Building Safety

Baroness Pinnock Excerpts

Wednesday 27th March 2024 Lords Chamber

[Baroness Taylor of Stevenage (Lab)]

My Lords, as this is the last business, I wish all noble Lords a restful and peaceful Easter.

I thank the Government for this update, given yesterday in the House of Commons. There are more than 4 million people in the UK living in buildings over 11 metres tall, including 1.3 million in buildings over 18 metres. That is why it is of the utmost importance that this building safety issue moves forward without any further delay.

As my noble friend Lord Kennedy and other noble Lords pointed out in the debate this afternoon, we are now more than seven years on from the tragedy of the fire at Grenfell Tower and the loss of 72 lives. It seems, at last, some progress is being made to address the multitude of issues that arose from that catastrophic fire and previous dreadful fires, such as that at Lakanal House in Camberwell—which I remind noble Lords was in 2009.

I pay tribute to the determination and commitment of the survivors of Grenfell and other campaigners, such as the Manchester Cladiators, the National Leasehold Campaign, End Our Cladding Scandal and the UK Cladding Action Group. Their powerful voices and front-line witness have kept the issue right at the top of the agenda and enabled the progress of which this Statement forms the latest step. However, it is just not good enough that they have had to wait so long. Will the Minister tell us whether the Government are now going to set a deadline by which remediation work must be completed?

It is important that both Houses are updated regularly on progress to tackle the scandalous building safety crisis, and this Statement indicates some progress. However, I hope there is no complacency in moving this forward at greater pace, because the figures produced by the Government last week showed that only 21% of high-rise blocks have been fully remediated and that hundreds of thousands of families are still stuck in flats with dangerous, flammable defects, whether that is cladding, missing fire breaks or wooden balconies. We cannot underestimate the seriousness of the impact on their lives. Dreams of home ownership are shattered as they battle with freeholders to get this remediation carried out, and family finances are broken by remediation costs, exorbitant insurance and the nightmare of being trapped in flats that people are too scared to live in but cannot sell.

What progress is being made in working with lenders to ensure that properties caught up in the cladding scandal can be sold or remortgaged? Even those that have had remediation done are suffering from problems with this. Progress remains slow. What progress has been made, for example, on the registration of building control inspectors? The deadline had to be extended by an additional 13 weeks from the original deadline of 6 April. What assurances can the Minister give that that extended deadline will be met?

This building safety Statement refers only to buildings over 11 metres. I know from the discussions on the Building Safety Act and subsequent statutory instruments that your Lordships’ House remains concerned about buildings up to 11 metres in height. Indeed, it was raised again today in the debate on leasehold. I would be grateful if the Minister could reiterate to the department that we still have outstanding concerns in this regard and would appreciate a full response in due course. Although in the leasehold debate the Minister said that the Government were taking the risk to life most seriously, lenders and mortgage providers are taking a much more risk-averse approach than the Government.

The Minister will know that I have mentioned before the dreadful situation that residents of Vista Tower in Stevenage face, so I was pleased to see the Minister in the other place specifically mention in this Statement that legal action against Grey GR in that respect is imminent. We note that other legal action is pending, but can the Minister please let us know how quickly leaseholders who have been forced to use their own money for remediation, and that spent by taxpayers, will be able to receive recompense following remediation contribution orders? Will there be any accountability for the manufacturers involved in building safety defects, so that all those responsible for the building safety crisis have to face the financial consequences of their actions?

Can the Minister update us any further on the long-awaited second staircase guidance? I note the Minister in the other place said it would appear this week, but as we are right on the last sitting day before recess I thought it worth flagging up again that it is still due. Absence of this guidance is holding up the construction of thousands of safe homes across the country.

At last, we are moving to a point where the respective responsibilities for resolving the crisis between the construction and development industry, freeholders, statutory agencies and the regulator are becoming clearer. Importantly, we are moving to a point where those responsible for failure can be held accountable for their actions, although we must keep our eye on enforcement processes, as it seems they are not the strongest part of the new regime. For example, although additional funding for councils to undertake enforcement is welcome, we must not forget the backdrop of the extreme funding pressures councils are under, which continues to make the increasing regulatory and enforcement burdens an added strain. I hope the whole burden of this will not be forced on councils and that the department will continue to play an active and robust role.

Lastly, I raise the issues relating to the extraordinary burden being placed on leaseholders because of shocking increases in insurance premiums—up to 1,000% increases in some cases—even after buildings have been remediated and made safe. Can the Minister update us on what discussions the department has held with the insurance industry to set out the Government’s expectations in this regard and how they plan to mitigate this awful further burden on leaseholders?

We are grateful to the Minister for her constructive approach to working with opposition parties on this issue. It is clear that the will across your Lordships’ House is to move this on at pace and to continue to press for full remediation for all building safety defects to be completed as quickly as possible. Everybody deserves to feel safe in their own home, and it is taking too long. Those who have profited from not paying enough attention to that safety need either to put matters right or to be brought to justice without any further delay.

[Baroness Pinnock (LD)]

My Lords, in reference to the Statement, I have to say how irritating it is that statistics are selected to project a positive picture of progress made on the remediation of building defects as a result of the Building Safety Act and how refreshing it would be if the Government were able to reflect on the poor rate of progress, instead of trying to spin a success story. Spinning the progress made is not doing anybody any favours. It is certainly not helping the thousands of leaseholders who are still stuck in limbo in flats where work has not been started and where even an assessment of whether work is needed has not been made. Perhaps an honest appraisal of the situation would put some government energy into trying to resolve this issue. As the noble Baroness, Lady Taylor of Stevenage, has just asked, what is the timetable? How long have leaseholders to wait while this scheme is making snail-like progress towards some remediation?

In Inside Housing last week, a piece by the investigative journalist, Peter Apps, provided some very different numbers from those given by the Government in the Statement. I am not accusing the Government of having inaccurate figures, but they were very selective. I have no reason to challenge the report in Inside Housing, which says:

“As it stands, of 3,839 buildings above 11 metres being monitored by the government due to the need for cladding remediation, 2,286 have not even started works yet”.


The terrible Grenfell Tower fire was nearly seven years ago, and 2,000-plus buildings have not even had work started yet. But the report in Inside Housing went on to say that

“the 3,839 figure could eventually rise by as much as 5,000”.

based on the Government’s own estimates. We really do not know how many are in desperate need of remediation.

So my question to the Government is: can we have a full and final estimate—which surely should be possible nearly seven years after Grenfell—of how many blocks of flats are in need of remediation? How many of them are over 18 metres and most at risk? How many are over 11 metres? What consideration is being given to those under 11 metres, given that many thousands of leaseholders and tenants live in such flats, which the Government regard as being relatively safe but which insurance companies and service charges and all the rest do not? They are in total limbo, waiting for some action to unlock the situation that they are in. That is my first question.

Secondly, in January, there was a fire in Petworth Court in Wembley, which is a social housing building. The social landlord knew that work needed to be done and the original builder accepted that work needed to be done, but they have been in dispute ever since about how much responsibility each should take for it. That is another issue which desperately needs to be addressed because, at the end of it, it is leaseholders who are stuck in this awful situation of going to bed every night knowing that their buildings are unsafe and vulnerable to very serious fires. So another question that I want answered, please, is about how the Government are going to resolve the disputes between what are sometimes leaseholders and sometimes social landlords and the developers and builders.

My third point is this. According to the Statement, the Government are going to drip another £6 million of public money into council enforcement action. Now, I am absolutely fed up with the answer to any problem being that the Government will spend another bit of money trying to do something about it, instead of accepting what the fundamental issue is here. If you do not fund the public services on which we all rely—such as building regulations and building enforcement—properly in the first place, when there is a problem we are forever going to have the answer, “We’re going to drip another £2 million or £3 million in to try to solve it”—and it will not. It will deal with a little bit this time, but nobody can plan with little bits of money being dripped into public services in this way. So, please, at least take this back to the Government: fund the thing properly rather than dripping in money.

[The Parliamentary Under-Secretary of State, Department for Levelling Up, Housing & Communities (Baroness Swinburne) (Con)]

I agree with the noble Baronesses, Lady Taylor and Lady Pinnock, that too many residents in England continue to live in unsafe buildings, while irresponsible building owners fail to set things right. Last year saw a fundamental step change in our programme to fix unsafe buildings, with the launch of the cladding safety scheme last July. All private sector residential buildings above 11 metres in England now have a pathway to fix unsafe cladding. Following intensive talks with the homebuilding sector, we have also secured a solution that will see the original developers of defective buildings take responsibility to pay for and fix historical safety defects. Where developers are building owners and not currently funding cladding remediation, the Government have committed more than £5 billion to ensure that residents are safe—and feel safe—in their homes. However, there is still more that we can and will do.

Where building owners are failing to fix unsafe buildings quickly enough, enforcement action by our regulatory partners is critical. That is why we are announcing a new comprehensive package of support for regulators to boost enforcement. We continue to accelerate our remediation programmes. Over 4,000 buildings of over 11 metres are now in our remediation schemes; this is double the number of buildings in our schemes a year ago. The number of buildings reported to have started or completed remediation work has also more than doubled since February 2023.

