Fire Safety Bill

Earl of Lytton Excerpts

Consideration of Commons amendments
Tuesday 27th April 2021 Lords Chamber

[The Lord Bishop of St Albans]

Well, my Lords, here we are again. I do not want to detain your Lordships’ House for too long, because everything has been said several times already, but I want to make a few comments, if I may.

I, too, want the Bill to pass. I pay tribute to Her Majesty’s Government and the money they have already found and put on the table, which is very significant. But since we last gathered here, the sheer scale of the crisis, which is in its very early stages, is slowly beginning to unfold before us and become ever clearer. I believe that is why the majority in the other place declines each time an amendment goes back, because those long-serving, seasoned campaigners in the other place realise what is going on. The stories are coming out absolutely relentlessly, and new research is being published.

At a few minutes to four this afternoon, I received an email from someone who works in Parliament. I will call her Claire; that is not her real name, but she will know who she is, because she emailed me at 3.56 pm and asked if I will speak up. She said, “Will you speak up for the leaseholders again and table an amendment? I bought a flat under the shared ownership scheme. I own a 25% share, yet I am liable for 100% of the costs. I am already paying an additional amount each month, and I know this amount will soon increase as further remediation work takes place. I simply cannot afford to pay for the remediation works, nor should I have to. The stress of this situation is becoming intolerable. My mental and physical health are approaching a state of collapse”. “Will you speak up?”, she said. I have not met her yet—I hope she will say hello to me one day, perhaps when she guesses who I am or sees me around the place. This is someone who we bump into, who works in this place and who serves us.

It is not just the many individuals. Since we last came to this provision, research by the Prudential Regulation Authority, which is assessing the building scandal, has said that it poses a systemic risk to the UK financial sector. Some of the work done since then is finding a huge number of flats and homes which are simply unsellable. For example, it has been reported that

“a one-bedroom flat at Leftbank, in Manchester, failed to sell despite being listed for half the £330,000 its owner had paid in 2017”.

What Members in the other place are realising is that, slowly, this will roll out, and it will mean that many people on whom this Bill relies to be able somehow to stump up the money to repair the buildings will not have that money. The buildings will not be repaired, because some of these people will have to walk away, probably very unwillingly.

We have not only those individual stories but some really worrying assessments coming out of the housing and financial market in our country. Some 3 million people, as we heard from the noble Baroness, Lady Pinnock, are affected. As we are paying tribute to fire and rescue officers, I have three emails from fire and rescue officers who were personally affected by this cladding. These are the people involved, along with nurses, police, teachers, care workers and many others—the House knows the sort of people we are talking about.

I believe that the intent of these amendments is the same: to accept that we have a very difficult problem and really want to see some sort of brokered agreement, whereby developers, cladding manufacturers, freeholders and leaseholders make their fair contribution. We realise that everybody will have to do that, but feel that there need to be protections for leaseholders and tenants over these coming months, before the government scheme comes in. I am minded to support this Motion if the noble Lord, Lord Kennedy, brings it to a Division, but I continue to hope and plead that Her Majesty’s Government will be able either to come up with a compromise or make some sort of formal undertaking on what the building safety Bill will offer, so that we can all get behind it and get this really important Bill through.

[The Earl of Lytton (CB) [V]]

My Lords, I declare my professional involvement with construction and property matters and that I am a vice-president of the LGA. We should be in no doubt that the Government have triggered an issue that is destined to cause significant damage, loss and distress to many leaseholders and tenants. My comments will be aimed at Motions A1 and A2 in the names, respectively, of the noble Lord, Lord Kennedy, and the noble Baroness, Lady Pinnock. I commend them on their persistence and diligence.

I also commend the Government on committing their £5.1 billion to this matter, but the reality is that money alone is not the answer. It requires a plan that is co-ordinated, structured and comprehensive; to be honest, it was needed the day before yesterday and certainly not at some unspecified time in the future. The Government cannot, in all conscience, have been unaware that a situation would likely arise where a significant sector of property might be affected by the expansion of the fire safety regime, nor deaf to the observations of just about every informed observer, from, I believe, the Bank of England downwards, warning of the need for action.

Fire Safety Bill

Earl of Lytton Excerpts

Tuesday 20th April 2021 Lords Chamber

[The Deputy Speaker (Lord Russell of Liverpool) (CB)]

My Lords, if Motions A1 and A3 were both agreed to, A3 would replace A1.

[The Earl of Lytton (CB) [V]]

My Lords, it is a privilege to follow the right reverend Prelate the Bishop of St Albans and to speak to Motion A2 in my name. I refer to my vice-presidency of the LGA and my professional involvement with property and construction over many years. I thank the Minister for keeping his door open for discussion; that has been enormously helpful. This amendment is an attempt to find a way out of what I see as an impasse, which, if not dealt with, may cause unquantifiable financial loss, bankruptcy and hardship—as referred to by the right reverend Prelate.

I am indebted to my local fire and rescue service in West Sussex and to the National Fire Chiefs Council, for briefing me on the task ahead of them. I am sure we all agree that they do a fantastic job in keeping us all safe and dealing with risks in a fair and proportionate manner. I am also indebted to Members in another place who have convinced me that the issues I seek to address cannot simply be brushed aside. This is not a challenge to the essential principles of the Bill, which I entirely agree are critical in the light of the Grenfell Tower tragedy.

The problem arises because although the Bill is short and apparently inoffensive, and from a fire safety standpoint is the necessary reaction of any Government to a post-Grenfell inquiry, its means of implementation have much broader and effectively retroactive results. In amending the existing fire safety order’s scope, it extends to any building comprising two or more residential units. It relates not just to cladding but, ultimately, to a much wider range of fire safety issues and to buildings not previously subject to that safety regime.

Noble Lords should bear in mind that there are two lead organisations here: the local authority through its housing functions in respect of houses in multiple occupation and student blocks, and the fire and rescue services, particularly for higher-risk and taller buildings.

Every time there is a fire in a flatted building, it adds to the malaise. When, in the wake of the Grenfell fire, a four-storey block in Worcester Park was destroyed in September 2019, it became clear to me that no Government can risk specifying a cut-off point of safe versus unsafe buildings, and I acknowledge that. So as matters stand, many relatively low-rise buildings, where risks are considered fewer and without a clear threshold, will, for a time, be caught by this long enough to cause serious problems for a significant number of tenants and leaseholders. It is this unconstrained exposure to uncertainty and risk, and the reaction of the markets to it, that has created the problems that we now encounter.

Crucially, there is a significant gap between now and the time when the first 12,000 over-18-metre buildings in England will have been checked, a process which is estimated to be completed by December this year. Then there will be a further period, lasting until some 68,000 further buildings in the 11 to 18 metre height range have been dealt with. During this period, the issue of proportionality and risk will be left to the febrile mortgage and insurance market. I have no doubt that fire safety inspectors will take a fairly strict approach, and indeed would expect them to, at any rate until further guidance is available—which guidance itself might be an outcome of the analysis of the first tranche of inspections of the highest-risk buildings. That delay occurs before one gets to the design and specification of the remediation works by those who might have to satisfy their own professional indemnity conditions, followed then by tendering and ultimately remediation.

The right reverend Prelate and the noble Baroness, Lady Pinnock, in her amendment, endeavour to protect the tenant and leaseholder from the effects of the Bill by saying that they shall not bear the financial burden. I am compelled to express the view that this needs to be taken further: if, as a result, the building owner as freeholder is made liable for something that they in turn cannot afford or cannot be made responsible for, beyond the assets of whatever corporate ownership vehicle holds the freehold or other superior interest, then the liquidation of the holding company and the vesting of the negative-value asset in the hands of insolvency practitioners will do little to get the building remediated. To that extent, the responsible person under the Bill might be a man of straw, and that I see as a weakness in what the Government propose.

To deal with this, one needs a scheme, and the Government have commendably said that they will introduce one to fund remediation, but this suffers from several limitations. First, it applies only to cladding. Secondly, it does not cover all buildings with claddings—even less the other fire safety issues that the Bill might also trigger. Thirdly, I very much doubt that the sum allocated is enough. That said, I am extremely grateful for the government commitment to making £5 billion in funding available, as the Minister has explained.

Apart from properties becoming unsalable, uninsurable and unsuitable for mortgage lending, in some cases they might well be so risky as to be declared unsafe for occupation, pending remediation works. Displaced occupiers will be wondering what it is in the principle of safety and proportionality in relation to their own home, given the nightmare imposition of unimaginable costs and liabilities, that justifies rendering them homeless in addition. Of course, it might well not come to that, and it is my purpose to encourage the Government to ensure that there is a scheme to make certain that it does not. The full extent of the problems may still be yet to come, but I strongly suspect that many of the responsible persons are holding on until this Bill receives Royal Assent before proceeding further.

No Government can simply look on and say that it is not an issue of a very serious kind when people have been seriously threatened in their own homes by negative equity, bankruptcy and worse. With an entire market section being blighted, action is essential. By the same token, no agency apart from government has the power to procure a change, which ultimately must be by some form of consensus, but which requires regulatory and other powers—or the threat of them—and a degree of arm-twisting involving some very powerful players. There are too many interests and moving parts here, and neither constructors, owners, leaseholders, tenants, insurers or mortgagees can procure effective solutions on their own. It is a systemic failure, in which it is right for the Government to intervene. Indeed, taking these hard decisions is why we have government intervention at all.

