Levelling-up and Regeneration Bill

Earl of Lytton Excerpts

Committee stage
Wednesday 15th March 2023 Lords Chamber

[The Earl of Lytton (CB)]

My Lords, I have added my name to Amendment 158. I declare an interest as a vice-president of the National Association of Local Councils; I am also the co-president of the West Sussex Association of Local Councils.

I remember clearly that we had a difficult meeting of the county association, in that the matters were contentious. It was dealt with online. I and my co-president went through the whole thing; all I can say is that it was entirely satisfactory. It was well organised from the word go and was well marshalled by the clerk of the association. The matter was carried off to everybody’s reasonable satisfaction; given that there were contentious matters, nobody complained.

I would just like to say that the world has changed. The world was changing beforehand; I was doing virtual meetings long before Covid came along. The fact that the technology was there and was sped up says a great deal about those who were responsible for getting things organised, particularly those in this House who organised things so that we could hold our proceedings virtually. It was enormously to the credit of those who seized the opportunity to do it.

However, if we are going to speed up Britain, one of the first things we will want to do is make sure that we make cost-efficient use of people’s time. The first bit of cost-efficiency is reducing road miles; we can start by decarbonising meetings. I am not very far from my local authority offices but I know that, by the time I have travelled five miles, found a parking space, probably paid for parking, crossed the road and gone into the council chamber—I am not a serving councillor; I just use that as an example—it will have taken me a good half an hour, with another half an hour on the way back, thank you very much. If you want busy people to devote their time and energy, you really have to make efficient use of their time; otherwise, they disconnect.

The other important thing here is inclusivity; other noble Lords and noble Baronesses have mentioned this. We are dealing with people who may be infirm or have mobility difficulties. This may involve young people in households with schedules that do not match; they may work away so it is hard for them to get back in time with normal commuting. Of course, you also have parents who are looking after young people and cannot get away. They cannot detach themselves from their household, never mind the infirm or those with other issues.

On the grounds of cost-efficiency and inclusivity, these amendments are very powerful. I thank the noble Baroness, Lady McIntosh, for introducing this group and the noble Lord, Lord Lansley, for taking us through the history of where this issue was. I say again: things have moved on. We need to look at a modern, efficient way of working. This amendment does not say that you would have to have virtual meetings; it gives local choice on the matter. How come a parliamentary Select Committee can operate virtually if it decides that that is convenient, as I think is still the case, but a parish council—or a planning committee, for that matter—somehow cannot? This is inconsistent and makes no sense, so I very much support these amendments. I hope that the Minister, the noble Earl, Lord Howe, will consider them carefully and reflect on them; I know that he is an enormously fair-minded man when it comes to these things.

[Baroness Pinnock (LD)]

This issue is part of a threesome that we have debated this evening: local democracy; fiscal and electoral decisions; and, now, how we hold meetings. How is it that Westminster can dictate how local councils should conduct themselves? That is the question I want to ask. I know that they deal with potholes; actually, I have a plan for potholes. Can we have migration of potholes? Do noble Lords think that would help? It seems to me that these amendments have a lot of merit; I will say why.

The first issue is travel. The noble Earl, Lord Lytton, raised this but only in relation to going a short distance. In their wisdom, the Government have created two new unitary authorities, which start their life in April. North Yorkshire is one. If you live in Selby or are elected to represent Selby, in one part of North Yorkshire, you now have to travel 56 miles to get to a council meeting in Northallerton. That is a 112-mile round trip to get to a meeting. You have to ask yourself: is that an efficient use of anybody’s time, and does it contribute to our net-zero ambitions?

Then there is Somerset, which Members of the Committee may believe is a smaller county, but if you live at one end, in Frome, and the county hall is in Taunton, at the other end of the county, that too is 56 miles and a 112-mile round trip. That is not cost effective or efficient in anybody’s life. If you live in Yorkshire, especially North Yorkshire, and you have to go across the dales or the moors in winter to attend a meeting, you know that sometimes it is simply not possible. That is one reason.

I hope the Government will take up the suggestion by the noble Lord, Lord Lansley, of bringing forward a government amendment, either shortly or at the next stage, to deal with this. As the noble Lord said, it is about efficiency. Virtual meetings lower costs and enable more people to get involved. If we are interested in local democracy, as I am, the more people who can get involved and engaged in decision-making, the better.

My final point, well made by my noble friend Lady Scott of Needham Market, is about the engagement and involvement of people who are otherwise excluded from being councillors because of either caring responsibilities or lack of transport. If you do not have a car in North Yorkshire, I do not know how you get to Northallerton. Maybe the noble Baroness, Lady McIntosh, can tell us, but I think it might take a couple of days.

For all those reasons, it is really important that if we want to reinvigorate our local democracy—which is essential if we are to narrow inequalities, which is at the heart of the levelling-up process—we need more people to be engaged. If we want more people to be engaged and involved, we have to enable it by letting councils decide for themselves whether they want virtual meetings. I fully support the principle behind all these amendments.

Levelling-up and Regeneration Bill

Earl of Lytton Excerpts

Committee stage
Monday 13th March 2023 Lords Chamber

There is huge merit in Amendment 70, albeit with the caveat that the noble Lord, Lord Foster, himself made on what actual voting percentages and so on should be. I do not underestimate the importance of those matters in democracy, but the principle seems absolute: the districts have to be at the table.

[The Earl of Lytton (CB)]

My Lords, I support Amendment 81, spoken to so eloquently by the noble Baroness, Lady Scott of Needham Market. In doing so, I draw attention to my vice-presidency of the National Association of Local Councils, which I had the privilege of serving as president for many years, and my current joint presidency of the West Sussex Association of Local Councils.

It is regrettable that, notwithstanding the status of neighbourhood plans as a material consideration in local planning structures, principal authorities often seem to be obliged to disregard them, despite having considerable agency in the production of these plans. I refer to the calling of referenda or, as sometimes seems equally likely, delaying of the calling, which I can only assume has sound reasons. It creates great problems, given that there is substantial commitment of time and no small amount of public money to the neighbourhood planning process.

As we move into other areas that will involve multiple local authorities, such as biodiversity net gain and water neutrality, I can see that it is perfectly legitimate for these to be dealt with at what you might call a superior level. But it remains absolutely essential that communities still have a voice, a view and a role in that particular decision-making format. If the Secretary of State’s comments mean anything when he refers to strengthening the role of communities, as I understood him to say some while back, it must be something other than lip service—something other than parishes and town councils being somehow left behind. When I say that neighbourhood plans are being disregarded, I think of the neighbouring parish to the parish in which I live, where precisely this has happened.

It is very important to understand the structure of town and parish councils, as alluded to by the noble Baroness, Lady Scott, with their knowledgeable, highly engaged and often very effective interventions in local planning processes through their structure of county and district associations as well as the individual parishes. They should not be underrated. They have access to resources you would not believe. I have come across parishes in which top planning consultants happen to be residents. These people are highly engaged, highly knowledgeable and should be listened to. Parishes have moved along massively in the past 20 or 30 years. They really are the only structure that represents the community at this level. When you think about it, there is no other authority that extends down to that level of where people really live and do things in their work/life balance. If people feel disregarded, as do many residents in my part of West Sussex, it bodes ill for engagement, cohesion and, ultimately, the efficacy of national policies. I would not want that to go unstated in the context of the Bill.

[Lord Shipley (LD)]

I rise to speak to Amendments 155 and 156 in my name. These are probing amendments because I think it is very important that the Government explain their intentions. Amendment 155 provides that non-constituent members of the combined authority are not able to vote, given their status, and Amendment 156 provides that associate members of a combined authority are not able to vote, given their status. On a previous day in Committee we addressed this issue, in part. However, the Government need to undertake some mature reflection about what is proposed here.

Giving a vote to somebody who is not a full member of a combined authority is unwise. My amendments provide that there should be no vote for anybody who is not a full member of the authority. The principle is that full members are voting members, and voting members are full members, but you cannot have full voting members when they are not full constituent members, as opposed to associate members, of the authority.

The voting structure between counties and districts as explained in the Bill would provide a route for resolving any impasse that might arise if votes were allocated on the basis of population. Of course, a county would have exactly 50% of the votes. If all the district councils voted against the county—one hopes it does not come to that—there would have to be some kind of system for a casting vote. The mayor would seem to be the way forward.

After reflecting on what we have been saying on previous days in Committee, to me it seems that district councils, which are responsible for planning and economic development matters, ought to be full members of a CCA. That seems to me to be the principle. It should not be at the discretion of the CCA, which does not have a district council member, to simply award a vote to that district council member when other district council members may not have a vote because, as the noble Earl, Lord Howe, said on the previous day in Committee, when giving a vote to one non-constituent member or to an associate member, it does not follow that other associate or non-constituent members would have a vote.

So this is a probing amendment. It is complicated; I understand that. When in due course we reach Report, I just hope that the Government will be prepared to examine the structure they have proposed here. I have come to the conclusion that they should permit district councils within a CCA area to become full members. At that point, those full members would have a right to a full vote under their own terms of membership. I hope very much that the Minister will be able to respond to that, so that we can get a better feel of what we need to do on Report to bring in further clarification on this matter.

Levelling-up and Regeneration Bill

Earl of Lytton Excerpts

2nd reading
Tuesday 17th January 2023 Lords Chamber

[The Earl of Lytton (CB)]

My Lords, I declare my professional and personal interests in this matter as a chartered surveyor in the areas of planning, heritage and short-term lettings, and as a vice-president of the National Association of Local Councils. I am grateful for the briefings from NALC, the RICS and others. The speakers’ list for this Second Reading means that much of my thinking will go unsaid, for which noble Lords may be grateful. Nevertheless, this is a behemoth of a Bill. Although there is plenty on the broader aspirations of the Bill that I can support in principle, unfortunately time allows me to focus only on where the proposals appear to me to be defective.

