Daisy Cooper
Main Page: Daisy Cooper (Liberal Democrat - St Albans)Building Safety Bill (Fourth sitting)
Daisy Cooper Excerpts(3 years, 3 months ago)
Public Bill CommitteesRead Full debate Read Hansard Text
Daisy Cooper (St Albans) (LD)
Q
Dr Glen: It follows on from what Mr Byrne was saying about how do you think we can get around this. At ARMA, we have always said, right from probably a week after Grenfell, that time is the issue and not the money, and that we should get people safe first and worry about who pays later—but here we are four years later and we are still dithering around about exactly who should pay and who should not.
For me, because of the scale, the only way to get people safe is for Government to put the money forward to forward fund it, because other schemes might require a time delay while funds are brought in or while disputes go on. However, I do not think the Government or the taxpayer should pay in full. There is some culpability where, for example, having oversight has failed, but there are instances where the Government and the taxpayer have nothing to do with it and should not foot the bill.
Let us get people safe first by providing that funding, and then find out who should pay, perhaps people who have pushed forward products that are not fit for purpose or people who have constructed badly. There will be instances, I am afraid, where leaseholders might have to pay. If we have a 15-year-old building, we have taken the cladding down and sadly the concrete is 15 years old, it is going to need some repair work. It is nobody’s fault apart from Father Time. In that instance, maybe the leaseholders should pay for that. It is a different question if they might not be able to, in which case let us have some grants available.
I am staggered that four years on from Grenfell I am answering the same questions with the same answers. That is why we support the polluter pays Bill, because unlike some other amendments we have seen in the past that show that leaseholders should not pay, which we absolutely agree with, it provides a route to pay. One thing about leasehold service charges is that if there is no money there you cannot do anything. Finding people who should not pay does not help remediate the buildings. It just makes it more difficult, in a way.
Martin Boyd: We put forward a proposal last year for a levy scheme to introduce £12 billion into the system. It was a project that was primarily developed by a former Bank of England economist, and the proposal was that the money would be provided. and then would begin to be repaid after five years. The Government would have five years to decide who should contribute, and that would obviously be a mixture of the developers and the material providers, and possibly even the leaseholders—who knows?
Unfortunately, at the time the Government wanted to develop their own levy scheme, so we have the proposed £2-billion developer levy, but that does not get us enough; we still need to put £12 billion to £15 billion into the system. It cannot come from the magic money tree. We need to have a rational policy. Leaseholders have been screaming for ages that they want a solution. None of them thinks that the taxpayer should pay for this. Perhaps some do, but most of them are realistic in accepting that we need to find a financial solution that gets us out of the mess, because if we do not the housing market will stay in crisis for years.
Daisy Cooper
Q
Martin Boyd: On the specific “polluter pays”, we have not seen the detail yet, so we do not know. The difficulty, as has been referenced in a number of witness statements to the Committee, is that a lot of the developers have used special purpose vehicles, so we do not know yet what proportion of the market would be able to recover from this anyway. The building in which I have a flat is 20 years old. I have to accept, in reality, that even if my developer had done something wrong it is rather stretching things to think that I could go back and take action against them.
Dr Glen: It is a very complex situation. If it wasn’t, we would have found the solution a long time ago. Is it perfect? No. Is it a good start? Yes, and I am very happy with good starts.
Siobhan Baillie (Stroud) (Con)
Q
I was interested in your point about grants, Dr Glen, because ultimately we know that quite a lot of businesses have gone bust. Your proposal that we effectively get the taxpayer to foot the bills upfront, knowing that there will be a big gap potentially, is a problem. I am just playing devil’s advocate. On your point about grants, you are suggesting that the taxpayer pays. That is a point of concern for people who are not affected by this and are thinking about the overall financial purse.
Dr Glen: I understand that. The specific example that I was using for grants was that we strip a building down, take the cladding off, look at the building and say, “Oh my gosh. Something has happened to the concrete.” I completely understand why the Government should not be making every building as new. It is the practicality, because the way that service charges work means there is no profit margin in them. If there is any leftover at the end of the year, you give it back. If there is a deficit, you demand it.
This is the problem: let us say that you, Siobhan, are a leaseholder in a particular building, and I say, “Terrible news: we’ve found that there’s a bit of problem with the concrete, so we need to do some work on that. It’s not applicable for the building safety fund because it’s nothing to do with the cladding; it’s just Father Time.” If you then say, “I’d love to—I can understand where you’re coming from—but I just don’t have £2,000,” what do we do? If you do not pay, the others should not pay for you surely, so suddenly I am £2,000 short. That means that I cannot do anything as a managing agent, because I cannot place that contract. I am talking about short-term mechanisms to mean that we can get that building safe. That is why it is a complex situation with no absolute way forward.
