Leaseholders and Cladding

Hilary Benn Excerpts

Wednesday 12th February 2020 Westminster Hall

[Geraint Davies (in the Chair)]

Before I call Hilary Benn, may I simply say that 13 Back Benchers wish to contribute? In the event that Mr Benn speaks for 20 minutes, everyone will have three minutes; in the event that he speaks for 10, everyone will have four. He is free to take as much time as he likes, and I will divide the remaining time equally between Back Benchers. Obviously, interventions will take time, but they will not result in more time for Back Benchers. I call Hilary Benn to move the motion.

[Hilary Benn (Leeds Central) (Lab)]

I beg to move,

That this House has considered leaseholders and cladding.

May I say what a great pleasure it is to serve under your chairship, Mr Davies? I am grateful to all colleagues present. I know that a number will wish to intervene, but the more interventions there are, the longer I will take to complete my argument, which I am keen that the Minister should hear. I think the turnout shows her the strength of feeling on this issue.

It is not difficult to understand why there are strong feelings. Imagine that someone has saved up all their money and bought their first flat. It is the home of their dreams. They move in, the future beckons, and then one day a letter drops on the mat. It is from their managing agent, and it tells them: “Your home is in a building that has now been judged a fire risk because of unsafe cladding, and as a leaseholder you must immediately—this day—start paying for a waking watch. Otherwise, all of you will have to move out of your homes.” In one case in Leeds, such a waking watch is costing each flat-owner £670 a month plus VAT, on top of mortgage payments and the service charge.

The leaseholder is probably then asked to meet the cost of putting in a fire alarm system, which may or may not reduce the cost of the waking watch. Then, to their absolute horror, they are asked to pay for the cost of replacing the dangerous cladding to make their building—their home—safe. The problem is pretty obvious to us all: they simply do not have that kind of money. Their home has been rendered completely worthless, therefore they cannot remortgage. Their insurance premium is, in all likelihood, going up, and they worry about possibly being made bankrupt because of all the costs. That could result, depending on what job they do, in the loss of their job as well as their home. Yet none of that is in any way the fault, responsibility or doing of the leaseholders.

[Mr David Lammy (Tottenham) (Lab)]

I have a building in the Tottenham Hale village with 432 people who cannot get a mortgage or remortgage. Is it the view of my right hon. Friend that that is entirely unacceptable, because fire and building regulations are rightly the Government’s responsibility? The Government should step in to support those individuals.

[Hilary Benn]

That is absolutely my view. My right hon. Friend anticipates what I will come on to say.

[Mr Tanmanjeet Singh Dhesi (Slough) (Lab)]

I congratulate my right hon. Friend on securing this immensely important debate. Does he agree that, although the Government’s recent announcement of the aluminium composite material cladding fund is welcome, it does nothing to help blocks, such as the Lexington and Rivington apartment blocks in my constituency, that have non-ACM dangerous cladding or are plagued by other fire safety defects, such as a lack of effective firebreaks? It is distressing to see those residents, who are worried about their finances and security, now suffering sleepless nights and fearing bankruptcy and homelessness. The Government need to help them out.

[Hilary Benn]

My hon. Friend is correct: there is a fundamental unfairness in the treatment of different types of leaseholders. That is the argument that I will make.

As we have just heard from two colleagues, a growing number of our constituents face this problem—in my case, leaseholders from St George’s building and a number of blocks in Leeds Dock and Timble Beck, who have other types of dangerous cladding. I pay tribute to the Leeds Cladding Scandal group, to all the other groups that have been organised up and down the country, and to the very aptly named Manchester Cladiators, who have really got organised. That name tells us how determined they are to win.

[Lucy Powell (Manchester Central) (Lab/Co-op)]

I thank my right hon. Friend for securing the debate, and for mentioning the Manchester Cladiators: a network of dozens of blocks in my constituency that are affected by such issues. What the Manchester Cladiators really want is to be at the heart of an ongoing dialogue with the Government to resolve the issues. The period of passing the buck between freeholders, insurers and the Government has to stop.

[Hilary Benn]

I agree completely, and I hope that today’s debate is part of the dialogue that has already begun. Leaseholders want to feel that they are being listened to, and they want to be able to meet Ministers. I hope that this debate will ensure that more of that happens.

