Building Safety Bill

Earl of Lytton Excerpts

Committee stage
Thursday 24th February 2022 Grand Committee

[Baroness Pinnock (LD)]

After that rapid run-through of about 40 amendments in this group, I shall respond to all of them as follows.

The first three amendments are in the name of the noble Lord, Lord Blencathra, and I have to say that I have a lot of sympathy with what he said. Too many times, when new homes are built in the ward where I live and which I represent—and I declare again my interest as a councillor in Kirklees—roads are not completed to adoptable standards, because that is a good way of saving money. You sell the homes and move on quickly, and it is then really hard for enforcement to be effective, especially when the fines imposed are paltry in relation to the costs of enforcement. So I have a lot of sympathy with what the noble Lord, Lord Blencathra, has said, and I hope that the Government could look again at that element of the building safety regime.

The next amendments referred to are those in the name of the noble Lord, Lord Best, Amendments 94A, 94B and 97A, about the new homes ombudsman. I agree completely with what the noble Lord, Lord Best, has said—and the Minister is nodding, so I assume that he does too, and will make changes at Report. That is excellent. It is especially about the issue in relation to Amendment 97A, about extending the time limit to six years. People buy a new home, starry-eyed, and move in—excited, obviously—then one or two snagging issues arise; they try to get them resolved, they fail to do so, time runs out, the two years has gone and they have nowhere to go. So it is an excellent move to extend that to six years.

In my capacity as a local councillor, I have had to try to help people, and I have to say that I have failed, because we did not have these powers in place at the time, to do with people for whom simple things like plumbing was not done adequately. Their kitchens were being flooded out, and nobody would take on the responsibility because their time had run out. So I totally endorse the views expressed, and the hope expressed by the noble Lord, Lord Best, that the timeframe for the new homes ombudsman should be six years.

I heard what the Minister said before he introduced his great long list of amendments: that the Government were considering extending the warranties for new homes from 10 years. The trouble with warranties, unless they are really tightly worded, is that developers can find a loophole. You end up with a new home owner on their own trying to get recompense from a powerful business—often a David and Goliath situation and, in this case, David often does not win. That is why I support the move of the noble Lord, Lord Best, to give the new homes ombudsman—him or her; would it not be good if it was a woman?—power to deal with defects in new homes.

That brings us to the many government amendments that the Minister introduced, which he called technical. I always worry when Ministers call amendments technical. It is like saying, “Don’t worry about these. We will rush them through, nobody will notice and you might regret what we have to say.” I am pleased that he was very clear that the building safety regime will apply equally—I hope this is what I heard—to all buildings, regardless of where they are in the UK, be they Crown buildings or, indeed, the Palace of Westminster. I would love to have a discussion about the impact that will have on the restoration project.

Extending the scope of the Bill to include the devolved Governments has been rather rushed over. I have here the Welsh Government’s legislative consent memorandum on the Bill, in which the Senedd says that its consent is required to Clause 126, to which the Government have an amendment, about remediation and redress. I seek from the Minister some explanation that the Government will not ride roughshod over the powers of the Senedd. We have devolved Governments in three parts of the UK, and we need to respect their powers and work with those Governments. I am sure they would work with the Government as long as they do not try to act quickly, not get their consent but try to rush over them. That is no way to work.

I have here a long paper, which I am sure the Minister has seen, which outlines exactly what the Senedd hopes the Government will do. I am sure his civil servants will be able to give him a form of words which will enable me to reassure those of my colleagues who are concerned about Welsh affairs that the Government do not intend to intrude on the powers of the Senedd. With those words, I look forward to the Minister’s response.

[The Earl of Lytton (CB)]

My Lords, I will just pick up on one or two things. Before I do so, hearing other people’s declarations of interests, particularly that of the noble Lord, Lord Blencathra, makes me realise that mine on Monday was perhaps a little light, although it is in the register. I am a co-owner of let residential and commercial property, but nothing of the nature of long-leasehold flats—they are all individual houses.