I start with the proposals for combined county authorities, which it appears will be created by ministerial fiat without democratic input, with members of the authority having at best indirect local democratic accountability and the associate membership having none at all but potentially still with voting rights. I see local democracy being diminished by that.

On Clause 75 and long-term empty dwellings, a one-year trigger is not long enough to prevent unfairness to people with genuine good reason, such as executors dealing with a deceased person’s estate, properties undergoing renovation, or, for that matter, those properties which cannot be let because of poor EPC ratings or defective services—and all that assuming that there are no planning delays where consent is needed. In addition, the definition of periodically occupied dwellings in Clause 76 would very likely catch all sorts of unintended cases, and the proposal lacks proper evaluation of the problem.

On short-term lettings, I declare an interest. Under Part 12, I suspect that many would qualify as a business property. But even when so advised, building authorities frequently consider that they are under no obligation to request a review by the Valuation Office Agency, to which direct owner access is problematic. That is unreasonable and needs to be rectified. On registration, I am at least glad that the Secretary of State will consult first.

Despite the Government’s warm words about communities, there is little that fosters or promotes the role of parish, town and community councils, which was referred to by the noble Lord, Lord Stunell. There is nothing that deals with the community representation inequality in unparished areas, the absence of powers of general competence and the continued lack of resources for this sector. There is nothing that protects the social and financial investment in neighbourhood plans from being flouted by principal authorities or being further undermined by a street vote. Online meetings ought to be a general option, but they are precluded at the moment.

Turning to Chapter 3, on heritage assets, I declare that I am an owner of listed buildings. The new temporary stop notice proposals would be fine were it not for the complete lack of clarity about what works will be caught. Historically, many councils take the view that any alteration, minor or not, requires formal consent, but there is a fundamental unfairness in that approach, made worse by poor levels of resourcing and poor heritage competence. I could go on about unreasonable delays, unnecessary expense and impractical conditions, but I will move on.

On planning enforcement in Clause 107, I am curious as to the justification for extending the four-year period in relation to unauthorised works to match the 10 years for changes in use. The considerations are not the same. The four-year rule has been in place since 1947, and in this modern age we have far more surveillance facilities than ever. I question whether the change is of practical benefit, given council resources. We need more detail.

Part 10, on the proposed enforced lettings of vacant shops, seems to be an example of a poor grasp of the practicalities, the dangers of overriding commercial agreements, and the risks to local authorities and market sentiment. Shops are not kept empty for fun, and this measure displays little appreciation of the costs or consequences.

Noble Lords will expect me to comment on Clause 213 and the proposal to reserve the Secretary of State’s powers in relation to the Royal Institution of Chartered Surveyors. Noble Lords may well be aware that, long before the Bill was published, RICS had accepted the report of Alison Levitt KC into a purely internal matter. In actioning the vast majority of her recommendations, it then commissioned my noble friend Lord Bichard to review its governance and purposes. He reported last June; RICS accepted his recommendations, retained him as a senior independent governor and committed to five-yearly independent reviews henceforward. So what is the matter with that willing self-reformer? It is a politically neutral membership body constituted under a royal charter, with clear ethical, professional, technical and disciplinary codes, which operates globally and, above all, with independence. I suggest that “independence” here means freedom from interference of any sort, including political. Would the Minister agree that any such interference could of itself affect domestic and international perceptions of RICS and with it the reputation of this country as a safe jurisdiction for professionals?

Finally, given the assurances made by Lee Rowley MP in the other place, will the Minister agree to meet me and representatives of RICS, before Committee, so that we can understand the department’s grounds for this measure?

Non-Domestic Rating (Chargeable Amounts) (England) Regulations 2022

Earl of Lytton Excerpts

Tuesday 20th December 2022 Lords Chamber

[The Earl of Lytton (CB)]

My Lords, I declare my interest as a chartered surveyor and valuer once upon a time in the employment of the Inland Revenue Valuation Office, and a member of the Rating Surveyors’ Association, of whose annual parliamentary reception I am pleased to be the sponsoring Peer.

Bearing the mark of Cain in that respect, I thank the Minister for convening a drop-in session yesterday, even though my noble friend Lord Thurlow—who I am glad to see here—and I very nearly missed it. I am grateful that she has moved these regulations and for her explanation. They are very welcome and long overdue.

I warned the Minister, however, that my welcome would include some finger-wagging, so here goes. Although these regulations right an historic wrong, they do not by any test make it all okay. Leaving aside the impenetrable algebra of Parts 1 and 2 of these regulations—I do not recommend any noble Lord to pursue that too diligently—this measure is rendered necessary because of the effects of transition on those who, at revaluation, have their assessments reduced.

As noble Lords will know, transition is designed to smooth the adjustment process and prevent a cliff edge but, due to Treasury insistence on enshrining in law the principle of fiscal neutrality, the phasing in of increases is currently matched and compensated for by a miserably slow phasing down of reductions. In short, those whose assessments are reduced, possibly due to sectoral overvaluation of one sort or another, often do not see the benefits within the lifetime of a valuation list—the five-year life of a revaluation as at present. In fast-changing situations, this matters quite a lot and frankly is objectively unfair.

Although these regulations set out to redress that gross injustice, there is a sting in the tail, in that the £1.6 billion subsidy that enables these regulations to function will be clawed back from business rate payers in the last year of the 2023 revaluation lists, due of course to the question of fiscal neutrality. The only thing that stands in the way and would eliminate that is the long-promised move to a further and as yet undelivered overhaul of the entire system. I am very grateful to the Minister for her comments and hope that other speakers may be able to enlighten us on the likelihood of that. This may not be dealt with before the end of the current Parliament—it may be beyond that—and it will need all-party buy-in.

The business rate pays a huge and disproportionate amount towards local government finances. It is more than nearly any equivalent recurring property tax anywhere in the western world; we ought to bear that in mind. It has gone up by nearly 90% since 2001, far more than any increase in rents and rather more than the increase in profits, one might suppose. Pro rata it is disproportionate by reference to many other comparators as well, including by capital or rental value, floorspace, demands made of local government services and rate of increase—particularly when compared with that other local government source of finance, council tax. It is driving away enterprise, commitment and investment from the nation’s high streets, encouraging moves to cheaper or off-pitch locations, home-based enterprises and internet trading. As an aside, I comment that if the provision for enforced rental auctions of high-street retail property is still in the levelling-up Bill when it gets to us, it will mean, if anything, an admission of failure and an act of desperation that I think likely to backfire.

I welcome this limited measure for what it is, but wag my finger at the lack of action over the elephant in the room that sits behind it. Noting that the 2023 revaluation does not reduce many of what one might suppose the most seriously affected sectors—namely, retail and food operations—by more than about 10%, and bearing in mind that we are talking about 1 April 2021 as the valuation point, I think that we are at a tipping point. If nothing is done and we are not careful, the once-workable business rate system will become so tarnished and broken by mismanagement, lack of care, gaming of the system and denial of any sense of equity that abolition will be the unanswerable endpoint.

The Government’s 2023 revaluation support package is welcome but none the less papers over many cracks. Can the Minister tell us the position on the technical review consultation, which is now more than a year old? Can she give a categoric assurance that there will be comprehensive business rates reform in the life of the 2023 revaluation that can command the support of opposition parties? I will put it another way: when will we get a non-domestic rating Bill providing comprehensive reform and a move to three-yearly revaluations, doing away with transition and the need for a Treasury free bet of fiscal neutrality? Finally, will the Government rein in HM Treasury, address the excessive demands on the tax yield from this source, and move to a fairer tax take before it is too late?

Housing (Built Environment Committee Report)

Earl of Lytton Excerpts

Tuesday 8th November 2022 Lords Chamber

[The Earl of Lytton (CB)]

My Lords, it is always a pleasure to follow the right reverend Prelate. I declare my professional interest as practising chartered surveyor, and I follow the noble Lord, Lord Moylan, in saying what a wonderful chairman we had in the person of the noble Baroness, Lady Neville-Rolfe, for the production of this report. Its sharpness—the edge that it has—is her hallmark. What a privilege it has been to serve on the Built Environment Committee and to work with colleagues. I add my thanks to our clerk, policy analyst and committee operations officer for their untiring efforts.

For me it was a real pleasure to come across Professor Paul Cheshire again. He was one of my lecturers when I studied at the College of Estate Management 50 years ago. I just hope he felt that some of the fairy dust and some of his wisdom had sunk in.

I warned our chairman, the noble Lord, Lord Moylan, that I might be making a bit of a departure. I will leave the bulk of the report to speak for itself because I think it largely does that. I should like to address a little of what I might call the size of the remaining iceberg that lies beneath the surface. I may be slightly nearer to the noble Baroness, Lady Thornhill, than she might at first suppose.

We concluded that behind delivery shortfalls against target there is some lack of coherence in government policy in relation to delivery, particularly in the area of planning, which has been referred to. It is not that the Government do not have clearly stated targets—they clearly do—but the mechanism for getting results seems in disarray. A series of patch and repair operations has been undertaken over many years with an absence of thoroughgoing assessment of the implications in a very complex interleaving of tiers of government, executive agencies, international commitments, national priorities, societal and special interests, along with significant infrastructure challenges, not least when you have to meet them upfront as part of a development process. This may be due to the number of departments involved but also to the underresourcing of planning departments. They are matched by increasingly financially powerful volume housebuilders. They have been referred to in other circumstances as showing oligopolistic tendencies.

I think there is a wide perception of minimal corporate ethics in a sector that sits uncomfortably close to the political elite in the sponsorship of party conferences, political donations and photo opportunities for Prime Ministers and others wearing hard hats and high-vis jackets emblazoned with corporate logos. These might not be harmful of themselves, despite appearances, but there is obvious potential for what might be called high-level offline activity.

Closer to home, and with resource-starved authorities in high-value areas, there is clear evidence that these influences are being brought to bear in policy-making at local level, often—I suspect, and this is certainly the suspicion of many citizens—in priority to the express wishes of communities. After all, local planning officers can be effortlessly outgunned by skilled legal teams, even without recurring aspects that the average citizen would perceive as fundamentally dishonest. Strategic housing allocations are made but then built out at a dribble, thus perpetuating high and growing house prices and placing forward housing rollout in the hands of unaccountable private companies.