[Steve Reed (Croydon North) (Lab/Co-op)]

It is powerful to hear how the issue is affecting people across the country, including residents of Radnor House in my constituency of Croydon North, which is in south London. Leaseholders are living in a block, converted from offices, that has wooden cladding, so they do not come under the ACM fund that the Government have opened. Yet they, too, face massive bills that they cannot afford, in homes that they cannot sell. It feels to them as if the Government are penalising innocent leaseholders instead of stepping in with real help, which is what they need.

[Hilary Benn]

My hon. Friend has painted a picture, as we all can, of the strain, the heartache and the worry, which are not difficult to understand. If we had received one of those letters and it was happening to us in our home, we too would be worried sick. Our constituents who are caught up in that nightmare want our help, and they need it now.

The Minister knows only too well how we got here, following the terrible fire at Grenfell Tower, so I do not propose to go over any of that again. The Government had to act in the wake of that tragedy to change what was clearly a wholly defective system. However, having done so, Ministers have put leaseholders in a manifestly unjust position. Were that not bad enough, as more and more building surveys have been done, other problems have come to light, such as missing firebreaks—which mean that the buildings were never built according to building regulations in the first place—or wooden balconies, which the new guidance says have to be replaced.

[Dr Matthew Offord (Hendon) (Con)]

I have 1,087 developments in the Pulse development in Colindale. A lot of people bought those properties after the building regulations were signed off by the local authority, as recently as 2017. Those people have not been protected by building regulations and now, as the right hon. Member says, simply cannot afford to either remortgage or sell their property. They are in redundant properties. The concern is that the assurances from building regulations were simply not worth the paper on which they were printed.

[Hilary Benn]

The hon. Member makes a really important point. Lots of my constituents say to me, “But it was signed off under building regs. Surely that means it’s safe.” Well, it does not quite mean that, for reasons that we can go into on another occasion. It is part of the system that has still to be fixed.

Other leaseholders are drawn in because, even though their blocks have not been identified as having a problem, when they try to sell the flat the mortgage company says, “Okay—but, by the way, where’s the certificate that says that this building complies with the new regulations that the Government have, quite properly, put in place?” If they cannot produce it, the property is worthless and becomes unsellable. If that was not complicated enough, just to complete the story, the ownership structure of blocks and the history varies. The developers may have gone bust, the builders may no longer be trading, and some freeholders say, “I’m terribly sorry, but I don’t have the money to replace the cladding on this building.”

[Kevin Hollinrake (Thirsk and Malton) (Con)]

I draw the House’s attention to my declaration in the Register of Members’ Financial Interests. It is not simply that freeholders say, “I don’t have the money.” They do not have the obligation. Most freeholders do not have an obligation to mitigate any such problems. Perhaps the only people who do are the original developers—who, as the right hon. Member says, may not be there—or the leaseholders. Is that not the problem? As he rightly says, leaseholders in many cases have no means to pay for that remedial work.

[Hilary Benn]

The hon. Gentleman, who has great expertise in this matter, is correct. I will come to what the Government have said about the responsibility of freeholders, but I think the point we are all making is that this is not the fault of the leaseholders, who never expected when they bought that first dream home that this burden might fall upon them.

[Rushanara Ali (Bethnal Green and Bow) (Lab)]

My constituency, like my right hon. Friend’s, has a lot of high-rise blocks—among the highest number in the country. One of the major issues is getting the Government to finance the work that needs to be done ahead of any further tragedies and fatalities, and ahead of the Budget statement. Does my right hon. Friend agree that two years after the appalling, horrific tragedy of Grenfell, the Government need to step up and create a fund so that those works can be done, and should then go after the freeholders to make them—rather than our constituents—pay when they are able to do so? That should be our focus and priority, as we said time and again in the last Parliament. I hope that we do not have to keep saying this. I hope that the Government heed our advice and make sure that the Chancellor puts some money into those works in the March Budget.