The noble Lord, Lord Blencathra, raises an absolutely crucial point: the magistrates’ court is too small a threat. It does not have the technical knowledge, and I do not believe it has the capacity either, to deal with it. This threat will simply be laughed at. It really has to have much more meat than that, whether it is through the court process—which I am always a little reluctant about—or through what is proposed in the third group of amendments later on, and in particular my amendments, which obviously take a different tack on how to establish liability. I very much support what he said there.

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[The Earl of Lytton (CB)]

My Lords, as your Lordships will know, I have three amendments in my name in this group. I will speak first to Amendment 115 and then to Amendments 118 and 119, collectively now branded the “perpetrator pays” amendments. I was very pleased to hear the Minister’s prefatory comments, because he is absolutely right. The amendments in the name of the noble Lords, Lord Young of Cookham and Lord Blencathra, and mine come from fundamentally the same hymn sheet. I impress on the Minister: never mind the differences in approach, there are core, fundamental principles that lie behind them all and which, I would like to think, we hold in common. Those principles must be carried forward into the Bill. At the very least, the Minister must come back, not later than on Report, with a version that will hopefully attract some consensus.

I was very glad that we agreed on the earlier point that non-compliant construction is simply unlawful. It is just a real shame that this has been going on for 30 years. One of the problems is that building inspectors are not on site full-time but call to check at certain stages only, so nearly the entire process of receiving good, compliant construction is based on the trust placed in those who direct matters on the site, plan the work, procure materials and labour and oversee standards. I am so glad that my noble friend Lord Thurlow referred to clerks of works. I totally agree with him. The progressive decline in their use is part of a cost-cutting philosophy.

According to the fire chiefs’ council, whose representative was, I believe, giving formal evidence to a parliamentary committee in December, the failings are still ongoing, so the matter is urgent. It appears that many of the approved inspectors are in far too close association with those whose works they oversee.

The problem we have here is one of weak claimant and powerful defendant, and it is that fundamental imbalance that prevents things such as acting against defective workmanship that may amount to unlawful activity. That is why we have to do something to redress that.

My amendments were reworded with “the perpetrator pays” on the advice of the parliamentary clerks—I am very grateful to them for that, because it is a much snappier title than “polluter pays”. Amendment 115 inserts a new schedule, which outlines a remediation scheme. I use the word “outlines” advisedly, because my amendments do not seek to drill down into the administrative detail; that is a job of work for the department to take forward. The amendment tries to set certain principles.

Amendment 118 sets the principles of “the perpetrator pays”, and Amendment 119 is simply consequential. I am indebted to parliamentary counsel Daniel Greenberg for his unstinting efforts in drafting them. With respect to the Minister’s comment, I am indeed a chartered surveyor and no lawyer, but this has come not from my pen, as it were, but from that not only of Daniel Greenberg but of leading construction counsel. They have checked both the construction contractual arrangements and ECHR law and tried to proof the amendments against the risk of sequential legal action and, in particular, judicial review— all of which could effectively unseat the entire process and render anything that we might try to achieve of no effect simply because of the costs that would be faced by anybody trying to exercise it.

I also thank the huge number of leaseholders, who have been appallingly affected, for their patience and stoicism—but also those who have written to me, expressing their support for this group of amendments. I am especially glad that the noble Lord, Lord Blencathra, added his name to Amendment 118. I thank him for that, because this is not a partisan matter but a question of morality and justice, preventing contagion from irreparably damaging a market sector. That is the other piece of the equation at risk here. This is not anti-developer; my belief is that there are many conscientious developers, but a number of significant players have allowed standards to drop. It is those latter that I wish to single out and attach responsibility to, where it properly lies.

I say to all those responsible in that respect that, with all the plethora of information about cause and effect, the advice and case studies and their long experience and their own knowledge of the contracting world, what is it that they did not understand about all this? It really beggars belief that we have got to this stage. My purpose is to make the developer strictly liable for demonstrable failures to meet the regulatory standards at the time of works. I seek to deliver on the sentiments voiced across the House at Second Reading and expressed by Ministers in parliamentary proceedings and elsewhere that leaseholders should not pay the remediation costs arising from fundamental construction failings—and in connection to my amendment, that relates to fire safety. I am holding the Minister to that express promise.