In turn, this leads to further manipulation and horse dealing over available sites. Railroading of developments is often done via ruinously expensive appeals and inquiries. Despite clear local and neighbourhood policies, citizens’ wishes are being overridden. As the noble Lord, Lord Moylan, pointed out, SME operators have been squeezed; they simply cannot compete in this environment. The public perceptions are negative, mistrustful and disbelieving of the conditions and controls, especially Section 106 ones, that they are told local authorities are able to impose.

Certainly, in my own area, one does not have to join up many of the dots to understand what has been going on over the last 18 months between the majority party on the council and a series of well-funded developers. Indeed, on the current matter of water neutrality, which is well up the agenda, it is beginning to look as if the clear principles set out by Natural England may be up for grabs via a system of permits according to a tariff, with long-term but ultimately unenforceable requirements of things such as low-flow taps and diminutive bath-tubs. Of course, none of these will diminish the core problem of growing abstraction and the resultant damage to environmental assets—at least, not any time soon.

Adequate delivery risks failure, not just in build-out rates and the quality of place-making and durability of homes but in less physical ways—for instance, rent charges, where a new freehold house is tied into annual payments for maintenance and management of common areas or public realm assets. That is the roadways, hard and soft landscaping, storm water drainage arrangements, play areas and maybe security systems and lighting—things that have not been adopted by the local authority. These charges are prone to being ratcheted up and can easily reach levels at which mortgage companies may decline to lend. This has earned the name “fleecehold”. Such additional charges, as compared with the generality of homes in a district as a whole, cause value writedowns and selectively unfair treatment. This is one of the unsatisfactory outcomes we are dealing with.

During my own researches, I happened upon one local authority that had set up a company to own and manage these rent charge opportunities, explaining as it did so that it would make a profit of several million pounds in the first few years of operation. This is from a council that decides the planning merits, sets the conditions and planning contributions, writes the Section 106 agreement and has the power to adopt public realm assets or not, as it chooses.

I could go on and explain—but I will not—how similar cost-recovery schemes may in due course feed into new home owners paying disproportionately for wider societal issues such as water neutrality, as I mentioned, or, perhaps more topically still, biodiversity net gain, and how the administration of these can easily cross the line between obligations, objectively fair administration and the appearance of disreputable practice. The entire delivery process is therefore between rocks and hard places, and sits above a crevasse.

The HBF—the noble Baroness, Lady Thornhill, referred to this—also sent me the report. That set out 12 critical additional burdens on the housebuilding sector, which cumulatively would add £20,000 to the build cost of every new home. That was an average; the range was £19,000 to £21,000. If that is correct, then affordability will go out of the window and, as the HBF suggests, development viability with it. There is just too much being taken out of the system.

I hope the Government will take careful note of the issues for meeting housing demand that we have reported. What we have set out are really the headlines; there is a good deal more subtext underneath. We need to recalibrate and facilitate better social housing build-out and, as the noble Lord, Lord Moylan, has said, a better situation for small and medium-sized enterprise. That will require a substantially different model because, as I see it, resources from housing development and the housing delivery process are being dissipated.

Building Safety Bill

Earl of Lytton Excerpts

Consideration of Commons amendments
Tuesday 26th April 2022 Lords Chamber

So I hope that, in the next parliamentary Session, we will have a chance to discuss leasehold in more detail and to reform it, and have more initiatives that mean that more houses are built, but in collaboration with people such as leaseholders, who can advise on some of the pitfalls of building too quickly and put forward safety concerns.

[The Earl of Lytton (CB)]

My Lords, it is always a pleasure to follow the noble Baronesses, Lady Neville-Rolfe and Lady Fox. I pay tribute to the efforts of the Secretary of State and the Minister to achieve significant changes in the face of a very difficult situation. That should never be understated. If it has been too slow for some seriously challenged individual households, the Bill is undoubtedly immeasurably better than when we started. Obviously it was a disappointment to me that several key elements were rejected in the House of Commons, and I remain concerned by the sub- 11 metre exclusion, buy to lets, enfranchised blocks and orphan buildings, about which so much has been spoken. Although the point that the perpetrator should pay was not before the House of Commons, the problem remains a real one: the problem of funding does not go away.

On the 11-metre cut-off, it has been consistently said that with the measured and proportionate response that the Government say they have adopted, there is no systemic risk for low-rise properties. I do not know whether this means that other mitigations, such as alarms, smoke detectors or sprinklers, may be appropriate, but the claim seems to lack a basis in data. The point was well made in the seventh report of the Levelling Up, Housing and Communities Committee of the other place and followed by an Answer to a Question for Written Answer of mine: without data, assertions regarding risk, mitigation options and cost-benefit lack foundation and create doubt.

If the Government are saying that adding sprinklers, smoke detectors and alarms to such buildings is an acceptable means of overcoming an initial failure in construction, I ask the Minister to be aware that there is a reputational and moral hazard here. If those are seen as workarounds to deal with essential, original compartmentation in buildings, I would really worry about how that will be taken forward and potentially abused in the future. I just do not want to go there; this one has been bad enough. So we rely heavily on government assertions that they will have the powers to deal with these issues.

I acknowledge that the Secretary of State has made considerable progress on the developer pledge but, as the British Property Federation observes, it does not cover sub-11 metre buildings and, in several aspects, as the noble Lord, Lord Young of Cookham, said, it may be inconsistent with the Bill. But if, as I am led to understand, this will be enforced by denying developers planning consent, apart from the questionable basic legality of such an intervention in planning and development laws, it should be noted, as I have said to the Minister before, that planning consent runs with the land, not with the applicant, and even less with whoever happens to be the current owner. That is a matter of law, not of debate.

I was also led to believe that one of the reasons why the perpetrator-pays approach would not stand the test is that it means backdating to a previous era, beyond what would normally be covered by the provisions of the Limitation Act. If I am right and a fundamental failure to meet the mandatory provisions of building regulations from 1965 and at all times since is, in fact, an offence, time cannot run against the commission of an offence in favour of the perpetrator. I am a bit fearful that aspects of the Bill could be regarded as arbitrary and discriminatory as between classes of owner and the nature of liabilities, touched on by other noble Lords. In a sense, that might lead to its own legal trajectory in another area.

I hope the Government have a constant process of rolling review of what is going on here, because if we do not deal with ongoing market turbulence, lack of confidence, economic attrition and the victims in all this simply concluding that they have been hung out to dry in some way, that will really be a system failure and we will not have delivered on the promise given by Ministers in the other place and here that leaseholders should be kept free of these costs, for which they were entirely blameless. I am absolutely sure that the noble Baroness, Lady Pinnock, will say just that in a minute.

I finish by paying tribute to noble colleagues with whom I have worked and particularly to the many leaseholders and their groups. They have campaigned for justice and proper defect remediation. My arguments here have been fuelled by their plight, and I intend to keep reminding the Government that this matter, until it is all put to bed, will have to remain in their line of sight.

[Baroness Bennett of Manor Castle (GP)]

My Lords, it is a great pleasure to follow the noble Earl, Lord Lytton, and to hear that he intends to keep a close eye on this, because that will clearly be needed well into the future.

I rise to offer Green support for Motions D1 and H1 and to make a single point about how I see these fitting together. The noble Baroness, Lady Hayman, and others said that the leaseholders are the absolutely innocent parties here—but, more than that, it is important to say that they are the injured parties. They have been injured over years and years of stress and worry, both financial and about their physical safety, given where they are forced to live. Think about going to bed every night fearful about what is going to happen. They are the victims of the policies of successive Governments who have allowed the building industry to act as a cash cow rather than a provider of secure, affordable, decent homes.

There are still a lot of steps down the road, but if we pass Motions D1 and H1 we give those leaseholders and owners the clarity and certainty that they will be looked after, whether or not their building is under 11 metres, and that they will not be hit with a bill that they still cannot afford to pay, as the noble Baroness, Lady Hayman, said.

I was tempted to say that your Lordships’ House should put one last heave behind the Building Safety Bill, but then I thought that was a slightly unfortunate metaphor in the context we are talking about. I will pick up what the noble Baroness, Lady Hayman, said: the campaigners have done so much work and have fought so long and hard on this. Let us buttress that and put in the final supports they need to get the Bill we should have.

Building Safety Bill

Earl of Lytton Excerpts

3rd reading
Monday 4th April 2022 Lords Chamber

[Lord Young of Cookham (Con)]

I thank my noble friend for his very kind words, and, in return, I commend him for the progress which he has made with the Bill, with his statement on 10 January, the amendments he tabled on 14 February and the further amendments he tabled last week on Report. I also commend him for his engagement with those who have sought to improve the Bill; he engaged with patience and humour despite, from time to time, considerable provocation from two former Chief Whips.

I will make two very brief points. First, I hope the amendments that were carried last week will not be overturned in the other place: amendments protecting those in buildings under 11 metres; amendments protecting leaseholders from making any contribution; and amendments that seek to protect the position of enfranchised leaseholders and put them on a par with unenfranchised leaseholders.

Secondly, there is still some unfinished business. We need to make progress on so-called orphaned buildings. I know my noble friend recognises the problem, which he believes, I think, can be dealt with administratively, and in an exchange on Report he pointed to the funds available, but it remains to be seen whether those funds will be sufficient and who will take on the responsibility of remediating these buildings given that the leaseholders —at the bottom of the waterfall—will not have the resources to do this, particularly if they are expected to litigate first.

I hope that, in the other place, some thought might be given to this and, in what is entirely a matter for the other place, I hope they recognise that they have never seen these clauses at all and therefore allow adequate time for consideration of Lords amendments.