[Hilary Benn]

I agree with my hon. Friend. When the problem of ACM cladding was first identified, the Government quite properly said that it all has to come off and be replaced. Importantly, they also said that however it was done, leaseholders should not have to pay. On 29 November 2018, the then Secretary of State for Housing, Communities and Local Government said:

“Everyone has a right to feel safe in their homes and I have repeatedly made clear that building owners and developers must replace dangerous ACM cladding. And the costs must not be passed on to leaseholders.”

I agree with that. The Secretary of State repeated that point on 9 May 2019, when he said:

“Leaseholders find themselves in this position through no fault of their own, and this is not morally defensible.”—[Official Report, 9 May 2019; Vol. 659, c. 688.]

Again, I agree. It would be monstrous to expect people who are entirely blameless to pay for the mistakes and errors of others. It has been pointed out that if our constituents had bought cars or washing machines that were a fire risk, no one would dream of saying to them, “Sorry, you are going to have to pay for the cost of replacement.” Their problem is that they bought the home of their dreams.

I acknowledge the responsible way in which some freeholders, including in Leeds, have accepted that they need to foot the bill to replace the cladding. That work has either been done, is in progress, or we are told it is timetabled. However, despite the Government’s policy, there are freeholders who have not lived up to their responsibilities. That is why the Government eventually realised they could not carry on, because otherwise ACM cladding would not be removed.

On 9 May last year, the Government announced the £200 million fund to support the removal of ACM, to protect those leaseholders from bearing the cost. There have been problems with that fund—slow disbursement, bureaucracy and the like—that are for another debate, but I welcome that decision. It showed unreservedly that the Government were determined to uphold the principle they had established: leaseholders should not have to pay. However, what is now happening in respect of buildings with other types of unsafe cladding completely contradicts the principled position that the Government have taken until this point.

Why is this happening? First, the Secretary of State said on 20 January that he had received advice that ACM cladding was much more dangerous than other types of cladding. Anyone who has seen the film of student accommodation in Bolton going up, convulsed in flames, might wonder whether that is the case, since that building was covered in high pressure laminate. It was the Government’s review that brought in the new advice, and that advice toughened the standards, leading to other buildings being peered at, prodded and having bits taken off them when people discovered the problems with HPL and other systems. Nobody knows how many such buildings there may be, but the point is that leaseholders in buildings with other types of cladding find themselves in exactly the same position as people who are living in buildings with ACM cladding, except for one thing: the Government’s fund does not cover the removal of their cladding.

Secondly, the idea of differential risk is not applied by the West Yorkshire Fire and Rescue Service. It does not distinguish between different types of cladding when it issues notices that say, “This building is unsafe. Start a waking watch now, or you are going to have to move out. Give us a plan for how you are going to replace this cladding.” The chief fire officer of West Yorkshire fire service put it to me this Monday that

“it is our view that there is no difference between unsafe ACM cladding and unsafe HPL cladding.”

Why, then, are the Government seeking to distinguish between the two when it comes to the position of leaseholders? I say to the Minister that that position is completely unsustainable.

Thirdly, Ministers have rightly been adamant that unsafe cladding has to be removed. They have set up the fund and said that they are going to name and shame freeholders who do not get on and do it. The latest building safety data says that 174 ACM-clad private-sector residential buildings are still yet to be remediated. What is those Ministers’ position on other types of dangerously clad buildings? Are the owners of those blocks going to be named and shamed—and if not, why not?

When the Secretary of State was pressed on that point in the House on 20 January, he indicated that the Government were considering further help. In answer to my hon. Friend the Member for Hackney South and Shoreditch (Meg Hillier), he talked about the possibility of loans. If those loans went to the freeholders, that might possibly be a way forward, but only if the Government could guarantee that none of the costs would be passed on to the leaseholders; if they just got a bill for it through their service charge, that would breach the principle that the Government set out. However, it was clear from the Secretary of State’s reply to my hon. Friend that he was talking about loans to leaseholders, because he referred to existing examples of building owners who have provided low-interest or zero-interest loans on a hardship basis. He went on to say:

“There may be a role for the Government in ensuring that that works, that the loans are affordable, and that it is done as quickly as possible.”—[Official Report, 20 January 2020; Vol. 670, c. 33.]