Just to go into the amendments in a little more detail, noble Lords will of course note the salient characteristics set out in principle. I shall run through it as a summary. Leaseholders should not be responsible or liable for fire safety remediation costs, not even to the extent of Florrie’s law capping. It just is not appropriate. They have been led to believe that they would be relieved of paying for things for which they were wholly innocent—points consistently made by the noble Baroness, Lady Pinnock, and points still ringing in our ears from the passage of the Fire Safety Bill onwards. Secondly, the taxpayer should not foot the bill, other than as an extremely limited last resort—and I mean extremely limited—and for interim funding to get a remediation scheme in place, as bridging finance. The fallback under my amendments is not the taxpayer but the industry that allowed these practices, and what amounts to a gross breach of trust, to take root. The burden should fall on those with involvement in these practices, directly or indirectly, and not attach to wholly innocent and diligent operators. That is a matter of straightforward fairness.

The amendments are tightly focused on originating fire safety hazards in residential blocks—not any wider construction faults or building types. This is deliberate, because of the sudden, unplanned and catastrophic nature of building fires, especially when occupants are off-guard and possibly asleep, with the custody of minors and even with disabilities, and thus at their most vulnerable. It follows the thread set in place by Dame Judith Hackitt. Expanding beyond that focus would be unhelpful at this juncture.

The proposal covers residential buildings of all heights. As I observed at Second Reading, when a low-rise building in Worcester Park burned down in 2019, as was referred to last time, it could so easily have cost lives. Building height is not the sole determinant factor of high risk.

I intend to attach blame firmly to the perpetrator in a manner that is inescapable liability following the establishment of defect as fact. The perpetrators may be numerous, but the claim will be made against the developer or lead contractor on a joint and several basis, leaving them to pursue the wrongdoers in satellite litigation, if they choose, after making the payout or fixing the defect. These liabilities should not be a wider industry or societal collective responsibility; that is what bad people like to achieve—spreading their risk among the rest of us. I say no to that, and no to any amendment to this Bill that has that effect. I consider it also as a factor that leads to uncertainty and unconstrained risk response in insurance terms. In other words, it allows the contagion to spread where it should not.

The parties should be on even playing field, not one where there is trial by bank balance or a gravy train for litigators. A scheme has to be straightforward and transparent, not mired in complicated process, even less labyrinthine administrative hurdles. It should be operable by individuals or their agents on a per-building basis, and I was pleased that the Minister referred to the per-building approach. It should not discriminate between types of owners, for reasons we have already heard. It is indefensible that liability for defects should depend on the status of the injured party or the nature of their tenure, as if wrecking somebody’s pension pot or a social landlord’s finances is in some way acceptable, when for the homeowner it is not.

Landlords have moral obligations towards their tenants as well. There is that trickle-down effect of responsibility, so I say no, not even by reference to supposed wealth nor by dint of some anti-freeholder prejudice. You either subscribe to the rule of law for all or you deny credibility and confidence in government, and potentially an entire market sector, as well as evading the proper exercise of justice. I would make only one slight exception: my amendment would also protect housing associations which have purchased in good faith. The only situation where that might not pertain is where the housing association was itself the developer. However, I defer on any of that to my noble friend Lord Best, because I suspect that there are different structures within housing associations that deal with the development on the one hand and the housing association function as a quasi-charity on the other.

Just to make sure that everybody is focused on matters, the idea in these amendments is to propose a public register of determinations so that everybody knows what is going on. I hope that, going forward—this is critical—it should serve to eliminate the perverse incentives and poor culture in the race to the bottom on cost-cutting and safety, which the noble Baroness, Lady Brinton, referred to.

I think it will be found that the amendments are clear, written in plain English and perfectly understandable. As I say, they do not set in place detailed definitions or administrative schemes but seek to establish principles. I consider that they would greatly simplify what I and, I believe, other noble Lords and the Government are seeking to achieve. They would, I hope, minimise the administrative burden on government and the attendant risks of action on defects and their enforcement, but a clear statement of principles must come first.