[The Earl of Lytton (CB)]

My Lords, your Lordships will of course know that I have one principal abiding fear about this Bill, which is exactly the point that has been made by the noble Lord, Lord Young—who I regard, along with the noble Lord, Lord Blencathra, as my co-conspirator on this Bill.

To put a little more flesh on that bone, in a case where the original developer or builder cannot be identified or is identified but has gone bust, the question is about getting the remediation cost from these defunct individuals. Given that we have effectively removed the liability of leaseholders for remediation costs—and rightly so, in my view—what then happens when those freeholders and leaseholders are faced with no other option going forward? That is my abiding fear about the overwhelming financial odds that might face these occupiers.

Whether is it possible for the Minister to clarify that, I do not know. However, I add my voice to those of others who have expressed their appreciation for what the Minister has done: he has tackled this with a real sense of purpose, with an open-door policy to talking with those who have concerns, and I appreciate that very much. Behind him is the Bill team, to which I pay tribute as well.

I pay tribute to my co-conspirators, and also all those across the House, on all sides, who have supported me in Divisions—I appreciate that very much indeed. I particularly pay tribute to fellow Cross-Bench Peers, the noble Baronesses, Lady Finlay and Lady Grey-Thompson, and the noble Lord, Lord Best, who, on individual aspects, have campaigned tremendously effectively to have this Bill altered, very much for the better.

Beyond this House, I pay tribute to the efforts of organisations such as the Leasehold Knowledge Partnership, which has been very helpful in many respects. Most of all, I thank the perpetrator pays team, Steve Day and Daniel Greenberg; as far as I am concerned, their input has been absolutely fantastic and totally indispensable.

My last point has to be for all those who wrote to me: the couples who had put off having a family, or even getting married; the distraught pensioners; the families with their hopes and finances on hold, whose children have had their education disrupted and who have been unable to move because their properties were unsaleable for work or for any other purpose; and those facing bankruptcy and repossession. They have been my driving force. In all my years of experience as a chartered surveyor, I do not think I have had so many people write to me, and I hope that I have been able to give a voice to the voiceless in that respect and some glimmer of hope that, at the end of a really long dark period for them, there might be a little bit of light. I remain committed to the principles that I have held to throughout the course of the Bill.

Building Safety Bill

Earl of Lytton Excerpts

Lords Hansard - Part 2 & Report stage
Tuesday 29th March 2022 Lords Chamber

I do not think we can simply sit and wait. If the Government cannot accept this amendment, they must come up with an alternative proposal that ticks the box. Without such an assurance, this Bill simply will not live up to its name.

[The Earl of Lytton (CB)]

My Lords, as it is my first contribution in this part of the Bill, I must necessarily declare my interests as a practising chartered surveyor, a member of the RICS and a patron of the Charted Association of Building Engineers. I am also a member of the Built Environment Select Committee, chaired by the doughty noble Baroness, Lady Neville-Rolfe, who keeps us all in order. I think she is splendid and I do not say that for want of any favours. I also own residential rented property: no flats, no high-rise, thank goodness.

I pay tribute to the Minister for the meetings he has arranged, the dialogue in which he has been willing to engage and his untiring efforts and those of his Bill team. It is fair to say that we have come an enormous way in this Bill and that is in large part, if not solely, because of the drive the Minister has put into this. I am pleased that he has clarified the limited partnerships and provided the other clarifications in the amendments he has introduced. I also pay tribute to all noble Lords around the House who have stuck with the principle that the innocent should not be made to pay for the mistakes of the developers and constructors.

I will just deal, if I may, with Amendments 201 and 202, which are in my name and on which I will not be seeking the opinion of the House. They relate to a matter I referred to in Committee, which is insolvent landlords and their interests being escheated to the Crown. That means that potentially, there is no landlord as such to organise remediation work, leaving remediation in limbo and responsibility for costs uncertain. That follows on from what the noble Lord, Lord Young of Cookham, set out with, I may say, a degree of piercing clarity which I found unchallengeable. I will outline the differences between my further amendments and his, but not on these ones.

The sole purpose of my Amendment 201 is to clarify the Crown responsibility. Amendment 202 covers where a superior leaseholder defaults and as a result the liability potentially passes to others. This amendment would serve to prevent a lease being disclaimed, thereby creating another loophole and another piece of loose liability floating around the system.

Amendment 229 in my name is another probing amendment; I hope it is self-explanatory. It attempts to deal with a perceived problem of delay by landlords and agents in accepting first funding agreements for remediation. The matter was highlighted in a recent edition of Inside Housing. Reference was made to the logjam created because managing agents were reluctant to sign off on remediation contracts without knowing who would be paying for the work or, indeed, when. That effectively stalled the first funding offer acceptance.

It was thought that the matter had been resolved; according to the Inside Housing article, the Minister confirmed in December that the logjam had been cleared. Notwithstanding this, the article said, the problems persist. It reported cases in St Albans, London and Manchester; in other words, all over the country. It is known that there are few enough contractors ready and willing to take on the—quite demanding in some cases—work of remediation, which this Bill addresses. Delay will simply cause contractors to go elsewhere and opportunities to be lost. This prejudices both leaseholder and, ultimately, I suspect, freeholder. It makes no sense. There may be many reasons for this—usually, I suspect, surrounding the landlord’s own tactical and financial advantage—but none can justify the excessive delay that this amendment seeks to avoid.

There seems to be a bit of a blame game going on between the department on the one hand and block management interests on the other. I am reluctant to take sides on that. This amendment intends to treat the symptoms by setting a time limit on acceptance of the offer so that things cannot be spun out. I hope that it will have the effect of concentrating minds and will be conducive to good order for that reason.

I now turn to Amendments 234 to 237 in my name. I make it clear that, subject to what I may hear from the Minister, I may need to test the opinion of the House on these amendments. They would have a similar effect to Amendment 233 in the name of the noble Lord, Lord Young; namely, to relieve leaseholders and freeholders of what many of us feel is an unjust imposition. Much of what we have been discussing arises because the Government believe, as I do, that, given the 30 years during which certain bad practices have taken root in construction quality, not every defect will have an identifiable perpetrator or associate currently in existence, solvent and with sufficient assets to make a claim a practical possibility. The Government seek to ensure that, if a construction defect exists which does not fall within their scheme of financial support for remediation and there is no perpetrator to be found, the public interest that buildings are made safe will persist. In their view, the only other possible sources of remediation funding are the freeholders and leaseholders.

I think it is fair to say that the noble Lords, Lord Young and Lord Blencathra, and I have been in a sort of huddle since Grand Committee. We all believe that the fallback should be the perpetrator of the situation. The amendment in the name of the noble Lord, Lord Young, proposes falling back on the local authority or the Secretary of State—AKA the taxpayer. I am aware that the Treasury has said, in fairly blunt terms, “We have made an allocation of £5.1 billion and that is it.” That means no more money unless it comes out of the departmental budget, impinging on other important work that the department might wish to take place. I take it that this is one reason, among many, why the Secretary of State has taken the initiative to protect the departmental budget by seeking voluntary contributions from the construction industry for a further £4 billion for other defects—good on the Secretary of State for doing that.

The first question I have for the Minister is: can he update us on how things are progressing on that voluntary scheme? Certainly, the industry’s initial response was not very fulsome, and the Secretary of State made what one might describe as a somewhat sterner demand— and very rightly too. The Minister’s answer is pivotal to how likely it is that property owners will have to fork out for these defects and thus require the protections he seeks to build into this Bill.

If the perpetrator, as defined, cannot be found, then it becomes a test of what is “just and equitable”—to use the words in the Bill—in apportioning the orphaned responsibility and cost between two groups of property owners, who, in the main, are likely to be completely innocent of the construction-related defects and for whom arguably it is neither just nor equitable that they should bear that responsibility and cost at all. Of course, that circumvents what I understand to be meant by the perpetrator pays principle, and results in the passing back of both responsibility and cost—the two are not exactly the same—to the innocent.

Given the Government’s insistence on this approach, I conclude that the deficit between what can be claimed from extant, solvent and legally liable developers on the one hand, and the true remediation cost on the other, is likely to be significant; otherwise, why would we be here? Meanwhile, I sense the industry is telling us, in the blunt cant of the trade, that we can whistle for it.

The Government’s remediation model of liabilities, exemptions, cost controls, means testing, tiered contributions by property value, appeals to courts and much chasing of tails withal is certainly not straight-forward. Any one of the procedural steps is contestable to some degree and contested they will undoubtedly be. So, while the many leaseholder protections are welcome, such as cladding on buildings over 11 metres, building safety levy backstops on cladding costs, exemptions for sub-£175,000—or £325,000 in London—properties, and non-cladding remediation where the landlord is or was connected to developer.

These are very welcome, but the model is incomplete and there remain significant exclusions. Properties under 11 metres are certainly one of them, but we will have to wait until we get to Amendment 115 in a later group to discuss that. There is also the question of buy-to-let landlords with more than three properties, but we will have to wait until we get to Amendment 123 to consider that. There is no backstop for non-cladding remediation costs. Leaseholders in enfranchised or commonhold blocks, as discussed in Amendment 117, may get some support for cladding remediation from the building safety fund, but I question whether they will get everything they are due under a true perpetrator pays principle.

Some issues have not necessarily been eliminated, despite what the Government claim. The noble Lord, Lord Young, referred to the waterfall, so I can skip my explanation as he has explained it much better than I would. Establishing cost liability does not of itself generate funds for remediation if those liable to pay are broke. It is a very important principle, because if the guys made responsible have no assets or cannot get at their assets because they are mortgaged up to the hilt and there is no equity, then what is the purpose of placing this onus on them in the first place?

The Government are taking a substantial risk in leaving it to the courts to decide whether it would be “just and equitable” as regards their various proposed orders. That seems to be tantamount to an invitation for further litigation, delay, uncertainty, risks, and so on. There will be applications for remediation orders, remediation cost orders, building liability orders, and litigation under the Defective Premises Act—my mind freezes over when I see that list.