From the start, we have prioritised the remediation of the highest-risk buildings. The ACM cladding remediation scheme, which funds the removal of the most dangerous Grenfell-style cladding, is nearing completion, with 98% of those buildings having started or completed works by the end of this month. This figure rises to 100% in the social sector. Over 50% of high-rise buildings in our building safety fund, which deals with buildings over 18 metres in height with non-ACM cladding, have also started or completed work. I apologise for the statistics, but these are real numbers, so I think the House deserves to know. For 346 buildings identified as requiring works under the developer remediation contract, remediation work is expected to start by January 2025.

Registered providers of housing also report that remediation work is complete or due to be completed for 87% of identified buildings with cladding related to defects by September 2028. The bulk of the outstanding buildings requiring remediation are between 11 metres and 18 metres in height. These medium-rise buildings now have a funded route to remediation, following the launch of the cladding safety scheme in July 2023. We expect the number of medium-rise buildings starting and completing remediation to increase as applicants enter and progress through the scheme.

Our focus is now on getting more buildings into our funds and accelerating their remediation process, including through robust enforcement action where needed. The data published this week in our new enforcement league table shows that levels of enforcement activity vary by regulator and region. Some regulators are doing a commendable job. For example, Newham Council recently won a landmark case and successfully prosecuted a building owner for delaying vital remediation work on unsafe cladding. However, as today’s data shows, some councils and fire and rescue authorities need to do more to ensure the safety of residents in their area.

Last year, the department published a joint statement with building safety bodies committing to see buildings made safer faster through a robust regime. The building safety regulator, the Local Government Association and the National Fire Chiefs Council all put their names to this statement. This week, we are delivering on this commitment by announcing our next package of support for our regulatory partners.

In response to the noble Baroness, Lady Pinnock, I support allocating the further £6 million for the next financial year in grant funding to councils, in addition to establishing a new grant funding scheme to support councils and fire and rescue services with complex enforcement. It is needed; the work is additional work, and therefore we are putting in the money to enable them to do it properly.

To ensure that regulators have the tools they need to harness this funding and drive remediation, we are publishing a new suite of guidance this spring. New enforcement data also increases transparency for the public and empowers communities to see how their authorities are using their funding and powers to keep them safe.

The noble Baroness, Lady Taylor of Stevenage, asked about a number of things, including progress made on registration of building control inspectors and other safety measures. Together with the noble Baroness, Lady Pinnock, she asked about buildings below 11 metres. I will seek to answer as many of those questions as possible. If I miss any, I apologise and will write to the noble Baronesses.

The noble Baroness, Lady Taylor, asked what progress has been made on the registration of building control inspectors. The deadline for registering with the building safety regulator is 6 April. All building inspectors must be registered at least class 1 by that point. However, the building safety regulator has taken the decision to extend the registration period for experienced building inspectors in England who have not yet completed their competency assessment. To benefit from the extension period, they must be registered as class 1 before 6 April and be enrolled on a validation scheme in order to have their competency assessed at the level at which they intend to practise. They will have until 6 July to complete the assessment process. It is crucial that the sector continue to undertake the validation and registration processes in order to meet the competence requirements set by the building safety regulator.

Regarding second staircases, following public consultation and liaison with expert bodies, there is a recommendation that all new tall residential buildings over 18 metres have a second staircase. This will provide an additional means of escape for residents, and I am sure it is supported across the House. We will publish the updated approved document and guidance. I am told, with some authority, by my department, that that will still be by the end of March. Therefore, I am assuming that it will be in the next day or two. I will report to the House if that does not happen—but I hope that it will.

With respect to buildings under 11 metres, it is generally accepted that the safety risk is proportional to the height of the buildings. The risk to life from historic fire safety defects in buildings lower than 11 metres is less. Therefore, building safety-related remediation works are required in a very small number of buildings under 11 metres. A fire risk assessment and accompanying fire risk appraisal of external walls, conducted in accordance with PAS 9980 principles, will often find that lower-cost mitigations are more appropriate in low-rise buildings.

To give some assurance, in rare cases where remediation work is required in buildings under 11 metres, the Government have retrospectively extended the limitation period under Section 1 of the Defective Premises Act 1972. This enables legal action to be taken against developers and contractors where works completed in the last 30 years make a dwelling not fit for habitation.

With regard to the accountability of manufacturers involved in building safety defects, the Defective Premises Act has been amended to cover refurbishment and refitting work for works completed after the Building Safety Act came into force on 28 June 2022. Civil claims can therefore be brought against manufacturers for defective or mis-sold construction products where these products contributed to the dwelling being unfit for habitation. This provision applies to all dwellings and has retrospective effect for cladding products within a 30-year period. The Building Safety Act also gives courts new powers to extend liability to the associated companies of developers.

With regard to the way in which leaseholders and taxpayers will retrieve money they have paid towards a remediation scheme, under the Building Safety Act 2022 we have granted leaseholders the power to apply to the First-tier Tribunal for remediation contribution orders. The First-tier Tribunal has the discretionary power to decide a timeframe in which the money must be paid to the specified person. In the first ever RCO issued, the respondent was required to pay the amount specified in the order within 14 days of the decision date. If the respondent does not pay the specified person within the deadline set by the tribunal, the order can be enforced through the county court system.

Discussions have been taking place with the insurance sector. A lot of discussions have happened and, indeed, where buildings comply with building regulations or align with the industry-accepted PAS 9980 standards, insurers should now offer affordable premiums and should not prescribe additional remedial works. The Association of British Insurers and its members have stated that premiums should reduce where buildings have completed remediation or have become PAS 9980 compliant in the external wall assessment and have therefore shown a marked risk reduction. We expect insurers to honour their commitments and ensure that premiums are priced fairly and appropriately, given the level of work that will have been done.

With regard to selective statistics, monthly data is now being released that can be seen by all, and the progress can be seen; therefore, rather than selective data, the whole dataset will be available for people to observe. Indeed, when taken together with the transparency and enforcement measures through the enforcement league table, I hope that will allow not just this House and its Members but the wider public to keep up the pressure on remediation, making sure that it all happens at pace.

With regard to additional estimates, the numbers have not changed since they were released as prevalence estimates. The publicly available data suggests that 4,092 residential buildings of 11 metres and over with unsafe cladding are being monitored by DLUHC. This comprises just over 2,500 18 metre-plus buildings and 1,500 buildings of 11 to 18 metres. We will continue to bring more buildings into the remediation scheme and provide monthly updates on that progress as and when we have it.

I thank the two noble Baronesses for their comments and look forward to working with noble Lords to try to make sure that we continue at pace to make sure that people live in safe homes.

Leasehold and Freehold Reform Bill

Baroness Pinnock Excerpts

2nd reading
Wednesday 27th March 2024 Lords Chamber

[Baroness Thornhill (LD)]

My Lords, it is an absolute pleasure to follow the noble Baroness, Lady Taylor of Stevenage, with her meticulous attention to detail. I too thank all those who have contributed to getting the Bill to where it is now. It is noticeable that MPs across all parties have worked tirelessly on this Bill— I will not name names because you always miss someone out—in the other place. That is a sure sign that there really is a consensus and a need to drive this forward.

To say that this Bill is needed and well overdue is an understatement. The Secretary of State himself said that the leasehold system was “outdated” and “feudal” and a lot more besides. Millions of property owners own their homes through leases in England and Wales, which along with Australia are the only places in the world where this system still exists. As there have been numerous parliamentary and independent reports from organisations ranging from the aforementioned Law Commission to the Competition and Markets Authority giving incredibly similar recommendations, you would think this Bill would be relatively straightforward—but not so. We are disappointed that there are no proposals to really reinvigorate, which is the word being used, commonhold nor a clear pathway to it becoming the main tenure.

Liberals have actually been campaigning against leasehold since—wait for it—Lloyd George’s People’s Budget—

[Baroness Pinnock (LD)]

Of 1909.

[Baroness Thornhill (LD)]

Of 1909—I am glad that my noble friend Lady Pinnock knows that.

This system is so engrained in our history that there is inevitably going to be a chasm between the Secretary of State’s theatrical rhetoric and harsh reality. There are also going to be winners and losers. Indeed, the Secretary of State pledged to

“squeeze every possible income stream”.—[Official Report, Commons, 11/12/23; col. 659.]

that freeholders have under the unfair feudal leasehold system. But we do not feel that the Bill as it stands does this. As has already been said, the devil will be in the detail, and we will hope to work with some of that detail.

The Government are demonstrably vulnerable to extensive lobbying, and this has weakened both the Government and the Bill, most recently regarding ground rent, which we feel should eventually be abolished. There is no hiding our disappointment that promises to abolish leasehold have been watered down, particularly the fact that flats are exempt; we would seek to include them, the more so because they make up 70% of leasehold properties. Retirement homes are also exempt. Why developers of retirement properties get a special carve-out is beyond me—surely the Government should be on the side of the elderly and vulnerable, at that time in their lives, who have downsized, freeing up family homes. However, they are unwillingly extorted in their new home and when they or their relatives come to sell, there are further charges—the so-called event fees.

The exemptions will mean that significant numbers of leasehold homes will still be built. The rhetoric has turned to “reform” rather than “abolish”. It is a disappointment but perhaps understandable in a Government that are now too weak to deliver big changes such as this and perhaps have too many of those with vested interests in their ranks or on their donor lists. Add to this the quiet death of the Renters (Reform) Bill—I hope the Minister will have an update on that—and it certainly leaves much for the next Government to get their teeth into.

