Building Safety Bill

Earl of Lytton Excerpts

2nd reading
Wednesday 2nd February 2022 Lords Chamber

[The Earl of Lytton (CB)]

My Lords, all these wonderful speeches are a hard act to follow. I declare that I am a fellow of the Royal Institution of Chartered Surveyors, a valuer and a patron of the Chartered Association of Building Engineers, so this is familiar territory. I very much welcome the Bill and the opportunity that it presents to discuss the issues. I thank the Minister for his comprehensive introduction, his engagement, his openness and above all his vigour. However, I believe the Bill needs improvement in scope and function.

First, a bit of advice. The Minister’s letter of 20 January suggests that the department will investigate the governance of RICS. With respect, that ship has sailed. Following a report by Alison Levitt QC, the noble Lord, Lord Bichard, was asked by RICS last December to look into its governance and purposes—so, as ever, we should wait for that report.

The Government should be wary of criticising insurers, managers and valuers for overreaction to safety risks. Proportionality is based on good information and consistent technical advice, so the withdrawal of the consolidated advice note and its replacement with PAS9980 does not necessarily put the genie back in the bottle. Perceptions of risk pervade the property sector. Valuers reflect but cannot uninvent market sentiment. RICS sets standards for consistent analysis and reporting but cannot override the market, which is why, with full support from valuers and the wider industry, it retains the application of EWS1, including low-rise buildings with cladding, and has published a detailed justification.

Noble Lords may recall that a low-rise modern block of flats in Worcester Park was completely destroyed by fire in September 2019—unrelated to cladding, I understand, and, thankfully, nobody was injured. While human life is of first importance, instances of total loss of buildings influence insurance risk. Cladding apart, as we have heard, compartmentalisation, fire stopping and so on are issues regardless of building height, so it is self-evident that low rise does not of itself negate the risk to buildings and occupants, which is why the scope of the problems has grown.

The Bill will create the role of “accountable person”. Dame Judith Hackitt’s recommendation that there be a single individual is logical in administrative terms, but people are now nervous about taking on that responsibility. Residents’ management companies are often populated by volunteers, few with knowledge of building construction and maintenance. Collective freehold ownership and commonhold do not resolve this issue, so management professionals are extremely concerned about this.

My next point is about accreditation, particularly of those who have reason to design, specify, supervise or carry out works to residential properties, most especially those forming part of larger buildings. That certainly needs to be tightened. As HSE is now to have oversight of responsible persons, it should be working with all professions and accreditation bodies to ensure consistent standards without excessive cost.

My main point, however, is about financing the remediation of dangerous cladding and other fundamental defects in construction. I welcome the Government’s announcement to protect leaseholders from remediation costs. However, the details and scope are as yet unclear. Without a range of mechanisms for raising the necessary funds quickly, leaseholders may well continue to live in unsellable, risky and high-cost buildings.

The Government demand that industry steps up to the mark and voluntarily pays for its mistakes, but I remain concerned about reliance on that. Whatever welcome pledges of support are made, the Government need to ensure that they are bankable at an early date, so that any necessary fallback measures can be enacted in the Bill.

It is obvious that remediation of unsafe buildings must proceed with redoubled urgency, and unaffected buildings need to be signed off rapidly, so scaling up the inspection capacity is vital. Innocent leaseholders of all types—I make no exclusions—must be protected from the costs of remedying critical construction defects. They have purchased in good faith on the basis of fitness for purpose, and I do not exclude social landlords.

We need to concentrate minds. Responsibility for serious defects in original construction or refurbishment rests squarely with those who designed, specified, constructed or supervised the works, or who made false claims for construction products. Those responsible should not be allowed to collectivise their liability through an overall levy and thus avoid individual blame, or the culture will simply persist. The taxpayer should not fund this, other than to ensure a legislative framework, robust administration and the early generation of remediation funds, and to provide a fallback where all else fails. Funds already allocated should be for bridging and safety-net purposes and not deplete other areas of departmental funding. Protracted legal proceedings and justice according to bank balance must be avoided. This should be overseen by an independent national entity, although the joint inspection team may have a role in assessing buildings and collecting evidence.

These are the principles behind what is known as the polluter pays amendment, which has been gathering momentum for some months. I pay tribute to the Minister for his engagement with this and to those whose persistence has developed the concept to an advanced stage. I hope the Government will adopt it. Polluter pays would create strict liability where it is found that buildings did not meet relevant standards at the time work was carried out. That liability would cover interim safety measures and insurance premium increases. Once defect and involvement are known, liabilities towards owners would be established on a joint and several basis, so blame would not need to be apportioned. It would provide a relatively simple appeals system via the First-tier Tribunal to prevent leaseholders facing an unequal contest with large corporations. These liabilities need to be taken on the chin: no tax breaks, side deals, concessions or sweeteners—just the same transparent rules for everybody.

Successive Governments may have failed to regulate adequately after the Building Act 1984, but that Act did not remove anything from the principles of the building regulations, the British Standards Institution, codes of practice and other documents. Since 1965 the requirements have been clear, but elements of the construction industry have simply evaded obligations and everyone knows it.

We cannot allow the responsibility of the neglectful few to burden society at large or damage the wider industry reputation, or we will never deal with the perverse incentives to cut corners long term. The human toll is acute and practical imperatives need high standards of corporate ethics, shouldering of responsibility to rebuild sectoral confidence and, above all, speed. This need has never been greater. I look forward to working with the Government to seize the opportunity for real and lasting change under the Bill for the relief of freeholders, for national credibility in construction and in the interests of justice.