By the same token, if there is to be a government safety net of a type that is effective, no leaseholder can simply expect the taxpayer to foot the Bill for all and every fire-safety shortcoming. This is where, particularly in relation to the amendment in the name of the noble Baroness, Lady Pinnock, I differ from that approach. I do not suggest that any of this gets construction warrantee providers, approved inspectors, designers, constructors, housebuilders or building managers off the hook. It will take time to establish liabilities; it is time that those finding themselves in financial fetters do not have at their disposal. That is the problem. Absolutism by government on the one hand and by leaseholders alike will not get the necessary work done or erase the terrible personal tragedies that I fear will result.

The deal is this: for a monthly sum which should be affordable, even if most unwelcome, the capital cost of remediation could be amortised via a loan, funds for early inspection and remediation raised, and works put in hand as soon as possible. This might also fund short-term interim safety measures. The long-term bond so created would, I believe, be saleable. The important thing for affected flat owners is that they could not be charged until a scheme was in place, but the scheme has to be driven initially by government, and that is what this amendment is about.

The current government scheme seems to be based on rolling things out in due course. I appreciate the Minister’s point that he does not wish the Government to be unduly pressurised or under the cosh on this, but the need to get this safety net into place right now is overwhelming. By the end of this coming summer, impossibly large bills are most certainly likely to have dropped onto doormats, prohibition notices and evacuation orders may be in place, and bankruptcies may have grown to a national scandal. I hope that we avoid this, but I for one cannot simply stand by and let that happen unchallenged or by default. I realise that it goes against what some have been asking for, but what is better: to know that you are innocent but that your home remains unsalable and you risk being put in an impossible financial position or rendered homeless, or to know that there is at least some means of funding the remediation so that, in any event, at least some benefit is salvaged out of this debacle?

I know that it also goes against the grain of government to interfere with private legal arrangements and liabilities, but the circumstances are truly exceptional, and the scope of the works is relatively specific. The alternative is a high level of sector-wide economic damage and individual financial destruction.

I know that the Minister is not minded to accept any of the arguments that I have put forward, or my solutions. I make it clear that I do not intend to press this Motion. It is my wish to get further explanations from the Minister. My questions are these. If not this amendment and scheme, then what? If not in this Bill, which triggers it, or even in the building safety Bill, then how? If not now, with the ill-effects so apparent and very likely worse to come, when? Further, if not by government, by whom and by which agency?

If, as I suggest, the objection to broadening things comes from HM Treasury, I ask whether the Government have considered the political and economic enormity of the outcomes if this problem is not addressed now. To that end, could the House be advised what impact assessment has been made of the wholesale value of write-offs and the risk of sectoral market collapse? Lastly, if the Minister feels my concerns are misplaced and things are not as bad as I have suggested they might be, surely then the risk of exposure for the taxpayer is of itself a stopgap, a confidence-building measure, rather than a serious run on the Exchequer.

Non-Domestic Rating (Public Lavatories) Bill

Earl of Lytton Excerpts

Report stage & Lords Hansard
Wednesday 17th March 2021 Lords Chamber

[The Earl of Lytton (CB) [V]]

My Lords, I warmly commend the four noble Baronesses who have put their names to Amendments 3 and 6. In speaking to this group, I declare my professional involvement with non-domestic rating as a vice-president of the Local Government Association and as head of the National Association of Local Councils, and through my involvement with rural tourism and public access generally. So I hope noble Lords will forgive me for having a slightly dry, technical assessment of this approach.

It is right that, in the light of mass closures of public lavatories up and down the country, we should have a better idea of the provision and what is happening in terms of trends. I do not have the figures to hand, but my expectation as a chartered surveyor would be that in the context of the overall cost of the facility of heating, lighting, water supply, cleaning, building repairs, insurance and maintenance, the business rate element of a public lavatory would not be a tremendously significant factor. However, I stand to be corrected. Maybe a superior facility would indeed attract a willing payment per use at economically viable levels. Certainly, some municipalities are starting to buck the trend, and I am very pleased to note that Wales is leading the way—a point made so eloquently by the noble Baroness, Lady Randerson.

The measure demanded here would obviously involve devoting some government resources to the review referred to. The distribution of Changing Places facilities is known, if I apprehend correctly from the British Toilet Association’s information. However, those run by other organisations—parishes, municipalities, venue and beauty spot managers, stately homes, royal parks, shopping centres and so on—is information not necessarily collected in one place. Though the dispersed knowledge must be held somewhere, it is not comprehensibly in the rating lists, for instance, which only record those separately in assessment. However, I do think that there is a collective will to close this information gap if the Government were so minded to tap into it.

As we have heard, public lavatories are clearly part of essential infrastructure. The old, the young, those with medical conditions, and the fit and healthy, all need access to decent lavatory accommodation. Manifestly, there are gaps in provision, because I am certain that we are all, like the noble Baroness, Lady Thomas, aware of unsuitable areas being used for informal toilet purposes. This is a personal hygiene and general public health issue, potentially damaging to the general environment, and must be addressed.

Regarding Amendment 4, I applaud and support the noble Lord, Lord Greaves, in advocating the role of parish and town councils. Many parish councils would willingly take on public lavatories, but as we have heard, are no more able to raise the money to run them than the principle authorities who may run them now. Even in transferring responsibility to parish councils, as happens, it is commonplace for the financial provisions not to form part of the transfer. This adds to the problem, and the essential funds for this essential infrastructure are therefore not ring-fenced. This is part of the process of attrition.

Beyond that, it is a matter of economic consequence for optimising the use of destinations to which the public may resort, and the public enjoyment of urban and rural space for shopping, recreation and so on. I find it tragic to hear, as we just have, of people who dare not venture far from home because of distance from suitable facilities or certainty of any provision whatsoever. I am mindful of the gross indignity that such an absence of facilities can create. These issues are very important. I am less certain that they are necessarily a matter for the Bill, given its long title, but having been accepted as amendments, I assume that they are in scope. Accordingly, I accept the general thrust of these, and look forward with interest to the Minister’s comments.

[The Deputy Speaker (Lord Russell of Liverpool) (CB)]

The noble Baroness, Lady Jones of Moulsecoomb, has withdrawn from this group, so I call Baroness Pinnock.

Fire Safety Bill

Earl of Lytton Excerpts

Consideration of Commons amendments & Lords Hansard
Wednesday 17th March 2021 Lords Chamber

[Baroness Pinnock (LD) [V]]

My Lords, I draw the attention of the House to my relevant interests as a vice-president of the Local Government Association and a member of Kirklees Council.

Much has happened since the Bill was last debated in this House in November. It is already clear from the contributions to this debate today that this is an unresolved crisis of major proportions. I thank the Minister for the opportunities that he has provided to discuss the issues raised. The Government’s response has been to regard this as largely an issue for lease- holders and freeholders to resolve. Gradually, however, they have acceded to the principle that, without government intervention and funding, the problem will not be resolved.

The purpose of all the amendments in my name and that of the right reverend Prelate the Bishop of St Albans is to extend the principle already agreed by the Government. Amendment 4F in my name would extend the contribution that the Government make to cover not just the remediation but the extortionate service charges and higher insurance costs that are currently being levied on these leaseholders. This serious problem can be successfully fixed only with up-front funding from the Government, which can then be recouped from developers, construction firms and manufacturers.

The Government’s own estimate is that the total cost of remediation will be in the region of £16 billion. The buildings involved are not just in London but all across the country. Following the Grenfell tragedy, we now know that ACM cladding was affixed to blocks when it was known to be inflammable. As the cladding is peeled away, further serious building defects are revealed. The Government recognise this, as they have issued a directive to local authorities requiring an inspection of various features, including fire breaks, insulation and spandrel panels, as well as cladding. This is now much more than a cladding scandal; it has become a construction crisis.

Worse still is that some of the defects that are being exposed were in breach of building regulations even at the time of construction. The big question then is: who is going to pay? Currently, the Government are providing grants for the removal of cladding only and are restricting those grants to buildings of 18 metres or more in height. Yet cladding has to be removed from all blocks, irrespective of height. The Government have chosen 18 metres partly because they simply have no idea how many blocks there are that are lower than 18 metres. I have asked the ministry for the analysis of those risks to which the Minister will refer but have received no reply to date. Good decision-making is dependent on well-researched data, which is then shared for all decision-makers.

At the heart of this crisis are people who have done everything right and nothing wrong. They are innocent victims and have suffered enough. Imagine living in a flat with your family, knowing for three years or more that the home you saved hard to buy is a significant fire risk. That fact alone has left emotional scars on those leaseholders. Then imagine, having carefully budgeted, being faced with an additional service charge of several hundreds of pounds each month to cover the extras: waking watch, insurance and more. For some, the final straw is that you are then billed for the costs of total remediation. For individuals faced with these enormous bills, the choices are very limited.

Bankruptcy has already been the solution for too many. George is one such. He describes himself as a frightened leaseholder and says, “I have been informed that it will cost £2 million to replace the cladding and remedy the defects. That is £50,000 per flat. I’ll be bankrupt by the end of the year at the age of 28. The building has one grant, covering 10% of the costs.” Everything that he and others have worked and saved for is lost through no fault of theirs. It can lead to homelessness. Sarah lives in a flat in the Royal Quay in Liverpool. The normal year service charges for that block were £270,000; this year, the service charges are nearly £1 million. Sarah says that the defects are so numerous that the fire service may have to escalate from a compliance to a prohibition notice, which will shut down the complex. If that occurs, 400 residents will be made homeless.