On these Benches, our biggest concerns are building safety and cladding, which my noble friend Lady Pinnock, of Cleckheaton, will continue to work on as she has done since the very early days of the Grenfell tragedy.

The other big one for us is the lack of real reform regarding regulation of property agents and their management fees. These are a right rip-off and a licence to print money for doing nothing or next to nothing. The report from the noble Lord, Lord Best, in 2019 made many sensible recommendations as did the Law Commission in the same year. These should be implemented in full.

My own recent casework reminded me sharply of how vulnerable elderly leaseholders are when demands are made for payment for repairs that they deemed were completely overpriced. To prove their point, they went to the trouble of getting three quotes from local builders for the same work. The range within the local builders’ quotes was very little, but the difference between the landlord’s quotation and the most expensive local builder was thousands of pounds—for fencing.

A closer inspection of the last years’ invoices revealed the kind of stories we are now all too familiar with: huge sinking funds; many contingency cushions; eye-watering rises, all with no reasonable—an interesting word that we will no doubt talk about during the passage of the Bill—explanation. The residents decided collectively not to pay their most recent management bill. The company responded with threatening letters, which of course were intended to intimidate them into paying. I will not name the company, as following my involvement things began to be sorted out—we do have our uses—and moneys were reimbursed to residents. But this Bill will offer them very little to ensure that they are not ripped off again, and in this situation the fact that the digging was done by two retired accountants, who have now left the scheme, made me realise that even with the right to manage some residents may not want to manage for themselves and will need to employ a property management company. These are currently unregulated and unscrupulous in far too many cases.

I will, however, praise the work of the Property Institute, which represents thousands of property managers and aims to raise standards and improve transparency for residents. We need to remember that there are always good guys—and gals—out there who also hate their reputation being trashed by those less scrupulous.

The Bill will ban the sale of leasehold houses, but not so-called fleecehold estates: the practice that has developed over the past 10 to 15 years of the public spaces that were once adopted and maintained by the local authority now being in private hands—a management company—with the residents footing all the bills for communal repair and maintenance. What a nasty surprise for them on moving into their new home. First, they may not have known that they were liable for such costs. Often, people are told, “Oh, you’ll just be paying for the grass to be cut a couple of times a year”, before they realise that it is also for the playgrounds, roads, fencing and everything else. There is evidence to show that there is mis-selling in this area. Secondly, those people may not have realised that they would be paying for services that have already been done by the council. In effect, they are paying twice for facilities that others can also use, as well as paying full council tax. Freeholders refusing to pay the so-called rent charge could find their freehold changed to leasehold.

To be fair, the Bill really is trying to put some of this right, but it is all a little bit uncertain—there are more consultations, and more this and more that—as to how things will work; for example, on the ability to appoint a substitute manager. I look forward to the details of how that will happen, along with the proposals that give leaseholders a new right to request information about service charges and the management of their building. That is good but it, too, will need fleshing out, as it feels like the power of what is released and how is still very much in the hands of the management company.

Likewise, the proposals for right to manage will come to naught if leaseholders are not supported to transition. Current charities, such as the Leasehold Advisory Service and others, will need more tools and resources to help this transition and make it work. It is disappointing that commonhold has not taken off in the way that we expected, so we clearly need to give more support to make these really positive changes work.

Key to all of this working at all is to regulate managing agents. Without that, many of the measures will not be successful, or not as successful as they could and should be. We must raise standards and increase competence across the sector and, ultimately, have a fair and transparent system that residents feel is fair—and, if not, that there is a simple and accessible form of redress, unlike the current recourse to the First-tier Tribunal, which, when I explored it for those elderly residents, was neither simple nor accessible. We feel that this fleecehold practice should be abolished altogether and revert to local authority control, with developers contributing to the council coffers towards the upkeep of the estate.

I make a final plea to the Minister that there are potentially thousands of leaseholders who are in a bit of a quandary at the moment about whether they should extend their lease or wait for the legislation—will they be be winners or losers?—depending on which way things go. If the Government could give clear guidelines and guidance as soon as possible to all those who are thinking of selling or remortgaging, I am sure that would be welcome.

Of course, it would be churlish not to say that there is much to welcome in the Bill. I am sure that, by the end of it, we will all be a lot wiser as to marriage value, the extension of leases, enfranchisement, forfeiture, and much more. We look forward to working across the House to table amendments to improve this well-intentioned but somewhat disappointing Bill. In particular, we would like to ensure that the rhetoric around the Bill is borne out in reality.

--- Later in debate ---

[Baroness Pinnock (LD)]

My Lords, I thank the Minister for being so generous with her time in discussing the content of this Bill and for being willing, on behalf of the Government, to front it. As we have heard, there is wide support for the Bill, but significant shortcomings have been noted from all quarters and all sides.

Reform of this archaic property ownership arrangement is long overdue. There has been a welcome focus on general consumer rights and protections over recent years. However, the leasehold/freehold arrangement has remained largely unchanged, to the considerable detriment of leaseholders. Liberal Democrats have long supported radical reform of the leasehold/freehold arrangement. As my noble friend Lady Thornhill reminded us, it was David Lloyd George in 1909, in the People’s Budget, who first laid down that reform was essential, not just to extend, as the Bill does, the rights of leaseholders but to deal with the concept of an outmoded system that harks back to times when everyone was beholden to the landowner.

As we have heard, this is a Bill of 123 clauses and 12 schedules—and that is just at the last count. Since the Bill’s introduction in the Commons, the Government have added 224 amendments, which illustrates its complexity and, as the noble Baroness, Lady Andrews, pointed out, developing legislation on the hoof—or as my noble friend Lord Stunell said, the Government chasing their tail.

The Bill seeks a number of key changes to the leasehold/freehold relationship which are positive. Unfortunately, the Government have failed to use this opportunity to really grasp the nettle and set down a complete reform of the system. The Government have long promised a fundamental reform to replace freehold with commonhold, which is more in line with property rights across western Europe. Despite the 2022 Act, commonhold remains a rarity. Why have the Government failed to use this opportunity to end freehold and introduce commonhold for all property, including flats?

It is extremely disappointing that, according to media reports, the Government are even backtracking on reform of ground rents. The Secretary of State announced only last November that the proposal will “save leaseholders thousands” by slashing ground rents and setting them at a peppercorn. That is another promise abandoned. Evidence shows that some freeholders increase ground rents substantially year on year, as we have heard this afternoon, and yet other ground rents remain so low that they are not worth collecting but remain as a charge on the property. Ground rent really is paying something for nothing and should be confined to history. However, I accept that there are financial interests, such as pension funds and charities, the concerns of which must be taken into account as reform proceeds. Nevertheless, a solution that achieves abolition can and must be found.

The other significant omission in the Bill is the abolition of draconian forfeiture, whereby the failure to keep up with ground rent payments can result in the forfeit of the property to the freeholder. There can be no justification in any circumstances for this to remain on the statute book. I hope that the Minister is able to respond to the numerous questions about the lack of action on forfeiture in the Bill.

This much-diluted reform Bill does, however, contain some positive changes, even if they are rather muted. Scrapping the presumption that leaseholders are required to pay landlords’ legal costs is putting right a plain wrong. Leaseholders’ service charges have been exploited by some freeholders and managing agents to such an extent that these have, on occasion, risen by up to 1,000%. The proposal in the Bill is to insist on transparency and reasonableness—but what is reasonable? How will it be defined? This leaves too many loopholes for the unscrupulous to continue to exploit. Can the Minister explain how exploitative behaviour by some freeholders, or their managing agents, will be prevented, given the wording of the clause?

That brings me to insurance charges. Since the terrible tragedy of Grenfell Tower, insurance costs for leaseholders in flats have escalated to the point at which some are paying more than £3,000 a year for buildings insurance—a travesty, considering that leaseholders do not own the bricks and mortar being insured. Of course, there must be some arrangement by which the building is insured, but to put the commissioning rights in the hands of the freeholder or agent is like putting the cat in charge of the cream. Clause 57 seeks to protect leaseholders from the worst excesses of insurance commissioning, but it is not at all clear that it will be effective. Perhaps the Minister will be able to demonstrate that the days of milking the buildings insurance to the benefit of those not paying the insurance will completely end.

So-called fleecehold is another money-making wheeze by developers and property agents. Developers, having realised that local authorities were not in a position to take on further liabilities, have devised a system whereby house owners on newly constructed estates pay a service charge for maintenance of green spaces, play areas and even roads, as my noble friend Lady Thornhill so eloquently exposed. The same householders will also be paying council tax to cover such maintenance in other estates in their district. Undoubtedly, what will happen is that, as an estate gets older, more maintenance will be required, especially if the estate road was not built to adoptable standards in the first place. The liability will fall on home owners, who may not be able to suddenly pay out for a new road. So it is good that the Bill proposes in Clause 98 to insist on a redress scheme, but how much better it would be if assets in new estates were forced to be adopted by the local authority in perpetuity.

Part 8 amends the Building Safety Act 2022 to ensure that the landlord will be responsible for remedying or mitigating relevant defects in a building. Some of us who have spoken today spent many happy hours debating the Building Safety Bill and drawing attention to its defects at the time, and it is a great pity that the Government have failed to grasp this new opportunity to redress the serious limitations of that Act and extend rights to leaseholders in buildings under 11 metres, and enfranchised leaseholders.