On should the taxpayer pay—I am a taxpayer and would like not to pay—it is undeniable that, under successive Governments, there have been changes in regulation where, perhaps, a developer has said, “I would like to put this material up—it’s not cheap— can I?” and the local council has said, “Yeah, it’s fine”. That same local council and, in fact, sometimes the same person, is now saying, “Actually, you shouldn’t have done that”. Is it right that the developer or whoever in good conscience who did what they thought was right at the time should pay, or is that something where we should say, “Sadly, there are some things that taxpayers should front up for”? It is a very complex situation. I come back to it again: there is no single solution. The only one I can see is to let the Government pay now and then figure out how to get the money back later.
I would like to think a bit further than that. This will not be the last issue we have in housing over the next decades. Let us form this fund, so that when whatever it is that next comes up, whether it is something toxic that we did not know about or something else, money is in the bank so that we can start moving on these things straightaway. Let’s think forward as well.
Martin Boyd: I have a letter sitting here from officials in December 2017, after we had written to Ministers saying it is very urgent that Government intervene early on or we will end up with leaseholders going through a rather nasty experience that will drag on for years. I did not think at the time it would be so many years. The assumption was that, well, of course, the law will allow you to take your building owner, as we keep saying, to court and make them pay. It has not happened. The law was never ever going to make that happen.
The statements that we made have been made in Parliament too, and said that building owners should do the right thing. It is not what the law says they should do. They are under a fiduciary duty to represent the interests of their company. If you happen to own ground rent investment and therefore are deemed to be the building owner, which will only represent possibly 1% of the property value, or even less, how on earth are you expected to pay to remediate the cladding? It was never, ever going to happen. Grants have been the only way the system would work from the very beginning. I think it is still the only way that we have left.
Shaun Bailey
Q
Dr Glen: I am a bit wary about looking at the ownership structure, simply because if we waved a magic wand and all those buildings were today commonhold, everybody living in them would be in exactly in the same position. It does not solve anything. You can argue, “If it was commonhold, they could maybe sell some air space and generate a few million,” but that is sort of selling the family silver. You could do that to put new boilers in.
More generally, there are things that legislation can do. I am a big fan of mandatory, independently set reserve funds because buildings deteriorate after a time. Naturally, people say, “You want me to pay for something that won’t happen for 25 years. I’m going to be out of here in five, so I don’t want to pay towards that.” We see that when dealing with boards, which naturally look at whether they can put a sticking plaster on something rather than committing to major expenditure. Other things can be done to help.
How can you resolve the relationship between landlords and leaseholders? As Martin says, sometimes their interests are diametrically opposed, and they are within the organisation. I am painfully aware of many RMCs—my firm almost used to do nothing but RMCs—where you have a dichotomy between the buy-to-lets, who want the minimum service charge possible, and the people who live there, who want the place to be nice and cleaned every single day. You will still get that conflict. The problem is people who are not related living together in close proximity. Communal living is one of the issues. I do not have an answer for you.
Daisy Cooper
Q
Martin Boyd: Unfortunately, my view is that the residents’ voice section of the Bill and the HSE’s current work is the weakest element of the whole process. The Government have not dealt with the issue of the residents’ voice particularly well for a very long time. There is no system at all in either the social or the private sector for the proper representation of everyone’s interests.
As we said, the landlord is obviously sitting in conflict. Under the Bill, I get to sit in conflict with my leaseholders because I have become the accountable person. Under me, I have a responsible person—one of Nigel’s managing agents—who will employ the building safety manager. With my landlord’s hat on, I am liable if things go wrong, but I have no responsibility for any of the costs. All the residents have full responsibility for the costs, but no control. It is only because I am a landlord and a leaseholder that we get that common interest. In both the social and private sector, we have had landlords who have undermined effective resident engagement for decades.
Early in the Bill’s passage, we set out a proposal for a formalised system to create a residents’ group on every site, and the view at the time was that that sat outside the Bill’s purview, but there is no point in setting up a system for cosy little decisions to be made that filter down to the residents, where you hand them a nice little infographic saying, “Please don’t store petrol in your flat.” That is what has been done. The social sector best practice group has produced an infographic, and one of the diagrams says, “Don’t keep petrol in your flats.” Well, if that is our view of the intelligence of people who live in flats, we have a very, very long way to go.
We need to take a very different approach to resident engagement, and what I have said to officials is that, rather than take a top-down approach—assuming that we call the landlord the top of the system—it should start at the bottom with people who actually live in the buildings. Give them the facility to organise themselves and represent their common interests.
Dr Glen: As a managing agent, I would much rather deal with a representative committee of residents than each resident individually, because obviously time is involved in that. It would be nice to think that those residents will represent everybody—that would be nirvana—although it will not always be the case.