Not surprisingly, given those examples, for some the stress is such that very serious mental illness, or worse, has followed. Hundreds of thousands of individuals and families are watching and waiting for the decision of this House today. They are willing us on to help to find a fair and just solution to a problem that is not in any way of their making, yet they are the ones who are being asked to pay the price. If the right reverend Prelate the Bishop of St Albans wishes to divide the House, as he has indicated, the Liberal Democrat Benches will support him. If, however, he chooses not to do so, then I will wish to test the opinion of the House.

[The Earl of Lytton (CB) [V]]

My Lords, I declare my interests as a vice-president of the LGA and as a practising chartered surveyor. I have very considerable sympathy with all these amendments but, the matter having now been decided by this House, gone to the other place and now come back, it behoves us to consider all these matters with a degree of objectivity, despite the clear emotions that are involved.

With regard to Motion moved by the noble Lord, Lord Kennedy, I agree that it has taken far too long to deal with this matter, which has allowed the issue to grow in a way that should have been nipped in the bud at an earlier stage, but I realise the complexities of the issues, which I will address in a moment. On all these amendments, I must say at this juncture that I do not know which way I would vote; it will become apparent why as I proceed.

It goes without saying that I have the greatest possible respect for the right reverend Prelate the Bishop of St Albans and the powerful case that he makes for Motion C1 and, for that matter, the case made by the noble Baroness, Lady Pinnock, on the allied Motion C2. Indeed, every fibre of my being tells me that a great injustice has been visited on many innocent people as leaseholders and tenants in buildings affected by this Bill who have faced the burdens of past failings, delays and inaction, which they themselves may be powerless to deal with. It must be as if the whole system of property law and ownership has conspired against them. As a property professional, I feel that most acutely. It has been made worse, as I say, by the length of time that these problems have been gestating.

However, whatever my heart tells me on the grounds of ethics and justice, my professional experience tells me that these amendments would, almost inevitably, not achieve their aims or address the present or future fundamental issues. This Bill potentially affects a very wide category of property and tenure, not just high-rise blocks. The provisions of Clause 1 extend the regulations to any property comprising two or more separate units of accommodation. I ask noble Lords to contemplate just what that means in practice.

Non-Domestic Rating (Lists) (No. 2) Bill

Earl of Lytton Excerpts

2nd reading & 2nd reading (Hansard) & 2nd reading (Hansard): House of Lords
Monday 18th January 2021 Lords Chamber

[The Earl of Lytton (CB) [V]]

My Lords, I welcome the opportunity to debate these two Bills, which I support. I thank the Minister for an online meeting last week. I refer to my professional involvement with non-domestic ratings, my membership of the RICS and other bodies, and my interests as a vice-president of the LGA and the NALC, and as a business property owner.

My own experiences started in the Inland Revenue valuation office in 1975. At that time, residential and commercial properties shared a common valuation approach based on an assumed rent between a hypothetical landlord and a hypothetical tenant. I observed both the Layfield report and the Lyons report, which looked at local government finance and central government grant. My maiden speech here was on the Local Government Finance Act 1988, enacting the ill-fated community charge and setting domestic and non-domestic systems on different trajectories. I was in private practice when the poll tax was replaced with council tax, or CT, based on bands of capital value as at 1991. Business rates remained rent based. Subsequently, there was a capping on limited CT increases, but original value bandings for England remained. Business rates, by contrast, were subject to inflation-plus annual increments to uniform business rates, with periodic revaluations. This divergence has changed the tax burdens.

Things sharpened up when the Labour Government curtailed empty property relief, but nothing matched the later financial shock of the 2010 revaluation, based as it was on 2008 peak-of-market rents, by which time of course values had fallen, with insolvencies and rent voids soaring. I saw demands for a fairer approach, reliefs and more frequent revaluations grow, and the effects of the Treasury principle of fiscal neutrality meaning that changes could not of themselves adversely affect tax yield. Welcome exemptions and reliefs for the very smallest premises were thus funded by larger ratepayers. I benefit from that.

Transitional relief for large changes in the rates burden balanced gainers and losers, but the way in which downward transition now operates means that, in the example of a shop in Canterbury, the 2021-22 rates bill will still be 80% more than it would have been without the relief. That seems intrinsically unjust. More frequent revaluations would reduce or eliminate the need for transitional relief but lack delivery. Ideally, we should have annual revaluations but, like the noble Lord, Lord Shipley, I suspect that that may be impractical, although it is proposed for Scotland. Meanwhile, too many rates bills are still coloured by the never-repeated 2008 rental values.

A surge in rating appeals of course followed the 2010 revaluation—many thousands on that list are still outstanding—in response to which the Government introduced a check, challenge, appeal, or CCA, system. It was designed to weed out frivolous cases and reduce administrative burdens, but it also put significant barriers in the way of genuine cases, perceived by appellants as protecting the Valuation Office Agency, the VOA, from the inevitable results of poorly resourced, researched and compiled valuation lists. Avoidance, needless to say, has become more prevalent.

Criticism continues. Largely because of the inflation-proofed and fiscally protected yield, the uniform business rate has risen to over 50p. Some businesses pay more in business rate than rent; reliefs apart, all pay much more on any measure than their services-hungry residential counterparts or businesses under any comparable European tax. The Minister may well wish to reflect on this legacy. The pandemic measures have been very welcome, but even they do not alter the underlying landscape.

I turn to what I call the “lists Bill”. It puts back the next revaluation to 2023 and cuts to three months the deposit of the rating list before it comes into force. The Minister has said how the antecedent valuation date works, but a 2023 revaluation means a 2021 AVD. Although I am assured that the Valuation Office Agency is confident of the evidence base—despite lockdown, furlough, forced closures, pop-up rent deals and rate holidays—other experts think that market rental evidence this April will be thin and unreliable. For bars, clubs and property valued on fair maintainable trade, current evidence will be largely absent. Delaying the AVD to, say, September or December is possible, but apparently not in contemplation due to VOA operational timeframes. I am not entirely convinced on that but am keeping an open mind.

The reduced three-month list deposit period was originally linked to three-yearly valuations—on which the Bill is silent, so it is a little asymmetric. Checking an assessment and pointing up errors in January is one thing; getting the VOA at a busy time of year to make corrections in time for dispatching rate bills in March is another. Bear in mind that rate demands are payable in full until the rateable value is amended. I note that the LGA says it is altogether too short a lead-in period for its members. So this “lists Bill” has consequences.

On public lavatories, I welcome the overdue and long-promised exemption. I thank the Minister for writing to me last October and for confirming backdating. What the Bill sets out is reasonable and appropriate, but it highlights the need to examine public facility exemptions more generally.

Rental values still afford an excellent market-derived business tax base, but problems with the business rates system remain and, as the noble Lord, Lord Shipley, said, major reform is certainly needed. On this, professionals, local government, businesses, the CBI, Revo and trade organisations are united. I commend the Government for commissioning their fundamental review and thank the Minister for his reassurance, but can he confirm that Parliament will have a chance to debate it?

I hope the review will be bold and will look at the overall business rates system and its fairness within local government finance, alongside the appropriateness of exemptions and reliefs and issues of avoidance. I hope that alternative revenue streams, such as those related to online trading and opportunities for locally managed and levied revenues, will be included. It is not before time; critically threatened physical retailing, as well as many investments, pension schemes and jobs may depend on getting this right.

Fire Safety Bill

Earl of Lytton Excerpts

3rd reading & 3rd reading (Hansard) & 3rd reading (Hansard): House of Lords
Tuesday 24th November 2020 Lords Chamber

[Baroness Pinnock (LD) [V]]

My Lords, this short, two-clause Bill has provoked considerable interest across the House, which is surprising, as it is a Bill that seeks to remedy some of the system failures that led to the appalling tragedy at Grenfell Tower. I join in the thanks to the Minister for arranging meetings with those of us who wished, through amendments, to improve the Bill. I thank him very much for listening to the concerns we raised.

The Bill, as amended, provides greater protection for residents by implementing some of the recommendations of the Grenfell inquiry phase 1 report and requiring fire risk assessments to be made publicly available for potential residents. The Grenfell Tower Inquiry is, little by little, exposing the building practices that resulted in flammable cladding being attached to Grenfell Tower—and many other buildings across the country—with such tragic consequences.

Currently, there is a crisis involving people across the country who are in constant fear and anxiety because they are living in flats that are encased in flammable cladding. Currently, it is the leaseholders and tenants who are expected to pay towards the costs of making their homes safe. However, we have passed an amendment to stop that outrageous practice. They have been sold homes that were deemed to be safe but are not, because of building failures. The cost of putting those failures right must not be theirs. The amendment we passed on Report puts that principle into the Bill.

Since Report, I have had many emails and messages from desperate and distraught residents of these flats. Some are being asked to pay way over £40,000 towards the costs of putting these cladding and other building failures right. It is not fair and it is not just. I hope the Government will be able to accept the principle set out in the amendment. I very much look forward to the Minister’s reply.