The Minister will not be surprised to hear that we on these Benches will seek to put right the wrongs that have still not been addressed by the Government in their legislation. As others have said, people are living in flats that are unsafe, unable to be sold and unmortgageable because this Government have failed to deal with wrongs that are not of the residents’ making but of the making of the developers and construction firms which built those flats in the first place. We will pursue amendments along those lines.

There are some real positives in the Bill, such as removing the duty on leaseholders to pay the freeholder’s legal costs in a dispute. The various redress proposals have considerable merit. Enabling existing leaseholders to extend the lease or purchase the freehold in a new way is another positive step, as are the measures in relation to some regulation of property agents, although this does not go far enough, as the noble Lord, Lord Best, and my noble friend Lady Thornhill pointed out. I recognise that, having said at the outset that the Bill is a step in the right direction of reform, I have then spelled out the many glaring omissions and the lack of bold endeavour which are a feature of the Bill as it stands.

The debate has exposed the controversy surrounding any reform, but we on these Benches will use the remaining stages of the Bill to probe the detail and propose amendments in areas where the Bill is deficient, which are various and numerous. I look forward to the Minister’s response.

Local Government Finances

Baroness Pinnock Excerpts

Thursday 21st March 2024 Lords Chamber

[Baroness Pinnock (LD)]

My Lords, I thank my noble friend Lord Shipley for securing this debate, and for his excellent and analytical introduction, and all noble Lords for the many local examples that they have shared and for their eloquent contributions. I have relevant interests as a councillor for nearly 40 years and as a vice-president of the Local Government Association.

The words “local government” were once synonymous with pride of place and pride of people. Councils were duly elected and took action to improve that place, be it through housing improvements, creating parks or ensuring public health reforms. It is a sentiment that the right reverend Prelate the Bishop of Manchester also expressed. The demise of the once great vision of what elected bodies could achieve for their place has been gradual. The question is whether we are reaching an endgame in that vision. My noble friends Lady Scott of Needham Market and Lady Hamwee have exposed and expressed that as a real threat.

Local government is shorthand for the provision and delivery of services that make a tangible difference to the lives of individuals, families and communities, be they in villages, towns or cities. That is why this debate is so important. Cutting funds to councils means real reductions in services that provide basic support to people in need, blocking opportunities for young people and leaving the place that people call home in a state of decline.

The challenge for the Minister is to demonstrate that the Government understand that local government is not about the delivery of disparate services defined only by central government. Local government, at its best, is far greater than the sum of its parts. It is local government that is the key to preventing difficulties becoming crises. For example, closing swimming pools and leisure centres as well as reducing youth provision will mean that young people have fewer places to go and fewer interests to enjoy, and the consequence can be a rise in anti-social behaviour.

My noble friend Lord Shipley has rightly focused on sources of income for local government. That is something that we really need to think about in this debate. A SIGOMA briefing stated—and I thought that this was really telling—that there has been a move away from providing local government funding based on need to one based on local tax-raising ability, so that councils in more affluent areas are able to raise far more through council tax than councils in more deprived areas. Can the Minister confirm that that is the case and that government claims of increasing core spending power include a requirement for councils to raise council tax by the limit set by the Government?

All that adds up to not very much in the sense of levelling up, which sounds ever more a hollow promise, as many noble Lords have said. Does the Minister agree that the social care precept is a new tax, introduced by the Government to help fund social care? That tax adds a further 2% on council tax bills in the higher-tier authorities and unitary councils and 2% more on the bills of hard-pressed council tax payers. In my own council, that means, for the average council tax payer, an additional £200-plus per year. As we all know, council tax is regressive, so is that a fair way of raising more funding for social care services?

As my noble friend Lord Shipley has rightly pointed out, 69% of local councils’ total spend is on adult and children’s social care, leaving 31% for everything else: highways, leisure, parks, libraries, culture, the arts—we could go on. I remind the Minister that my noble friend also said that the Government seem to be knowingly letting things get worse, in terms of the consequences of cuts to all the other services. We are still waiting for the fair funding review.

Of course, there are other forms of income for local government. The Government have been pushing for councils to use their reserves, but this is such a short-term and short-sighted approach to local government funding. As reserves can be used only once, this props up a budget for one year only and leaves an even bigger gap the following year. It is not sustainable for the Department for Levelling Up, Housing and Communities to push councils to use their reserves, especially because, as we have been reminded, the OBR has assessed that local government is facing further significant cuts to its funding as the proportion of GDP will fall by 3% over the next few years.

My noble friend Lady Hamwee contrasted being a local councillor 30 years ago with how local government is now—so constrained by government that it is in straitjacket. There is, as she says, little local discretion now available to local councils. That means, of course, that local councils are not able to respond effectively to real local need, because if there is no discretion, there can be no response.

Quite rightly, we have a real focus on arts, culture and libraries. The noble Baroness, Lady Bull, the noble Earl, Lord Clancarty, the noble Lord, Lord Freyberg, and my noble friends Lord Foster and Lady Miller all raised the vital role that culture, the arts and libraries play in the life of a place, and their economic importance in attracting business and investment. There are also the life chances they open up and the opportunities they provide for enhancing life and well-being. The tragedy is that these are the areas of local government funding that have had huge cuts, and there is no sense of the Government recognising the impact of the cuts, and no sense that the cuts will be replaced, except by these odd little pots of money that can be applied for and go somewhere—but, in the scheme of things, go nowhere. My noble friend Lady Miller had the telling statistic that more people go to libraries every year than watch football—I am up for that, as a statistic.

My noble friend Lady Scott of Needham Market pointed to the value of parish and town councils, and the enormous work they are doing. I know that my colleagues in Somerset Council, which is struggling with huge cuts to services, has sought a bigger and better partnership with its local parish councils to make up the difference.

To conclude, there is a crisis in local government. As we have heard, one in five councils are anticipating effective bankruptcy. Selling off council assets permanently reduces councils’ ability to serve local residents. Local councils matter. As we have heard, people are passionate about what local councils at their best can do. That is why the gradual decline of local government matters. We on these Benches value what councils can do; we will support and enhance them. The question to the Government is, will they?

Non-Domestic Rating (Rates Retention: Miscellaneous Amendments) Regulations 2024

Baroness Pinnock Excerpts

Tuesday 27th February 2024 Grand Committee

[Baroness Pinnock (LD)]

My Lords, I draw the Committee’s attention to my interests as a councillor and a vice-president of the Local Government Association. I thank the Minister for her detailed introduction. The Liberal Democrats support these technical changes. I do not know how we could oppose them without having a very detailed understanding of all the complexities of the changes that the Minister has outlined today. As she said, the purpose is to ensure that local authorities receive the correct payments from business rates, which are a very important source of income for local authorities.

This is indeed a very technical SI, and the formulae for calculating the redistributive mechanisms are also very complex, as I have read in the paper that we are considering. However, it seems to me that the greater the complexity, the greater the likelihood of unintended inequities creeping in. So my first point to the Minister is this: the Explanatory Memorandum states:

“There is no, or no significant, foreseen impact on the public sector”


and that the intention is to

“minimise the impacts on local authorities as far as is practicable”.

Now, as the Minister will know, local authorities are in very challenging financial times, so every penny in the council coffers will make a difference. Can the Minister put parameters on

“as far as is practicable”?

Are we talking thousands or hundreds of thousands of pounds? I hope it is not millions. What are the parameters that the Government have used for describing

“as far as is practicable”?

I appreciate it will never be absolutely precise, because it is so complex.

The Minister will appreciate that business rate income is a very important source of funding. On the other hand, councils have a responsibility to ensure vibrant high streets. The result of that is councils wanting business rate bills to be reduced to help retailers. There were some changes in the last piece of legislation to which this SI refers to do that. It was reported last year in the Times, and referenced on Report on the Bill, that some retailers have business rates bills that are equal to or higher than their rental costs. That cannot be right. It leads me to suggest that root and branch reform of the business rates system is urgently needed.

Part of the solution to this gross unfairness is the way that the existing system overly favours online retailers that operate from very large warehouses. An example could be Amazon. The Minister will repeat that the Government have adjusted business rates so that these giants of the retail world pay a bigger share towards the local services they use, but these changes were minimal, resulting in a drop in the financial ocean for large online retailers. For example, it cost Amazon £29 million when its business model is in the billions. Yet the system still overwhelmingly favours online retail, despite government commitments in the levelling-up Act to reinvigorate the high street.

A radical change to create a fairer balance between what is known as “bricks and clicks” would go a long way to achieving what the Government are committed to doing—and which I support—as regards the high street. So can the Minister provide any hope at all that such a change is somewhere on the agenda? It is a key lever in reinvigorating our high streets and ensuring that major online retailers pay a fair share.

The Minister in response may point to small business rate relief. She would be absolutely right that many small shops have 100% rate relief, but that just further emphasises the point that I make. Any system that relies on substantial reliefs and complex redistribution mechanisms while failing to capture income from completely new business types—the online businesses—is ripe for fundamental reform.

I appreciate that this has gone slightly off-piste but, when we are considering the redistribution of business rates, which are a very important element of local government funding, it seems to me that we should use any opportunity we can to remind the Government that, to achieve some of their key objectives, a fundamental reform of business rates is absolutely essential. However, I support the technical changes that are introduced by this statutory instrument.