There is no bridging funding facility in any of this, so unless the Secretary of State steps in or some other funding is levered in, remediation cannot take place. People cannot simply buy in on spec some large amount of a contractor’s time and substance; it is just not going to happen. Some of those who might, I suppose, be in line to be contributors to this just and equitable approach to splitting it between innocent parties—and I am sorry to go on about that—are not going to be there. Some buy-to-let investors will be denied any protections, and some landlords will fail the cost contribution test; I tried to make that clear when we were dealing with this in Committee. If you multiply the number of properties that they hold by £2 million per property, you will very often find that the total figure is greater than their capitalised worth—ergo, they drop out of responsibility.

--- Later in debate ---

[Baroness Bennett of Manor Castle (GP)]

My Lords, I rise with pleasure to follow the noble Baroness, Lady Neville-Rolfe. I agree with almost everything she said and very strongly back her amendment. The political spread we have just achieved across the House in that regard is interesting.

I sat through the previous group, and I am indebted to the noble Baroness, Lady Pinnock, for counting the 70 amendments in it. I listened to the detailed and informative contributions, particularly from the noble Lord, Lord Young of Cookham, and the noble Earl, Lord Lytton. I learned a great deal about waterfalls. I am still not entirely convinced that there is a solution to the “if no one’s left to pay who’s going to pay?” problem. None the less, it is very clear that this is an unusual Bill and that we have very broad agreement on what we are trying to achieve; that is, that the perpetrator pays to ensure that innocent leaseholders and home owners who through no fault of their own have found themselves trapped in awful, incredibly stressful, dangerous circumstances are not the ones who ultimately suffer and that the people who create the problem pay for it.

However, given the complexity of everything we have just done, we cannot be sure that the Bill will deliver and that there will not be unexpected hitches and problems along the way. I agree with the noble Baroness, Lady Neville-Rolfe, that five years is just too long. The noble Baroness, Lady Fox, spoke about the personal experience of being stuck out of a home, and some people are stuck in homes in awful situations. Two years is the right time to look at this in the round.

This may be where I slightly part company with two earlier speakers. I think there is broad agreement that we have a huge cultural problem in the building industry. I should perhaps declare a historic interest as the daughter of a builder. I knew quite a bit about the Australian building industry and lots of the problems that I saw in that situation have been magnified and intensified by economic developments over the past few decades. We have mass housebuilders that are far better at being cash cows than at producing homes. We are trying to change this situation and the whole culture of the industry. We are trying to get homes that are produced so that people have a secure, stable, affordable place to live. It is such an enormous change that we cannot wait five years to review this, so I commend the amendment tabled by the noble Baroness, Lady Neville-Rolfe.

[The Earl of Lytton (CB)]

I, too, commend the noble Baroness, Lady Neville-Rolfe, on this amendment. Given the circumstances of the Bill, the number of variations in it and the sheer number of moving parts involved, a review is essential for precisely the reasons she said, and I support the amendment.

[Lord Greenhalgh (Con)]

My Lords, I am grateful to the noble Baroness, Lady Fox of Buckley, and my noble friend Lady Neville-Rolfe for this insightful debate.

Amendment 26 from the noble Baroness, Lady Fox, would require a review of the financial impact of the new regime. I reassure the noble Baroness that a review is already required by Clause 152, which provides that:

“The Secretary of State must appoint an independent person to carry out a review of”


the system of regulation of building safety and standards and the system of regulation for construction products. Importantly, the reviewer is not limited and may choose to review connected matters, including the matters mentioned in the noble Baronesses’ amendments.

Similarly, Amendment 246A in the name my noble friend Lady Neville-Rolfe would require a review of the impact of the Act. I apologise for the mix-up that resulted in my addressing this amendment in an earlier group. I will repeat for the record that we believe that this further replicates Clause 152 in the Bill and therefore we believe this is unnecessary.

What I do say to my noble friend is that the Secretary of State has to appoint someone to carry out the review within five years, so that is a long-stop date. I am very happy to meet my noble friend to ensure that we get going with this review at the very earliest opportunity to make sure that that long-stop date is comfortably met. We also need to make sure that this review is substantive and learns the lessons of a new regime in the broadest possible sense and addresses the points raised by the noble Baroness, Lady Fox of Buckley, as well those raised by my noble friend Lady Neville-Rolfe, who has had tremendous Front-Bench experience as well as experience as a distinguished civil servant.

With those explanations, I kindly ask the noble Baroness, Lady Fox, to withdraw her amendment and my noble friend Lady Neville-Rolfe not to press her amendment.

--- Later in debate ---

Moved by

[The Earl of Lytton]

115: Clause 120, page 127, line 27, leave out from “dwellings” to end of line 32
Member’s explanatory statement
This amendment extends the cost protections in the Bill to leaseholders in buildings of all heights containing two more residential dwellings.

[The Earl of Lytton (CB)]

My Lords, this amendment is leading the charge here. I refer noble Lords to Grand Committee, when the noble Lord, Lord Blencathra, in particular, questioned why only buildings of a certain height benefited from the cost protections in this Bill. This is a matter on which I feel very strongly—and, indeed, both my cosignatories feel strongly—and I give notice that I may well press the amendment to a Division.

I reminded the Grand Committee at the time that building safety is not governed by building height alone or, possibly, at all. I refer to the fire at Worcester Park in September 2019. The Minister went on to give us a graphic description of the circumstances. However, despite that the Minister stuck to his text in suggesting that lower rise buildings do not have the same risk profile. I have probably paraphrased him, and that may not be the precise form of words that he used, but that is the drift of what he was saying. If, as he recounted in the circumstances of the Worcester Park fire, it was so well alight after nine minutes that the fire and rescue services concluded that the building could not be saved, that represents to me an existential risk to occupiers who may be asleep, confused of mind, infirm, pregnant, disabled or otherwise particularly vulnerable, especially as regards the speed with which an inferno can evidently develop.

A block of flats without adequate separating walls to me is just as dangerous above ground-floor level as a high-rise block without decent fire doors. I do not make a distinction in terms of risk; they are both equally perilous, as far as I can see. Be that as it may, I have received emails from occupiers of identical buildings in the same development in the Worcester Park building, telling me that the developer was remarkably reluctant to address basic issues and shortcomings, many of which may have accelerated the fire in the building that was actually destroyed. Furthermore, they said that they could not sell their flats and that insurance had gone through the roof, and interim measures were costing a fortune—exactly the same problems and privations as with taller buildings.

I will just say—other noble Lords will be able to elaborate—that the Government have not made the case for excluding these, other than giving the impression that this is driven, dare I say it, by a degree of Treasury parsimony and a departmental inclination to go no further than it absolutely has to. There seems no good reason for height exclusion on any moral, economic, safety or practical ground. I beg to move.

--- Later in debate ---

[The Earl of Lytton (CB)]

My Lords, I will test the opinion of the House on Amendment 115 in a minute. However, before I do so, I will say how much I appreciate the contributions from all noble Lords. It has been an absolutely fascinating debate. As others have said, we are really getting into the core philosophy of what sits behind this Bill. I feel slightly like the skinny fly-half who, having got hold of the rugby ball and made a dash for the opposing side’s try line, finds himself up against a veritable wall of the opposition. It is only seconds later that he finds that a substantial number of heavyweights from his own side have propelled him over the line and applied him and the rugby ball into the mud to score a try. We have not scored a try yet. That, of course, depends on noble Lords—the referees.

I thank the noble Lord, Lord Young, for his summary of this and the other amendments—I found him to be wholly convincing. I will not go into a great deal of detail, given the well-rounded debate we have had, but Amendment 117 seems to address an issue which actually borders on discrimination on the grounds of tenure, and it is a really perverse outcome for commonholders as a tenure. It is a tenure to which the Government should be giving support—we all know that. Excluding them cannot be right.

Various noble Lords have spoken about extending the number of buy-to-let properties. That would rely on their accepting the basic premise of a charge to the leasehold and freehold properties as a default mode—I shall come back to that in a minute.

Amendment 126 is necessary because, unless the benefits under the Bill inure to the benefit of the buyer as a signee, the Bill would simply act to the prejudice of the seller, which would remain and lead to unfair loss, cost, worry, delay and disadvantage—and we cannot have that. A reduction to zero charge would be beneficial and I would support it, but, again, I go back to the question whether I would start from this point.

I welcome a lot of these amendments and would welcome some of those from the Government if I was not troubled by their basic premise of deciding that orphan cost liabilities must be spread between two categories of the innocent. It is a matter of policy; it is not a matter of human rights. I listened carefully to what the noble Lord, Lord Marks, and the noble and learned Lord, Lord Hope of Craighead, said on that, and I found it absolutely fascinating. The fact remains that freeholders as we know them very often have a minority interest by value, so the questions remain: where do you find that real, available hard cash to fund the remediation, and after what degree of litigation, delay and cost?

Despite what the Minister said, and I admire his tenacity, I remain unconvinced by the arguments. On sub-11 metres, I do not see that the argument has been made for the quantifiable difference under the Bill that the Government are trying to achieve, bearing in mind that the Worcester Park building was a four-storey building. I wish to test the opinion of the House on Amendment 115.