[The Earl of Lytton (CB) [V]]

My Lords, it is a great privilege to be invited to make some concluding remarks on the Bill on behalf of the Cross Benches, especially as I was not able to participate in the initial stages. We have covered a huge range of issues, such as those raised by the noble Lord, Lord Bourne of Aberystwyth, on electrical safety, and those raised by the noble Lord, Lord Stunell, and others, focusing on safety assessments and the perils of the deregulatory approach under permitted development rights. We have ranged from fire doors to liability issues and, of course, as highlighted by the noble Baroness, Lady Pinnock, the effect on the innocent who are blighted by the costs of remediating cladding systems.

As a technician, first and foremost, I am particularly grateful for how some of my own points were received. With Dame Judith Hackitt’s report ringing in our ears, even as we debated the Bill the ongoing inquiry under Sir Martin Moore-Bick reminded us of the construction culture that we need to address, along with the reputational challenges that have been the hallmark of what has come out post Grenfell. We must never forget the effect on those who were directly affected by that terrible tragedy. I pay tribute to the Labour Front Bench for constantly reminding us of the need for the Bill. I thank the Bill team and the Minister for keeping us on the critical path—expediting things at this stage is clearly an expression of our common wish.

Of course, some matters will now need to be reconsidered by the Commons, so it may not be the last we hear of this: the Bill needed improvements and I hope that, as mentioned by the noble Baroness, Lady Pinnock, the Commons will take due regard of the careful and considered points that have been raised in this House. Given the legacy of issues that have got us here, it is a tough call, demanding courage and a firm steer from the Government, and I hope the Bill will underpin that process.

[Lord Greenhalgh (Con)]

My Lords, I genuinely thank all Members of this House for their positive engagement. The Cross Benches, the Liberal Democrats, the Opposition —at the end of the day everybody wants to see a better Bill, and I certainly understand that. I thank the noble Earl, Lord Lytton. I learned a lot from his contribution on behalf of the Cross Benches. It was incredibly thoughtful and practical, understanding that this requires a firm hand from the Government and that we need to have a coherent programme as we move forward.

I am well aware that the building safety Bill, which already has around 120 clauses, will be considerably longer, in its passage through Parliament, than this three-clause Bill. But I want to make the point that we have seen constructive and more opportunistic contributions, and I want to put them into three buckets. The very constructive contributions, as this returns to the other place, are around the competence and capacity of the professionals who will have to work with the system day to day. We not only want to have nice documents and a good fire risk assessment, we need to ensure that fire safety management works and that the people in the buildings know how to prevent these things from happening in the first place. The identification of a responsible person is also important. Accountability underpins all this, so that was very helpful, as was the discussion about the recording of fire risk assessments and their availability to occupants. Some of those points were incredibly constructive—there were more, but I put them in the “constructive and relevant” bucket.

Then we have the “constructive, but this is not the right legislative hook” bucket. Electrical safety is incredibly important, since its lack is the cause of many fires in dwellings. We recognise that we need to find the right vehicle, but this is not it and I think noble Lords accept that.

Then we had the more opportunistic comments. There is a real commitment to implement the phase 1 inquiry findings from this Government, from the Opposition Benches and from the Liberal Democrats, but we had to consult, and the fire safety consultation had more than 200 responses. We need to use that as the vehicle, through regulation, to ensure that the crisis that happened three and a half years ago never happens again. Although you can never say “never”, that is the purpose of these packages of reform and we stand by that commitment. We just want to find the most practical and proportionate ways of achieving that end point, by talking to the people who have to manage that system day to day.

Also more opportunistic were the comments around decades-long poor construction and poor quality. We are talking about decades of problems and, unfortunately, they are going to take a long time to resolve. The question of who pays for this remediation requires careful balance. We want building owners to be responsible for this. We want developers to build high-quality buildings, so that we do not have to remediate in the future to the extent that we do today, and that we face today with our future buildings. We want developers to pay, and they have paid. We have seen this with the ACM fund. However, the extent of how bad this is, beyond cladding, has not really been calculated. It has just been guesstimated, but it runs into many billions of pounds. Therefore, in wanting to have personal accountability but also appropriate action by the state, we have options.

Fire Safety Bill

Earl of Lytton Excerpts

Report stage & Report stage (Hansard) & Report stage (Hansard): House of Lords
Tuesday 17th November 2020 Lords Chamber

[Lord Whitty (Lab) [V]]

My Lords, I fully support all the amendments put down by the noble Lord, Lord Bourne. Many of the points have been made by my cosignatories already.

On the last point made by the noble Lord, Lord Tope, clearly this does nothing to undermine the essential responsibility of the manufacturer—and to some extent the retailer—in the safety of appliances. Indeed, some of the liability rests with the user or householder if they use them irresponsibly or unsafely or do not return them when a recall has been issued. However, it is also the case that the owner or manager of the building is responsible for all the tenants, leaseholders and owner-occupiers who occupy that building. If there is a fire, differential tenure is hardly relevant; the rules should be the same for all forms of tenure. An electrical fault could arise anywhere and could affect any neighbour in the block, as we have tragically seen all too often. It is important that a high-rise block is covered, with responsibilities to the owner or manager, regular clear inspections and a list of equipment. Electrical systems are presently dealt with differently from gas; there is a requirement for gas inspections for everybody. We need to require the owner to take account of the potential damage to others within his or her building.

Obviously, we hope the Government will take this up as rapidly as possible. There are issues around who bears the cost and whether this is the appropriate Bill for these clauses. The latter seems odd to argue; this is the Fire Safety Bill. We are arguing that it should include provisions about the single most frequent cause of fire and measures that have already been identified in the Grenfell inquiry. These are most relevant here. I understand the Minister might prefer to see them in the forthcoming building safety Bill, but they are not there; the fact that the provisions in these amendments are not in the pre-legislative version of the Bill at the moment, although some aspects of electrical safety are, makes us doubt the speed with which these clauses would be brought into operation. It would be much better if they were in this Bill.

On cost, I am indebted to the noble Lord, Lord Best, who wanted to speak in this debate but was somehow precluded. He calculated that, even if inspection costs for carrying out the regular inspection were £100, that would be £20 a year over five years, or 20p a week per premise, which would go on the service charge to leaseholders and tenants in one way or another. That is a minimal cost for a major contribution towards everybody’s safety. It would not be logical for the requirement on the owner for inspection to be postponed until the building safety Bill comes through, but it would be better than nothing. If we can be given an absolute assurance, I will accept it as second best, but it really should be in this Bill to prevent fires starting now. I support all these amendments.

[The Earl of Lytton (CB) [V]]

My Lords, I first declare an interest as a vice-president of the Local Government Association and a chartered surveyor with some 45 years of experience in dealing with the management, maintenance and condition survey of properties, as well as matters of tenure. I apologise to the House for not having been able to participate directly on previous stages of the Bill. Many noble Lords will know that I have been following this extremely closely and have written to many of them, including the Minister.

Turning to the thrust of these amendments, I entirely agree with the purpose of the amendment on electrical systems: to make regular periodic tests and inspections of fixed electrical installations most desirable. However, with leases in long-leasehold tenure, the leaseholder is typically responsible for what is in the flat and is identifiably unit-specific to that bit of accommodation. Typically, that also applies to other conducting media and conduits such as drains, extraction ducts and water supplies. Some items are centrally operated, such as fire alarms and detection equipment, which may be within the flat and may be differently treated, but such provision does not always pertain to rack-rented letting. Straightaway, the legal obligations between different types of tenure, which are established in the case of long leasehold in their long leases, and therefore in their title, are not consistent across what I might call the flatted sector.

I also have concerns about the scrutiny and enforcement of the regulation, which in the past has sometimes been patchy. The issue is one of resources. The capacity, competence and finance are often insufficient or inadequate in the areas where the responsibility lies, or, in some circumstances, the responsibilities may be split. The Government must address these in the context of the Bill, because the subject matter is vital in terms of human safety, and too important to be left to chance, but I wonder how secondary legislation will deal with overriding established practices set out in the legal arrangements for tenure and occupation.

I appreciate that the noble Lord, Lord Bourne, is very enthusiastic about electrical appliances. I am a little less enthusiastic, not about the objective of greater safety, but about the practicality. There should be a clearer cut-off between what is “system” and what is “appliance”. For instance, a hardwired electrical hot towel rail is regarded as appliance, not system. There should be a clearer definition, so that anything with a square pin plug on the end of its lead falls under “appliance”. Again, there are issues to do with things such as cookers, which are also hardwired.

I note and largely agree with the views of the LGA regarding the enforceability in real life, and the shifting of responsibility, in my definition, from the primary leaseholder or occupier of the unit, who is in charge of the items in the building, unless they have been supplied by the lessor or manager from inception. There is an assumption that there will be some degree of occupier co-operation. Logging the appliances on a register may capture the inventory at a moment in time, but that does not procure accuracy without continuous updating, so there are issues there as to how much time and energy are to be taken up with doing this. Some modern service lettings include white goods, and possibly many other smaller items, and, to give the example of holiday accommodation, typically the owner of the accommodation provides all the white goods and appliances, but even that does not stop someone coming along with their own appliance, which may not be tested. The same thing applies for normal rentals.

Therefore, accuracy is an issue. Retrofitting the sort of standard that might apply in circumstances where all the white goods and appliances are pre-provided by the lessor would be extremely difficult. If the intention is to include everything that might be caught under a normal PAT test, that will be extremely detailed, with a high turnover of items within any five-year period. If occupiers of flats are not obliged to declare all relevant items whenever exchanged for another, or whenever a new item is brought in, this could create an impossible task for managers. Therefore, if the Minister agrees to this amendment, in detail or in principle, some of these issues must be addressed.

