Building Safety Bill

Baroness Pinnock Excerpts

Committee stage
Monday 21st February 2022 Grand Committee

I feel passionately about this; I hope that comes across. I feel that I am constantly saying “We need to do this” in every debate on legislation where there is an opportunity, but it never actually happens. I hope that the Minister will listen to my plea with some sympathy.

[Baroness Pinnock (LD)]

My Lords, I apologise: I was not here at the beginning of Committee due to flooding on the track. There was no electricity on the lines so the north was cut off—my part of the north, anyway. I draw the Committee’s attention to my register of interests as a vice-president of the Local Government Association and a member of Kirklees Council. I will speak particularly to Amendment 11, which I have co-signed with the noble Baroness, Lady Hayman.

It is clear that the role of building inspector is absolutely critical in ensuring that buildings comply with approved plans and are built in accordance with building regulations. It is also evident from tragic incidents and residents’ concerns that some buildings have been constructed in breach of building regulations —we have already heard that this afternoon—and that the constructors have managed to get away with it. This Bill is an opportunity to scrutinise these issues and agree a more effective inspection process.

The Bill proposes the new role of building safety regulator to be the ultimate voice for inspection and advice on building safety. The regulator will be part of the wider Health and Safety Executive; that seems right to me. The HSE is a respected body with wide expertise in safety matters. Building safety and inspection need simplicity for clarity, as well as relevant expertise, training and access to advice.

The regulation and inspection of building safety in the Bill fall into two distinct parts: construction and post construction. It is the construction part that we are dealing with now. On the construction element, the Bill provides for the building safety regulator to be to building inspector for buildings over 18 metres. I can understand that, because such buildings are more complex and the safety risks are greater, but there has never been an explanation as to why it is 18 metres. I look forward to the Minister explaining why, apart from historical reasons, 18 metres is the cut-off point.

Of course, the definition of high-risk buildings—or “higher risk”, as they are now described—includes, as I understand it, care homes and hospitals. Can the Minister let us know whether the building safety regulator will be responsible for those buildings as well? It is positive that there will be a register held by the BSR for registered building inspectors, although it is not clear what qualifications and experience will be required to be such an inspector.

I turn to buildings under 18 metres, which do not have quite the same inspection regime, as we have heard. This complicates matters; we need simplicity. The BSR remains the final adjudicator. However, where the Bill falls short is in the complicated regime that is created for buildings under 18 metres. The Hackitt report made absolutely clear the need for accountable persons at each and every stage of construction—the gateway process—yet those waters are muddied for buildings under 18 metres. I thought I heard the Minister intimate earlier this afternoon that the powers of the building safety regulator may be extended to include buildings below 18 metres; perhaps he can make that clear.

Accountability is absolutely critical and, if the Committee gets my point, it should be an accountability that can be recovered. Building inspectors come and go but the one certain place where documents can be stored is in a local authority, because it has legal requirements to keep documents for a great many years. Given the argument from the noble Baroness, Lady Hayman, it seems to me that keeping building control within a local authority as the adjudicator for all buildings under 18 metres would be right. It is a question of having not just a regulator in a far-off place dealing with these buildings but people on the ground who know and understand the issues, the builders, the challenges in each area and how those challenges can be overcome. Some of that will be lost if there is this complexity about inspection in buildings below 18 metres.

On Amendment 43 in the name of the noble Baroness, Lady Hayman, the schedule absolutely should include buildings in multiple occupancy, which clearly have different challenges for building safety. Quite often, they can be older buildings that have been divided up into flats. Unless there is oversight of what goes on, those buildings could easily create building safety concerns. We all know of old buildings where we live—well, I guess a lot of us do—and where we have concerns about those that have been divided up. You fear for the safety of folk in them because of the lack of fire doors and escape routes, so this amendment, too, gets my wholehearted support.

The noble Baroness, Lady Hayman, has proposed Amendment 127 on flood resilience. I can tell the Committee that, certainly where I live, there will be more attenuation tanks under the ground than houses above it. I kid not; they were 10 or 15 metres long and three or four metres deep in a recent planning application. These issues are really important because more construction is taking place, if not exactly on flood plains, because that is not permitted, but where the flood risk is at level 2 or 3. Almost the worst thing that can happen to buildings is for them to be flooded. Where I live, the sirens went this weekend and people had parts of their homes flooded. That was in previously built homes; let us make sure that, in future, flood resilience for homes is part of the regulations under the Bill. Otherwise, we are just building homes to flood. Where I live, as I say, there is certainly a lot of concern on new-build estates that that will be the case.

--- Later in debate ---

[Lord Greenhalgh (Con)]

I thank the noble Lord for giving me that get-out. He is absolutely right that this is a complicated matter. You often have an old office building from which you create a new residential dwelling. We will check whether that is included in the purview of this Bill, and I will write to the noble Lord on that matter.

[Baroness Pinnock (LD)]

Permitted development rights are not about just the conversion of offices into homes. Where I live, many old mill buildings have been converted. Some of them, particularly the one called Titanic Mills, are very large. There are additional risks in those buildings. Will the elements in this Bill apply to those conversions as well?

[Lord Greenhalgh (Con)]

I will combine the letter for the noble Lord, Lord Shipley, and the noble Baroness, Lady Pinnock. Essentially, they want an answer to this question: “If you take a non-residential building, whether it is an office block or a Yorkshire mill, and you create a residential dwelling, will that be in scope when it comes to a new build?” The start point does not matter—it is non-residential—so is it included? I will answer both noble Lords in writing and lay a copy in the Library.

--- Later in debate ---

[Baroness Brinton (LD) [V]]

My Lords, just before I speak to the two amendments in this group, I ask the Minister whether I might be copied into the answer about permitted development rights on the previous group. We had an interesting case in Watford three years ago, where a small industrial unit was converted under permitted development rights into 15 tiny flats, and not one of the upstairs flats had windows. At the time, the planning inspector, who overruled the borough council, commented that it was within the rules and that planning permission was not required. Even the size of the flats was outside of the scope: normally, the minimum should have been 39 square metres; the largest flat was 22 square metres and the smallest was 16 square metres. I would be grateful if I could see the Minister’s written response.

I support both Amendments 5 and 10 laid by my noble friend Lord Stunell and signed by my noble friend Lady Pinnock. Dame Judith Hackitt talked about the importance of absolute clarity on who is responsible for which element of safety and control. The mistake in recent years has been to allow a multitude of different arrangements that have enabled a culture where matters of safety are somebody else’s problem; hence Dame Judith Hackitt’s focus in her report on the golden thread.

My noble friend Lord Stunell has talked eloquently about the issues thrown up by self-certification. I will not repeat his points, other than to say that destroying compartmentation by remediation works much reduces all other safety features, if not makes them redundant. I echo his concerns about that, and I would welcome the Minister’s response in order to see whether that is covered by the new arrangements. If it is not, these amendments should be given serious consideration.

[Baroness Pinnock (LD)]

My Lords, I will just say how important these amendments are. Although they are brief and innocuous on the surface, they are fundamental to building safety. In the Grenfell Tower inquiry, it became clear that the window replacement was not as satisfactory as one would hope and that the gaps between the window frames and structure of the building were filled with a flammable material. That is why the second amendment in the name of my noble friend Lord Stunell is so important.

That is just one example. Electrical safety is also critical. Self-certification is all very well, but having oversight, as the Hackitt report points to, helps to create clarity and accountability and to ensure that there is proper documentation. I hope that the Minister will be able to put our minds at rest but, if not, it is certainly one of the areas that we will want to pursue at the next stage of this debate.

[Lord Khan of Burnley (Lab)]

My Lords, I speak very briefly to Amendments 5 and 10 in the names of the noble Lord, Lord Stunell, and the noble Baroness, Lady Pinnock. I thank the noble Lord for presenting his amendments in such an eloquent manner and just want to reiterate the case for clarity from government on these important amendments, which we on these Benches agree with.

These amendments are asking for the whole of the works to be considered under one building control authority. It is important to recognise the case that is made here, which is that, under the doctrine of self-certification, there is a big gap. By supporting these amendments, I hope that the Minister can address the concerns of the noble Lord, Lord Stunell. The noble Baroness, Lady Pinnock, provided a good example and emphasised the Hackitt report’s references to accountability and making things clearer.

