Building Safety Bill

Lord Blencathra Excerpts

Committee stage
Thursday 24th February 2022 Grand Committee

Moved by

[Lord Blencathra]

13: Clause 38, page 39, leave out lines 21 to 23

[Lord Blencathra (Con)]

My Lords, I rise to move Amendment 13 and to speak to Amendments 14 and 15 standing in my name. First, I declare a personal interest in that I am a leaseholder in a block of flats near here which qualifies for remediation work; we may have wooden balconies and other bits and pieces not technically covered.

Quite simply, I have tabled these amendments because I believe that the penalties for big building corporations are ridiculously light. I accept that for the single trader plumber, electrician or brickie, the magistrates’ court might suffice, but I say to my noble friend the Minister that it is preposterous to permit the Persimmon or Berkeley Homes of this world to be taken to a magistrates’ court for breaches of the law and fined a mere £200 per day that the breach continues. Theoretically, a magistrates’ court could impose an unlimited fine for breaches of the amounts imposed, but those amounts are trivial. Contrast that to the Health and Safety Executive, where last year the average fine was £140,000 and it fined the National Grid £4 million. Not a single person was killed in that incident, but the HSE believed that the National Grid’s records were inadequate and fined it £4 million.

In 2019, the Competition and Markets Authority fined three construction firms £25 million, £7 million and £4 million for indulging in a concrete pipe price-fixing ring. In 2021, another two firms were fined £15 million for fixing groundworks contracts—and these companies were not the large, mega housebuilding firms we all know and love. If the CMA can impose those levels of fines on small and medium-sized companies which have not compromised safety, why on earth should we even countenance four construction monoliths—which, in 2020, posted profits of £3.8 billion—getting a fine of £200 per day for breaching building regulations? That is why I believe we need to hit them hard, and the penalty in my amendment is the construction cost of the building they broke the law constructing, and that cost would double for each month that they fail to remedy it.

Let us emulate the CMA, which says:

“In calculating financial penalties … the CMA takes into account a number of factors including the seriousness and duration of the infringement, turnover in the relevant market, any mitigating and/or aggravating factors, deterrence and the proportionality of the penalty relative to each company’s individual circumstances.”


I simply suggest, in conclusion, that if that is the modus operandi of the CMA, it should be the modus operandi when we are tackling huge building firms which have breached building regulations. The big corporations need to be hit hard. Our penalties at the moment may be appropriate for the single plumber and electrician but not for the Berkeley Homes of this world, to name just one. I beg to move.

[Lord Best (CB)]

In the absence of others, I rise to speak to Amendments 94A, 94B and 97A, which seek to strengthen the hand of the new homes ombudsman. At Second Reading, I congratulated the Government on introducing this new dispute resolution service. I noted just how important it was for consumers to have an accessible and effective means of handling their numerous complaints against shoddy workmanship, building defects and appalling service in rectifying these problems, not least by the oligopoly of volume housebuilders.

My concern has been that the new homes ombudsman will not have sharp enough teeth to deal with these powerful players, and at Second Reading I posed a number of questions to the noble Lord the Minister accordingly. He was able to give me some reassurance on the independence of the new ombudsman from the industry. The housebuilders will be required to fund the ombudsman’s costs and will have a major say on the New Homes Quality Board, which will oversee the ombudsman service and agree the code of practice to be used, but the Minister assured me that the independence of the ombudsman will be preserved.

Subsequently, I have received a lengthy and extremely helpful briefing from the chair of the New Homes Quality Board, Natalie Elphicke MP. From that it is clear that considerable effort has gone into ensuring the genuine independence of the new arrangements from the influences of the housebuilding industry. I am grateful for those reassurances and for other details of the work that has been going on behind the scenes, which I hope will now receive the publicity it deserves.

Only Parliament in statute can endow the ombudsman with legal powers, and two of my amendments before the Committee today are intended to bolster the ombudsman’s jurisdiction to achieve better behaviour by the housebuilders. At present, the Bill makes provision for the ombudsman to make “make recommendations” about changes that developers and housebuilders should make to improve standards of conduct or standards of quality of work where,

“following the investigation of a complaint the ombudsman identifies widespread or regular unacceptable standards of conduct or standards of quality of work”.

This is good stuff, and making recommendations to this end is an admirable task for the ombudsman. However, making recommendations is not the same as placing requirements upon the builders to up their game. Amendments 94A and 94B add a power for the ombudsman to go further and place “improvement requirements” on the members of the scheme—that is on all the builders and developers selling homes, where widespread unacceptable standards of conduct or quality of work are found.

Amendment 97A seeks to strengthen the ombudsman’s hand in another way. At present, the remit of the ombudsman only covers any faults, defects, snagging problems and so on during the first two years after a new-build home is purchased. Certain defects that emerge after two years would be the subject of a claim under the 10-year warranty, which is a compulsory part of the sales process. The trouble with this cut-off of two years for the ombudsman is that the warranties thereafter do not cover all kinds of issues that may not be catastrophic defects but are, none the less, aggravating problems that can cause endless anxiety, annoyance and cost to the purchaser.