I suggest a phased approach, to allow for the most at risk and the most dangerous situations to be dealt with as a matter of urgency. Here, I am with the noble Lord, Lord Bourne, but for the rest, one must ensure that the arrangements are put in place in a workmanlike manner, that they are practical and, particularly, that manufacturers and retailers be locked into the chain of compliance. Also, there has to be a cultural change, so that every occupier of a high-rise block realises that they have a responsibility and an input, and that they are pivotal in procuring safety and ensuring that they do not misuse—or fail to maintain and clean—their appliances or operate them in unsuitable locations. I recognise, approve and agree with the thrust of these amendments, but I remain concerned about some of the detail.

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[Lord Shipley (LD) [V]]

My Lords, the noble Baroness, Lady Neville-Rolfe, has made a number of helpful and very important points. Amendment 6 seeks clarification from the Minister on a number of problems in relation to leaseholders and the impact on the housing market of the current problems with selling properties. I, too, look forward to the Minister’s response, as it would be helpful to us all to have an up-to-date understanding of his thinking.

We shall, of course, address this matter on Amendment 13 as well, as it is central to the future management of high-rise accommodation, or the less high-rise accommodation that nevertheless still suffers from some of the problems of the high-rise blocks. As the noble Baroness said, we need a way forward for the housing market in solving the problems of some leaseholders. I entirely agree with that, and I hope that forthcoming meetings will be able to address those issues.

Amendment 5, moved by the noble Lord, Lord Kennedy of Southwark, is entirely sensible. Of course it is right to consult properly and fully in developing legislation, so I assume that the Minister will be able to confirm this afternoon his entire agreement to this amendment because it is so eminently sensible.

[The Earl of Lytton (CB) [V]]

My Lords, although I certainly agree with the thrust of Amendment 5, it is Amendment 6, in the name of the noble Baroness, Lady Neville-Rolfe, that I really wish to address.

Many of my years in the property profession have been spent in survey inspections, with a spell in estate agency and mortgage valuations and brief periods in block management, and I have spent a good deal of time on the forensic identification of defects. Therefore, I feel reasonably well qualified to support the noble Baroness, and I thank her for raising this important issue, which affects the residential sector. Rightly, she referred to the indirect effect of the Grenfell tragedy. That is a matter on which I have been in constant contact with the Chartered Association of Building Engineers, of which I am a patron and which has been very helpful in identifying various matters in respect of the Bill.

As the noble Baroness said, the effect on the residential market for flats in particular, and over a very broad spectrum by age and type, is now apparent. This has affected security for mortgage lending, exacerbated by the prospect of large and, as the noble Baroness said, unquantified remediation bills. Some sort of game of pass the parcel seems to be in train as to who will end up picking up those bills. It affects buildings insurance cover and premiums, and interim measures such as “waking watch” are racking up huge costs. These and the likely shortfall, as I see it, in the provision for remediation made by the Government—welcome though that is, but nevertheless there is a shortfall as against the widening scope of the buildings that might ultimately be affected—have seriously affected the ability to sell flats. It is not clear that this is in any way confined to high rise, as I am increasingly aware, as one of my children attempts to sell a flat in a four-storey modern and, I believe, conventionally constructed block.

A few days ago, a lady emailed me to say that she is a resident of a sister block to the one in Worcester Park which burned down last year. She is completely stuck with a currently worthless asset and no apparent movement on remediation. The latest Sunday Times carried an article about this, graphically illustrating the issues and defects that have been found to be present in a number of remaining identical buildings that are still standing.

Before this gets yet more problematic and starts affecting potentially a far wider range of properties than at present, the Government need to use their powers and influence to get all the interested parties round a table—constructers, lenders, insurers—and point out, as the noble Baroness said, the reputational as well as economic and social damage that needs to be contained beyond the issue of direct liability and who shoulders that, and require their active co-operation to resolve this in a constructive manner and not leave vulnerable homeowners, to put it bluntly, hung out to dry.

I appreciate the criticism of the EWS1 form, but it came about because of a particular need to do with mortgage lending. It is now being required for a much wider range of purposes, for which it was never intended. Why? Because it was the only tool available. The Government could step into this obvious void and make sure that some other form of certification solution was provided. But they, or somebody else, would have to take responsibility for that, and I realise that that is an issue. Meanwhile, the potential liabilities make it ever less likely that those without specific accreditation to do the necessary inspections will be willing to undertake such work and, indeed, they may not be able to get professional indemnity insurance either.

The Government need to get ahead of the curve here. If these measures are rushed into effect with full force immediately and without additional steps, there will be more serious disruption and collateral damage to come. I suggest there be a phased and managed approach aimed at containing the ill effects, restoring trust and confidence, above all, in the measures being put in place and limiting financial loss while dealing, most importantly, with the most pressing issues where residents’ safety is at the greatest peril. None of this is without risk; nor is the normal “Not my responsibility, guvnor” liability-passing response appropriate in these abnormal times, given the number of national issues we face and the effect on the wider economy.

This means temporary but probably arbitrary cut-offs, probably in height terms—11 metres may be the right figure for blocks of flats—perhaps with certain other definitions, then dealing with those and drawing the net more widely later on and inevitably, as one will, picking up legacy issues from older regulatory sign-offs on the way. Some sort of lower-tier interim certification, which the noble Baroness referred to, perhaps by a non-specialist, would enable low-risk properties to escape the contagion that might otherwise engulf the sector. I wonder if this is what the Minister will propose in Amendment 7. I will listen with great interest to his response.

[Baroness Pinnock (LD) [V]]

My Lords, I remind the House of my interests, as recorded in the register, as a councillor in Kirklees and as a vice-president of the Local Government Association.

I turn first to Amendment 6, through which the noble Baroness, Lady Neville-Rolfe, has raised concerns about the inclusion of all multi-occupied domestic premises within the scope of the Bill. The issues raised relate to leaseholders who find that they are, in effect, unable to move as their property is within the scope of the Bill and, therefore, that the fire risk exists but is not quantified. The later amendment in my name explores these issues in more detail.

In Committee, the noble Lord, Lord Parkinson, spoke on behalf of the Minister and confirmed that the Government intend that all multi-occupational buildings are within the scope of the Bill and the fire safety order 2005. He also argued in Committee that the height of a building is only one factor in assessing fire risk, and others have given recent examples of fires in such buildings that support that argument. The issue, then, is about prioritisation, as the noble Earl, Lord Lytton, has so expertly explained, and what actions the Government are able to take to minimise the impact on properties deemed low priority and, therefore, presumably of lower risk. It is that issue that the Minister needs to clarify. Will the Government bring forward regulations or guidance to demonstrate the criteria to be used to fire assess properties? Can these be used by leaseholders to demonstrate low risk, and thus release their property from being frozen out of the housing market? I look forward to the Minister’s response to these concerns.

The other amendment in this group, in the name of the noble Lord, Lord Kennedy, raises issues about consultation. It lists consultees, as a very similar amendment did in Committee. My colleagues and I are always in favour of the widest possible consultation on any issue. However, there is an inherent risk in a list that becomes exclusive while intending to be inclusive. The list of consultees is one which we would expect, however, to be involved in all relevant consultations. As my noble friend Lord Shipley said, the list is inherently sensible, so I hope the Minister will be able to accept such a list. Again, I look forward to the Minister’s response.

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[Lord Greenhalgh (Con)]

My Lords, I shall speak also to Amendment 14. In Committee I made a commitment to set out during today’s debate the Government’s position on how the Fire Safety Bill will be commenced. Your Lordships’ House is aware that the Home Office established an independent task and finish group, chaired jointly by the National Fire Chiefs Council and the Fire Sector Federation, which brought together interested parties from across the fire and housing sectors. Its role was to provide a recommendation on the optimal way to commence the Bill. The group advised that the Bill should be commenced at once for all buildings in scope. I have accepted this recommendation to commence the Fire Safety Bill at once for all buildings in scope on a single date.

The group also recommended that responsible persons under the fire safety order should use a risk-based approach to carrying out or reviewing fire risk assessments upon commencement by way of using a risk operating model, and that the Government issue statutory guidance to support this approach. I also agreed to this recommendation, which will support responsible persons to develop an effective prioritisation strategy for such assessments, which will be supported by a risk operating model currently being developed. The Home Office, with support from the National Fire Chiefs Council and the Fire Sector Federation, will also host this model once it has been finalised.

The government amendments tabled today intend to take forward the provision of statutory guidance to support this approach. These amendments ensure that the risk-based guidance which will be issued by the Secretary of State to support commencement of the Bill for all relevant buildings will have the legal status to incentivise compliance with it. It does this by stating explicitly that a court can consider whether a responsible person has complied with their duties under the fire safety order by compliance with the risk-based guidance. Equally, if a responsible person has failed to provide evidence that they have complied, it may be relied on by a court as tending to support non-compliance with the duties under the order.

The government amendment also creates a provision to allow the Secretary of State to withdraw the risk-based guidance, but this can be done only after consultation with relevant stakeholders and appropriate persons. Our rationale for inserting this provision is that we believe that a point will eventually be reached where, having followed a risk-based approach to prioritisation, responsible persons will have assessed all the fire safety risks for the external walls of their buildings in direct consequence of the commencement of the Bill. At that stage there may no longer be a need for the guidance to remain in place. I assure your Lordships’ House that the Government will commence the Bill at the same time as issuing the guidance. Amendment 14 achieves this effect.