[Baroness Taylor of Stevenage (Lab)]

My Lords, I draw attention to my interests in the register as a vice-president of the Local Government Association and as a serving councillor on Stevenage Borough Council and Hertfordshire County Council. I thank the Minister for her introduction to this statutory instrument and I am very grateful for her explanation of the relaying of it, which was informative.

I suppose that this instrument is necessarily complex and technical in content, but, if we look through it, we see that in many ways it demonstrates exactly how far business rates—or non-domestic rates, as we have to call them—have got from their objectives. They are intended to ensure that businesses make a contribution to the communities that allow them to thrive, to link them with the people and public services of their local area. They should recognise the differentiation between small, start-up and local businesses and the multinational corporates, when in fact non-domestic rates sometimes penalise them in inverse proportion to their ability to pay. They should also ensure that areas wishing to improve, increase or regenerate economic activity are able to vary the business rates to incentivise according to local circumstances.

Looking through the pages of mathematical formulae and complex calculations in this SI, I say that it would not be surprising if any average business doing so felt that we had somewhat lost the plot. The complexities of the system do not really benefit most councils, either, although we appreciate the funding that comes from them. For example, my borough raises over £61 million in non-domestic rates but, after all these calculations and the turning of the Government’s sausage machine, we get around £4 million of that—in spite of having three of the most deprived wards in the country.

So we need to refocus business rates back on to what they were intended to do. That is why they are part of Labour’s plan to support the vast majority of businesses in this country that are SMEs. They employ 16.7 million people and boost our economy by £2.4 trillion; they breathe life into our high streets; they deliver services that make our life easier: and they provide the goods we need to thrive. While SMEs welcomed the support they got during Covid, many of them now feel neglected as they struggle to survive the cost of living crisis, the recession and the complexities of this business rates system, which can seem utterly overwhelming, as the noble Baroness, Lady Pinnock, set out.

Labour’s plan for small businesses will be an important milestone in recognising their value to the economy and the essential role that they have in ensuring the economic growth that we need. We will undertake a fundamental reform of business rates, which will reshape this antiquated system and refocus it on business not bureaucrats’ objectives. We want to make sure that bricks-and-mortar businesses do not continue to pay disproportionately more than their online competitors. We want to take the burden from high streets and the businesses that sit at the heart of our communities, such as the local café that makes our morning coffee, the mortgage broker on our high street who went above and beyond to help you get your first home, the plumbers who come out of hours when you have water pouring through the ceiling. We want a new system that incentivises businesses to invest, rather than discourages them doing so. Our plan for business rates sits within a comprehensive plan for small business, which tackles all the issues that our many conversations with those businesses have told us are key to their future.

We had the chance to speak on the wasted opportunity to revise non-domestic rates during last year’s debates on the Bill, as the Minister said. We recognise that, for now, this technical paper is necessary to put in place the mechanism for the current system, so we will not be putting forward any formal objections, but I have some questions for the Minister. Can she comment any further on the Government’s plans to shift the current disproportionate burden of non-domestic rates taxation from small local businesses to online corporates or, potentially, on alternative forms of income for local government, including an e-commerce levy, with the funding retained by local government?

The retailers that we know and love on our high street, such as M&S, Boots, WHSmith and small, local businesses, seem to have a dramatic penalty in the business rates system over big online retailers such as Amazon. The current top-up and tariffs system is now outdated and, in view of the extraordinary cuts to which local government has been subjected, it often penalises areas of deprivation just because areas around them may be more economically vibrant. Can the Minister comment on what recent assessment has been carried out on the validity of the tariffs and top-up system?

What progress has been made on the Government’s promised consultation on business rates avoidance and evasion? The LGA, for example, has called for a review of exemptions, such as where businesses happen to be located on farms, and further clamp-downs on business rates avoidance, along the lines of those introduced in Wales and Scotland, to ensure that the rules on reliefs, such as empty property and charitable relief, are applied fairly.

The Minister knows that the LGA is also in favour of giving councils more flexibility on business rates reliefs, such as charitable and empty property relief, and the ability to set their own business rates multipliers or, at the very least, to set a multiplier above and below the nationally set multiplier. Have the Government given any further consideration to those proposals? Lastly, could she comment on the glacial speed of the appeals process, which distorts council finances and reserves, as councils often have to hold funds for not just months but years while they wait for the outcome of business rate appeals?

As I said, we understand that this instrument is necessary to move forward non-domestic rates for this year, but we hope that there is an understanding that sticking plasters, even complicated and technical ones such as this, are the problem and not the solution.

Leasehold: Property Management Companies

Baroness Pinnock Excerpts

Monday 19th February 2024 Lords Chamber

[Baroness Penn (Con)]

My Lords, the Bill aims to grant freehold homeowners on private or mixed-tenure estates the same rights of redress as leaseholders in this area—equivalent rights to transparency on estate charges and the ability to challenge those charges at tribunal. I believe the CMA is also looking into this matter, and we look forward to receiving its final report.

[Baroness Pinnock (LD)]

My Lords, some freeholders, although not all, treat their leaseholders as a cash cow. I have two examples for the Minister. First, there was a ground rent increase—and there is no value at all to the leaseholder in a ground rent—of 113% this year, which was backdated three years, and the sum was demanded to be paid in full in four weeks. Secondly, there was a 23% increase in service charges this year. There is no accountability. Transparency there is, and challenge there can be, but nothing comes of it—and it seems that nothing in the Bill will change that. Can the Minister tell me that it will?

[Baroness Penn (Con)]

I can. The Government have consulted on a range of options to reform existing ground rents, having legislated in 2022 to set all new ground rents at a peppercorn rate. Following the outcome of that consultation, we aim to legislate in the current Bill before Parliament. As I say, not only will we give leaseholders greater rights to transparency on what service charges are charged for, to ensure that they are reasonable, but we are changing the cost regime in the courts so they can challenge those charges where they think they are unreasonable.

Local Planning Authorities: Staffing

Baroness Pinnock Excerpts

Monday 12th February 2024 Lords Chamber

[Baroness Penn (Con)]

My Lords, one of the things we have done in our recent changes is make provision for the indexing of planning fees going forward. That will ensure not only that local authorities will benefit from the substantial increase in fees that were put in place in December this year but that, on an annual basis, the value of those fees will be retained in future.

[Baroness Pinnock (LD)]

My Lords, the Minister mentioned the increase in planning fees, and she is quite right, but when the Government made that increase they knew that it would not cover the costs of planning applications. Can the Minister justify why hard-pressed councils have to take funding from other public services to pay for planning applications?

[Baroness Penn (Con)]

My Lords, we want to proceed in a measured way, providing additional resourcing without disproportionately impacting businesses and householders. Full cost recovery now could result in a substantial rise in some fees, which would adversely impact some developments. Of course, further to the fee increases and the additional specific funding through the planning skills delivery fund, we have made provision for an increase in the settlement to local authorities overall this year.

Temporary Accommodation Costs

Baroness Pinnock Excerpts

Wednesday 31st January 2024 Lords Chamber

[Baroness Scott of Bybrook (Con)]

Through their powers, local authorities can look to purchase accommodation. In the last two Budgets, we have given special dispensation to local councils, first, on special borrowing and, secondly, on their moneys from the right to buy. It is up to local authorities to look at the ways they can provide those houses, but I will take that back to the department as an idea.

[Baroness Pinnock (LD)]

My Lords, as the Minister has rightly said, the Government are allocating £1 billion to reduce homelessness. Unfortunately, it is clearly not working, as homelessness is at a 25-year high, with the result that local authorities have to spend increasing proportions of their budget on their statutory duty—which they want to undertake—to house people without a home. For example, Eastbourne Borough Council has an annual budget of £15 million but is spending £4.9 million each year on its statutory homeless duty. That is not sustainable. What are the Government to do?

[Baroness Scott of Bybrook (Con)]

As I have said, on 24 January, the Government announced additional measures for local authority funding worth £600 million, including £500 million of new funding for adult and children’s social care. It means that core spending powers will be up by £4.5 billion next year. This is what we are doing to help local authorities with all the pressures on their budgets at this time.

Teesworks Joint Venture

Baroness Pinnock Excerpts

Tuesday 30th January 2024 Lords Chamber

[Baroness Taylor of Stevenage (Lab)]

My Lords, at the heart of this issue are the people of Teesside and the public asset formerly owned by them, which should be regenerated for their benefit, to generate jobs, employment and industry. They should also be receiving sufficient return for their investment of land and the other value of the site. The governance of the project should ensure an appropriate sharing of the risk taken by the private sector partners in order to justify the returns they have already accrued, as documented in the review. For the Government to suggest in this Statement that the report exonerates all those involved from any questions about what has happened and to insinuate that local MPs’ challenge of the many issues explored in the review was them using the communities of the north-east as a political football is simply not appropriate.

We understand that the project is complex. I have experience of instigating and overseeing a billion-pound regeneration project, so I understand the complexities that can arise. We also recognise that, in an area like Teesside, the urgency of moving at pace on a project which is going to generate jobs and employment is vital. However, that should not give any of those involved carte blanche to ignore the absolute necessity for the project to follow the strongest principles of probity, governance, transparency of decision-making, procurement practice, scrutiny and best value.