This is a really difficult issue. It is always a surprise that people do not realise that managing agents often do not know who the resident is. Somebody will hide the fact that they are sub-letting, for a variety of reasons. They might not want the taxman to know that they are receiving rental income. They might not want to pay a sub-letting fee, or they might not bother to get around to it.
It is difficult to engage with residents when you do not know who they are, but capturing their voice means we have to do that. We also have to filter it. I will give you an unfortunate example that I read about on LinkedIn over the weekend. A firm that specialises in out-of-hours said that they had had a complaint from a gentleman. It was about an issue that did not need instant attention, because that would cost four times as much and he could wait until Monday. The firm received 155 phone calls from that person over two days, most of which were abusive.
Something I put in my paper was that we need somehow to figure out how to filter this. The example I gave was someone saying, “It’s a bit dark in this corridor.” Is that a complaint? Is it just ruefully saying, “My eyes are getting old,” or do I, as a managing agent, have to log that, report it to the regulator, track it and bring in somebody to install new lighting at the cost of £2,000 that weekend? I do not know.
This is a difficult area to get into, but the more we, as managing agents, can get a collective response, the less admin you are doing trying to deal with absolutely everybody.
Ruth Cadbury (Brentford and Isleworth) (Lab)
Q
Martin Boyd: The answer on whether it is fully clear—I think we would fully agree on this—is that when you get into complex sites with mixed private, social sector and commercial, you are going to have a number of accountable people, a number of responsible people and, potentially, a number of building safety managers. The potential for conflict there is enormous.
The issue I have with the Bill is this: I can accept that you want to make me accountable if I get something wrong, but the Bill, if we use the analogy of cars, is trying to make me responsible for the fact that Mercedes produced a diesel engine that broke the rules. I did not design the building. I did not build the building. I am responsible, and fully accept I should be responsible, if we do something wrong with the management, but we, effectively, are non-exec directors. At any large site, that is how it will be.
Residents do not run their own building unless it is very small; they will contract and employ a professional managing agent. In turn, there is no such thing as a building safety manager at the moment. I do not see why they are needed at all in the occupation phase, because what a professional property manager does is contract a relevant expert when they are needed. If the air conditioning system, the lift system, various plant and machinery or the fire alarms need to be updated, they will go out to a relevant expert.
The idea that we are somehow going to put that expertise in one individual and that they will make the decisions is just going to cause conflict. The property manager will be trying to budget for how they plan to look after the building for the next five years, and the building safety manager will have a different set of priorities. As far as I understand it, the building safety manager wins—so what happens if the building safety manager spends all the money and there is nothing left for the property manager to spend? The answer is that they will just have to put up their bills, so we will have one set of building safety charge bills getting bigger and bigger, and another set of normal service charges getting bigger. It will cause problems.
Dr Glen: A big worry for me about the impact of having an accountable person, particularly where there are lay boards, is, to put it succinctly: who in their right mind would agree to be a director with that level of accountability? What are we going to do in those circumstances?
We have talked about potentially bringing in professional directors—that is one possible route, if the lease allows it, and that would be a cost, again. That is going to be an issue, I believe, for anybody in their right mind taking on that level of responsibility. What this might mean is that there are no leaseholder-led boards—they might appoint a professional who then appoints and instructs the managing agent accordingly, but you might see residents’ management companies and right-to-manage companies disappearing.
Martin Boyd: I think there is a risk, because if you want to make me responsible for Mercedes, you need to put me in charge of Mercedes. I am not going to do that, so I am stuck. People who sit on the boards of RMCs usually consider the matter quite carefully. You are taking on a serious responsibility, helping to look after the lives of other people. But you are doing it as a non-exec.
I make it clear to the rest of my board on regular occasions: “You do not interfere in operational matters.” We employ professional managing agents to do that. I think that the legislation needs to be structured to allow that non-exec position to continue because if you want to say, “I am suddenly going to make you criminally liable for matters you don’t control,” Nigel is right: who is going to be stupid enough to take that role? More importantly, a representative of the Association of British Insurers will be speaking to you in a while and I think you are going to struggle to find anyone who will insure that role or those of the building safety manager and the responsible person.
The Chair
Q
James Dalton: Good afternoon. My name is James Dalton. I am the director of general insurance policy at the Association of British Insurers.
Steve Wood: Good afternoon. My name is Steve Wood. I am the chief executive of the National House Building Council.
Dr Colwell: Good afternoon. I am Sarah Colwell, the director of fire suppression testing and certification at BRE Global Ltd.
Daisy Cooper
Q
“Although the frequency of fires over the last 10 years has decreased, insurers have seen a significant increase in the damage and costs from fire spread”.