I thank my noble friend Lord Porter of Spalding for his amendment in Committee, which would have placed a duty on the Secretary of State to issue an approved code of practice to support the commencement of the Bill. I had a very constructive discussion with my noble friend and officials from the Local Government Association last week, and I am pleased that he supports our approach and agrees that there should be no delay in commencing the Bill.

One of the issues that the task and finish group considered was how responsible persons will be able to update their fire risk assessment where there is limited capacity in the fire risk assessor sector, primarily fire engineers, to advise on external wall systems. This underlines the recommendation for a risk-based approach to an all-at-once commencement, on which we are acting. Our approach sends a signal to the fire risk assessor sector, mainly fire engineers, that their expertise should first be directed to where it is needed most: to the highest risk buildings.

I draw attention the statement of the Fire Sector Federation, which supports our approach to commencement. It said that

“the introduction of further new measures … using systematic risk- based guidance, will lead a prioritisation approach towards helping to identify the fire risk status for a … building such that those presenting the highest threat to life are afforded the highest priority”

for “remedial action.”

I thank all members of the task and finish group for their work in developing advice to the Home Office and my officials. I consider that the group has provided an optimal solution to commencing the Fire Safety Bill, allowing the Government to introduce the provisions at the earliest opportunity. It is important that we continue the good work undertaken with relevant stakeholders on the task and finish group, with a view regularly to monitoring the effectiveness of the risk-based guidance and risk-operating model. My amendments seek to take forward the recommendations from operational experts in the field of fire safety. I beg to move.

[The Earl of Lytton (CB) [V]]

My Lords, the proposed risk-based guidance set out in the amendment is extremely welcome, particularly if it means what I think it means: assessment not only by building type but in relation to the specifics. The risk-operating model is especially welcome in this respect, and I thank the Minister for tabling the amendment. When is the guidance likely to be finalised? It is linked to the Bill coming into force and it is important that it be done as soon as possible, subject to reasonable scrutiny. We need reasonable certainty and to calm financial, insurance and property market fears.

Knowing the limited scrutiny that secondary legislation receives, can the Minister give an assurance that the guidance will be unequivocal—in clear, jargon-free and plain English, capable of consistent application and not liable to misleading or alternative interpretations? I say that with some feeling, having had to deal with matters of regulation over many years. Can the Minister also say whether there will be consultation on the details —in the knowledge that, within reason, the sooner this measure is brought in, the better—and whether there will be parliamentary scrutiny of it?

I particularly welcome the Minister’s reference to the signal that will be given to the accreditation sector and the insistence on indicating priorities. Getting capacity will clearly be an issue and the person responsible for a building—as happens in some employment situations—does not necessarily need to be an externally trained professional.

I will raise one further issue. A member of my family, as I mentioned earlier, has a flat in a relatively low-rise block in a London borough. I spent a bit of time on the borough’s website looking for details of the 2006 planning consent that governed its construction. Unfortunately, all the information—bar the notice—was missing from the website. I was told that I could make an application; it is not clear whether or not I would have to pay for that.

The other aspect of this is the information that goes into building control, which should be the details of how the building is to be constructed. If people are to be able to make a reasoned assessment of the safety or otherwise of their building, having that constructional information is rather important. The standard approach, however, is that building regulation information is not readily accessible on demand and may involve copyright issues where plans are provided. This may be fair enough, but there is an overriding need to know. If the architect, or the approved inspector—or whoever might have this information, since it might not be in the local authority records—cannot be traced, the only solution, which may have to happen anyway to some extent, would be for someone to take intrusive steps to open up parts of the building for inspection.

That basic information, which at some stage must have gone into the public domain or been used for an approved building regulation inspection, needs to be rounded up. Can the Minister offer any comfort or reassurance that steps will be taken to make sure that this essential information is recovered and available to those who need it?

[The Deputy Speaker (Baroness Morris of Bolton) (Con)]

My Lords, the noble Baroness, Lady Eaton, has withdrawn from speaking to this group of amendments so I call the noble Baroness, Lady Pinnock.

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[Lord Tope (LD)]

I am very grateful to the noble Lord, Lord Kennedy, for raising this issue today, and to the noble Lord, Lord Mendelsohn, for explaining it so fully and clearly. We have come a very long way in a fairly short time from the days when it was thought to be a good idea for people going on holiday for, say, a month to let out their home for a month to help cover the costs of the holiday, and everybody was happy. I recall lively debates in your Lordships’ House during the Deregulation Bill, as it then was, when we did away with the requirement for planning permission to be granted if a home in London was to be let for more than 90 days. That was thought to be one of the regulations that should be done away with, and so it was.

Although this may have happened anyway and is not a consequence of that, there has been an explosion—perhaps I should not use that word, but that is the way it has been—in the number of properties being let, initially primarily in central London, then increasingly spreading to the suburbs of London and now, for some time, throughout the United Kingdom, particularly in areas of high visitor attraction. Properties that are no longer, frankly, people’s homes, are let; probably most of these properties are not lived in by anybody who could conceivably be called an owner-occupier, as the people living in them change, often quite literally night by night.

If you talk to the Covent Garden Community Association, for instance, they will give you some considerable horror stories of the sorts of things that go on in that particular part of central London. We see whole blocks of flats where there is not a single resident—or, worse, there is a single resident surrounded by people who change on an almost nightly, and certainly weekly, basis. So it is a considerable issue, far wider than the very important one raised by the noble Lords, Lord Kennedy and Lord Mendelsohn, and I am grateful to them for spotting this particular loophole, if it is a loophole—this gap in the legislation.

We need to recognise that, for better or for worse—probably for better and for worse—it is no longer simply a question of people letting their home while they are away for a temporary period. This is now big business, and there seems to be a significant and important gap in the legislation. I hope the Government will, if not agreeing to this particular amendment, certainly recognise that this is a very important issue throughout the country, that it needs to be dealt with very urgently, and that this is an opportunity to do so.

[The Earl of Lytton (CB) [V]]

My Lords, I declare an interest here, as a co-owner of holiday cottages. I reassure noble Lords that for many years now these have been subject to precisely the type of matters raised by the noble Lord, Lord Mendelsohn, such as electrical system and appliance safety and smoke and carbon monoxide detection, which lie behind the amendment. To be honest, this is no more nor less than good practice; however, success depends on how intrusive the measures might be under the Regulatory Reform (Fire Safety) Order. There are, as I mentioned earlier, some good precedents for a degree of self-assessment.

The noble Lord, Lord Kennedy, in ably moving this amendment, referred, I think, to hotel standards in comparison with Airbnb. I suggest that trying to apply hotel standards for something that is purpose-built for that type of operation, and with the numbers involved, is probably a different situation. However, some of the principles undoubtedly apply. One of the most important factors is that, unlike the homeowner in their own flat, the visitor is not necessarily familiar, at any rate initially, with the layout of the building. It so happens that every time I have to rent a property such as an apartment, or take a hotel somewhere, I usually make it my business to work out where the fire escape is, because one hears so many horror stories about these things. Generally, it is fine, but I make that point.

The point has already been made [Inaudible.] flip in and out of principal or second home status largely undetected. A point arises as to whether, in every case, the mode and category of occupation by somebody who is paying to stay is actually different, whether they are a tenant on a short-term holiday or something even shorter than that, such as Airbnb. The important thing is that the amendment does not need to capture premises that are outside the intentions of noble Lords or, for that matter, fail to capture those that should properly be brought into it.

If I may digress, I make a plea for consistency in the way some of these regulations are applied. I shall use electrical systems as an example. Recently, I was alerted to the need for a certain type of electrician qualification because of a query from building insurers. It transpired that accreditation for an electrician to self-certify their own installation work does not automatically permit them to inspect and certify somebody else’s. Even electricians do not understand this, let alone householders, so knowing what to ask for is a science in itself, and I think that sort of thing needs to be resolved. To stay on that subject, just about every electrician I know is already tied up doing landlord testing, so getting anything in addition done is not at all easy, because there is not the manpower capacity in the system. Personally, I would not want some quick-fix form of training and accreditation on electrical matters, other than by somebody who had a background and a proper qualification in electrical installation.

Finally, however safe the system may be, occupiers bring in equipment of their own, or may do things that are unsafe. There should be a certain amount of saving provisions for that sort of eventuality. I think of a typical example: you go and do your regular inspection of a holiday home and you find that the cover of the smoke alarm is dangling, with the battery missing. It may be that somebody removed the battery because it was bleeping—although, because you put the battery in only three months ago, that is not a terribly likely situation. Then it occurs to you that perhaps the battery was needed for some child’s toy and it was removed for that reason. Occupiers can do silly things, particularly when their minds are on holiday. If the noble Lord were to press the amendment, I am not sure at the moment which way I would vote, but I do think there is an issue about compliance in this case that needs to be addressed.

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There would be many positive benefits from having both registers and I hope that, when he responds, the Minister will accept these proposals. However, if he is, unfortunately, not able to do so, I have to give notice that on Amendment 10 in particular, in the interests of householders, I will seek to test the opinion of the House.

[The Earl of Lytton (CB) [V]]

My Lords, it is a pleasure to follow the noble Baroness, Lady Pinnock, and I thank her for moving her amendment.