--- Later in debate ---

Moved by

[The Earl of Lytton]

234: After Clause 136, insert the following new Clause—
“Building safety cost orders
(1) The Secretary of State must by regulations make provision for the Building Safety Cost Panel to make building safety cost orders on the application of an interested person.(2) A “building safety cost order” under this section is an order requiring a specified body corporate to make payments to a specified person, for the purpose of meeting costs incurred or to be incurred in remedying relevant defects (or specified relevant defects) relating to a relevant building.(3) An order may—(a) require the making of payments of a specified amount, or payments of a reasonable amount in respect of the remediation of specified relevant defects (or in respect of specified things done or to be done for the purpose of remedying relevant defects);(b) require a payment to be made at a specified time, or to be made on demand following the occurrence of a specified event;(c) provide for payment in services or money’s worth.(4) The regulations must make provision for the Building Safety Cost Panel to issue a warning notice to a person before determining whether to make a building safety cost order under this section against that person.(5) The regulations must make provision requiring that a building safety cost order under this section—(a) be made in a prescribed form; (b) contain prescribed information.(6) The regulations may make provision about service of a building safety cost order under this section including—(a) how an order is to be served;(b) when an order is to be taken as having been served;(c) the persons on whom an order must be served.(7) The regulations must make provision in relation to—(a) enforcement of a building safety cost order made under this section (including enforcement by the Secretary of State or the tribunal);(b) powers of the Secretary of State to order a person served with a building safety cost order to pay any costs incurred by the Secretary of State under section (Building safety cost order: determinations) in respect of a building safety cost order under this section.(8) The regulations may make provision for persons to apply to the Secretary of State for a review of a building safety cost order under this section.(9) The regulations must make provision for appeals to the tribunal in relation to—(a) a decision of the Building Safety Cost Panel to make or not make a building safety cost order under this section;(b) a refusal by the Building Safety Cost Panel to review a building safety cost order under this section;(c) the outcome of a review by the Building Safety Cost Panel of a building safety cost order under this section.(10) The regulations may in particular include provision suspending a requirement to pay an amount due under a building safety cost order under this section pending the determination of a review.(11) The Secretary of State must make regulations under this section within a period of three months beginning with the day this section comes into force.(12) In this section—“associated”: see section 123;“interested person”, in relation to a relevant building, means—(a) the regulator (as defined by section 2),(b) a local authority (as defined by section 29) for the area in which the relevant building is situated,(c) a fire and rescue authority (as defined by section 29) for the area in which the relevant building is situated, or(d) a person with a legal or equitable interest in the relevant building or any part of it;“prescribed” means prescribed by regulations under this section;“relevant building” means a building consisting of or containing one or more dwellings;“relevant defect”: see section 122;“specified” means specified in the order.(13) This section comes into force on the day this Act is passed.”Member’s explanatory statement
This new Clause confers a regulation-making power for the Secretary of State to provide for making of building safety cost orders by the Building Safety Cost Panel.

[The Earl of Lytton (CB)]

I wish to test the opinion of the House.

Building Safety Bill

Earl of Lytton Excerpts

Committee stage
Wednesday 2nd March 2022 Grand Committee

[Baroness Fox of Buckley (Non-Afl)]

My Lords, I was already feeling inadequate enough, but my inability to come up with a Latin phrase or joke on this particularly peculiar amendment of mine is nerve-racking. Clause 129 makes further amendments to the fire safety order and focuses partly on the risk of balconies. My Amendment 115A suggests tightening up the wording so that balconies should be considered a risk only if and where they can be shown to materially contribute to the spread of fire, flame or smoke.

I think this amendment is needed because I am concerned about unnecessary building safety work. I am not sure if this amendment is the right way to resolve the problem, but leaseholders who I have spoken to see emerging a widespread focus on alleged non-cladding defects, such as balconies. This can be a driver to carrying out unnecessary fire safety work, for which leaseholders must pay, with no existing government funding to help. We are all familiar with the “#claddingscandal”, but I want to avoid a scandal, or at least an injustice, emerging that is not to do with cladding. That is what this amendment probes.

Broadly, we now have a situation in which a block of flats can have a fire risk assessment that effectively determines that the building is sound but, because some notionally flammable material has been used, for example in the balconies, there are problems with valuations associated with EWS1 and a pre-emptive, rather than necessary, remediation approach. Leaseholders are then encouraged to think of their blocks with these balconies as unsafe and to believe that remediation work is necessary—and the costs will inevitably be charged to them as a fait accompli. This could be driven quite cynically by freeholders using building safety to do upgrades or carry out what otherwise would or should be regular maintenance, at leaseholders’ expense. To be less cynical and assume far more good faith, or at least to understand the pressures on freeholders and owners, I am worried that one of the unintended consequences of this Bill would be to drive up fears among owners, assessors, accountable persons and so on, under the weight of legal and insurance liability, that they would be blamed for any fires that occur, in any circumstances. As such, blame avoidance could mean stretching assessments of what is considered unsafe beyond credibility or credulity.

This seems to be partly the explanation to the rather panicky response to any building materials that can catch fire. At the moment, this is expressing itself as the almost default assumption that balconies with timber as a component are dangerous and should be replaced. This is in spite it being well documented that timber can outperform steel in a fire, depending on how it chars. An example of where this can lead is a block of flats in Castletown in Dorset. Leaseholders were shocked, at the start of the year, to receive a letter telling them that the timber-decked balconies of the 204 flats in their block had to be replaced by aluminium balconies, as some may be unsafe. Guess what? Leaseholders must meet the cost of this work estimated, on average, at £10,000 a flat.

In addition to that horrifying financial prospect, the Atlantic House Leaseholders Association raised some other issues pertinent to the Committee debates so far. For example, there was no consultation at all with the leaseholders on this decision about the balconies. Leaseholders are a tad suspicious that the contract for the work to replace the balconies was awarded to the block owner’s subsidiary company. The plan that was just announced, but not consulted on, is to carry out the installation inside people’s flats, instead of putting up scaffolding, regardless of the major inconvenience and intrusion this will cause in leaseholders’ homes. The other day I talked about whether you can call it your home if people can just come in, in the name of safety. This is really going to affect people’s home lives.

Also, if there is wear and tear on the timber decking on the balconies in question, it should actually have been the building owner’s responsibility to maintain them and keep them up to standard. Yet, despite them having failed to do so, leaseholders are now being forced to pay for the changes to the balconies, under the auspices of building safety and the threat of fire risk.

I am concerned about a climate in which there is a danger of failing to weigh up risks and assess matters objectively and proportionally. Sometimes, in the name of safety—I think that this was true in that instance in Dorset—leaseholders’ lives are being made a misery, and they are being made to pay a lot of money for remediations that do not necessarily mean that they are safer.

I do not know if noble Lords saw the story in the Manchester Evening News about social housing tenants in Salford suffering freezing conditions for months, since cladding came off their blocks. Having lobbied to get their concerns heard, they were recently sent a letter by Pendleton Together, which manages the nine council blocks, offering

“top tips for keeping warm”.

These included: “dress in layers”, wear “a hat and gloves”, keep “active” and consume “warming food and … drinks” —I thought that these might be handy in this Room, which has been rather chilly. This is another top tip:

“don’t drink alcohol to keep warm as it can give you a false feeling of warmth when you’re actually cold”.

If I were cold, I might still have a drink.

More seriously, I am glad to see that Salford council, which should, in general, be commended for its aspirational housing policies—I am not particularly having a go at it—has apologised for what has happened in its area and for the patronising and condescending message of the letter. But I was using it to illustrate that measures designed to keep people safe from fire can lead to home owners suffering freezing cold, for example, in the middle of an energy price crisis. Unfortunately, fire safety can trump common sense.

I will take noble Lords back to balconies and the Atlantic House block in Dorset that I was talking about. There is a similar perverse outcome in relation to balconies there allegedly being made safer, because, ironically, the decision to replace timber decking with aluminium might make them less safe. Luckily, the chair of the leaseholders’ association is a retired engineer from the construction industry, so he spotted that the use of aluminium might not be a safe option at all. Aluminium can be corroded by salty sea air—the block is near the sea—unless it is anodised. The truth is that those leaseholders might well be safer, and not facing a £10,000 bill each, if the balconies with timber decking remained.

My amendment is narrow and might seem a bit specific or even trivialising, but it is an attempt to probe whether the Government will consider adopting a broader cost-benefit analysis approach specifically to balconies to avoid more EWS1-type problems. It is also an attempt to encourage the Government to be wary of the zero-risk approach of a one-sided and overly precautionary culture of fear, with which the Hackitt review is imbued; there are lots of good things in it, but there are also a lot of things that I do not want to just endorse. Many of the leaseholder campaigners whom I have talked to say exactly the same: they warn that we should talk more to leaseholders, who of course want to be safe but do not want safety to lead to them having to pay for expensive and unnecessary remediation work, on balconies in this instance, when it is just not needed. I beg to move.

[The Earl of Lytton (CB)]

My Lords, I think the noble Baroness, Lady Fox, has done a considerable service, because she has highlighted quite a number of things. You might say balconies represent important facets in terms of building safety. The question of balconies may have been triggered by a fire—it may have been in Australia—caused by a discarded cigarette end on a timber-deck balcony. The circumstances, of course, of timber in high summer in New South Wales or wherever may be significantly difficult from in a typical English summer. I grant you that—and, of course, timber does not retain significant degrees of combustibility throughout the season, typically, in this country. I can certainly testify to disposable barbeques being a far more potent source of fire in such circumstances.

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[Baroness Neville-Rolfe (Con)]

My Lords, as I was saying, the Committee will know that there has been a serious problem aggravating the difficulties that leaseholders have experienced in the post-Grenfell world. This is because insurance companies and mortgage lenders have required these external wall assessments to be made and the dreaded EWS1 forms to be filled in before transactions can proceed. However, not only are the assessments expensive—or they were—but the requirement to provide them implies, or implied, a very cautious view of the needs of fire safety in particular. Worst of all, there has been a crippling shortage of RICS professionals to carry them out.

I argued during the passage of the Fire Safety Bill that this process was over the top, as sometimes happens with professional-based regulation, and increased the numbers of unsaleable properties post Grenfell by hundreds of thousands. I was therefore delighted to hear the Valentine’s Day announcement of the Secretary of State, Michael Gove—in addition to the January comments quoted earlier by my noble friend the Minister —stating that:

“The provisions will protect leaseholders and encourage a more proportionate approach to fixing buildings. Currently, building owners can simply pass all costs on to leaseholders, with no incentive to hold back on unnecessary remediation work that has brought misery to leaseholders. Today’s package, alongside the duties in the wider Bill, will create an environment for tough, proportionate action on critical safety issues while preventing cost inflation and excessive work.”


