accepting our proposals for a building works agency, which would provide a more hands-on approach.

As we have heard, home owners, many of them first-time buyers, have become trapped in a perfect storm in unsafe buildings because they cannot sell their homes, and are forced to pay thousands in remediation works through no fault of their own. We propose that a team of experts does what the Government have not done so far with this Bill: go from building to building to assess real risk, deciding what needs to be fixed and in what order, using the building safety fund to get those buildings fixed and overseeing the work. Crucially, the Government could then sign off the buildings as safe and sellable, bringing certainty back into the market.

To make it clear, we see the building safety works agency as a separate body to the building safety regulator, with no duplication or crossover; in the debate in the other place, the Minister felt that there was crossover. We see the building safety works agency overseeing the remediation works and the other body regulating. One regulates and one does the work. This would mean that the Government could really take on those who are responsible for creating the crisis and who need to pay. This approach was put in place by a cross-party group of politicians and experts in Victoria, Australia, after there was a serious fire there. That is why we think it would work here: it is not just an idea off the top of our heads but something that has been done and worked before. It would enable the Government really to lead from the front on this matter.

Briefly, my Amendment 125 was tabled before the most recent government amendments. It replicates the McPartland-Smith new Clause 5 from the Commons, amending Part XVI of the Housing Act 1985. Now that the Government have tabled their amendments, it has been superseded, but I will still speak to it to remind the Committee that there have been previous attempts to address the fire safety question during the passage of the Bill. This amendment illustrates that there are different approaches to how the issue can be solved in legislation. It was previously tabled with a range of other amendments addressed to Part 5 of the Bill with the aim of allowing the Government and local authorities to enable grants for remediation work—specifically, by allowing the Government and local authorities to designate dwellings with cladding and fire safety defects as defective.

Having now seen the government amendments, I ask the Minister why the Government could not back the original amendment, which was after all tabled by Conservative Members of Parliament. How did the Government then arrive at the decision to table what they have come up with?

I want now to look at some of the other amendments in the group, and in particular at the implications of government Amendment 92. We do not think that any of the announcements benefit leaseholders who have already paid for remediation work—this has been mentioned by other noble Lords today. The fact that there is no retrospective coverage means that even if the proposed amendments become law and are effectively implemented, many leaseholders will continue to suffer the financial impact of the building safety crisis.

I therefore indicate our strong support for Amendment 131, in the name of the noble Lord, Lord Young of Cookham, which proposes that the Secretary of State set up a statutory public inquiry. It is really important for us to understand exactly what the situation is. Otherwise, there will be no recovery of these costs to leaseholders. Any steps which will lead to full retrospective protection for leaseholders who have already paid remediation costs should be taken seriously by the Government.

If the Government choose to introduce a cap on non-cladding remediation works—the noble Baroness, Lady Pinnock, talked about this extensively in relation to her amendments, and we fully support what she is trying to achieve—it would mean that the maximum amount payable would be a peppercorn amount, which is effectively nothing and is where we need to be. Leaseholders should not be liable to pay for any costs that have resulted from a faulty regulatory system, whether these are related to cladding or non-cladding remediation, or interim safety measures. As the noble Lord, Lord Naseby, said, all leaseholders should be treated exactly the same.

Further, it is unclear who will be liable to pay for remediation costs or the provision of interim safety measures such as waking watch in cases where the £10,000 or £15,000 cap has been met. Many buildings with fire safety issues can be occupied thanks to waking watches and other interim measures. If these are removed, there is a risk that the building receives a prohibition or decant notice and/or a withdrawal of building insurance cover. I hope that the Minister has his thinking cap on, because I have quite a lot of questions and requests for clarification. There have been a great number of amendments to consider and fully understand, so I hope that he will bear with me.

The combined effect of the various amendments is pretty complex. They seem to create what I can describe only as a system of cascading statutory protection, each stage of which is triggered only if the prior one is exhausted. I shall go through my understanding of it. Can the Minister confirm that I am correct or clarify where I have got it wrong? I know that the noble Earl, Lord Lytton, also asked for clarification in a number of areas.

My understanding is that the system would work as follows. First, developers who are still the freeholders of a given building or are linked to it by a subsidiary, as well as cladding manufacturers, are expected to pay first. Secondly, freeholders of buildings who are not the original developers or linked to the original developers are expected to pay second, subject to an affordability test to be set out in the future via regulations. Thirdly, if those freeholders cannot pay, leaseholders will be expected to pay only a capped amount based on Florrie’s law towards non-cladding costs only. Anything they have paid to date counts towards the capped amount. Assuming that I have understood this correctly, I ask the Minister for more clarity on how this cascade system is expected to work in practice and what estimates, if any, the Government have made.

For example, how do the Government expect to define the affordability test at stage 2 of the cascade in regulations, given that this will make a huge difference to the number of cases that then get to stage 3? Why is there no protection for social landlords at stage 2, given the impact on affordable housing supply? What happens if freeholders of buildings who are not the original developers or linked to the original developer cannot pay and the costs exceed the leaseholder cap by a substantial amount? Who makes up the difference? Would it be from the department’s affordable housing budget, for example?