I echo the concerns of the noble Baroness, Lady Brinton, about who is responsible. This amendment would put the whole of the works under one regulatory authority, and situations in which remediation works could lead to other building safety effects would be addressed clearly. This would be better overall for home owners and for the safety of citizens. I look forward to hearing from the Minister.

--- Later in debate ---

[Lord Greenhalgh (Con)]

My Lords, we come to the—I am sorry, it is the turn of the noble Baroness, Lady Pinnock.

[Baroness Pinnock (LD)]

The Minister is far too eager.

During the course of the debate on this group of amendments, it has struck me that the challenge of this Bill is that it is primarily in response to a terrible tragedy. That has meant that the scope of the Bill is quite narrow, in response to the terrible Grenfell fire—perhaps rightly so but then, from what we have heard, opportunities to improve building safety do not come round that often. So it is not surprising that noble Lords across the piece are trying to say, “Why don’t we include this?” An opportunity to do so will not come again for a long time.

The passionate argument made by my noble friend Lord Foster is a case in point. Climate change is the most serious challenge facing all of us. If we do not address the building regulations to deal with the challenges it poses, we are definitely missing an opportunity. I apologise for my cough; it must be all this sitting and standing on crowded trains. Excuse me; I am okay. There is an opportunity for the Government to think about including the issues of the particular challenges of climate change as they relate to buildings during the debates on the Bill, otherwise it is an opportunity lost.

On Amendments 6 and 149 in the name of my noble friend Lord Stunell, who has spoken on them and to which I have added my name, building safety is not just about construction; it is about the safety of people once they live in them. Having been a councillor for a long time, I have heard about a number of issues from private sector and housing association tenants. The dangers of stairways in particular often come up. That is the reason for Amendment 6 in my name and that of my noble friend. We need to consider those risks and how they are going to be addressed. If people are concerned about them, what are we going to do about it? There is no obvious way of doing that at the minute.

Any new system—such as the one we have now, which is quite complicated in parts—ought to be reviewed. There is a huge gulf between theoretical improvements to building safety and actual improvements. Does the new system work? I bet that parts of it will not; that is almost inevitable. So let us agree to Amendment 149. I know that the Minister is going to stand up and say, “All the others I have said no to, but this one is such a good idea that we will agree to it”.

Building Safety Defects

Baroness Pinnock Excerpts

Monday 7th February 2022 Lords Chamber

[Lord Greenhalgh (Con)]

My Lords, I am used to the interventions from the noble Baroness. I had four years of it in City Hall and it is nice to join this great place and continue where we left off in 2016. However, I believe there is a process, which is getting Royal Assent. It is very clear that the passage of the Building Safety Bill is critical to ensure that we have those protections for leaseholders and that the polluter pays.

[Baroness Pinnock (LD)]

My Lords, there is a big difference between protecting leaseholders and ensuring that they do not pay a penny piece for wrongdoings that were none of their making. Will the Minister give an absolute guarantee that leaseholders will not have to pay a penny piece, whether or not it is after the Building Safety Bill has passed into law? As for leaseholders who have been forced into bankruptcy or those who have already paid their bills, will they still have to pay or will there be compensation?

[Lord Greenhalgh (Con)]

My Lords, it is very clear that we must differentiate the need to protect leaseholders from finding the funds to pay for these buildings. That is why my right honourable friend in the other place has sought to raise, voluntarily in the first instance, some £4 billion for medium-rise cladding. But we need to look at how we protect the leaseholder and get the polluter to pay. For the detail, as I say, noble Lords will have to wait until Valentine’s Day.

Levelling Up

Baroness Pinnock Excerpts

Monday 7th February 2022 Lords Chamber

[Baroness Pinnock (LD)]

My Lords, I remind the House of my interests as a member of Kirklees Council, a vice-president of the Local Government Association and someone who lives in a part of west Yorkshire where there are significant areas of deprivation; I see it every day.

Nearly three years have passed since the levelling up slogan was first used. It is good at last to read some definition of what it may mean. It is good that there is a recognition that deep-seated economic and social deprivation can be tackled successfully only through long-term sustained change. Batley in west Yorkshire, has, for example, been the recipient of City Challenge and Single Regeneration Budget funding—the earlier iterations of levelling up. Yet, sadly, Batley remains an area of considerable deprivation, partly because this earlier funding failed to deal with the basic issues of a lack of well-paid jobs, poor transport links and health inequalities. Therefore, a commitment to sustained and very long-term investment for change is welcome.

However, the challenge for the Government is that of investment—or, in this case, the lack of it. Fundamental and continual gradual change such as that described in the White Paper takes many years to achieve. Without substantial additional funding, change will be imperceptible to those who live in the towns and cities described. Further, any additional funding is on the back of huge cuts to the very local services in the so-called 12 missions.

Let us take public transport. We already know that HS2 to Leeds has been axed, HS3 is a pipe dream and even basic electrification of the trans-Pennine route is to be partial. What about bus investment? Even today, mayors and council leaders in the Midlands and the north have exposed a 50% cut to improving bus services. Access to jobs and opportunities are rightly emphasised in the White Paper. Will the Minister explain how mission 3, on public transport, can be realised when the starting point is even more cuts to services?

Then there is the issue of enabling all children to reach their potential, especially in the crucial areas of numeracy and literacy. It is a great metric to measure, but the widespread closure of Sure Start children’s centres due to major cuts in funding, combined with schools funding falling, is hardly the backdrop to enabling school improvement. At this point I ought to bring the House’s attention to my interest as a local school governor. Does the Minister agree, and will he point to an increase in funding that would enable the skills, literacy and numeracy targets to be reached?

A key metric, which I was genuinely pleased to see, is narrowing the gap in healthy life expectancy. This is such an important measure because it is linked to many key determinants of health: quality of housing, affordability of healthy food, access to skills providers and the quality of local health services and the environment. Perhaps the Minister can say how the Government will improve access to GPs for residents in my area, which has many fewer GPs per capita than the average.

Access to dental health is also vital. Yet Dentaid, a dental charity that operates in developing countries, also provides services in my area due to the lack of NHS dentists. It is shameful. Will I be able to assure those residents that the Government will provide easy access to NHS dental care for all who need it?

The creation of skilled, and thus better-paid, jobs is a basic requirement for improving the economic well-being of areas such as mine. Perhaps the Minister can explain how inward investment can be achieved and combined with providing local people with the skills to take up the higher-skilled jobs that are created. Seeing cities as the centre of development is insulting to the local towns that are supposed to be providing the jobs for these cities.

Finally, the governance issues are not highlighted but are slipped in almost under the radar. I have come to the conclusion that the Government despise local government. They want to abolish district councils and create more mayoral authorities without any evidence that reducing democratic representation and involvement leads to better decision-making and accountability.

Levelling up, however desirable, will not be effective without also levelling up funding. The shared prosperity fund, for example, shows the direction of travel the Government are going in. The north of England loses over 50% of that replacement funding for EU structural and regional funds. In total, it amounts to nearly £100 million lost money for the north. Will the Minister commit to levelling up funding through fair funding for councils, equivalent transport funding with the London area, and the shared prosperity funding for the north of England that fulfils the promises made during Brexit? Until any of that can be agreed to be a starting point, levelling up will remain a pipe dream for most of us.

[The Minister of State, Home Office and Department for Levelling Up, Housing & Communities (Lord Greenhalgh) (Con)]

My Lords, it is difficult to follow those two speeches because we have had a speech that is more balanced from the noble Baroness, Lady Pinnock, and, I am afraid, quite a pointed speech from the noble Baroness, Lady Hayman of Ullock.

As a relatively new Minister, I understand that there are so many examples of government policy that never get published. Those who have served in government will know that there are very many areas where policy is discussed, debated and raised but never sees the light of day. The first thing I want to do is to pay tribute to my right honourable friend the Secretary of State, as well as one of the most tireless, policy-heavy and thoughtful Ministers I have had the pleasure of working alongside: Neil O’Brien. Minister O’Brien has even signed my copy of the levelling-up White Paper, which, in decades to come, will be worth a lot of money.

I think it is a tremendous document with a very clear plan to level up this country. As someone who spent 20 years in local government, with some of the most deprived areas alongside some of the wealthiest, I believe in the mission to level up without levelling down. That is not to forget the technical annex of this plan, which, I have to say, I have not read yet but I am happy to say that I will be reading it, probably after this Statement.