This very thorough and detailed report delivers a scathing assessment of the way those principles have been treated. Its 28 recommendations highlight: the need for reviews of financial regulations; better oversight and scrutiny; the make-up of the board; reporting to the board; that the public interest test should be foremost in terms of transparency; and that not enough attention is paid to conflicts of interest, including those of the mayor. Very seriously, the report highlights procurement issues, including the decision in August 2021 to change the balance of ownership in favour of the private owners to a 90:10 split, and the issue of the balance of risk between the public and private sector, when, to date, the public sector seems to have taken the bulk of the risk and been responsible for the costs invested, while the private sector has had the benefit of the profits. I am sure this way of operating would have gone down as a wow factor on “Dragons’ Den”, but has it really all been in the best interest of the people of Teesside? Have they got value for money for their public investment?

The concerns outlined in the report are absolutely not minor or trivial matters. The Minister made much of the fact that the report concludes it did not find evidence of illegality or corruption. Well, good, but surely we have learned from recent high-profile scandals, such as the Post Office Horizon issue, infected blood, and the supply of PPE, that there may be ways of operating that, while not strictly speaking illegal, are certainly not desirable or acceptable.

This scandal has exposed gaps in accountability and proper attention to local democratic scrutiny and a failure to follow the principles of spending public money, which makes it clear that there should be a further investigation by the National Audit Office. The NAO has already indicated that it would be willing and able to carry out that review. The people of the north-east surely deserve reassurance that every pound of their money invested in this project will count and will deliver sufficient return—especially as the private sector developers seem to have reaped a pretty healthy return, with little or no investment. So I ask the Minister: will a proper accounting review by the NAO will now be undertaken?

I understand that the chair of the Public Accounts Committee called the metro mayors together when they were elected and suggested they put robust auditing arrangements in place—as, following the abolition of the Audit Commission, there was no regulated accounting for them. The accounts published recently for Teesside were the first for the public to see. Is the Minister reassured that the advice of the PAC chair was taken?

This review represents a scathing indictment of what has happened on Teesside, and if we are to grow the country’s economy at pace and scale, as is my party’s ambition, surely it is important to understand the detail of the lessons that need to be learned. What steps did the Government take to ensure that officials who have previously worked at South Tees Development Corporation or public bodies on Teesside were free to comply with the investigation, regardless of any non-disclosure agreements they may have signed? The report itself cites that a former monitoring officer who advised on some of the significant decisions—including the move to 90:10 ownership—

“was invited to interview but declined because they felt their professional duties barred them from participating in the review”.

Can the Minister answer the question that so many local people are asking about the sale of scrap metal and aggregate from the site? Is she reassured that an appropriate share of the benefit from those sales has gone to local people?

To conclude, while we all accept that there is a need for major regeneration projects to proceed with pace, is the Minister satisfied with a report which found that:

“We did not see sufficient information provided to Board to allow them to provide effective challenge and undertake the level of due diligence expected of a commercial Board”?


There has been no private finance invested to date, while over £560 million of public funds have been spent or committed. Outcomes are reported quarterly to government, in line with the agreed criteria. However, these do not record the cumulative position on either costs or benefits, nor do they compare the current overall position in respect of costs or benefits with those set out in the business case.

Inappropriate decisions and a lack of transparency, which failed to guard against allegations of wrongdoing, are occurring and the principles of spending public money are not being consistently observed. Does the Minister conclude that the people of Teesside got value for money for their very considerable investment? Does she conclude, as the Minister in the other place did, that there should be no referrals onwards to other bodies for further review? Surely this damning report asks more questions than it answers—questions that the people of the north-east deserve and have a right to have answered.

I will finish with the final words of the report, which ask the questions so many local people, including the Northern Echo, want answered. The report says that:

“Based on the evidence from the review the governance and financial management arrangements are not of themselves sufficiently robust or transparent to evidence value for money”.


What are the Government going to do about this?

[Baroness Pinnock (LD)]

My Lords, I thank the Minister for the Statement. What a sad state of affairs it is that a vital and very large regeneration project in the north-east of England has to be the subject of an independent government review because of justified public criticism and concern.

The Financial Times and the Yorkshire Post have both, independently, been investigating the decisions made by the mayor and the development corporation. Senior investigative journalists with considerable experience have been seeking answers to basic questions of openness and probity in relation to the mayor, the development corporation, the joint venture and the local councils. They were absolutely right to do so. What is more, this report confirms their claims.

Unfortunately, this Statement seeks to draw a veil over the very serious conclusions drawn by the independent panel. The starting point is that the Tees Valley project is funded by hundreds of millions of pounds of public money, either from government grant or local prudential borrowing. The investment of public money rightly brings with it higher levels of transparency, challenge and probity.

There are 28 recommendations in the report, and they reveal a damning indictment of the process and procedures adopted by the mayor and the STDC with the joint venture company. The report states that the panel is not confident that

“we have been given access to all relevant materials”,

and that

“we have not been able to pursue all lines of evidence or examine all transactions”.

Anyone reading that will know that the panel is greatly concerned that there is much more to be investigated. My first question to the Minister is whether the panel will be given more time to examine those areas that have yet to be covered, or, as the noble Baroness, Lady Taylor, suggested, whether the NAO will be asked to investigate.

In its own words, the panel focused on just six areas, the main one being the establishment of the joint venture. Initially, this was a 50:50 deal between the public and private sectors, and that is a common arrangement for such schemes. However, the arrangement morphed into a 90:10 split, with the private sector taking the 90%. The report states that

“there is no formal partnership agreement that sets out the obligations of the JV partners, although it is clear that the JV Partners are heavily influential within the operations of the Teesworks site”.

My second question is whether the Minister concurs that there is no such formal agreement. If so, will the Government demand that there is one, and that that agreement will be open to public scrutiny?

One of the curious decisions made by the Teesside mayor and the combined authority is the appointment of two individuals as partners in the joint venture. In my experience, this is highly unusual in publicly funded projects. My third question is therefore whether a joint venture with individuals is in the best interests of transparency.

I turn to my fourth question. Following the report’s statement that the panel were “surprised” that, when the joint venture was set up in 2020, the report doing so

“contains so little detailed explanation and implies that there aren’t any material implications directly arising from this change in approach”,

even though the result of the joint venture was that

“two or three privately owned companies would likely receive significant financial returns”.

This was indeed the outcome. Can the Minister tell the House whether the balance of reward and liability detailed in the report is a fair one, and one which gives best value to public money?

There are myriad questions that require an answer from the Government. My next question concerns the liabilities apparently unknowingly acquired by the local councils and the Tees Valley Combined Authority. The first two recommendations of the report focus on the issue of who makes the gains and who holds the losses. My fifth question is this: does the Minister agree that passing on liabilities to local authorities while local government is in such a parlous financial state is, at the least, poor management, and, at worst, a deliberate ploy to shoulder local authorities with liabilities that are not rightly theirs?

I turn to my sixth and final question. Will the Minister agree to return to the House with a progress report on the implementation of all 28 recommendations, as I note the mayor has accepted these recommendations only “in principle”? Those of us who care deeply about good governance, probity in the use of public money and transparent decision-making want to see these recommendations implemented in full.

[The Parliamentary Under-Secretary of State, Department for Levelling Up, Housing & Communities (Baroness Penn) (Con)]

My Lords, I thank both noble Baronesses for their questions. Before I turn to the specific points, it is worth reminding the House of the context of both the review and the work being done in Tees Valley by the development corporation.

Remediating and regenerating the former Redcar steelworks is a highly complex brownfield regeneration opportunity. The alternative is a massive liability to taxpayers in clean-up costs and an annual multimillion pound bill just to maintain a highly contaminated site. Most importantly, as my noble friend Lord Heseltine said in his 2016 report on the Tees Valley, the site is also part of a much bigger picture, which provides an opportunity for regeneration that is unrivalled in size and scale and also in potential opportunity, as we are seeing with development of the freeport in the area.

In June last year, at the request of the Tees Valley mayor, my noble friend Lord Houchen, an extraordinary independent review was launched by my right honourable friend the Secretary of State for Levelling Up, Housing and Communities. That review was commissioned in response to and to consider the serious allegations of corruption and illegality made by a Labour Member of Parliament in the House of Commons. The findings of the review are clear on this point: those allegations are not true. The panel found no evidence of corruption or illegality. In addition, the panel also made a series of recommendations aiming to strengthen governance and increase transparency. We welcome this oversight, as does the mayor, who has confirmed that he intends in principle to accept all the recommendations relevant to him and his authority. There were two recommendations relevant to central government. We will carefully consider how to support the continued success of mayoral development corporations and the recommendation regarding the landfill tax.

The noble Baroness, Lady Pinnock, asked a series of specific questions about the report’s recommendations. It is right that the panel has considered a number of specific issues in the development of its conclusions and recommendations. The next steps are that the Secretary of State has written to the Tees Valley mayor, asking him to respond to the panel’s recommendations within six weeks, and it would not be right at this time for me to comment any further on specific examples quoted. It is important that the combined authority shows progress, and we will wait to see its proposals before deciding on further action. However, I am confident that the mayor will take these recommendations seriously and I look forward to receiving that update. It is only right that we give the mayor, working with partners, time to reflect on the panel’s report. We will review his reflections and response to the Secretary of State before setting out any further action that may be needed.