I do not believe we have heard that from anyone else in our evidence so far. I wondered whether you could tell us a little more about that, particularly in terms of what kind of emergency status fire remediation should have attached to it and what the impact of the increase in damage and costs has had on the insurance industry and on leaseholders.
James Dalton: The insurance industry has been calling for a significant period, including well before Grenfell, for significant reform to the building safety regulatory framework, including in terms of fire safety. Over the last decade, we have seen a reduction—with the exclusion of Grenfell, obviously—in the overall number of lives lost in fire. I think the Government statistics will bear that out. Over the same period, however, the insurance industry has seen a significant increase in the overall cost of fire claims, including but not exclusively from residential buildings.
If I include all commercial fires—in warehouses, commercial premises and residential building blocks, for example—there has been a significant increase in the cost of fire, but we suspect that one of the reasons for that is that, as we now know, fire spreads much more quickly than had previously been anticipated in the context of such things as modern methods of construction, including all the issues that you have been hearing about in the context of cladding in particular, and wider fire safety defects that we have found in the post-Grenfell world.
Daisy Cooper
Q
James Dalton: The significantly increased cost of fire is obviously passed on to all premium payers through increased premiums. For leaseholders in the post-Grenfell world, there have been very significant increases in the cost of insurance for some of the buildings that have been identified as most at risk.
I and the insurance industry particularly empathise with all leaseholders who have been affected, and we have worked hard to ensure that where buildings have not been able to access insurance, we have tried to facilitate insurance. The sad reality is that, in the absence of a quicker remediation programme, those leaseholders will continue to face increased insurance premiums.
Ruth Cadbury
Q
James Dalton: I would say that it is not just residential; it is in a number of buildings. If you think about the significant increase in online shopping, for example, which has driven the development of very large non-compartmentalised warehouses: those are very significant fire risks because they lack the structures internally. It is a problem that the insurance industry is cognisant of both here in the UK and internationally.
Kate Osborne (Jarrow) (Lab)
Q
Dr Colwell: An initial reading of the Bill in its current form suggests that the answer is no. Work will be required to ensure that we are clear on the standards being applied and how those are being used in the framework. We also need provision for going from testing to third-party certification, to ensure that we have the provenance following through on the products being used and the context in which they are being used.
The Bill lacks a little clarity. As mentioned earlier, the detail will probably have to sit in a secondary framework if we are to ensure that we get to the level of implementation that gives us a clear playing field.
Daisy Cooper
Q
James Dalton: May I comment briefly on the buildings insurance point? I should have been clearer in my answer and said, “All other things being equal.” I do not know what the insurance premium tax will be on the commission of buildings insurance, or what the wider regulatory environment will be like, tomorrow, next year or in five years’ time. All other things being equal, the Bill should, overall, decrease the cost of buildings insurance. It is a very difficult question to answer.
As I said in my previous answer, some insurance policies will be clear. There will be some insurance policies where the businesses in question that were insured no longer exist, for whatever reason. The question then becomes how those affected leaseholders and/or building owners will exercise their rights under the extension. To answer your question, in my experience insurance litigation can be complex, expensive and lengthy.
Daisy Cooper
Q
James Dalton: On the question of the extension in the Bill, in some respects the answer is: “Let’s see what happens as a result of this process and the wider parliamentary process.” At the moment, we have significant concerns about the extension of the limitation period from six to 15 years. Once Parliament decides and legislates, and once the Act becomes operational, we will need to see what the ultimate regulatory framework looks like, and what the implications are from an insurance industry perspective. This is an issue that we are actively working on. It was, shall we say, a surprise for us to see this in the legislation. As I said in my previous answer, it had not been consulted on, so we are working through the potential implications, both from a regulatory and legal perspective, and that process is ongoing. I would like to answer your question, but I think it is too early to say.
Steve Wood: One complication is that there is too much scope for different interpretations by professional people of the existing regulations. That is why there needs to be much greater clarity in the Bill—to remove or minimise that risk. For example, competent people looking at the same external wall system could draw different conclusions about compliance with the building regulations. We have to avoid that, because it creates uncertainty. It does not help confidence in the industry, and certainly not professional indemnity insurers, when you have that sort of situation, because you are not sure what risk you are exposed to as an insurance company. That is why we have to remove the ambiguity in the legislation and make it crystal clear. The challenge that the whole industry and everybody has—regulators as well—is dealing with this legacy issue while trying to build a better future.
The Chair
If there are no further questions from Members, I thank the witnesses on behalf of the Committee.
Examination of Witness
Mr Matt Wrack gave evidence.