There is no single policy or intervention that can achieve change on its own. This is a plan for England, Wales, Scotland and Northern Ireland. Levelling up across the United Kingdom does not mean levelling down, as I have said; it means boosting productivity, pay, jobs and living standards by growing the private sector. We on this side of the House recognise the importance of the private sector and spreading opportunities and public services, especially in those places where they are weakest, and restoring that sense of community.

I am very interested that both the Opposition and the Liberal Democrat Front Bench accuse this of being a White Paper without the necessary resources to level up. I did a word count of this document—that is the kind of thing I did. In first place, mentioned nearly 1,000 times—994 times—were “fund”, “funding pot” and “grant”: plenty of opportunities to channel the money that was committed in the spending review at the end of the last year into the means by which we will level up. In second place, with only 31 mentions, was “tax” or “taxation”. This is a plan with plenty of opportunities to channel that money precisely to ensure that we level up this country.

I want to deal with the two specific points around skills and an area I feel very strongly about—as a former deputy mayor for policing and crime at City Hall, serving the then mayor and our current Prime Minister—that is, ensuring that we reduce violent crime and that our cities are safe. It is fair to say that if we do not feel safe walking around and being part of our community then there is no chance for some forgotten areas to regenerate and to revive. I take very seriously that commitment around public safety.

Surely, if you have a clear mission around crime, which is safer streets by 2030—homicide, serious violence and neighbourhood crimes will have fallen—focused on the worst-affected areas and you back that up with money channelled into the safer streets fund, you are doing precisely that. You are ensuring that communities that are riven by crime and violent crime have the funding they deserve on top of their existing funds to tackle the very thing that has been raised.

There is a very clear mission on skills—how we can improve skills and therefore see the productivity improvement that this nation really yearns for. I discussed this today with Rob Halfon, who is very much a champion of skills in the other place. He said it was so great to see skills front and centre in an agenda and see it with its own mission statement. Interestingly enough, when we want specific examples about how skills will be improved, we should look at the plans in Blackpool and Walsall, two of the three pathfinder areas that bring employment and skills provision together. Bringing employment and skills provision together will enable people to get into work and to get on in their lives.

Frankly, it is quite hard to stomach the idea that this is an empty vessel when there is so much detail in here. I could spend the next 45 minutes—although time eludes me—explaining point by point what levelling up means and how we can deliver those 12 missions. This is a Government who want to deliver—not over a couple of years; these missions are set to 2030. This is clearly a Prime Minister who does not want to be elected again but again and again. That is why this levelling up is precisely what this Government will achieve. It will take time but here is the mission and we will deliver it in due course.

Building Safety Bill

Baroness Pinnock Excerpts

2nd reading
Wednesday 2nd February 2022 Lords Chamber

[Baroness Pinnock (LD)]

My Lords, this has been an excellent debate on a Bill that is widely supported across the House. I remind noble Lords of my interests as a member of Kirklees Council and as a vice-president of the Local Government Association.

First, a question: why is it that regulation is seen by some as an unnecessary obstacle to business until a tragedy occurs? It has taken, as I think all noble Lords have said, the deaths of 72 people at Grenfell Tower nearly five years ago for building safety to be taken seriously once more. To respect the memory of the 72 and all those whose lives have been scarred forever by that dreadful fire, the Bill must provide the deep-seated reforms that are essential to prevent a repeat of Grenfell. Secondly, the Bill absolutely must ensure that existing leaseholders and tenants do not pay for any of the remediation work, such as replacing flammable cladding and rectifying construction failures such as the failure to include fire breaks.

Noble Lords from across the House have rightly welcomed the Bill, which will make sure that legislation and regulation reflect modern construction methods and materials. It is, as my noble friend Lord Stunell described, “a once in a lifetime opportunity to regulate what is currently a dysfunctional industry”. Unfortunately, the Government have failed to grab that opportunity fully and define new standards of housing construction and accountability for those standards for all new housing. As my noble friends Lord Foster and Lord Stunell pointed out, here was an opportunity to set new standards for energy insulation, expectations for zero-carbon homes and heightened fire safety features; and for a step-change improvement in regulation, inspection, and enforcement. However, the Government have chosen to focus on a narrow element of the housing construction industry: that of so-called higher-risk buildings. That is truly a missed opportunity.

On the proposals in the Bill, Dame Judith Hackitt’s 2018 report, Building a Safer Future—which I have read—proposed a systemic reform of building regulation, and the Bill is incorporating into legislation the safety system that she laid out. The framework, which creates a hierarchy of responsibilities, is a considerable improvement on the existing position. The new building safety regulator will be embedded within the Health and Safety Executive, which seems appropriate and positive. Duty-holders, responsible for different aspects of design and construction, will be accountable to the new regulator. What is not clear are the skills and expertise that are required, as my noble friend Lord Shipley said, and whether these already exist and need to be codified or whether there will be delays in implementation because new training programmes will be necessary.

Once a higher-risk building is occupied, a whole new, and costly, regime is proposed. Leaseholders already pay considerable sums for a managing agent or equivalent posts, which are not regulated—anyone can set up as a managing agent, with no experience of property management. The Bill proposes the role of “accountable person”. Does the Minister anticipate that managing agents will take on that role? As the accountable person will be responsible for appointing a building safety manager, can the Minister explain what qualifications this postholder will have, the anticipated additional cost to leaseholders and the accountability of this postholder to those required to pay for the work?

I was speaking to leaseholders only yesterday. One said to me that she already pays a service charge of £6,000 a year, and that it is estimated she will have to pay a further £2,000 on top of that for a building safety manager. There surely has to be a better way forward than piling costs on to leaseholders—I think it was the noble Lord, Lord Thurlow, who referred to that. Can the Minister explain whether these posts will be expected to report to the building safety regulator?

What powers will residents have in this new regime, either as tenants or leaseholders? I appreciate that there will be a new ability for tenants to refer complaints straight to the ombudsman, but what rights will leaseholders have to ensure that they are getting value for money from these new posts? Will all inspection reports be made available to all residents? Will they have a right to challenge overcharging for these new posts and for any repairs that are deemed necessary? There is the opportunity in this Bill to strengthen the rights of leaseholders, one for which I am sure we will be placing amendments in Committee because, unfortunately, it is an opportunity that is being missed at the moment.

My noble friends Lord Stunell and Lady Brinton rightly pointed to the disaster that is the existing building inspection system. At the heart of this particular problem was the decision, 20-plus years ago, to enable developers to appoint their own building inspectors, under contract to that company and therefore hardly independent. Perhaps some of the construction failings exposed post-Grenfell are a consequence. The part-privatisation of building control also denuded local government of building inspectors. That, combined with the very large cuts to local government funding, meant fewer inspectors and therefore a less tightly regulated system for construction. Light-touch regulation can have dreadful consequences in this sphere.

Many noble Lords, including my noble friend Lady Harris, spoke about construction materials, and rightly so. The Grenfell Tower Inquiry is exposing some of the irregularities, or indeed worse, by manufacturers and suppliers. A single clause, Clause 128, attempts to remedy this. However, it would be helpful if the Minister could explain the system for testing new products. My noble friend Lady Bakewell of Hardington Mandeville highlighted issues around fire doors in this regard.

I would like to know from the Minister what role the British Research Establishment and the British Board of Agrément will have in testing and recommending building products. They are not mentioned in the Bill. It will be good to hear the Minister’s response to that, and to the very interesting suggestion from the noble Lord, Lord Crisp, of taking a wider view of safety. I look forward to discussing that proposal further. This falls in line with many noble Lords who have raised the issue of safe staircases—that would come into that general sphere. There is room, within the Bill, to make amendments to that effect.

Last of all these issues, but in no way least, is the failure so far of the Government to make practical and realistic responses to the cladding and remediation crisis. Just a few weeks ago, the Secretary of State made a bold announcement, in which he said that:

“Government must take their share of responsibility”,—[Official Report, Commons, 10/1/22; col. 283]


that manufacturers have shown “insufficient contrition”, that those who profited will pay the price, and that leaseholders are “blameless”.