I do not think I have ever received such a volume of correspondence on any matter in which I have been directly involved in this House as has happened here. This has come in personal emails from innumerable leaseholders and from residents’ groups, management groups, mortgage lenders, property consultants, professional bodies including the RICS and ARMA, and the British Property Federation. Even a former Australian state premier, Ted Baillieu, who now heads that state’s cladding taskforce, thinks this is a game-changer that it will look to as well. The eyes of many people in this country and elsewhere are on us.

In particular, I had an email yesterday from a Mr O’Connell, vice-chair of the Lancaster West Estate Residents’ Association—the estate that includes Grenfell Tower—in support of this. The Mayor of London has also indicated his support. I thank them all, and the social media have been absolutely buzzing. I hope the Minister will be able to repeat his previous support for the principle and that we can move on with this. I would like to make one or two comments on some of the other amendments in this group, if I may be given the time to do so.

Amendment 24, in the names of the noble Lords, Lord Young of Cookham and Lord Blencathra, is one that I would have contemplated tabling, because I felt it was so important for the debate. I am very glad that the two of them have tabled it. I understand that it was drafted by Professor Susan Bright and her husband. I have had the opportunity and the pleasure of meeting both of them virtually, at an online meeting. Professor Bright is an academic of absolutely unimpeachable principles and a stalwart campaigner for leaseholder justice, so nothing I say about this amendment or anything else should detract in any way from the high regard in which she is rightly held. I feel that both she and the noble Lords are very much on message about the necessity of freeholder redress. If there is a divergence, it is on methodology rather than on the principle, as I have said.

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[Baroness Hayman of Ullock (Lab)]

Then I will speak to my amendment, as I stood up first. As noble Lords have said, this has been a really important group of amendments to debate. I will speak first to my Amendment 35 and I thank the noble Baroness, Lady Pinnock, and the right reverend Prelate the Bishop of St Albans for their support.

Clause 57 gives the Secretary of State powers to impose a new building safety levy in England that will contribute towards the Government’s costs for remediating historical building safety defects. This will apply to developers making an application to the building safety regulator for building control approval, which of course is the new gateway 2 process that we have debated throughout discussion on the Bill. The problem we have, which is why I tabled this amendment, is that it will also be imposed on councils—the social landlords. Councils of course already face additional financial pressures, due to the Covid-19 pandemic.

We should not forget that the key role of local government is to serve communities—the Minister will completely understand this—and provide essential services. They are not the same as developers, so the purpose of this amendment is to make social housing providers exempt from the additional financial burden of the Government's proposed levy, to prevent council and social housing tenants subsiding the failures of private developers and paying the cost of remediating both council housing and private housing. We are concerned about what may be the unintended consequences of the Bill as it stands, because if the levy is imposed on local authorities, it will increase the cost of building or refurbishing social housing, or increase rents, as the right reverend Prelate said. Yet the benefits to funds will not be available to the tenants, who would otherwise have benefited from lower rents or better housing.

The money to fund remediation must come from somewhere. Inevitably, it will be at the expense of another critical service, either in housing or through increased rents. To ask for that does not seem the right way forward. Does the Minister recognise the potential impact of the levy on social housing supply? Again, the right reverend Prelate the Bishop of St Albans talked about our desperate shortage of housing in this area. We do not want anything that will negatively impact that. It is important that we do not pit the objective of providing for those in housing need against the objective of making buildings safe, when both must be delivered.

I turn to the other amendments in this group, looking first at the amendments in the name of the noble Lord, Lord Young of Cookham, which he introduced clearly and comprehensively. To us, they seem eminently sensible and practical, and the right way forward. As he said, Amendment 130 proposes that the Government establish a comprehensive prospective levy scheme on all developers, the money from which would go towards remediating the defective buildings. As I understand it, his Amendment 24 is consequential on the establishment in Amendment 130 of the building safety indemnity scheme. That means that the removal of building work that contravenes fire safety regulations could be carried out, if his Amendment 130 were accepted.