Kate Osborne
Q
Mr Wrack: There are other regulations covering office buildings. One big thing that has been highlighted by Grenfell is the difference in standards between high-rise residential blocks and an office block of an equivalent size.
In an office block, you would have far different fire safety measures, including two stairwells, regular fire safety drills and so on. Those do not exist in purpose-built blocks of flats, because those blocks were designed to deliver compartmentalisation—they were built to contain the fire within the flat of origin. What has happened in recent years is that that has broken down. I think that residential blocks are different from non-residential blocks. Whether two is the right number, I do not know.
Daisy Cooper
Q
Mr Wrack: That sort of structure is precisely what is needed. The post-war legislation effectively created the modern fire service. It introduced such a body, called the Central Fire Brigades Advisory Council. It included the Home Office, the inspectorate, chief fire officers and the trade unions. We had a very close relationship with researchers at what became the BRE, the fire service college. It was a joined-up way of thinking about the risks of fire, but was eventually criticised for supposedly being slow. Looking back, I think that criticism was very badly placed. I look at how they responded to a fire in 1958 where firefighters were killed; within weeks, guidance was issued.
I must say that it takes much longer today to get a change, and firefighters on the ground are hugely frustrated at the slow pace of change post-Grenfell. In the 1970s, we did have bodies that were looking at the emergence of high-rise blocks of flats, and their implications on fire safety and firefighting. We do not have those anymore.
Then Grenfell came along. We had warning signs. We had cladding fires in Melbourne and Europe. My own union came to the House after a fire in 1999 to warn about cladding systems, so as long ago as 1999 we were making warnings about the new systems that were being put on blocks of flats, which created the risk of the fire spreading up the outside of the building, yet in the intervening years very little has been done to address that risk; to improve the knowledge on the part of firefighters on the ground; or in any way to prepare for what that might mean for the people living in those blocks of flats.
There has been a complete lack of joined-up thinking for more than two decades on fire safety, and I appeal to people to think about how that could be put right.
The Chair
If there are no further questions, may I, on behalf of the Committee, thank the witness for his evidence? I am going to suspend the sitting for 10 minutes until we can fire up our next witness on Zoom. Thank you very much.
The Chair
We will now hear from Alison Hills, an affected leaseholder, and Steve Day, a campaigner on the polluter pays principle. We have until 5 pm for this session. Would the witnesses please introduce themselves for the record?
Alison Hills: My name is Alison Hills. I am a solicitor who is personally affected by the building safety crisis. I have also been very active in the campaign on behalf of a number of leaseholders, and I have spoken to a number of leaseholders across the country.
Steve Day: Hello, everyone. I am Steve Day. I am also caught up in the cladding crisis—a £30 million bill for 118 flats. We basically felt we had to fight it, and that has led to where we are today. Thanks for hearing us.
Daisy Cooper
Q
Alison Hills: Sure. The first point I would make is that the Building Safety Bill offers completely inadequate protection for leaseholders. Throughout the ping-pong process of the Bill, leaseholders across the country were repeatedly informed that protection would be forthcoming in the Bill, but it is clear that that is not the case.
Personally, I could be facing a bill of between £150,000 to £200,000 if funding is not forthcoming from either developers or the building safety fund. That could result in bankruptcy and the loss of my career as a solicitor, because my professional qualifications will be automatically revoked if I become bankrupt. I know there are a number of solicitors, accountants, and other professionals who are in the same situation.
Daisy Cooper
Q
Steve Day: Yes. I live in south-east London, in a development called Royal Artillery Quays. We had a £30 million cladding bill, have £1.7 million of internal firestopping issues, and a builder that says that we are timed out with the Defective Premises Act 1972 and the Latent Damage Act 1986 because we are 17 years old, and our 15-year hard stop in latent defects times us out. We are very angry.
My brother is here today. We are doing a start-up and do not have enough money for one salary. It is devastating to have to fight a developer that claims it has no legal liability, even though we found multiple breaches of the BBA certificate on the external wall system. I went around with a fire engineer with an endoscopic camera to see all the holes in the firestopping above every single flat. I am sickened.
I have had to help people in the development with depression. One of my neighbours had to talk someone out of suicide. I am sure my brother will not mind me saying that it has been challenging—running a small business start-up, and trying to fight a developer and come up with a statutory scheme to stop everyone else from doing this.
I urge you to recognise that full redress is not just something that we want—a “nice to have”. You will hear more evidence on it, but think about it this way: if you, as Parliament, do not intervene now, this will happen in decades to come. There is a race to the bottom in construction. I was on holiday, and after The Times article that came out last weekend backing the polluter pays Bill, I did not really want to be next to a senior member of the construction industry for my holidays. However, he was very understanding and said to me, “Well, yes, there is a race to the bottom. Yes, the cheapest contract always wins. Yes, the building control that looks the least at the defects is the one that gets the contracts.” We have to stop this. Levies and taxes is letting them get away with it. We have to step in. That is what I am asking you to do today.