The aim is to extract £4 billion from the companies that developed the buildings in order to pay for the removal of dangerous cladding from blocks between 11 and 18 metres. It is absolutely based on the polluter pays principle. I congratulate those leaseholders who have campaigned tirelessly for four years to get to the position we have today, where everyone across this House has confirmed they are in support of that principle. However, achieving that aim looks increasingly difficult. The noble Lord, Young of Cookham, emphasised how difficult it is going to be. I read in the media, only last week, I think, that developers are already consulting their legal advisers, which undoubtedly means they do not wish to pay and will find a means not to. What then? The Government appear rightly to have turned to materials companies to also contribute. Can the Minister tell the House the total sum that has so far been contributed by both developers and materials companies?

There is an urgent need to know, as invoices for remediation are with leaseholders now. The deadline for payment is this coming April, for many of them, and housing experts expect numerous defaults unless effective action is taken by the Government. Will the Minister let the House know when action will be taken to fulfil the promise made by the Government—which I applaud—that leaseholders will not have to pay a penny piece towards remediation? They need to know; we need to know.

As the Minister well knows, leaseholders face not just the costs of the removal of unsafe cladding—ACM cladding and other types that are flammable as well—but of construction failings, such as the lack of fire breaks. The Government have stated that leaseholders will not have to pay. We need to see essential steps taken to ensure they are not burdened with these totally unaffordable bills. Until we know, this will not do. Leaseholders have done everything right and nothing wrong; they are completely innocent victims in this building safety scandal.

This is a complex Bill with positive intent. Opportunities for more comprehensive reform have been missed and some elements will need to be amended to fulfil the aims that we all have to improve the Bill and, in the words of the Hackitt report, build a safer future. I look forward to working with the Minister and colleagues from across the House to make what is already a good Bill a much better one, and to make sure that leaseholders do not pay a penny towards remediation costs.

Building Safety

Baroness Pinnock Excerpts

Tuesday 11th January 2022 Lords Chamber

[Baroness Hayman of Ullock (Lab)]

My Lords, before I begin, I would like to pay tribute to my colleague Jack Dromey. Jack was a fearless campaigner for equality and justice, and always stood up for those without a voice. We will miss him.

Moving to the Statement, the Grenfell Tower fire was, as we all know, a dreadful and shocking tragedy which killed 72 men, women and children and ruined the lives of many others. One of the outcomes from this tragedy has been the knowledge that thousands of homes in hundreds of high and medium-rise blocks have deficiencies in their construction.

We are more than four years on from Grenfell, and hundreds of thousands of people are still living in dangerous blocks, while many flat owners have been left with spiralling costs for insurance and service charges. People have been facing huge bills and have endured enormous stress. The Government’s announcement of new statutory protection for leaseholders is therefore welcome confirmation that developers, not leaseholders, should pay to make homes safe. We should also recognise that this is only the start of the solution.

The Government’s plan currently seems to cover only the cost of cladding replacement, which makes up a small fraction of the building safety work required, because remediation work is not just about combustible cladding but about missing cavity barriers, firebreaks and fire doors, for example. A significant number of buildings have both cladding and non-cladding defects.

I understand from the Minister that the Government have withdrawn the consolidated advice note that left thousands of leaseholders in low-rise buildings unable to move home. This is significant progress, but there remains a gaping hole in the Government’s proposals. Leaseholders will still face ruinous costs to repair many non-cladding defects. I ask the Minister why the Government are not properly and completely supporting residents who have been hit with these huge costs, through no fault of their own.

We welcome the Government’s change in tone, so that leaseholders in buildings of between 11 metres and 18.5 metres will no longer be expected to take out personal loans to cover the cost of the work. Instead, the Government are focused on securing up to £4 billion towards the costs from developers. However, leaseholders are concerned about how the Government will force the developers to pay and experts have questioned whether £4 billion will be sufficient to cover cladding in buildings under 18.5 metres.

The Secretary of State said that he will begin negotiations with those responsible and resort to increased taxation if they fail, but reports have suggested that the Chancellor could block this. Documents from the Chief Secretary to the Treasury to the Secretary of State, Michael Gove, say that no new Treasury funding will be available to pay for this extra work; that the cost of the extra cladding removal must not exceed £4 billion; and that, if Mr Gove is unsuccessful in persuading or compelling developers to pay for the costs, they must be paid from existing housing budgets and

“safety should be prioritised over supply”.

I ask the Minister if there has been an assessment of what this would mean for the Government’s housebuilding programme. If the Government are serious about making developers pay, they should also take steps to make sure this never happens again. In the past four years, at least 70 schools and 25 hospitals and care homes have been built using potentially dangerous material, yet the Government still have not responded to a consultation on a ban on combustible materials, which closed over a year ago. I ask the Minister when we can expect to see the response.

Leaseholders are the innocent victims of this scandal and they need the Government to act as quickly as possible to resolve the situation, but remediation has been painfully slow. The Government continue to publish monthly updates on the progress of ACM cladding remediation, which do not include non-ACM buildings. Does the Minister agree that being transparent about the progress to make homes safe is vital to restore leaseholders’ trust? According to Labour analysis, at the current rate, it will take until 2026 for cladding to be removed from all social housing blocks and until 2024 from private blocks. Will the Government put forward a timescale to complete the remediation of all dangerous buildings?

Yesterday, the Secretary of State confirmed that he will meet Labour’s call for new clauses in the Building Safety Bill, when it comes to this House, to protect leaseholders. I ask the Minister to work with the Opposition Benches and other interested parties, so that we get these amendments right. Can he confirm that time will be allowed for proper scrutiny? I assure the Minister that, when the Building Safety Bill comes to this House, we will welcome the opportunity to work with him to achieve the much-needed improvements in this area.

The Statement before us has new measures that the Opposition welcome and genuinely want to see succeed, but the Government also need a clear plan to make developers pay for the works or leaseholders will continue to be stuck in limbo—stuck in their unsafe homes, unable to sell up and move on. People expect to live safely in their homes and I look forward to the Minister’s response to the ongoing concerns.

[Baroness Pinnock (LD)]

My Lords, I start by paying tribute to the cladding campaigners, whose extraordinary persistence in conducting a fact-based, solutions-offered campaign is largely responsible for the content of the Statement today. Their efforts on behalf of blameless leaseholders and tenants are a worthy memorial to the tragic victims of the Grenfell Tower fire.

The words of the Secretary of State are welcome. He says that the Government have to take a “share of responsibility”, that manufacturers have “shown insufficient contrition”, that those who profited will “pay the price” and that leaseholders are “blameless”. These are all quotations from the Statement and I welcome them.

On the face of it, the Government are responding to the fire safety and cladding crisis with bold proposals. However, the most important of these are more aspirational than concrete. The aim—to extract £4 billion from the companies that developed the buildings to pay for the removal of dangerous cladding from blocks of between 11 and 18.5 metres—is based on the polluter pays principle. Can the Minister explain how this will be achieved?

Special purpose vehicles and shell companies are devices that have been used to ring-fence the parent company from liability. Will the Government nevertheless expect the parent company to pay up? Then there are the distant freeholders, not based in this country. How do the Government anticipate extracting funding from them? Will action be taken to prevent construction and development companies ring-fencing their liabilities to prevent losses from parent companies?

Then there are the backstop arrangements to raise £4 billion, which seem rather confused to me. Will the Minister clarify whether further taxation of construction funds will follow if the requisite funding is not raised? The letter from the Treasury seems to suggest that, if all else fails, departmental funding will have to be used. Is that right? Will it be taken from the £12 billion set aside in the department’s funding to support affordable and social housing? If so, I am not sure I would be able to support it.

My next question is this: the £4 billion is to remove flammable cladding only. We know that a major element of the remediation costs is in the lack of firebreaks and compartmentation. Who do the Government expect will put these right? I appreciate that the Statement includes a commitment to create a 30-year period of limited liability, during which leaseholders could sue, although this would be a David and Goliath contest.

Then there is the question of timing, which is crucial. Leaseholders already have bills for remediation, many of which are in the tens of thousands of pounds. The date by which they must be paid is April this year. Time is running out. I understand that the Government rightly wish to protect leaseholders from forfeiture and eviction, but what about bankruptcy? Will that protection be in place by April? If not, I fear leaseholders may still find themselves at the mercy of the unscrupulous.