“Today’s package” sounds good to me. However, I remain a little sceptical, knowing just how bad the gold-plating has been. For example, we were right to agree earlier on the need to be proportionate about balconies, as the noble Baroness, Lady Fox of Buckley, argued.

The purpose of this probing amendment is to invite my noble friend, who is of course the Minister at the Department for Levelling Up, to update us and agree to undertake a review of the situation in 12 months’ time. The review proposed would focus on the tall buildings that are in scope, but the whole sector would benefit from a review that assesses the position of smaller buildings as well as the interests of the consumer rather than just the surveyor—in this case, the leaseholders and property owners affected. I add that the right reverend Prelate the Bishop of St Albans asked me to say that he supports this amendment but had to be elsewhere. I very much hope that my noble friend will look sympathetically on this request, particularly given the helpful change of approach by the Secretary of State.

[The Earl of Lytton (CB)]

My Lords, I will probably disappoint the noble Baroness a little, but I hope that I can also give a bit of explanation. I say that with particular feeling because she chairs the Built Environment Committee, on which I have the privilege to serve.

I understand the irritation that has been generated in some quarters by the EWS1 scheme. I ask the Committee to bear in mind that this was prepared as something of an emergency measure to deal with the logjam of unmortgageable, and therefore unsellable, properties. It was set up at the instigation of government and occurred following discussion with insurers, lenders and valuation professionals. It is a creature of common creation and not the RICS alone, although the RICS put it out. That is quite important.

The unfortunate thing is that, as it was the only form of certification around, it has been latched on to in certain quarters as providing some reassurance for things that it was never intended to achieve. In other words, it was seen as something with a wider fitness for purpose than was ever intended, and that is part of the problem.

When one produces something of this sort, it is produced in collaboration with others, but there will always be people across the spectrum; the insurance world is such that certain sectors of it will top-slice the risk. There will always be some that—a bit like some of what I might call the more adventurous motor insurers—will insure only certain clearly de-risked parts of the market in risk generally. I do not know whether that is a problem here.

This EWS1 was just reviewed in December. The RICS—again in consultation, and again, I believe, with support and collaboration from government but certainly with all the relevant bodies—decided that even though its application in terms of the problems that it created was reduced to a very small proportion, it should be kept because that was the view of valuers, mortgage lenders and insurers. The RICS as a professional body cannot ignore what these people are saying or the commercial pressures that are set before it in dealing with that. The RICS also published its justification in December, which is available on the web. I am all for de-risking things so that assessments of all sorts do not grow horns and a tail. However, I am not sure that having the Government take control and ownership of this particular matter would necessarily reassure lenders or professionals or, for that matter, benefit the market sentiment.

In its evidence to the Levelling Up, Housing and Communities Committee, the RICS acting chief executive made it clear that there is already a process in hand to train up a cohort of fire risk assessors pursuant to the Bill’s objectives. EWS1 itself is probably destined to wither on the vine in a relatively short period of time. I therefore hope that I have given some sort of helpful explanation of why I am not sure that it is a good thing for the Government to take on this thing, even if they felt that they were willing to get their fingers involved in that particular pie, and why it is probably best that the matter continues on the critical path it is now and we see the outcome of this cohort of newly trained people. I am sure that other professional bodies will need to do training as well; we must try to make sure that it is rolled out as speedily as possible so that, hopefully, the problems will be put behind us.

[Baroness Pinnock (LD)]

My Lords, I thank the noble Baroness, Lady Neville-Rolfe, for raising an important issue. There is confusion and concern around these EWS1 forms and assessments. There is confusion—which I will come on to, following on from what the noble Earl, Lord Lytton, just said—and there is certainly concern from leaseholders. Either they wait for ever for these external wall structural assessments, or those who do them err on the side of caution because of the way that they were brought in as an emergency measure following the awful Grenfell fire.

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I am very supportive of this amendment, because all it asks us to do is think about all of the issues and come back. Perhaps the Minister will commit to writing to all of us to put our minds at rest that the Government will create a lot of good fire risk assessors or de-risk some of the issues—this is the problem—that have been created by this emergency measure, although I understand why it was done. With those brief words, I hope that the Minister will respond positively.

[The Earl of Lytton (CB)]

My Lords, I should perhaps explain that, while I am a RICS member and fellow and a registered valuer, I do not actually deal with this particular thing. But, as a valuer, I understand constructs of risk and the attitude of lenders, because they so often dictate the process that is put in place by the valuers: they often set the fee for valuation and their form is used for this particular process. I say again that it is very difficult for a professional institution that tries to weigh up all these different bodies to get away from the big beasts of the mortgage lenders and the insurance world when it is dealing with this sort of thing. But I make no apology for that—there have been problems, and the noble Baroness is absolutely right that they have been visited, as she would say, on wholly innocent leaseholders. It is right that the whole thing should be kept under constant review.

[Lord Khan of Burnley (Lab)]

My Lords, I rise briefly to speak to Amendment 132 in the name of the noble Baroness, Lady Neville-Rolfe. It is a little but very important amendment and, as the noble Baroness will appreciate, “Every little helps” in making sure we get this right. I admire what the noble Earl, Lord Lytton, who spoke with great expertise, said about ending the confusion and providing clarity. That was a very important point. As a Lancastrian, I have never agreed with somebody from Yorkshire as much as I have agreed with the noble Baroness, Lady Pinnock, during the course of this Bill. She is quite right: leaseholders should not bear the costs for issues they have no control over. It is not their fault. We need to end the logjam.

This is my final contribution in Committee. It has been a fascinating debate. I have a special message for the Minister in Latin, to continue the theme: “Da operam, si potes”, or “You can do it, if you try hard”. We have debated a lot of fantastic amendments during this Committee. I am sure the Minister can do it and make this landmark Bill even better, to help people, residents and leaseholders across the whole country.

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[Lord Stunell (LD)]

My Lords, the noble Lord, Lord Aberdare, has certainly been energetic, forthright and determined on this issue, and rightly so. He has reminded the Committee that the Hackitt report made it clear that the withholding of money from second-tier, third-tier and fourth-tier contractors and suppliers put pressure on them, which made it much more difficult for them to deliver a proper and effective product or job on site. The downward pressure that they faced as a result of the withholding of that money was a major problem for them as functioning entities. That was the view expressed in Hackitt, based on the evidence that had already emerged from the Grenfell inquiry.

Of course, there is much wider evidence around the country. The collapse of Carillion is an example. I think that £140 million of retentions were held by Carillion and thereby lost from those on lower tiers in the pyramid. Whatever else might be said about it, that put a number of companies at risk of going out of business, and indeed a number of companies did so just because that money was lost to them. The evil impact of this is very clear.

Some of the impact is less clear but just as difficult. Such companies find that they do not have the resources to invest in skills, training and continuing professional development, simply because they do not have that cash in hand. So it has an impact. Under

“Matters which the review may consider”,


the noble Lord, Lord Aberdare, has sensibly listed in his amendment three important ones and then put “(d) other factors”. I would add investment and training as one of the other factors that suffer as a result of this.

I want to remind the Minister that it is government policy that all government contracts should be written in such a way that retentions are not in place. Unfortunately, not every government department has read the memo. I asked the Business Minister, the noble Lord, Lord Callanan, a Written Question and subsequently an Oral Question about how that was progressing. He was quite frank in admitting, and it is on the record, that the Department for Education had so far refused to implement the Government’s overall guidance that all public procurement should be without retentions built into the contract documents. I have no doubt that the noble Lord, Lord Callanan, is having a good go at the education department; I hope that I can add to that today and another Minister will have a good go at it, at the very least to make sure that the Government get their own departments to follow their own policy, which would be very much in the direction that the noble Lord, Lord Aberdare, is advocating. I have probably said enough, but I certainly hope to hear good words from the Minister in a moment or two.

[The Earl of Lytton (CB)]

My Lords, I support my noble friend Lord Aberdare. The matter of retentions comes right at the end of this series of Grand Committee sessions, but it is part of a culture. It is the race to the bottom, value engineering or cost-cutting. Construction contract architecture and the practices that have grown up with it are all part of the perverse incentives that have somehow been built up.

At one stage in my professional life, retentions of, say, 5% or 2.5% for limited periods, as the case may be, started as security for the proper completion of works as set out and to a required standard. However, I take the point made by the noble Lord, Lord Aberdare, that this has now gained the appearance of an informal and unconsented bankrolling of construction costs at the expense mainly of subcontractors and their suppliers. This has to stop. It is like all such situations: retentions have a legitimate use but have been subject to serial abuse. If we could keep our eye on one and render the other improbable, that would be all very well, but if the bad practitioners do not get the message, some brutal measures may indeed be necessary and better regulation and protection of sums due may follow from that. I cannot help thinking that the small and medium-sized enterprises that have dwindled and atrophied as a component part of the construction industry are the chief sufferers. They are unable to take on the big beasts of construction.

There is a real point behind this. If the memorandum that the noble Lord, Lord Stunell, referred to became a universal code of practice in the sense that you really had to justify yourself before stepping out of line, that would at least be a start. There is a lot we can do with what we know and the existing situation in terms of decent treatment, honest measures and taking care of the whole supply line we are dealing with. What the noble Lord, Lord Stunell, said about investment, training and that sort of thing is absolutely on point, and I certainly support the thrust of this amendment.

[Baroness Hayman of Ullock (Lab)]

My Lords, the noble Lord, Lord Aberdare, has raised a very important issue and certainly has our support. Something has to be done to resolve this, and others who have spoken have swung in strongly behind the noble Lord. I am sure the Minister has listened and is taking note.

We have heard that retention is the customary practice of withholding monies to cover defects and incomplete work, but it is also being used for so much more than that, as the noble Earl, Lord Lytton, and the noble Lord, Lord Aberdare, explained. Depending on the size of the project, it can be insignificant or very significant. Large construction projects can be worth £1 billion; huge sums of money can be affected. As the noble Lord, Lord Aberdare, said, reform of the problems this can cause is long overdue.