Mike Amesbury
Q
Steve Day: I am glad that you have asked about SPVs, as that is obviously a point of contention for our scheme. First, we are creating a statutory scheme—we are writing the law and Parliament is intervening. We would go after the parent companies when there is a relationship there. In the case of an SPV, we would try to establish that relationship. Remember that there are two parts to polluter pays—I do not know if you have seen the diagram. One part is to get the responsible parties to pay in full if we can. If we cannot find anyone—this is your first answer—we go to the levies that we have on the construction industry and the ancillary bodies such as cladding manufacturers and so on, who have all been part of the problem, as we heard in the Grenfell inquiry.
We can do a better answer than that, though: parent company liability. You might say, “Is that possible?” The UK Competition and Markets Authority can hold parent companies liable for the anticompetitive conduct of their subsidiaries, and can hold both the parent and subsidiary company jointly and severally liable for the payment of fines resulting from the anticompetitive conduct of the subsidiary. It has been done. If you want to look further afield, in German law, Konzernrecht holds parent companies liable for obligations of controlled subsidiaries; that has been done in Germany. Some say that British companies will not be attractive for investors if we do this parent liability, but it seems to be working in Germany. Hopefully, that gives you a little more colour on why we want to do this.
Ultimately though, take a step back from the legality. I am very grateful for Daniel Greenberg’s help and his 20 years of experience as parliamentary counsel; he is operating in a private capacity pro bono, because that is how much he believes in the Bill. He is not at all worried about this liability; he thinks it can and should be done. We have a simple, cost-effective and fast mechanism; a statutory scheme that will make those responsible pay, and their parents. Is that okay, Mike?
The Chair
Fire away.
Steve Day: There is another complication of the limitations extension, and that is basically the risk of a two-tier system. We have been discussing this with the polluter pays Bill team. There are bilateral investment treaties that have settlement provisions. We are concerned that if a foreign national were to use one of those provisions for international arbitration, especially in the case of a developer not existing in the UK—and these foreign investors are investors, leaseholders in UK property—they may be able to use that international arbitration and get compensation from the UK Government, where UK nationals will not be afforded such a privilege. That would be a shame if the developers do not exist and foreign nationals can use these international arbitration treaties when UK nationals cannot.
Daisy Cooper
Q
Alison Hills: First of all, once we had our intrusive survey undertaken, we had a waking watch implemented on is, which was at a cost of £400 per leaseholder. I have to say that a whole new crisis has been created as a result of the advice note and the EWS1 process. It is ineffective, it is placing leaseholders under an unacceptable level of financial risk. Personally, I felt more unsafe while they were in the building. They were undertaking activities such as smoking underneath flammable cladding. They were falling asleep. This sounds awful but they were peeing in our car park. We have also heard stories of other leaseholders across the country where single females have been harassed by them, which is completely unacceptable. That is just the first point, which is on waking watch alone.
In addition, we have had to pay increased service charges, which amounts to an extra £200 a month each. Our insurance has absolutely skyrocketed. I have heard of a leaseholder based in a block in Runcorn where it has increased by 1,400%. People are going bankrupt as a result of these interim measures alone, and that is before we even get to the remediation costs. As we have seen already, Hayley Tillotson was a leaseholder who has gone bankrupt as a result of these extortionate costs.
Leaseholders’ finances are being completely wiped out. It is completely unacceptable to put us under this level of financial risk and burden—in the middle of a pandemic as well, one might add, which only adds to the financial and mental health distress. There have already been reported suicides as a result of this crisis. I have to say that my mental health has seriously deteriorated, to the point that I have had to move out of my flat, because I could not sleep, eat or concentrate. It was an horrific situation to be in. Those are the sorts of things that are happening, and that is before we even get to any remediation costs.
Steve Day: Our service charge has doubled because of the waking watch and insurance. It is due to lack of trust in building regulations. The insurers do not trust, the lenders do not trust. That is devastating when you are doing a start-up as well. I do not have the salary that I used to have, and I do not have the savings I used to have because they have all gone on service charge. That is a huge risk.
Let me tell you something else. It is not just about the money for waking watch. I think we forget what it is about. Can you imagine people staring at your home 24/7 because they are so concerned that there is going to be a fire? Can you imagine what that does to you? You go to sleep wondering what on earth these people are doing staring at your building, going up and down the stairs. They are doing their job but their job is very concerning. They are so scared that they might miss it that they are checking things and all the rest of it. Then, there are some who do not do their job. You are in a total stress, non-stop.