The whole area of social housing barely gets a mention. Those social housing providers that are raising capital to remedy defects are doing so at the expense of new homes being built or existing homes being improved. Can the Minister describe the plan for the social housing sector?

Finally, can the Minister assure us that sufficient funding will be made available if the costs rise above £4 billion? I appreciate that I have posed many questions. If the Minister is not able to provide full answers, will he please provide a written response?

Despite all the questions, I am pleased that the Secretary of State has been so forthright in this Statement and has taken a very large step forward in addressing the plight of the thousands of leaseholders and tenants who have lived for four years in fear and anxiety, and who must not pay a penny piece to put right the wrongs of others.

[The Minister of State, Home Office and Department for Levelling Up, Housing & Communities (Lord Greenhalgh) (Con)]

My Lords, I join the noble Baroness, Lady Hayman, in paying tribute to Jack Dromey. I never met him, but it is fair to say that he touched my political career. All political careers end in failure—I do not know said that; it might have been Enoch Powell—but at the height of my political powers, Jack Dromey, then deputy general secretary of Unite, said at the TUC conference on 15 September 2009 these words, as recorded in the verbatim report

“there are two visions in our country. There is our vision, on the one hand, of every one with a decent home at a price they can afford, a new generation of council homes, green homes, in mixed communities with decent facilities, council homes so good you could walk down any street in Britain and not be able to tell the difference between private and council. On the other hand, there is the Tory vision. Do you remember Dame Shirley Porter? Wait for it! The flagship Tory council on housing, Hammersmith & Fulham, has drawn up plans that involve the demolition of thousands of council homes ending security of tenure and hiking up rents to market levels”.

I did not agree with his assessment of my time as leader of Hammersmith & Fulham council, and for ever more, I was described as Dame Shirley Porter in drag by some of my political opponents, but Jack was a phenomenal political figure. He was not just a trade unionist and distinguished parliamentarian who campaigned for good-quality housing, he was an extremely effective politician. It was because he noticed me and because of his comments that I suddenly became the 71st most influential right-winger according to a league table in the Daily Telegraph, and it has been downhill ever since. I want to thank Jack Dromey for noticing me. I wish there were more Jack Dromeys out there who listened to what I had to say on things.

I join the noble Baroness, Lady Pinnock, in paying tribute to the cladding groups. I suppose that I am the longest-serving Minister in government focused on the building safety crisis. I was appointed in March 2020. I had Covid and, as many of you know, I lost my mother the following April, so I was not really effective until then, but I had been working on this issue and thinking about it and getting to know many of the cladding groups and some of the leasehold groups personally through Zoom and Teams. I want to pay tribute to them as well. I have had meetings with Sarah Rennie of Claddag and am very impressed with what it is doing on behalf of disabled leaseholders. Ritu Saha of the UK Cladding Action Group is literally indefatigable. It is clear that she does not necessarily appreciate what I do, but I appreciate her tireless efforts, together with those of Liam Spender, who is obviously a very good lawyer. Julie Fraser from the Liverpool Cladiators is campaigning for leaseholders up in Liverpool. Giles Grover of the Manchester Cladiators is very effective. As many Bishops know, there is also Steve Day. Not a day goes by without Steve Day contacting me by some means or other—at any time of the day, I hasten to add. He has campaigned tirelessly on behalf of RAQ residents and come up with constructive ways in which we can strengthen the Building Safety Bill.

It is not just the cladding groups. There are also the leasehold groups such as the Leasehold Knowledge Partnership: Sebastian O’Kelly is a very distinguished former property journalist and Martin Boyd has an encyclopaedic knowledge of matters to do with leasehold.

Lastly, as a junior Minister, I should pay tribute to the new Secretary of State, Michael Gove. I really mean it when I say that he is a phenomenon. He has worked incredible magic to come up with a profound and brave reset around building safety. My right honourable friend is very clear about the principles that underpin this reset. We should just reflect on what he said in the Statement—first, on proportion:

“We … need to ensure that we take a proportionate approach in building assessments overall. There are too many buildings today that are declared unsafe, and there are too many who have been seeking to profit from the current crisis.”


That is absolutely spot on; we need a greater sense of proportion.

On protection, leaseholders are the victims. He said that leaseholders living in their own flats should not bear the burden of fixing historical fire safety defects that are no fault of their own. That too is absolutely spot on; we need to protect leaseholders.

The third principle, on pollution, is that the polluter must pay. My right honourable friend said:

“We should not ask hard-working taxpayers to pay … taxes to get developers and cladding companies making vast profits off the hook. We will make industry pay to fix … the remaining problems and help to cover the range of costs facing leaseholders.”—[Official Report, Commons, 10/1/22; cols 283-285.]


These are very clear principles set out by my right honourable friend. In yesterday’s Statement, he came out with some significant steps, as mentioned by the noble Baroness, Lady Hayman, such as the withdrawal of the consolidated advice note. That died yesterday. It could not have come a day too soon. It should have come earlier, but it now rests in peace—I hasten to add that it was published in January 2020 and I only became a Minister in March, so I had nothing to do with it.

It is important that we do not have government by diktat and that we get a sense of proportion. That will be possible with the publication on Wednesday of PAS 9980, which allows a risk-based assessment of external walls. We will also commence the Fire Safety Act. The noble Baroness, Lady Pinnock, was a fearsome adversary during its passage. We have a good Bill. We will commence that with the building prioritisation tool. The phrase is “shortly”, but it will be a matter of a few weeks; we need to get the IT right for that.

Underpinning proportion, we need a call for innovation. If we are to have more buildings made safe not by costly remediation where people profit—let us be clear, they profit from remediation—let us make mitigation a possibility in more homes. That is why I am delighted that we are beginning to fund some innovative ideas, some of which will work and some of which will not. I mention the Intelliclad system that has been funded by the Waking Watch Relief scheme. I shall not go into exactly how that works, but it is a form of innovation that may make mitigation an option more often than remediation. We have funded that system in two buildings, the Interchange building in Croydon and the Guildhall Apartments in Southampton. If noble Lords would like to join me to visit those, it may be useful and interesting. We need more innovation such as that, so here is a call for innovation.

Protection is the second principle, as was raised by the noble Baronesses, Lady Pinnock and Lady Hayman. We announced that, essentially, we are seeking a moratorium on forfeiture, so that those who live in buildings with historic safety defects do not lose their home as a result of their landlord forfeiting the lease. We are working with government to make that happen.

Importantly, not mentioned was the Defective Premises Act 1972, on which I became an expert and talked to some of my colleagues who are construction QCs. The limitation period in that at the moment is only six years. We have extended it prospectively to 15 years but retrospectively to 30 years, which covers the vast majority of buildings affected by the crisis. It means that people who built rubbish are liable through law to fix that. It is very important that there is statutory underpinning, and it is an important development in terms of protecting leaseholders.

Lastly, there is more money now. During my time as Minister, £600 million was made available in the first instance, then we announced a further £1 billion for the building safety fund. Under my right honourable friend Robert Jenrick, a further £3.5 billion was announced, followed by this £4 billion under my right honourable friend the Secretary of State. We now have £9.1 billion committed towards the remediation of unsafe cladding.

Of course, questions have been raised about how we make the polluter pay. Those are legitimate, but let us just take stock of the fact that this Government have effectively declared war on the polluters. Those polluters are not just developers; they are the manufacturers of cladding systems that do not work and are flammable; they are the manufacturers of the insulation that is flammable and all those defective construction products. It is pollution in the round; it is not just developers. Even construction companies that put up very poor-quality buildings are included. Everybody who has profited from this crisis is a polluter and they must pay.

In declaring war, we have a series of measures. To use a Second World War analogy, we have bomber command with levies and taxes which mean, at a very high level, you tax. We have had announcements from the Treasury about the developers tax on companies with profits above a certain amount, which will contribute £2 billion. There is also the building safety levy. I also count within the bomber command scenario the voluntary scheme where we come to you. Over two months, we are asking people who have polluted to stump up the £4 billion to pay for the historical problems they caused.

As a backstop, we have what I would call fighter command. That means looking at all kinds of measures —this was obviously heavily leaked and I know that the Secretary of State has launched an inquiry into the leaks. We are looking at taxes or legal means to extract the money if it is not given voluntarily. That is essentially the plan. As it says in the widely trailed letter, the department is the backstop—the Department for Levelling Up, Housing and Communities, not the Treasury. The money is there, effectively, and it is now about getting it from the polluters—that is the plan.