Retention is often a cause for complaint and quarrel. Subcontractors often find it difficult and can see it as a tool to be bashed with by the paying party, who can hold back payment whether there is good reason to do so or not. I guess that I ought to declare a past interest in that I used to work for a small business that was contracted into large infrastructure projects, so I am very aware of the kind of impact that retention of monies can have. We worked with a lot of other small businesses within large projects. If payment is held back through retention, often for many months, small businesses have a serious cashflow problem, often meaning they cannot pay their staff. This is about not just training but the basic running of the business. They can then become dependent on constant, rolling bank loans, which is not the way a small business wants to run.

All that could be solved if this was sorted out. We see signs everywhere about considerate contractors, but contractors are not always considerate to their subcontractors. We need to sort this out. As we have heard, it can be such a source of pain and concern when the party holding the monies goes bankrupt. Other noble Lords have mentioned Carillion, which is probably the largest example of that happening.

I will not say any more, because we are nearly there, and we are nearly at another vote, I think. The noble Lord, Lord Aberdare, very ably introduced his amendment, so I think the Minister will have heard his message loud and clear. The last thing for me to say during this Committee is that today in particular, and throughout, the Minister has been given an opportunity to slay a number of dragons, not just this one, so I look forward to his response.

Building Safety Bill

Earl of Lytton Excerpts

Committee stage
Monday 28th February 2022 Grand Committee

[Lord Young of Cookham (Con)]

My Lords, the instructions on the sheet of paper in front of me are not “crescendo” but “diminuendo”—some gentle accompaniment on the bass to the forte soprano that we heard from the noble Baroness, Lady Fox. But seriously, I want to add a brief footnote to the excellent speeches made by the noble Baroness, my noble friend and the right reverend Prelate.

I make the point that they all underline the need for the next stage of leasehold reform which the Government have promised, which does away with this feudal system of leasehold which exists nowhere else in the world. Once we have done that, all these problems that we have been talking about this afternoon will disappear: there will be an identity of interest between the freeholder and the leaseholder because they will be the same person. At some point, perhaps the Minister can shed some light on the next stage, confirming that that is indeed the Government’s objective and that they want to move in that direction as fast as possible.

I add a brief footnote to the excellent speech the right reverend Prelate made on Amendment 50A. In particular, I draw attention to the radical proposal in subsection (3)(a) of the new clause proposed in his amendment, which places an obligation on the landlord for

“where there is no recognised tenants’ association in existence before the coming into force of this section, creating a recognised tenants’ association and consulting with it about building safety”.

Because of the Long Title of the Bill, the right reverend Prelate had to confine it to building safety. However, it is a radical proposal. It places the obligation for establishing a tenants’ association not on the tenants, which is the position at the moment, but on the landlord, evening up the terms of trade. As I said, it is a very radical proposal indeed. An indifferent landlord does not want a residents’ association or a tenants’ association with whom he has a statutory obligation to consult, although I happen to believe that it is in his best interests to have such a dialogue. So the terms of trade are dramatically altered by the right reverend Prelate’s amendment.

In an earlier incarnation, I recall helping establish an organisation called Tpas—the Tenant Participation Advisory Service—I see the noble Lord, Lord Best, nodding sagely; he has a similar vintage to myself when it comes to housing legislation. That was focused primarily on tenants of social landlords, but I believe it has subsequently expanded into the private sector. It would be very well placed to advise landlords and tenants on how to set about establishing such an association, were the right reverend Prelate’s amendment to be accepted.

Finally, on this group of amendments, I reread chapter 4 of the Hackitt report last night, entitled “Residents’ voice”, and it has a whole series of recommendations about enfranchising the resident and the tenant in exactly the way that we have underlined. So, as I said at the beginning, I add a small a complement on the double bass to the excellent speeches that have been made on this group of amendments—or perhaps I am a tenor.

[The Earl of Lytton (CB)]

My Lords, I will try to be brief here. This is an extremely valuable group of amendments, and I entirely relate to the point made by the noble Baroness, Lady Fox, and the noble Lord, Lord Blencathra.

I will comment on something that the noble Lord, Lord Young of Cookham, said. He introduced the question of, if I paraphrase him right, the undesirability of the long-term continuation of conventional long leasehold, and I understand that. For some years I chaired the Leasehold Advisory Service when it was first set up, which was in response to a ministerial commitment that it should be put in place and that there should be advice to leaseholders.

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[The Earl of Lytton (CB)]

My Lords, I will try to be brief. I will just pick up on the last point made by the noble Baroness, Lady Pinnock, who has been a doughty campaigner on all this. We have the problem that this Bill creates a bureaucratic and quite complex situation. That can only weigh in favour of those who hold the real money here, which are the developers. We must try to focus on rebalancing that so that the leaseholders are on some sort of even playing field.

I noted very carefully what the noble Lord, Lord Young of Cookham, said on the detail of the accounting process. I very much support what he said. There is an element of discrimination, which was brought out by the noble Lord, Lord Naseby. Why do we discriminate between different categories of person and what does anybody think that will result in in terms of some class action further down the road? This whole thing has to be robust against applications to some international court, to the High Court or for judicial review. There absolutely has to be proof against serial activity. I know into whose hands that will play, and it will not be to the leaseholders’ benefit. There are an awful lot of exclusions here. The noble Lord, Leigh of Hurley, made a potent point about those who have already paid up. What about them? A point has also been made about proportionality and risk.

I will cut my other comments really quite short and just pose a few questions. As I see it—I was in dialogue with the British Property Federation about this—only in the case where you have a non-cladding effect, where the developer does not exist or cannot be found, does that trigger the freeholder responsibility to make a contribution for remediation, and only after the cap liability of the leaseholder. The Minister does not need to reply to me now, but I would like to be absolutely clear that that is the scenario—one of several—that applies here.

Moving on to Amendment 67, I would like to make a comment. As drafted, does the amendment cover limited partnerships? They are not corporate entities and are different from limited liability partnerships, which are covered by the amendment. For instance, the effective owner of Waterside Park, where a lot of issues have arisen, is just such a limited partnership. Is it the Government’s intention that limited partnerships should be included in the definition of “associated persons”? If not, why not? Because that would create a gaping hole.

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We are approaching 90 minutes on this group. I thank noble Lords for our spirited debate on this matter, which I know is close to the hearts of many on all sides of this Committee. I hope that I have provided the information and reassurance needed, and ask noble Lords to withdraw or not press their amendments.

[The Earl of Lytton (CB)]

The Minister answered a query I raised in connection with Amendment 72; I apologise for jumping a group. It was to do with commercial developers. I think I used the term “commercial developers”, but I intended to say “developers of commercial property”—that is, as opposed to commercial developers of residential property.

[Lord Greenhalgh (Con)]

Oh, I see. You said commercial developers?

[The Earl of Lytton (CB)]

I said commercial developers, but I meant to say “developers of commercial property”. However, I will leave that point for the next debate.

[Lord Young of Cookham (Con)]

My Lords, as the Committee enters its sixth hour of sitting, this is not the time for a comprehensive wind-up. However, I thank all those who have taken part in this debate.

My noble friend Lord Naseby made a valuable point about buy-to-let investors. Over the past 10 or 20 years, buy to let has become an alternative to a conventional pension for many people. I am grateful that my noble friend the Minister said that he is open to discussion on this; we count that as a win.

My noble friend Lord Blencathra had a series of amendments on the theme of protecting leaseholders. I am grateful for them.

My noble friend Lord Leigh of Hurley made a legitimate point about the freeholder who had not claimed the money he could have. I wrote down the solution that my noble friend the Minister arrived at. He said, “We will fix it at the political level.” The mind boggles as to what exactly that involves but I am sure that, with his robust physique and experience of government, he will come up with a satisfactory outcome on that.

The amendment in the name of the noble Baroness, Lady Pinnock, would remove the cap for leaseholders. I have a lot of sympathy with that. New paragraph 2(1), proposed by government Amendment 92, states:

“No service charge is payable under a qualifying lease in respect of a relevant measure relating to a relevant defect if a relevant landlord … is responsible for the relevant defect.”


That is fine, but then there is a whole series of exclusions, of which this is one. I find it difficult to reconcile the cap with the principle that the leaseholder is innocent and should not pay; I think we will have to come to back to that.

The noble Earl, Lord Lytton, made the same point as my noble friend Lord Leigh of Hurley: that the leaseholder should be able to apply. If the leaseholder could have applied in my noble friend’s case, there would not have been a problem and the freeholder would not have been in the loop, as it were.

I am grateful to my noble friend Lady Neville-Rolfe for supporting a number of the amendments. The noble Baroness, Lady Hayman, had her own, thoughtful approach to protecting leaseholders. She referred to the cascade. I hope that her many questions will be answered; perhaps we can all share in the letter that goes round. She also supported the request for an inquiry into compensation, for which I am grateful.

On the waterfall, the Government did not seem to appear in it. I thought that they were right at the end, but they have somehow been left out. I think that the Government are at the end of the waterfall if all else fails; my noble friend the Minister is indicating that this may not be the case, but what are the levy and fund for if not to help where the costs are not otherwise met by the freeholder, the leaseholder or the developer?

The noble Lord, Lord Stunell, asked how the cap was arrived at. It may well have been through a reverse process involving the Treasury.

Finally, my noble friend the Minister said that I thought he was a snake oil salesman. I believe that he believed what he said; my comment was about the pace at which he said it, which was like an advertisement where the terms and conditions are spelled out at an accelerated pace and one does not really have time to hear them. I think my noble friend said that enfranchised leaseholders are now within the scheme; I think he said that because I read his lips. I find that difficult to reconcile with what is in government Amendment 63:

“‘Relevant building’ does not include a self-contained building or self-contained part of a building … in relation to which the right to collective enfranchisement … has been exercised.”


If that should not be there, that is fine, but that is how I read it; I also made that point in an earlier contribution.