The noble Baroness, Lady Taylor, asked whether the NAO would now be asked to come in and do a further report in this area. The Secretary of State considered at the time of the review the suggestion that the NAO should undertake this review. However, it is not its role to audit or examine individual local authorities, and its powers would not normally be used for that purpose. Instead, the Secretary of State appointed a panel of three independent local government experts. It would therefore be duplicative and wasteful to commission a second review. The NAO said it would use our review to understand the implications for its other work programmes.

While the origination of the review is unique in that it was a request from the mayor, the form of the review is similar to others commissioned by the department, including in Croydon, Nottingham, Slough and Woking. We are taking a similar approach to other cases in relation to the next steps following the review by asking the mayor to respond to the Secretary of State about how he intends to respond to the review’s recommendations.

The noble Baroness also asked whether people were free to give evidence to the review, and in particular about the use of non-disclosure agreements. The panel chair has confirmed that she is not aware of any party who could not speak to the review or provide information due to a non-disclosure agreement. She is right that in the review it is stated that one former monitoring officer was invited to interview but declined because they felt their professional duties barred them from participating in the review, but that was not the subject of an NDA. Indeed, Tees Valley combined authority confirmed to the panel that it had informed the individual that it had no objection to them participating in the review.

It is also important in that context and in the context of the question from the noble Baroness, Lady Pinnock, about whether the panel had sufficient information to draw conclusions from the review and sufficient time to conduct it, to give the full quote:

“We have however secured sufficient consistent evidence to support our conclusions. We have found no evidence of corruption or illegality. We have identified a need to strengthen governance and increase transparency which can be done with limited impact on pace of delivery”.


The noble Baroness was right that the panel could not follow every lead; none the less, it stated that it had confidence in its findings based on the evidence that it had.

In terms of the timing of the review, I understand that it was totally independent of government; the panel was given sufficient time to conduct the review in the way that it wanted and gather the evidence it felt it needed to draw its conclusions. There was no constraint on the panel in that respect.

Finally, I turn to the questions of private involvement in the redevelopment of the Tees Valley, which is essential, as well as value for money and the public benefit that will come from the regeneration project. It is important to acknowledge that, after SSI’s collapse, the Government took on the responsibility for the site via the receivership process. They spent around £18 million annually just to keep the site secure and manage the worst hazards, including explosion and pollution risks for local populations. The site has required investment to clean up and an important principle of devolution is that decisions are taken locally to benefit local people.

While regeneration is still in its early stages and it is too early to make such an assessment on value for money, the report has identified that a number of benefits have already been achieved, including: 17% of the land already under contract, with a further 40% at heads of terms; 940 construction jobs, plus a further 1,950 recently announced; 2,295 direct and 3,890 indirect jobs created once the sites are operational; 450 acres of land remediated or in remediation; £1.3 billion of business rate income potential over the next 40 years, with a further £1.4 billion at heads of terms; and a new £450 million quay.

So both noble Baronesses are right to say that at the heart of this issue are the people of Teesside and the potential value of that site. The figures I quoted show some of the benefits that we are beginning to derive from this major project. We welcome the scrutiny of the panel, and I place on record our great thanks to the three-strong panel for their thorough work: Angie Ridgwell, the chief executive of Lancashire county council, Richard Paver, previously the first treasurer of the Greater Manchester combined authority, and Quentin Baker, the director of law and governance at Hertfordshire county council.

Tees Valley has a proud industrial history, and the Government are committed to giving it the proudest possible future, putting it front and centre of our mission to level up the country.

Long-term Plan for Housing

Baroness Pinnock Excerpts

Thursday 11th January 2024 Lords Chamber

[Baroness Taylor of Stevenage (Lab)]

My Lords, there surely cannot be any debate on the fact that we are in the midst of a catastrophic housing crisis, which figures from Shelter tell us leaves almost 300,000 of our fellow citizens homeless every night, including 123,000 children, and over a million families on social housing waiting lists. A planning policy framework doing its job would at least put the steps in place to start delivering the numbers of homes that would resolve this crisis, but this plan is neither long-term nor a plan to deliver housing.

Sadly, the Government’s caving-in to Back-Benchers in the other place, and developers on housing targets, means this planning policy framework will mean housing delivery falling far from the mark for the foreseeable future. Data published this week showed that consents are at an all-time low, 20% down on last year, and the National House Building Council shows a dramatic fall in registrations, down 42% in quarter two compared with last year.

Commitment to delivering real improvement in housing delivery has to be called into question when we have had no less than 16 Housing Ministers since 2010, and when the Secretary of State delivered his statement on this planning policy framework to a press conference, rather than in Parliament. The National Planning Policy Framework should provide the link to ensure that local councils are taking into account the strategic need for housing, industrial and commercial land, food and farming requirements and the whole range of environmental issues as they apply in each area. Local plans are vital to deliver what is needed across the country, but also to engage local communities in how that is done and to provide the protections needed against speculative, unwanted or dangerous development.

However, the level of uncertainty the Government have generated by flip-flopping over their commitment to housing, by failure to create proper industrial strategy and failure to take environmental issues seriously enough, has fatally undermined all of that and has now culminated in 58 local authorities either scrapping or delaying their local plans as they wrestle with the uncertainty over housing targets. Yet this Statement seems to unequivocally point the finger at local authorities.

I suggest that the Minister in the other place might want to look in the mirror here. The example closest to home for me was that after extensive local research, two years of intensive public consultation and partnership working, and an extended three-week public inquiry, our Stevenage local plan was submitted to the Government on time—and then sat on the holding direction on the Secretary of State’s desk for 451 days until it was finally approved.

It is not just on housing that this framework fails to deliver. Because we have no proper industrial strategy, it is almost impossible for local plans to meet the needs for industrial commercial permissions, and the honourable Member for Buckingham in the other place raised on 19 December that it does not meet the stronger protections for food production land use either, with a wishy-washy statement quoted by the Minister:

“The availability of agricultural land used for food production should be considered”.


What does that mean? Question after question when the Statement was debated in the other place, largely from Conservative Members, sought clarification of exactly what is meant by the fact that housing targets are an advisory starting point. The best the Minister could come up with was:

“I cannot pre-empt or suggest exactly what that will mean in all instances”.—[Official Report, Commons, 19/12/23; cols. 1275-6.]


One senior member of a respected planning stakeholder body told me that they stopped taking notes at the Secretary of State’s press conference on this topic because what he said just did not make any sense. Can the Minister please tell us how this process of advisory starting points for housing targets will deliver the 300,000 homes a year that are so urgently needed? We need to be clear here. There will be no levelling up unless we are at least aiming to provide a safe, secure, affordable and sustainable home for everyone. How does this set of policies deliver that?

On the key issue of resources, this is crippling local authorities’ ability to deliver against their planning obligations; indeed, the Royal Town Planning Institute reports 90% of local authorities as having a backlog of cases and 70% as having difficulties in recruiting. How will the Government support local authorities to resource their planning function as demand increases when their budgets are squeezed by the skyrocketing costs of children’s services, adult social care and, of course, homelessness? How do the Government reconcile their threats to remove planning powers from local authorities that do not meet the three-month deadline for delivery of their plan with the absolute obligation for authorities to consult local people? With a significant change on the issue of housing targets, surely it is understandable that further consultation must be undertaken. Has that been taken into account? If, as the Secretary of State has threatened, recalcitrant local authorities have their planning powers removed, who will undertake the planning work for their area? The Planning Inspectorate is already underresourced and its involvement in local plan-making would be a significant conflict of interest.

Time and again in debates during the passage of the levelling-up Act we were told that the Government would not accept amendments because provision would be included in the National Planning Policy Framework; for example, on ensuring that housebuilders focus on healthy homes and on making specific provision for housing for older people, flooding, access to open space, protections for historic buildings and a wide range of environmental issues. What assessment has the department carried out to ensure that all those issues—all those promises that were made to us—are incorporated into this new set of policies?

I return to my initial point: without a determined effort to deliver 300,000 homes a year, which we will need to resolve the housing crisis, we will continue to see the shameful situation where children are homeless, where they share beds with their parents because of lack of adequate space, where permitted development allows appalling housing conditions to prevail, and where poor housing affects the health and life chances of a whole generation. Perhaps it is time for a new ITV drama, “Mr Bates versus DLUHC”. In failing to tackle this through a clear housing strategy and the policies to support that, including targets, this policy amounts just to failure and another missed opportunity.

[Baroness Pinnock (LD)]

My Lords, I remind the House of my registered interests as a councillor in Kirklees—where we have an up-to-date local plan—and as a vice-president of the Local Government Association.

As the noble Baroness, Lady Taylor, just said, there are 1.2 million households on the social housing waiting lists and the Government’s own assessment is that 300,000 new homes need to be built every year. Having somewhere to live is a basic human right and a basic requirement that all Governments should fulfil. We have a housing crisis, and the response as set out in this Statement and the newly published National Planning Policy Framework fails to address that crisis. The policies are incoherent and fail on many levels. For example, the newly published NPPF refers to social housing only once and in a single sentence. There is a desperate need for social housing to rent. Can the Minister tell the House how long the 1.2 million households on the waiting list will have to wait for a safe, affordable home at a rent that is within their means?