One example is that roofs are not covered when properties are converted into new homes. A more commonplace example might be a buyer trying to get a French window repaired or replaced who raises this with the builder within the first few months but does not take it to a formal complaint to the ombudsman until after the two-year time limit is up. Or the buyer has a plumbing problem that gets fixed but returns, gets worse and finally leads to an ombudsman complaint, only to discover that the issue is now too late to be considered.

Amendment 97A would enable the owner to take a complaint to the ombudsman up to six years after the property was first purchased, where the complaint cannot be dealt with under the warranty. It will not be possible to complain about the warranty to the Financial Ombudsman Service, which handles redress in relation to warranty providers, because these warranties do not cover snagging and minor defects. Most warranties are pretty tightly drawn and some are worse than others. There is a strong case for giving the ombudsman the power to insist upon all warranties satisfying proper quality standards.

But specifically in relation to the housebuilders, what the consumer needs is for their complaint about the multiplicity of things that the builder gets wrong to be handled by the new homes ombudsman without the buyer being told that they are out of time. The purchaser may simply have been giving the builder the benefit of the doubt, or the particular defect may not have emerged immediately, or the buyer was just not sure of their rights. Two years is simply not long enough. Six years matches the traditional time for liability in other circumstances, as in the Defective Premises Act. The Legal Ombudsman, for example, will investigate claims up to six years after a relevant incident is reported.

While not detracting from my congratulations to the Government on bringing forward the proposals that will create a much-needed new homes ombudsman service, I believe that these amendments—which would place requirements for better behaviour on all house- builders and support the consumer for six years, instead of two, after their purchase—would sharpen the ombudsman’s teeth and help ensure that the new arrangements can make a real difference to the performance and behaviour of this industry.

--- Later in debate ---

[Lord Blencathra (Con)]

My Lords, as an aside, I was going to say that we are sitting in a bit of a chilly draught here, but then I reflected on what it is like for those people in blocks of flats which have had all the external cladding ripped off, leaving nothing between them and minus 5 degrees outside but a thin plasterboard wall. That is why it is important to get this Bill through and tackle that problem as soon as possible.

I am in complete agreement with my noble friend the Minister on the quality of Roman architecture. My favourite place to visit in the border country is the Housesteads military fort on Hadrian’s Wall, where the best-preserved part is the latrines in the bottom corner. To see that the Romans, 2,000 years ago, had running hot water in their toilets and latrines is an eye-opener—for many buildings in this country, we have still not caught up with hot running water in the toilet facilities.

I floated my amendments to suggest that corporate developers should in all cases be tried on indictment, with massive fines for infractions. We have all heard the expression “damned with faint praise”, but never in all my experience in Parliament have my amendments been damned with such lavish praise. My noble friend basically said, “Blencathra, you’re an absolute genius; your amendments are wise and right. We’re with you all the way; let’s hit them hard—but I still ain’t going to do it.”

I accept that there will be cases where the magistrates’ courts should have a say. I was putting in a more absolutist position. However, if the magistrates’ courts continue to have a role—as I accept—proper guidance must be issued to them through the judicial standards board, or whatever it is called. Massive fines should be imposed in those circumstances where they are deserved. As I have said, the HSE and the CMA seem to have managed to persuade courts to slap on big fines. Perhaps for local authorities it is a culture thing or, for the magistrates’ courts, breaching building regulations does not matter so much—there may be some cultural problems there, but we must cut through them and, if we keep the magistrates’ courts, make sure that guidance slaps on heavy fines.

My amendments are not as important as those from the noble Lord, Lord Best. I was impressed by his speech; I would accept my noble friend rejecting my amendments, but I think he is wrong to reject the noble Lord’s amendments, because what he asked for is eminently sensible and should not cause the Government any problems. What is the point of having a power to make recommendations if they can be ignored? Placing an obligation on builders to make improvement requirements is the only logical step. As he said, it must be beefed up—and if you beef something up, then it needs more teeth.

I also like his Amendment 97A. He made an impeccable case for it and I fail to see why the Government have rejected it—it just moves it from two to six years. Five years into my brand-new block of flats, I found a leak in the plumbing where the washbasin was. Eventually, I managed to separate the very posh fake marble frontage from it and found, in my inexpert experience, that a one-and-a-half-inch pipe had been stuck into a two-inch pipe and sealed with a bit of silica. I thought, “This ain’t right”. The developer said, “That is how we do it in the trade—nothing to worry about.” I thought, “I’m not having this”, so I hired at my own cost a plumbing expert consultant, who came in, looked at it, sucked his teeth and sent me a report saying that it should be a special reduction joint XYZ. I went back to the developer, served a notice that I would go to the county court with £200 of my own legal costs, and gave them the consultant’s report and the repair I wanted.