On the question of registers, I certainly agree that some list of assessments should be held for regulatory compliance reasons. However, there are likely to be several assessment bodies. Although something like the register of energy performance certificates, referred to by the noble Baroness, might be appropriate, I hope that the basis of assessment does not change every few years, as has happened with EPCs. I also hope that the standard of those accredited will be based on those with a professional standing and a working knowledge of construction. That standard was not adopted with the accreditation of energy inspectors, and I am sure that the noble Baroness would agree with me on that.

Beyond the minimum for regulatory purposes, it would probably be necessary to avoid a register that contained sensitive information. It is fair to say that some of the information that could be in a fire risk assessment might be sensitive. Therefore, it should not just be an online, free-public-access provision—at least, not in its full form.

It is also worth bearing in mind that this will, to a degree, for ever be a work in progress, so the register will not necessarily be accurate and up to date—but of course that is the situation with EPCs. However, somebody would have to maintain it. I think that that could be done only by a central government body, and that would have resource implications.

The really important thing is that occupiers and managers of buildings know that an assessment has been carried out, that it is in date and that occupiers in particular have the right to see it, and that any competent authority may do so as well.

Turning to Amendment 11, on the question of a public register of assessors, it is likely that many bodies will offer accreditation. Again, a central register would have to be held by some public agency if convenient public access was to be a reality. In practice, certifying bodies will themselves hold records of those accredited. I am not entirely convinced that others beyond occupiers, prospective purchasers and relevant public authorities need to have access to the register, and the public knowing that this matter is in hand, with enforcement of the need to carry out assessments, starting with those at greatest risk and progressing through the housing stock, would seem a fair balance.

The issue immediately before us, which has already been touched on, is the assessment of competence and, more particularly, capacity. This cannot be dealt with immediately. Not only does trainer capacity need to be built but issues to do with professional indemnity cover need to be resolved. I have already flagged up a number of these issues with the Minister, particularly the question of accrediting already competent professionals with a knowledge of construction. Therefore, the point was well made by the noble Baroness but there are issues that need to be taken into account.

On Amendment 12, in this group, I would much have preferred the noble Lord, Lord Stunell, in whose name it stands, to speak before me. This concerns one of the shortcoming issues that seem to be common in permitted development rights developments. Shortcomings in terms of living space, amenities, local environment, open green space standards and so on are all too frequent, and the health outcomes for occupants are also often very poor. Some of the buildings subject to conversion to residential have been quite unfit for that purpose. I have inspected some, so I can say that from professional experience. None the less, these projects have been signed off, although I suggest that that does not get owners off the hook on compliance more generally and that all developers who think themselves protected by completion certificates should think carefully about that. There is certainly an issue here.

In the meantime, ensuring fire safety in these permitted development conversions is a matter of top priority, particularly because they happen to house some of the most vulnerable people in society. I look forward to hearing the Minister’s response.

[Lord Stunell (LD) [V]]

My Lords, I will speak to Amendments 10 and 11, but will speak more fully on Amendment 12, as prefigured by my noble friend Lady Pinnock and the noble Earl, Lord Lytton.

Amendment 10 requires there to be a national published risk register, of which the two key requirements we have set out are that it should be publicly available and up to date. I understand the noble Earl’s concerns that this would always be a work in progress, but fire safety is always a work in progress. If we are talking about annual inspections, keeping a fire risk assessment up to date should come with the job.

If every landlord, designer, building contractor and construction operative always acted in strict compliance with the spirit and letter of every part of the existing regulations, this amendment would be superfluous. In my former professional life, I spent some years supervising building construction work; in case every anecdote about shoddy builders has bypassed your Lordships, I can confirm that such strict compliance is rare. However, one thing I thought sacrosanct was compliance with fire regulations. Even if the brickwork was shoddy and the plumbing a nightmare, at least the fire doors would fit. I now know I was wrong.

The picture emerging with devastating force from the evidence given to the Grenfell Tower inquiry is that at every level, from client and specifier to designer, contractor, subcontractor, and, as it now seems from the evidence this week, even specialist suppliers of critical components, it was not just a case of a few unfortunate errors because of lack of skill or experience but in some cases deliberate efforts to defeat the rules—even safety-critical rules on which many lives depended.

In the months and years since that terrible fire, evidence has been accumulating that this was not a one-off event in a particular building that happened to have a terrible outcome. There now seem to be, right across the country, many hundreds of buildings containing thousands of homes that are not just non-compliant, but pose a real and significant risk of harm to the people who live in them.

None of this would have emerged had the horrific events of that night not brought it very starkly to light. There was no transparency or openness to inquiry but a dismissive casualness in handling the legitimate concerns of those who had worries. In the case of the residents of Grenfell, those who had practical observations of non-compliant building work were completely swept aside. There was certainly no register you could check to show that your home was not a death-trap.

That underlines a significant truth: when those with power and authority find out about bad things and high risks that do not affect them but have a great or even fatal impact on the vulnerable and the weak, their natural reaction is to keep the news to themselves in order to avoid trouble and expense and to hope for the best. We must decisively end the hoarding of bad news on fire safety by the informed and powerful and empower the vulnerable who carry the risks and sometimes pay the ultimate price of life itself.

From now on there will be fire safety assessments. That is a very good thing, but it is essential that those assessments are in the public domain. I take the caveats that the noble Earl, Lord Lytton, has rightly made about privacy, security and so on, but the essentials of a fire safety certificate should be available for public inspection. They should be at least as public and accessible as an energy performance certificate from which you can discover how much insulation I have in my loft and I can discover how much the noble Earl has in his. We put up with that because of the greater good; we ought to be ready to put up with the same sort of thing for the far greater good of saving life post Grenfell.

It is unacceptable for landlords and building owners to hoard that assessment to the detriment of those to whom they rent and lease their properties and whose lives are in their hands. Grenfell Tower residents’ legitimate and specific fears about weaknesses they could see with their own eyes were swept away by those in authority. No one knew if any assessment had been made, what it said or what should be done about it, and who should rectify the faults disclosed.

--- Later in debate ---

[Lord Shipley (LD) [V]]

My Lords, I listened to the Secretary of State on the “Today” programme this morning, in which I heard him say that the cost of removal and remediation of dangerous cladding from residential buildings should be as affordable as possible for lease- holders. This afternoon is an opportunity for the Minister to make clear what this means. I understand that builders and freeholders may have responsibilities in meetings such costs, but where a leaseholder is not a freeholder, why should they have a responsibility to pay out?

The uncertainty for so many leaseholders who are stuck trying to sell their properties or are worried about their possible financial exposure needs swift resolution. The amendment would protect leaseholders who are not freeholders, and tenants, from extra costs, be they single or staggered lump sums, increases in service charges or increases in rents. The responsibility for making safe a building with a fire risk should not lie with the leaseholders or tenants. The amendment would make it clear that it is unreasonable to expect them to be responsible for those costs when they are the ones exposed to risk through no fault of their own. I hope the Minister will agree that this amendment, which would protect leaseholders and tenants, is justified.

[The Earl of Lytton (CB) [V]]

My Lords, this is an enormously complex issue, as I outlined in an earlier amendment. The current legal framework makes liability for the matters that have been referred to by the noble Baroness and the noble Lord a patchwork, and entirely uncertain of outcomes. So significant are the matters at stake that in a normal course of events it may be years before matters are resolved by the courts. We need a quicker fix than that, which is why earlier I suggested that the Government should take a firmer hand in this and not leave it to the industry and markets to sort out. In other words, there is a strong case for government intervention. I welcome this amendment, although not precisely on its own terms, because I think it has some potential flaws. However, certainly the opportunity to debate the issue is absolutely vital.

Grenfell Tower Inquiry: Phase 1 Report

Earl of Lytton Excerpts

Thursday 31st October 2019 Lords Chamber

[The Earl of Lytton (CB)]

My Lords, I too express my thanks to the noble Lord, Lord Bourne, for introducing this debate. As a practising chartered surveyor, I spend much of my time investigating and trying to head off building defects. I must declare my interests as a vice-president of the Local Government Association and patron of the Chartered Association of Building Engineers. However, I speak not from a special knowledge of tower blocks but more generally. I warmly congratulate our three maiden speakers on their splendid contributions to our debate and look forward to hearing from them in future debates.

That in this country, with its systems for product testing and approval and its long history of construction regulation and fire safety, we should be considering a report into so many avoidable deaths and shattered lives, and the gutted shell of a once purposeful block of homes, should make us all pause to reflect. I share the appreciation of Sir Martin Moore-Bick’s inclusion of a place in his report for each and every one of the victims by name. His Grenfell phase 1 report is truly vast in scope and forensic in its detail. I congratulate his team on it.

My purpose is to look at the failings across the sectors of building construction, improvement and maintenance, and use and management. Like the noble Lord, Lord Porter, I would have preferred to see phase 2 now rather than later because we have a substantial legacy of, and commitment to, high-rise residential blocks in this country. Over time, the perceived risks and the regulatory environment governing them has evolved. Not all critical change to a building is obvious; some really quite subtle changes can alter risks in ways not apparent even to local authority building control or environmental health officers, let alone to the fire and rescue service. Regulations governing post-construction alterations are not always retroactive in effect, as I understand it. At any given time, many buildings will almost certainly not meet the latest standards. On fire doors, at any rate, the report serves to change that, but there is clearly yet more to uncover about wider systemic construction failings.