However, that would be another change of policy, because on 9 May last year, when the then Secretary of State announced the grant fund, he was specifically asked about loans. He said:

“We looked at questions such as whether a loan arrangement could work but ultimately, given the complexity, the time that would have been involved and the need for all sorts of different consents, and given that my priority is providing a sense of assurance for leaseholders and getting on with this, we decided to adopt this structure.”—[Official Report, 9 May 2019; Vol. 659, c. 695.]

By “this structure”, he meant grants. If that was the view then, what has changed? Perhaps the Minister can explain in her response. When the Secretary of State talked about hardship, when leaseholders are on low incomes or do not have any savings, the implication was clearly that if a person does not fall into one of those two categories, they will bear the total cost themselves.

The problem with the idea of loans is that it completely breaches the principle that the Government set out at the start of this crisis—and believe me, it is a crisis. That principle was that leaseholders living in buildings with unsafe cladding should not have to pay for the cost of its removal, because that would create two classes of leaseholder: one whom the Government would seek to protect from the cost of replacing cladding, and another to whom the Government would say, “I’m terribly sorry, you’ve got to pay.” That would be completely unfair, which is why many of us are calling on Ministers to extend the coverage and size of the fund to all buildings with unsafe cladding of whatever type. We have already heard those calls today, and I am calling for that as well, because it is the only fair way forward and the only way in which the objective of removing all dangerous cladding, with which we all agree, can be achieved.

Unless that happens, in situations where freeholders cannot or do not find the money and leaseholders clearly do not have the money, the nightmare will continue. They will go on living in an unsafe building; the only way they will be able to stay in it will be to go on and on paying for a waking watch, as the cladding will never be removed because there is no one to pay for it. Eventually, that will bankrupt them.

[Stephen Timms (East Ham) (Lab)]

I thank my right hon. Friend for the case he has set out. Residents of the Lumiere building, in Manor Park in my constituency, tell me that there is ACM cladding on the front side of the building and other kinds of dangerous cladding on the other three sides. Does it not seem particularly absurd that Government funding can help with one part of the building, but not the rest?

[Hilary Benn]

My right hon. Friend makes an overwhelmingly powerful case for treating all unsafe cladding as unsafe and needing to be replaced.

The Minister has a tough job, because negotiations with the Treasury are difficult and there are complications. Was building control at fault originally? Can freeholders claim on insurance or building warranties? Can they sue the architects or developers for defects in the original design or construction, assuming there is still someone to sue? Perhaps, but that will take years, and it is not an answer.

I say readily, however, that if a claim is successful and the Government have paid to remove the cladding, the money ought to go back to the Government. I also have no problem with the Government taking equity in the freehold of buildings if they have coughed up for the removal of cladding. What more can the Government do about buildings that have not yet been identified as unsafe but where mortgage companies are asking for a certificate? The EWS1 form has not solved all the problems, so it would be good to hear from the Minister what more can be done.

I will bring my remarks to a close, because many hon. Members want to speak. I see no case for Ministers to move away from the principle they established at the start of the crisis: that leaseholders should not have to pay. I see no case for treating one group of leaseholders differently from another. I see no way for all the dangerous cladding to be replaced other than for the Government to step in and extend the coverage of their fund to all types of blocks that the fire service has identified as unsafe. That is what is needed and it is needed urgently.

All leaseholders on whose behalf we speak today, whose lives are in turmoil, will be watching very carefully to see how the Minister responds. They are not going anywhere—indeed they cannot, because they are trapped in their homes. All they are asking for is to be able to put this nightmare behind them, to go back to living in a safe home and to get on with their lives. Every single hon. Member in this Chamber has a responsibility to ensure that that is what happens, and happens soon.

[Several hon. Members rose—]

--- Later in debate ---

[Hilary Benn]

I thank all colleagues for the force and clarity of their arguments. It is no good pretending that the leaseholders listening to the debate will not be very disappointed by the response that they have heard. I hope that the Minister will go back to the conversations with the Treasury and say, “Blimey, we’re in a bit of a mess here—MPs on all sides of the House are not going to go away,” because we will be back. The Budget is coming up, and I hope that on that day, we will hear what the Government will do to ensure that leaseholders do not have to pay.

Motion lapsed (Standing Order No. 10(6)).