Non-cladding costs were also raised. I would say that cladding is a large proportion of the bill. I have seen quite a few of these. When we met the cladding groups yesterday, we spoke to Sophie Bichener, a leaseholder who has a £200,000 bill. About £60,000 of that is non-cladding costs, so 60% or 70% of the bill is cladding costs. In some cases, the amounts might be equivalent, but to say cladding is an insignificant amount would be a misrepresentation. We have taken a major chunk of this by focusing on cladding, which is, after all, the major accelerant of fires.

The noble Baroness, Lady Hayman, also mentioned pace and seemed to have some interesting statistics; I hope she will share the figures which have led her to assume that this will take until 2024 for private housing and 2026 for social housing. We have to get this done and it does take time, but I would point out that, certainly during my time, we have made progress—despite a pandemic—so that virtually every single building with the worst form of cladding has had it removed or fully remediated. There are some places, such as the 20 buildings in Southwark that we suddenly identified—the noble Lord, Lord Kennedy of Southwark, has come in right on cue—that we now have to remediate, but we have not known about those for long. It is important that we deal with the riskiest forms of cladding first, namely aluminium composite material, then deal with non-cladding costs. We committed £863 million of the initial £1 billion and, as we work through the process, there will be the further £3.5 billion for high-rises and we now have plans for medium-rises. It is a significant job of work and it would take any Government time to get it right.

Let us not rush it, however. If you rush it, you may do the remediation so poorly that you have to do it again in two years’ time. Of course, we need pace, but we also need quality remediation so that, for the lease- holders and people who rent these homes, the remediation lasts a generation and not a couple of years. That is important to think about as well.

The noble Baroness, Lady Hayman, mentioned buildings of under 11 metres. I really do not see a case for costly wholesale remediation of buildings of that height—you stick in a fire alarm. A simultaneous evacuation alarm system or other mitigation measures should work. I have not seen a fire engineer make the case that you need to undertake costly remediation of low-rise buildings, but am happy to be given examples of where we think low-rise buildings need to have millions spent on them to fix the problem.

I have been told to finish in a very delicate way, but it is important that I do my best to answer the questions and set out the Government’s position. I want to finish by saying that, following all my 20 years in local government—with 16 years as a councillor and council leader, four years in City Hall and now my role in this place—I of course want to work collaboratively with the Opposition, the Liberal Democrats, the Cross-Benchers, including the noble Earl, Lord Lytton, and the noble Lord, Lord Bilimoria, who is here specially and who I have known since university, and the Bishops. We will, I hope, work collaboratively to make the Building Safety Bill a better Bill and provide the protection that leaseholders in this country deserve.

Rating (Coronavirus) and Directors Disqualification (Dissolved Companies) Bill

Baroness Pinnock Excerpts

3rd reading
Wednesday 8th December 2021 Lords Chamber

[Baroness Pinnock (LD)]

My Lords, on behalf of my noble friend Lord Fox, I thank the noble Lord, Lord Callanan, for the constructive meetings that helpfully resolved the issues in the part of the Bill dealing with directors’ disqualifications and insolvency. I thank the Minister for the time he devoted to discussions on the Bill and the private meetings we held to try to resolve various issues, some of which remain; nevertheless, we are happy that the Bill has to pass to deal with the issues in front of us. I am still concerned about its retrospective nature, an issue that we did not fully resolve, inevitably. As the noble Baroness, Lady Blake, has said, the reforming of business rates is still a major concern. But with that in mind I wish to thank everybody who was involved, particularly Sarah Pughe, from the Lib Dems’ legislative team, for her help and advice. I am grateful for the way the Bill was discussed and debated so that we were, in the end, able to support it. With that, I thank the Minister for his help.

[The Earl of Lytton (CB)]

My Lords, I will make a contribution from, as it were, the technical Benches on the matter of non-domestic rating. I thank the Minister—this will probably be the only time I can thank him publicly—for writing to me about matters he raised when we were at a previous stage of the Bill, in connection with the package of measures the Government have put in place to try to alleviate the problems facing businesses. I do not know whether the right term is “sidestep”, but I suspect he did not quite get the point I was making. Where a major manufacturer carries out works to meet an environmental target—for decarbonisation, for example—and in doing so wrecks something tantamount to a building or structure, or an item covered by the plant and machinery order, a proportion of its value automatically gets built in as an addition to the rateable value. That has been described to me as the double whammy of having to pay for the improvement to meet a government-imposed target, and additional rates. I was trying to focus on specific instances involving a building or structure, or the plant and machinery order, but I leave that to one side because that was to some extent an overture to what the Bill is about. I mention it only because the Minister was making the point about the assistance the Government have provided.

As for the Bill itself, I obviously regret a business rating measure of such a binary nature preventing the effects of coronavirus being properly reflected in rental values as a material change of circumstances for the purposes of making appeals against the assessments. Although the government package of reliefs and other support for the business sector is extremely welcome, it none the less pales into insignificance compared with what businesses could have expected, had a material change of circumstances applied. I will leave that there.

The Government say that the material change of circumstances was never intended to apply to things like pandemics. Well, probably not, but there has never been a time like this when HM Treasury and HMRC have been quite so keen to protect their income streams come what may, regardless of the precise effects on businesses. I hope this Bill does not have the consequences I fear it might, but I remain concerned that the whole process of business rates is beginning to drive responses, which should always be a warning sign with any taxation measure going forward. That said, I thank the Minister and the Bill team, and other noble Lords who have spoken up for the business rate payer. I wish this Bill a safe passage, and I hope it will not fulfil my worst prognostications.

Rating (Coronavirus) and Directors Disqualification (Dissolved Companies) Bill

Baroness Pinnock Excerpts

Report stage
Wednesday 1st December 2021 Lords Chamber

Moved by

[Baroness Pinnock]

1: Clause 1, page 2, line 20, at end insert—
“(7A) Before the first determination to which this section applies is made, the Valuation Office Agency must publish a statement outlining—(a) how many checks, challenges or appeals in relation to a material changes of circumstances due to the coronavirus pandemic it has received and what the total monetary value of those checks, challenges or appeals is, and(b) its assessment of the impact of this section on the ability of the current system of business rates to—(i) provide an effective form of funding for local authorities; and(ii) support town centres and local high streets.”Member’s explanatory statement
This amendment would require the Valuation Office Agency to publish information on applications relating to a material changes of circumstances, and whether the changes introduced in this Act will support local authorities, town centres and high streets.

[Baroness Pinnock (LD)]

My Lords, I draw the attention of the House to my relevant interests as set out in the register, as a vice-president of the Local Government Association and as a member of Kirklees Council. I am speaking on Amendment 1 in my name and that of my noble friend Lord Fox, and on Amendment 2 in the name of the noble Baroness, Lady Blake.

I and my colleagues support the principle of the proposals—as I have said at every occasion—in relation to the non-domestic rates element of the Bill. Businesses have faced challenging circumstances due to Covid, and these challenges remain. Understandably, businesses have reviewed their position, and some have decided to use the VOA check, challenge, appeal process to seek a reduction in their business rates. The VOA publishes quarterly statistics of the numbers of businesses using the process to appeal their rates. The statistics do indeed show a spike in both the check and challenge elements of the process. For example, there were around 80,000 checks requested in the March to June quarter of 2020 —this spike compares with an average of around 10,000. However, 70,000 of these checks were quickly resolved. There were around 22,000 challenges in the next quarter, but fewer than half seem to have been resolved. There is clearly a significant increase in the volume of claims being received by the VOA. However, the value of these claims, including the value of successful claims, is not revealed.

Throughout the course of the Bill, I have been concerned to establish the evidence base for its proposals, including, importantly, the total value of successful and potentially successful claims which would result in a loss of business rates income. A loss in business rates income has a direct and adverse impact on local government finances, which have already been squeezed dry. Responding in Committee to similar concerns that I raised, the Minister was unable to give a categoric assurance that there would be no loss of income for local government. The Minister stated then that

“central government will meet 75% of the costs of irrecoverable losses in business rates income for 2020-21.”—[Official Report, 10/11/21; col. GC 522.]