It is all to do with the root cause. This is where I come back to the simple scheme that we have come up with. Let us restore trust in building regulations. EWS1s, PAS 9980s—it is a new way of showing building regulatory compliance, because the trust has gone from the lenders and insurers. Let us restore that trust. Full redress is the only way to do it. This is a unique situation, the costs are high and we need you, Parliament, to step up and put in this scheme.
There is so much support for the scheme—you will see that because we will put it out there to you guys as much as we can over the next few weeks. It is growing: we have bishops behind it, the Earl of Lytton and the Intermediary Mortgage Lenders Association. You have heard that the Association of Residential Managing Agents backs it and we have quite a few people that I cannot remember, but I am happy to write to you.
The support is only going to grow, because as we go through the Grenfell inquiry and we see some of the things that come out, maybe in module 6, full redress will come up again and again. If you want to give out loans to people and you let the industry off with a levy, they will never forgive you, because you did not go for full redress when you could have, and that is what I urge you to do.
Yes, it is unusual to have a leaseholder here coming out with a statutory scheme, but it is not just me—there is a load of experts helping me, all for free, because they believe passionately that we cannot let a levy system and a loan system go in when we have not tried full redress. It is possible, it is simple and it is fast, and we are working hard to limit the judicial review risk to the Government. We will be sending Mr Pincher and his team a new draft from Daniel Greenberg as soon as we can and hopefully getting something in to them, and then we can update you.
Alison Hills: I alluded to this earlier, but this is a very complex issue. There is liability against a number of parties—not just the Government for poor regulation, but developers, manufacturers, people such as Kingspan who mis-sold their products, insurers, Buildmark warranty providers. There are so many people involved here, but it is glaringly obvious that this Bill contains no repercussions at all for those people. The only people who have been legally held to account are the innocent leaseholders. As I see it, the fundamental role of Government is to protect victims and hold perpetrators to account, but this Bill does the exact opposite of that, and it is unacceptable.
Ms Rimmer
Q
It seems to me that polluter pays is the only suggestion that can go forward. We are not saying that the present Government are responsible for all this, but do you know of any other way than the polluter pays mechanism? Is it New Zealand that has the public safety emergency, where the Government have addressed that? It does not seem able to be addressed. Has anyone put forward to you any other schemes or other ways of addressing this? There are hundreds of thousands of family units in these properties—I do express my sympathy; I sincerely empathise and sympathise—but this simply must be addressed.
Alison Hills: Yes, thank you. It does have to be addressed. Obviously, there are the McPartland-Smith amendments, which protect leaseholders to some degree. There are some very helpful amendments—for example, the imposition of implied terms in residential building contracts to ensure that all buildings are adequately designed, comply with building safety regulations and use materials of satisfactory quality. New clause 5 also creates accountability for future builders by importing consumer rights protection into housing law. I fully support the amendments and new clauses, and I think they should be implemented in the Bill, but in terms of how to get the most amount of money from those responsible, the polluter pays Bill is the way forward, because it ensures that the right people are held to account and building safety regulations are adhered to in future. Obviously, Steve has worked very hard on this over the last nine months, so I will pass over to him at this point.
Steve Day: I think the building safety charge is another sign of not trusting building regulation compliance. The heart of polluter pays is not just to solve the crisis now; it is to restore trust in building regulation compliance. We have a set of functional regulations. B4 requires that
“the external walls of the building shall adequately resist the spread of fire”.
It should be very possible, then, with the approved documents, to show and to prove whether someone is liable for those defects.
We are getting very confused in this crisis. We need to bring it back to the two boxes of developments. We have one where the builders just did not keep to the regulations. We do not need to worry about the quality of the regulations—they just did not keep to them, not using the right fixings. Metal should be on firebreaks but they used plastic. Some are missing firebreaks. It is very simple stuff, which is very unappealable and very easy—low-hanging fruit. That is the box of not conforming to the regulations at the time—guilty. Not guilty, for the developers and the manufacturers, is the other box where the regulations were complied with at the time, but post Grenfell those regulations have changed. It is almost a retrospective liability, changing the goalposts. That is a failure of regulation, so that is where the public money would come in.
All we want is £5.1 billion of public money. We do not want to go to the Treasury unless we have to. We want to get that pot as big as possible for all those defective buildings—it is simple stuff, remember, such as fixings, adhesive pattern, firebreaks and so on—to make that £5.1 billion go further. That is what we are doing. I hope that our proposal shows that we have thought about how this might work with existing precedents. There is some discussion on whether the Environmental Protection Act 1990 and the apportionment process could be open to judicial review, because you might say, “If you’ve got a set of percentages and you’re just giving x per cent, y per cent, and so on, that could be open to challenge.” We have listened to that and we are working with Daniel Greenberg on a different, and much simpler, approach, which we will make you aware of, that will not be open so easily for judicial review.