I could tell the Minister of a family in my ward that contacted me this week. There is the wife, husband and a four year-old boy living with the grandmother, who has serious dementia, and a baby is on the way, in a two-bed Victorian terraced house with a front door that opens on to an A-road and the back door on to a ginnel, as we call it. It is an alley, I guess; we call them ginnels in Yorkshire. There is nowhere, literally no space, for that four year-old to play, or to put the baby. They rang me to ask what chance they had for a council house or a housing association home, and I had to tell them the awful truth: that virtually all the family homes have been sold under right to buy, very few replaced, and their chances are virtually nil within the next five years. How are the Government going to address that example and many, many more like it?

Debate on this vital national policy should have taken place when we debated the levelling-up Bill in this House. Many Members across the House, as the noble Baroness, Lady Taylor, said, asked for the information on the revised NPPF at that time, and it is now clear to me why the Government held back, because the National Planning Policy Framework as published fails to tackle this housing crisis by enabling local authorities to plan with confidence and with the goal of meeting their local housing need.

Housing need is defined not just by numbers of housing units required but also by type and tenure. The Government’s own figures show that 62% of the rise in households is of people over 65 living alone. Perhaps the Minister can say how the Government intend to ensure that this particular need is to be met, given the policies that they have now published. Is it possible, for instance, for local authorities to allocate a site for building with specific requirements to meet such locally determined need?

Next, the Government are relaxing housing targets by describing these as an “advisory starting point”. Can the Minister flesh out “advisory” in this context? How advisory is advisory? What advice will the Government be giving to the Planning Inspectorate on the definition of that word and what they expect it to mean?

Given that housing targets are to be determined more locally, can the Minister explain the rationale behind the requirement for 20 of the largest towns and cities to have 35% more homes than are determined by their local housing assessment? Why is it 35%, not 20% or 40%? Where does the figure come from, and what will it actually mean for those towns and cities?

One of the major holes in the Government’s planning and housing policies is that there are no penalties for developers who, having obtained planning consent, fail to start building or start a site and then delay building out. This is one of the major reasons for the crisis in housebuilding numbers: more than 1 million properties have planning consent but have not been built. Yet local authorities are to be penalised for failing to provide sites while, in those same local authorities, developers are failing to develop sites that have permission. What will the Government do about this dreadful state of affairs? What pressures will they put on developers to ensure that, once planning consent is given, the developer gets on and builds out the site?

Many residents oppose new homes because of the impact on local infrastructure, such as traffic, school places and access to health services. Many are justified in their complaints. For example, in my area of Kirklees, GP patient numbers are at 1,900 per doctor, as compared to the national average of 1,600. When residents raise the issue of more houses meaning greater numbers of patients for their local GP, where I live it is genuinely the case. There are already 20% more patients per GP where I live than the national average. What will the Government do to address the genuine complaints from residents about local infrastructure? That is just one example.

Providing the housing that we need is dependent on local authorities having up-to-date local plans, yet the majority of them do not have one. What action will the Government take to ensure that local authorities have up-to-date local plans? A local plan is the initial building block that unlocks sites for housing of a type and tenure that is so desperately needed. This Statement absolutely fails to address this. I look forward to the Minister’s replies to all the questions that have been raised; if she cannot answer them, I hope that she can give us written responses.

[The Parliamentary Under-Secretary of State, Department for Levelling Up, Housing & Communities (Baroness Penn) (Con)]

My Lords, I will endeavour to answer the questions from both noble Baronesses as fully as I can, but it is first worth reflecting on what this update to the NPPF sought to do. Both noble Baronesses rightly situated it in the context of the broader changes in the Levelling-up and Regeneration Act to bring forward a reformed planning system that allows more homes to be built in the right places, more quickly, more beautifully and more sustainably.

The right way to do this is through a reformed planning system. In December last year, we laid out our plan to do that. We made it abundantly clear that the only way to do so is through up-to-date local plans, which local authorities can deliver for communities to protect the land and assets that matter most and lay the foundation for economic growth. Part of that plan for reform was the update to the National Planning Policy Framework. In December 2022, we consulted on a series of proposals that received more than 26,000 responses, which we have worked through in detail. The updates that we made, which were announced at the end of last year, strike a careful balance between delivering homes that our communities need and protecting the things that we care most about, such as our natural environment, heritage assets, high streets and town centres—matters referenced by both noble Baronesses. The NPPF update acknowledges that different areas and different parts of the country must be approached in different ways and that local authorities and communities are best placed to ensure that the right homes are in the right places, where they are both needed and wanted.

Both noble Baronesses asked about the change to the NPPF which clarified that the standard method of assessing housing need is the starting point for local authorities. The NPPF expects local planning authorities to evidence and provide for their housing needs. The Government are clear that the standard method should still be used to inform the process. Local authorities can put forward their own approach to assessing housing needs, but this should be used only in exceptional circumstances. Authorities can expect their method to be scrutinised closely at examination. The standard method remains the starting point for this process and only in exceptional circumstances would we expect local planning authorities to move away from that. However, it is right that we allow for those exceptional circumstances. In the updated framework, the demographics of a particular area are pointed to as the factor which might mean that an alternative method would be appropriate for that planning authority to use.

Part of delivering homes in a way that meets community needs is about having a more diversified housing market. Therefore, the framework also strengthens support for SME builders and the wider diversity of the housing market by emphasising the importance of community-led housing development, ensuring that local authorities seek opportunities to support small sites to come forward and removing barriers to smaller and medium builders in the planning system. In the long run, that will also ensure that we make progress in delivering the housing that we need and keep us on track to deliver 1 million new homes during this Parliament.

The noble Baroness, Lady Pinnock, asked about social housing. Her points were well made. These updates to the NPPF did not have that as a particular focus but the Government are absolutely committed to increasing the supply of affordable and social housing. That is why our latest affordable housing programme is backed by more than £11 billion. We have increased the delivery of affordable housing under this Government. I would be very happy to sit down with the noble Baroness and discuss specific planning barriers to affordable housing further.

The noble Baroness, Lady Taylor, referred to the resources needed to unlock the planning system. She is absolutely right. That is why we have increased the resources going into local planning services. The new planning rules that came into force on 6 December increase fees for major applications by 35% and minor ones by 25%. The indexing arrangements now in place also ensure that they rise in line with inflation. Beyond that, the planning skills delivery fund was boosted by £5 million to £29 million. In the first round of funding, 180 local planning authorities are receiving collectively over £14 million. We recognise that the changes we have made to the planning system in the levelling-up Act and through the changes to the NPPF need to be matched by additional resources, which we have put in.

I turn to housing standards and a range of other issues that were debated at length during the passage of the levelling-up Bill. The Government have committed to bring forward further changes to the National Planning Policy Framework, bringing in a national development management framework. We are committed to consulting on those changes this year but, for the development of local plans, we believe that the combination of the measures in the Act and those announced and changed in the NPPF at the end of last year provide clarity and certainty for local areas to be able to make their plans and deliver on them.

Where that is not proving possible for local authorities, the Secretary of State has been clear that the Government are prepared to intervene. That is why the Secretary of State issued a direction about plan-making to seven of the worst authorities. The best outcome from those directions is that the local authorities themselves bring forward plans within 12 weeks and set out a clear timetable to do so. Should they fail, we will consider further intervention, but it would be based on the particular circumstances of those local authorities and reflect their points. I do not want to pre-empt that, as the best outcome for those areas is for the local authorities to take forward those plans themselves.

We are also taking action in London, because the homes needed in the capital are simply not being built. Opportunities for urban brownfield regeneration are being left untaken, as a result of the mayor’s anti-housing policy and approach. His plan does not contain sufficient ambition for housing, and he is underdelivering against it. That is why we are undertaking an urgent review of it.

There are a number of areas from both noble Baronesses that I may not have addressed. The noble Baroness, Lady Pinnock, mentioned infrastructure and of course we have the housing infrastructure fund, which provides the funding needed to ensure that development can take place, is supported locally and comes with the schools, hospitals and GP places needed to support it. I undertake to write to both noble Baronesses in detail on any further points on which I need to follow up.

Building Repairs: VAT

Baroness Pinnock Excerpts

Thursday 14th December 2023 Lords Chamber

[Lord Swire (Con)]

My Lords—

[Baroness Pinnock (LD)]

My Lords—

[The Earl of Courtown (Con)]

My Lords, there is plenty of time. It is the turn of the Liberal Democrat Benches.

[Baroness Pinnock (LD)]

My Lords, I have relevant interests recorded in the register. I want to turn our attention to people’s homes. Some 20 years ago, Kirklees Council offered free loft and cavity wall insulation to every home, regardless of tenure. It was largely funded by energy companies, and 100,000 homes benefited from that scheme. Will the Government learn from that pioneering scheme and consider its introduction across the country in order to achieve the COP 28 agreement?

[Baroness Penn (Con)]

My Lords, we learn from all successful schemes in this area, and you will see similar provisions in our current schemes, including the contribution of energy companies to the cost of improving insulation for households. We have a number of different schemes. They tend to focus, at the initial stage, on those on lower incomes who will most benefit from the reduced bills that improved energy efficiency will bring, but as we move towards achieving our net-zero targets, we will need to have the whole country covered. The expansion of our schemes takes it further—for example, the extended discount on heat pumps that we announced earlier this year.