Can the Minister confirm that local government will not be paying for any losses in business rates due to Covid?

Further, it is widely accepted that the existing system of business rates is ineffective and woefully inadequate in ensuring that retail businesses that use online ordering are paying at the same rate as those on traditional high streets that the Government often profess to want to support but lamentably fail to.

Amendment 2, in the name of the noble Baroness, Lady Blake, seeks a review of the impact of the changes and of whether business rates are fit for purpose. Any government review with recommendations to try to fix this broken system is welcome, and we support the sentiments in this amendment. I beg to move.

[Baroness Blake of Leeds (Lab)]

My Lords, I declare my interests, particularly as a vice-president of the LGA. I will speak to Amendment 2, in my name, and to Amendment 1, as introduced by the noble Baroness, Lady Pinnock.

As we begin Report, I remind the House that we are broadly supportive of the Bill and recognise that action needs to be taken swiftly. The measure in the Bill to rule out Covid-19-related material change of circumstances business rates appeals—that is quite a mouthful—coupled with the announcement of £1.5 billion in funding to provide additional targeted support to those businesses that have not already received rates relief, provides some certainty for local government.

--- Later in debate ---

[The Minister of State, Home Office and Department for Levelling Up, Housing & Communities (Lord Greenhalgh) (Con)]

I thank noble Lords for raising two important issues. The noble Baroness, Lady Pinnock, asked whether we will have data to know whether the £1.5 billion is enough and that we are not short-changing local government in any way. The noble Baroness, Lady Blake of Leeds, wanted to know about the future of business rates reform, given that we are seeing the economy shift to online and that many bricks-and-mortar businesses are struggling to pay their rates bills. I will try to address those points in turn.

I can give the noble Baroness, Lady Pinnock, some assurance on the availability of VOA statistics, which tell us about the adequacy of the Government’s support. During 2022, the VOA will provide new data specifically marking out Covid-related MCCs but, even in the existing data sets, we can get an insight into the nature of these cases. I quote more recent figures from October: as of 30 September 2021, 63,780 challenges were outstanding in England, the vast majority of which are on hold pending this Bill. Far more challenges could come forward from ratepayers who have already made checks—a check being the first stage in appealing the rateable value of one’s property. In the period since April 2020, the VOA has received more than 400,000 checks. So, there is a wealth of statistical evidence out there and it will be enhanced next year. This evidence cautions against any suggestion that we should introduce a like-for-like compensation for Covid-related reductions in rateable value, which, on account of this Bill, will rightly not materialise. That was never the intention, and we should not seek to create an equivalence.

On the point made by my noble friend Lord Leigh of Hurley and the noble Baroness, Lady Blake, we recognise that particular industries have been hit very hard by the pandemic. We have statistics on the drop in gross value added by industry, and there is a wide range of reductions by sector. That comes to the question of how we divide the £1.5 billion, which I will return to in the debate on the next group of amendments.

Let me give the Government’s most up-to-date position. Following the conclusion of the business rates review, the Government will shortly consult on measures arising from that review and seek to bring forward legislation in due course. The consultation was published only yesterday and explicitly anticipates future legislation to deliver major reforms. These include three-yearly revaluations, a major ask of ratepayers, support for property improvements and support for green plant and machinery. So, noble Lords should have complete confidence that there will be an opportunity for them to consider, debate and scrutinise these measures and the Government’s overall business rates policy.

I should have declared my residential and commercial property interests as set out in the register; I forgot to do that right at the beginning. I must underline that I have not been involved with any material change of circumstance approach, but I recognise that many businesses, including many small businesses, are waiting eagerly to hear how we will resolve this situation.

[Baroness Pinnock (LD)]

My Lords, I thank the Minister for his response. We clearly had evidence of the volume of appeals by businesses. I am still concerned about the value of those and whether sufficient money is being made available to recompense businesses, but we will come to that in the next debate. Having said that, I thank the Minister for his reply and beg leave to withdraw the amendment.

Amendment 1 withdrawn.

--- Later in debate ---

[Baroness Blake of Leeds (Lab)]

In this group we also have Amendments 7 and 8, in the name of the noble Baroness, Lady Pinnock.

I move this amendment to seek confirmation

“that the Secretary of State publishes advice to local authorities on the implementation of this Act.”

Clearly, there has been some movement on this issue; there was widespread concern about this Act in Committee. From my experience, this message has been repeated not only in this area but throughout the whole pandemic. Given that local authorities were tasked with many responsibilities in helping businesses with the financial packages from government, which were welcome, it is important that whoever is in government has the full respect for local government that it needs and deserves. Timely, appropriate and full information is of paramount importance.

I am sure that I do not need to remind the House that local authorities face a dire situation, particularly regarding their finances. Many of them are about to publish their budget, which they will have to deliver in the early months of next year. The timing of this Bill brings into focus why local authorities are asking for clarity, and the sense of urgency that is being expressed.

We know that, since 2010, under the policy of austerity, Conservative Governments have variously come together to cut £15 billion from central government funding to local authorities. According to the Local Government Association, councils in England will face a funding gap of more than £5 billion by 2024 just to maintain services at their current levels. That is why we must ensure that they get the best advice from government on the implementation of this Bill. If we could have real clarification from the Minister on what advice they will receive and when, we would be grateful.

On the £1.5 billion in the funding announcement, I remember my noble friend Lord Hunt saying in Committee that there is a problem in that the guidance to local authorities on the distribution of money is still awaited. Many businesses do not know whether they will qualify for funding given that, as I understand it, the criteria have not yet been published. My noble friend was particularly concerned that whole areas have been missed out in the proceedings.

In Committee, the Minister stated:

“The funding will be available as soon as local authorities have established their own local release schemes; the Government will support them to do this as quickly as possible, including through new burdens funding.”—[Official Report, 10/11/21; col. GC 522.]


I would be grateful if the Minister could provide an update on how that work is going, and give a clear explanation of how the rationale running throughout this is being used to inform how decisions are made and how fairness and transparency will be assured. I beg to move.

[Baroness Pinnock (LD)]

My Lords, Amendments 7 and 8 in my name pursue an issue I raised both at Second Reading and in Committee regarding the complete mystery surrounding the £1.5 billion of taxpayers’ money that the Government propose to use as recompense for businesses in removing their rights to appeal their business rates.

This is all very unsatisfactory. The Bill is in its final stages and we do not know, first, the value of the real and estimated claims being made by businesses via material changes of circumstances based on the impact of Covid. The Minister may well claim that there is no information regarding the value of estimated claims, yet that is precisely what the Bill seeks to do. Secondly, we do not know at all whether £1.5 billion will in any way be sufficient to adequately and fairly compensate business for the removal of lawful claims made to the VOA.

Conformity Assessment (Mutual Recognition Agreements) (Construction Products) (Amendment) Regulations 2021

Baroness Pinnock Excerpts

Tuesday 23rd November 2021 Grand Committee

[Baroness Pinnock (LD)]

My Lords, the Minister read out the technical details with gusto. He obviously enjoyed doing it. In a nutshell, what we are being asked to accept today is the transfer of a protocol attached to the EU Comprehensive Economic and Trade Agreement with Canada into UK law.

This simple transfer has involved a Command Paper—351—followed by the process in both Houses and presumably a time since January 2020 when Canadian building products were not able to be certified in Canada and the certification accepted by UK authorities. Perhaps the Minister will be able to explain whether that is the case and whether building products from Canada have had to be certified here in the UK as well as in Canada during this period.

Then there is Regulation 6, which appears to relate to the assessment of the Canadian assessment bodies and whether these comply with UK standards. Can the Minister explain how the assessment body in Regulation 6 is held accountable for its determinations?

At the heart of all this are the UK construction products regulations. These regulations may well be comprehensive and require construction products to comply with basic safety standards. However, regulations are only ever as good as the processes for ensuring full compliance. The Grenfell Tower tragedy has exposed the awful failings in this regard. The question, therefore, to the Minister is a very important one: how will the Government ensure complete compliance with the assessments of complex construction materials and, as importantly, ensure that the products are used as per the regulations? Those are the lessons from Grenfell.

In conclusion, this SI is a straightforward transfer of mutual recognition agreements from EU law to the UK in relation to construction materials from Canada. The wider issue is this: quis custodiet ipsos custodes? [Interruption.] Well, our beloved Prime Minister uses Latin all the time, so I thought I would add some in.