What came through in both the noble Lord’s introduction and how other noble Lords introduced their amendments is the fundamental principle that it is right that the person who is responsible for breaches and poor building work should be made to put it right. This is a simple, basic principle that I think we all agree with. It should not be that difficult for the Government to accept it; to me, the Bill already accepts it. Why not work with noble Lords who have put forward such important amendments today, take them forward and give us much more robust statutory protection for leaseholders, extending it to all work, as the noble Lord said, that contravenes regulations? We would strongly support any amendment that makes buildings safer and protects tenants properly.

I was also struck that the noble Lord, Lord Young, referenced freeholders. They have not been talked about enough in debate on the Bill, so I thought it was very important that that reference was made and that they are not forgotten.

The noble Lord, Lord Blencathra, has a number of amendments looking to make protections more robust. We strongly support his zeal in what he is trying to achieve. His objectives are really important; as he said, they are not exactly perfect in every way, but we are not about perfection here. This is about putting forward the issues that need to be considered to improve the Bill. He has done that very clearly. His aim to pull the “perpetrator pays” and protections for leaseholders together is important, because it makes the objectives and the direction we need to go in really clear.

The noble Earl, Lord Lytton, was right when he said that his amendment and those from the noble Lords, Lord Blencathra and Lord Young, come from the same point of principle—an important principle that we support. He is right that this is quite simply a matter of justice. As the amendment says,

“responsibility for serious defects in the original construction or refurbishment”

rests squarely

“with those who designed, specified, constructed, or supervised the works or made false claims”—

and that is not the leaseholders. It is important that leaseholders feel that their position on this is fully understood and that we are moving forward in this way.

The principle that the perpetrator pays is also really important, but I should like to ask the Minister something, because I am getting a bit confused. What is the difference between a perpetrator and a polluter paying? It has got a bit confusing to have these two phrases.

[The Earl of Lytton (CB)]

I put this amendment forward originally to your Lordships’ wonderful team of parliamentary clerks, who did not like the term “polluter”. They felt that pollution as a term of art meant something different—if you like, involving a release or deposit of something, rather than sticking something together wrong. But they said that they would accept “perpetrator pays”, so I said, “Okay, all right, so be it.” But actually I think it is a better term, so I give them due credit for that. That is the origin of the phrase.

[Baroness Hayman of Ullock (Lab)]

Perhaps someone should table some amendments to change the word “polluter” in the Bill to “perpetrator”, so we can all be in the same place.

Very briefly, I turn to the government amendments in this group. At earlier stages of the Bill, it was disappointing that what it contained fell significantly short of the action that was needed to protect leaseholders, so I put on the record how warmly we have welcomed the new amendments that the Government have proposed to address a lot of the urgent issues raised through debates on the Bill so far. However, there are a number of key questions that I shall put to the Minister for clarification today on the amendments that we have debated. I shall not go into detail, because we have heard an awful lot of discussion around them today—so I shall be brief.

How strongly committed are the Government to using their proposed enforcement mechanisms to ensure that industry plays its part and pays the funds that it has been asked to? How will the Government continue to play their part and pay the funds needed to end the crisis while ensuring that funding for affordable housing supply is protected, regardless of the contribution of funds from industry? How can leaseholders who have already paid remediation costs recover those costs retrospectively? I do not think that that has been properly dealt with so far. How will the Government ensure that new funding responsibilities for social landlords will not undermine their role in providing housing supply? That references back to my amendment.

I am sure that we will revisit some of those questions later in debates on this Bill. I ask a brief question about the new clauses in Amendments 74 and 75, which give the Secretary of State power to make regulations that

“prohibit a person of a prescribed description from carrying out development of land in England”,

and/or imposing a building control prohibition in relation to persons of a prescribed description. Those powers would be for any purpose connected with building safety or building standards. I should like clarification, because it is unhelpful that a

“person of a prescribed description”

is not defined in the amendments, which simply state that it means “prescribed by the regulations” under the clause. This is what I am slightly confused about; does it apply to persons who have been found to be in breach of building safety, or is it the means by which government would prohibit those who do not contribute to the extra £4 billion fund? Some clarification on that point would be really helpful.

I hope that the Minister has listened very carefully to the important points that have been made by noble Lords in this debate, and I end by saying to him, in the spirit of what has been going on earlier, acta non verba.