It seems that there is no more than an informal voluntary system among management bodies for recording or storing the critical features of design and performance data for buildings, for the handing over of core information to successive owners and for logging alterations and repairs. In some cases, these are carried out without reference to expert examination, or perhaps even to the insurers and other interested parties—including, yes, residents. Localised or specialist installation works can fail to take into account the larger implications for a block as a whole. But to be fair to the fire and rescue service across the country, it can fulfil its duties only to the extent that the information is current and available in a useable form, so that it can use it. The report makes valuable recommendations here also and let us note that poor co-ordination is not the exclusive preserve of public bodies.

There has in the past been no equivalent to product recall for buildings, whether from a design fault, critical component failure or poor manufacture and assembly. Many construction warranties seem to protect the developer under the caveat emptor principle and give comfort to mortgagees rather than provide a guarantee of construction adequacy to the consumer. Stricter liabilities will, I am certain, be something for the future.

I note that a recent fire in Greater London in a modern four-storey block of flats erected by a respected housebuilding group appears to have revealed serious workmanship, construction management and warranty sign-off shortcomings. It looks as if, even now, we are not erecting new residential accommodation to the standards legally required. I am not sure that the current regulatory balance of expendable buildings provided occupants can get out safely gives the right signal or avoids perverse outcomes. Not only should occupants be able to evacuate safely but the accommodation unit must contain fire, and perhaps modest explosion, safely and not result in wholesale building failure.

The report’s implicit assertion that blocks of flats should withstand modest kitchen fires is therefore timely. From faulty tumble dryers subject to recall but where the ownership, whereabouts and circumstances of use may be largely unknown, to poorly manufactured smartphone and laptop batteries, in dwellings accidents can happen.

Some will point to the dwindling resources available to local authority building control as a factor. The truth is that their resource has been eroded by manpower losses to the private sector. Approved inspector firms have taken a lot of the available capacity. I have on too many occasions seen defective workmanship and short-cutting in site supervision and construction management. We need more inspectors of higher quality and better regulation and not their alienation.

There is not always an adequate understanding of a building’s fire protection philosophy, any more than there is sometimes of the thermal envelope or the style and category of occupation. That is not unique to social housing or to tower blocks; it happens everywhere. There is fragmentation of responsibility, lack of integration and limited scope of roles, the silo mentality that we hear about, budgetary delimitations, a lack of holistic approach and checks by rote rather than asking those awkward “what if” questions. As we know, modern contracting arrangements in building construction are also fragmented, with known shortcomings in labour, management and contractual arrangements.

I sense that we have lost sight of some of the objectives of delivery of safe, durable and competent housing, and lost an ability to maintain an all-encompassing grasp of the construction process. Technology could assist us, but it is no good if the raw data is not stored properly. Management clearly needs to know, and to inform and educate residents. The bottom line, referred to by other noble Lords, is that the process of the law will follow. The Australian court decision in the Lacrosse fire case has put all on notice of collective responsibility and the pursuit of justice when professionals get it wrong. Phase 2 will undoubtedly complete the picture of just how much more work there is to do, and I look forward to it.

Non-Domestic Rating (Lists) Bill

Earl of Lytton Excerpts

2nd reading (Hansard): House of Lords
Monday 30th September 2019 Lords Chamber

[The Earl of Lytton (CB)]

My Lords, it is an absolute honour to follow the noble Lord, Lord Randall of Uxbridge, and to congratulate him on an outstanding maiden speech. He speaks with very great authority on the retailing and modern worlds from his experience with the family firm. I regret having received the speakers’ list only when I came into the Chamber, so I have not had the opportunity to discover anything embarrassing about him that I can share with the House. However, like many of us, he has a wiki page, which tells me that he studied Serbo-Croatian. Of course, we know of his distinguished career as a Whip in the other place. He will therefore be not only familiar with the usual channels, but unsurprised at some of the stranger bits of double Dutch and jargon that inhabit the business rates world. I look forward to many more of his contributions.

Many years ago, I made my own maiden speech on what is colloquially known as the poll tax Bill. Noble Lords with long memories will remember its fate. I hope that this Bill fares a little better, although, unlike the noble Lord, Lord Randall, I am not at all convinced of its greater worth. I take this opportunity to congratulate the Minister on his appointment and his arrival into the hypothetical world of rating assumptions, in which only really the property and the bills are tangible and most of the rest is some sort of statutory assumption. That is worth bearing in mind. However, the economic outcomes are real enough. The noble Viscount should therefore be especially wary of the complexities and risks. I certainly look forward to working with him on this sector. At my stage of life I have no particular axe to grind, though. As a Local Government Association vice-president, I see all sides. Having a professional involvement of 44 years with this area of local government finance, here is my contribution to what I hope will be a bit of semi-honest brokerage from a ratepayer’s perspective.

A few years ago this Bill, which mainly increases the frequency of rating revaluations, would have been welcome. At this stage, though, my fear is that it is too little and almost certainly too late. We have a five-year revaluation cycle—or did, until it suited the Government of the day to defer the 2015 revaluation date. They argued that that gave certainty to ratepayers. Perversely, it did so, but at the expense of pegging their business rates to the historically high levels of the antecedent 2008 valuation date, which in turn informed the 2010 valuation list. More realistically, it guaranteed certainty of tax yield to the Treasury. Let us not kid ourselves, then, that this was anything particularly to do with benefiting businesses.

The resultant seven-year gap up to the 2017 valuation list meant significant adjustments, which in many cases would have created welcome reductions in rates burdens were it not for something called transitional relief. That operates to shield ratepayers from sharp increases in rates, but is financed by negating the benefits of reduced assessments for the others. It also protects the taxman from falling tax yields and is, I understand, reputed by some experts to have given him a large windfall. It is the extended revaluation gap in a time of rapid change, though, which amounts to the Government taking their eye off the ball.

There is also something called fiscal neutrality. I apologise for inflicting this jargon on noble Lords; it is a Treasury mantra that means that any changes to concessions, such as transitional and small business reliefs, have to be off-set—effectively funded—by higher charges to the remaining ratepayers. At the same time, it provides a safety net, if not a windfall, for the taxman, so it appears at the very least to be somewhat asymmetric as to effect.

Unlike rents, which ultimately have to follow market reality, the national rate yield is a fully protected upward-only construct. This has resulted in extraordinary increases in overall rates burdens on businesses over recent years—extraordinary by comparison with other applicable indices. As a result, there has been mounting pressure for reform of a property tax that is now the highest of any comparable impost anywhere in the EU or the OECD area.

The Minister will tell us, no doubt, that the industry has asked for these valuations. The noble Lord, Lord Randall, also referred to that. I believe that the British Retail Consortium has, indeed, asked for that, but I understand that everybody else has been asking for still more frequent revaluations plus a host of other reforms. I therefore do not feel that the justification for the Bill is entirely there. In any event, it only scratches at a fundamentally much deeper problem.

In effect, the system has been gamed to breaking point, not only by some unscrupulous consultants, but by HMRC and the Valuation Office Agency. Nobody in the business community now has much confidence in it, perceiving it as unjust, unfairly administered with an overly complex system of redress called “check, challenge, appeal”, or CCA, to use its acronym, which is consciously designed, it would appear, to impede fair rights of challenge and appeal.

I commend to the House consideration of a closely argued submission made in March this year to the Treasury Select Committee in another place by Mr Jerry Schurder of Gerald Eve. He is an acknowledged expert in the business rates field. He outlines failings in all the main areas on which a tax properly and reliably rests. However, even if the Minister does not believe Mr Schurder, he cannot deny the evidence that businesses across the land are voting with their feet in responding to business rates burdens as a major consideration in their retailing, office and industrial space occupancy and decision-making, while investors hesitate to commit in the face of empty rates charges. When a taxation system causes behavioural changes on this scale, it is wise to consider carefully the underlying policy, which has certainly contributed to high street atrophy and business reticence. When anyone involved in upgrading their premises finds that they are in receipt of a higher rateable value, removing at a stroke much of the benefit of the improvement, it is also a retrograde system.

Business tax payers need confidence that they are being fairly treated. Here, I fear, they know that they are not. No Government can claim to be business friendly while presiding over unfair local business taxation. The results for retail streets, for visitor attraction to towns, for investment, pension scheme portfolios and so on are negative. However, I am afraid HMRC still does not get it and will shortly have to find radical and costly solutions that will not be fundable on the fiscal neutrality principle, as more and more people trade online or migrate to other methods of trading not involving high-value, high-priced premises. Business rates are not solely to blame, but they and their administration are now widely seen as a very significant factor.

To finish, and given the parameters I have outlined, along with the failure to keep to five-yearly revaluations previously and the subsequent attrition in Valuation Office Agency resources, can the Minister say how the proposal in the Bill will be implemented and funded? Will the additional costs of more frequent valuations ultimately have to be met by the ratepayers themselves? If so, how much more mismanagement should they be expected to fund? When it comes to billing authorities having 100% business rate retention, as we believe is the ultimate intention, what factor of reliability does he think will be a realistic measure of future rates yield? This clearly matters to local government finance officers. However, if the current system collapses through failure to rectify, modernise or resolve the deep mistrust now prevalent—I believe we are close to that situation—the consequential expense of replacing the system will be incalculable, along with a needless destruction of valuable taxation and valuation stock in trade. I refer, of course, to the information base on all properties that go into making up the valuation list.

I really cannot express much enthusiasm for this particular policy tick-box of a Bill, nor do I see it as tackling the real issues. However, given that there is an intention to do something—anything—it is at least welcome to that extent.