[A noble Lord]

Res ipsa loquitur.

[Baroness Pinnock (LD)]

Exactly, perhaps. Quis custodiet ipsos custodes? Who guards the guardians? This is important. With those remarks, I broadly agree with the proposed changes.

[A noble Lord]

I only went to a technical school.

Local Audit (Appointing Person) (Amendment) Regulations 2021

Baroness Pinnock Excerpts

Tuesday 23rd November 2021 Grand Committee

[Baroness Pinnock (LD)]

My Lords, I draw attention to my relevant interests as a vice-president of the Local Government Association, a member of Kirklees Council and a member of that council’s audit and governance committee.

The Redmond review into local authority financial reporting and audit is far-reaching in its recommendations and broadly welcomed by those in local government, who want greater simplicity and transparency in financial reporting and auditing. One challenge facing local government audit requirements is the narrowing number of private audit firms willing to take on such audits. Yet sound auditing is an essential prerequisite for value-for-money judgments and financial transparency, as local government financing becomes ever more complex.

The proposals in this SI tackle some of the issues regarding process. These relate to fee scales, deadlines, standard fee variations and the length of time for which an auditor is appointed. Setting the end of November as the deadline for setting fee scales so that up-to-date information can be included in the calculation seems sensible, as does setting standardised fee variations. However, can the Minister confirm that such fee variations will be in proportion to the local authority accounts being audited?

I have some concerns about the potential for an auditor to be appointed for as long a period as five years. As external auditors rely heavily on a good working relationship with the local authority finance team and its internal auditors, there is always a risk that a cosy relationship develops. Can the Minister explain the thinking behind the ability for the same auditor, rather than the same audit company, to continue for five years? An explanation of the criteria that will be used by the appointing person to appoint for shorter periods “where desirable” would be helpful, as would an outline of the circumstances for audit firm rotation partway through an audit period, to understand the thinking behind that. If the Minister does not have all that in front of him, it would be good if he could write me a note.

There is a far deeper concern with local authority audits than will be dealt with by this SI. The Financial Reporting Council, which regulates the accounting industry, said this year that 60% of the English local authority audits it had reviewed did not meet its required standards. The House of Commons Public Accounts Committee detailed the problems this July. I will quote from the summary of its report, as we need to think about it:

“Without urgent action from government, the audit system for local authorities in England may soon reach breaking point. With approximately £100 billion of local government spending requiring audit each year”,


the Ministry of whatever it is called now—levelling-down, communities and whatever—

“has become increasingly complacent in its oversight of a local audit market now entirely reliant upon only eight firms, two of which are responsible for up to 70% of local authority audits. This has not been helped by the growing complexity of local authority accounts … If local authorities are to effectively recover from the pandemic, it is critical that citizens have the necessary assurances that their finances are in order and being managed in the correct manner.”

Both the FRC and the Public Accounts Committee report raise fundamental issues about local authority auditing which are not addressed by this SI, but which I hope the Minister can respond to either now or in writing. Having said that, with the exception of the questions I raised earlier, I concur with the changes that have been proposed.

[Lord Kennedy of Southwark (Lab Co-op)]

My Lords, I, too, declare my interest to the Grand Committee as a vice-president of the Local Government Association.

Audit is about ensuring the proper inspection of a body’s financial affairs, ensuring that the financial dealings of the organisation, and the information that residents get, is correct and proper. It gives confidence to local people and, of course, to the Government and everybody else that an organisation is acting properly—or it identifies irregularities.

I was first elected a councillor in 1986—I am showing my age now. I remember the old district auditor, who used to look after the accounts. Of course, that is now all gone; we have local audits run through the Local Government Association.

The noble Baroness, Lady Pinnock, raised an important point on fee scales, what those fees are, when they can be varied and changed, and why. There is also the risk around the relationship: if the same person does the work every year, there may be an issue with things becoming too cosy. For me, there is the whole question of value for money. This is council tax payers’ money that we are spending here—so what are we doing to ensure that, when any fees are varied, we are getting value for money? The noble Baroness made the point that fewer and fewer firms are willing and able to do this work, which is also an issue for the Government to look at.

For me, it is about ensuring that public money is spent wisely, properly and legally. If fees are going to be varied, how do we ensure value for money? Then there is the issue of the reduced number of firms doing this work. How do we ensure that the relationship is not too cosy and is always properly professional? Having said that, I have no issue with the regulations, and I shall leave it there. I hope that the Minister can respond to the issues raised. I know that, if he cannot, he will come back to noble Lords with a letter and place it in the Library of the House.

--- Later in debate ---

[Lord Greenhalgh (Con)]

My Lords, we have had an interesting short debate on these regulations, and I thank all noble Lords for their contributions. The problem around audit is long-standing. I remember when I first became a councillor, which was a little later than the noble Lord, Lord Kennedy, back in January 1996 —a very cold month, if I remember—there were real difficulties with filing accounts on time, even then. This has been a long-standing problem and is not a recent one. Those who have read the Redmond review will recognise that the best way to deal with it is by investing and providing additional funding to support local bodies to improve standards. The point made by the noble Baroness, Lady Pinnock, is important. There is a contribution of some £15 million to support local bodies with rising audit fees, making sure that there is the competence required to file accounts in a timely way.

Often, there will be an issue around reconciliation of accounts, which is quite shocking. If you cannot reconcile your accounts—the fundamental accounts in control—money can be lost. There have been examples of councils losing money. So, having high-quality audit is extremely important, as is the completion of audits, which is vital in maintaining transparency and assurance of local authority accounts. Late delivery of local assurance can have a significant impact, not just on local authority financial planning but on the timely completion of whole government accounts. That is why the Government are continuing to implement all recommendations of the Redmond review, including the regulations before us today.

I will do my best to answer some of the questions and I will follow up in writing if I am not able to. In answer to the noble Lord, Lord Jones, the appointing person is specified by the Secretary of State at the Department for Levelling Up, Housing and Communities. It is not a salaried position; they are paid by the local authorities. Importantly, we are keen on the use of the scheme through the Local Government Association and Public Sector Audit Appointments Ltd, which has the specific technical expertise. Of course, local authorities can choose who they like. We recognise that this is a good scheme, which happens to be over a five-year period.

In response to the noble Baroness, Lady Pinnock, I will write on her specific points about shorter appointments, but all appointments require local authorities to voluntarily opt in. We recently consulted on proposals to establish the audit, reporting and governance authority, which is due to replace the Financial Reporting Council as the new systems leader for local audit. We will publish our consultation response in due course.

This is a largely technical provision, which I think has the support of noble Lords.

[Baroness Pinnock (LD)]

Before the noble Lord sits down, I asked whether the standardised variations of the fees would be in proportion to the accounts that were being audited.

[Lord Greenhalgh (Con)]

I thank the noble Baroness for that specific point. It is obviously technical in its nature. Public Sector Audit Appointments Ltd will be required to consult local bodies and local auditors before setting standardised fees.

Leaseholders: Costs

Baroness Pinnock Excerpts

Thursday 18th November 2021 Lords Chamber

[The Lord Speaker (Lord McFall of Alcluith)]

I call the noble Lord, Lord Haselhurst. Oh, apologies—I call the noble Baroness, Lady Pinnock.

[Baroness Pinnock (LD)]

My Lords, I remind the House of my relevant interests as in the register. If the Government are to avoid a torrent of bankruptcies by April next year, as has been predicted by Inside Housing, action must be swift. In particular, I ask the Minister about shared ownership. Somebody with shared equity of 25% is being asked to pay 100% of the remediation costs. That might be right in law, but it cannot be right in fact. What on earth are the Government going to do to safeguard shared owners?

[Lord Greenhalgh (Con)]

My Lords, I feel the burden, particularly on shared owners, who have a fraction of the equity in their home but face intolerable bills. I am surprised when I hear that social landlords, who should be caring for the people who live in those homes—the nurses and other people who support our NHS—are considering massive remediation schemes, very often for buildings that really require only mitigation at far lower cost instead. An MP raised a case with me yesterday of a nine-metre building where shared owners are facing bills of £20,000. That is because there is no sense of proportion. Let us get a sense of proportion, protect leaseholders and shared owners, and make sure that the polluter pays.