We also heard Mr Pincher’s comments in the Chamber on how many determinations we have to do. Remember that we are proposing that it is a public body, potentially under Homes England, and we have a de minimis limit. We do not have the reports that MHCLG has but we have a mechanism. It can set what the de minimis limit is before we have those determinations, and then basically there is a control mechanism for how this works. We have created the scheme so that in the primary legislation the scheme requirements are set out. It has to be in place six months after Royal Assent, but we do not prescribe exactly all the parts of the legislation; that will be done in subordinate legislation. We are prepared to do that work as well, because that is how much we believe in this.
I cannot answer all your questions on this today, but Daniel Greenberg has said that when the conference season is over, we will book a meeting room in Parliament and invite MPs and peers to come and hear our proposal, with the depth required so that you can scrutinise it properly. Perhaps the Earl of Lytton might come and help as well.
Ian Byrne
Q
I want to touch on residents’ engagement. It is hugely important. We saw that with Grenfell, and what was missing. Earlier witnesses said that the residents’ engagement section of the Bill is potentially one of the weakest parts. How do we strengthen residents’ voices, and the imbalance of power that exists? How would you reflect what residents need within the Bill to ensure that their voices are heard?
Steve Day: We need to have very good transparency from our managing agents. Often we cannot see the reports that are about the safety of where we live. We cannot see the accounts to see that they are spending the money correctly. We are given a very high-level aggregate view that often does not check out to what we are paying, so that side of things needs to be transparent. There needs to be a lot of thought towards how residents are engaged as well. Not all residents have the inclination to get together and form a committee. How do you handle that? Do the managing agents pick on one person and say, “You’re responsible for it”? I think that could all be strengthened.
Alison Hills: Luckily, in our block, our managing agent has been very forthcoming. We have regular meetings with them every two weeks. That position is quite lucky, but it took a lot of work to get to that point. A lot of leaseholders across the country have managing agents who do not share information, fire risk assessments and even evacuation plans. We have seen, particularly for disabled leaseholders, that some blocks do not have any evacuation plans at all. I think that is completely unacceptable.
Information sharing is the key point. Residents do have a right to see this information. It affects their lives; it affects their health and safety; and it affects their mental health. They need to know what to do in the event of a fire; they need to know what the defects are; and they need to know what the next steps are. As I said, my managing agents have been good with that, but many others have not.
Daisy Cooper
Q
Alison Hills: Yes, I think that would be very useful for residents. There are residents from all walks of life in all heights of building, and it is important that all their voices get heard. We are lucky: in our particular block, we have a very active residents committee; we are a very engaged set of leaseholders. But others might not understand about their building’s defects; they might not realise the whole situation that is affecting leaseholders. There are some, even in different blocks in my development, who do not realise the repercussions of the Building Safety Bill. I think this is just about information sharing and making sure that every block has a voice and every leaseholder has a chance to have their say. That is absolutely crucial.
Steve Day: One thing that would have helped me with my investigations was the BBA certificates. It is charging hundreds of pounds to get that, and it is often very difficult. I think we have a right as residents, if we have this massively large building, to know what the safety certificate says about our external wall system, so I say: let’s put it all online. The BBA, I am sure, can get its money in other ways. Also, if we are trusting the construction industry to keep to regulations, and if a development does get judicially reviewed with our redress scheme, I would say: let’s have Parliament put the information online, perhaps in a brief form—the judgment and the fact that that developer thinks that plastic fixings are fine on firebreaks. Let’s put it online, on a parliamentary website or some form of official site, so that a development has the ability to shame the developer, the construction or the cladding manufacturer if they choose to basically say that something unsafe is safe. I think we do need something like that.
Alison Hills: One of the positive aspects of the Bill is that there is a clause about mandatory keeping of records. That is absolutely crucial. It needs to be done—absolutely. Our developer cannot find the plans, for example, for our building. And that has happened across the board. There are so many leaseholders I have spoken to where they cannot contact the developers and they have just lost all the paperwork. How do you lose the building work paperwork? It just does not make any sense. But if there is a centralised system, it cannot get lost; it is all there, in black and white. And any leaseholder who wants to see it should have that right, because it does affect them. It is their home at the end of the day, and they need to know what the building safety issues are with their flats.
The Chair
If there are no further questions, may I, on behalf of the Committee, thank the witnesses for their evidence today? That brings us to the end of today’s sittings. The Committee will meet again on Thursday, for line-by-line scrutiny of the Bill. May I ask Committee members to leave the room promptly by the exit door and while observing social distancing? Thank you very much.
Ordered, That further consideration be now adjourned. —(Scott Mann.)