Because it was me, and I had the muscle and clout to do it, the developer coughed up immediately, refixed the whole thing and paid all the cost. But I have a unique position as a Member of this House, with the ability to make that threat. Most leaseholders cannot. That is why they go the ombudsman, who must have a longer period than two years to sort out these problems. I am not sure whether the noble Lord will bring it back on Report, but I say to my noble friend that there is no skin off the Government’s nose in conceding the noble Lord’s amendments.

However, returning to my Amendment 13, I will not go back to this on Report and beg leave to withdraw it.

Amendment 13 withdrawn.

--- Later in debate ---

I will stop there. I had a comment or two on the amendment from the noble Lord, Lord Blencathra; his proposed new subsections (2), (3) and (4) have the same apportionment problems as the Environmental Protection Act. I want to avoid that. All these things may sound like criticisms, but they are all capable of being sorted. I do not think there is any disagreement on that.

[Lord Blencathra (Con)]

My Lords, since it seems de rigueur to start with a quote, I suggest we start with Jean-Baptiste Alphonse Karr:

“Plus ça change, plus c’est la même chose”—


the more things change, the more they remain the same. However, we simply cannot have that quote for this Bill; we do not want things to remain the same. That is why I prefer the quote from Heraclitus the Obscure of Ephesus: “panta rhei, ouden menei”—all things change, nothing remains. That, I suggest to my noble friend, should be the strapline of this Bill, if he cannot put it into the Long Title.

As my noble friend Lord Young of Cookham said, this group contains probably the most important amendments in the whole Bill, along with government Amendment 114 on the cost schedule. That is why we will probably spend more time on it than any other. We have four major groups of amendments here, and we are all seeking to do the same thing. We have the Government’s amendments, my noble friend Lord Young’s amendments, those of the noble Earl, Lord Lytton, and mine. I am sorry that I have about half the amendments in this group. The sets from us Back-Benchers are all complementary. We are all in the same boat; we may have slightly different strokes, but we are all rowing in the same direction as we seek to toughen up the Government’s position, which is a very good start.

First, my noble friend the Minister said on Monday—when I was unable to be present—that he found my speeches priceless. I take exception to that. He is wrong; they are not priceless. If the Government accept my amendments, they will have a huge cost attached, starting at £15 billion. Every penny will be paid by the builders and developers, and that sum is just the excessive profits they have made in the last few years. They are not priceless—there is a good cost attached.

I am very pleased to be able to support my noble friend Lord Young of Cookham’s amendment and the excellent way he has introduced it today. I will not repeat his arguments, since I cannot improve on a single word of them. I also commend Amendment 115, in the name of the noble Earl, Lord Lytton. He is also an expert in these matters, as we heard just now. I particularly like his introduction to the amendment:

“The purpose of the FHRS must be to ensure that residential blocks of flats with fire hazards are made safe … speedily, efficiently, effectively and proportionately … without recourse to lengthy and expensive legal proceedings … without cost to leaseholders or occupiers, and … in accordance with the perpetrator pays principle.”


He replicates those principles in Amendment 118, which I am also pleased to support.

Now that your Lordships have heard from the experts, this enthusiastic amateur will attempt to explain his amendments in this group. Like my noble friend Lord Young of Cookham, I agree that my noble friend and the Minister, Michael Gove, have transformed the landscape of fire remediation works, and the government amendments to this Bill go a very long way to delivering on the pledge that no leaseholder will pay a penny and that the perpetrators will pay. But as my noble friend Lord Young of Cookham pointed out, not all relevant buildings are covered, not all leaseholders are covered and not all defects are covered. The object of my amendments—and of others—is to deliver the policy, fill in the gaps and make the protection more robust.

Two weeks ago, a noble Lord following a speech I made in the main Chamber said that I had, in my usual way, set out an absolutist position, but that I was nevertheless right to raise the issue, et cetera. So, like the noble Earl, Lord Lytton, I have attempted in my Amendment 148 to set out some key building safety objectives to which the Secretary of State and everyone else exercising functions under the Bill must have regard to when making regulations.

I do not like these EU or UN regulations which begin with dozens of meaningless “whereas this” and “whereas that”, et cetera, and our Office of the Parliamentary Counsel does not like declaratory objectives which do not actually make substantive law. Nevertheless, when I was chair of the Delegated Powers Committee, I and my committee heavily commended my noble friend’s boss, Michael Gove, on the Fisheries Act—which has now passed—because it began with a series of objectives, which we had never really had before in legislation. We said that it was a wonderful way to start the Act, and that got universal approval from all the countries of the union. My noble friend should go back to his boss and say that, if it was good enough for the committee and I to commend him then on setting objectives at the start of the Bill, he should adopt either the Lytton principles or the Blencathra objectives and put them at the start of this Bill, setting the scene for what we want to do in future. I invite colleagues to look at my Amendment 148, and I promise then that I will not read it out to them. I will read out my other amendments, however.

The concept behind my Amendment 34 is very important since it relates to Clause 57, one of the most important clauses in the Bill. But the clause has a weakness, in my view, in that it gives the Secretary of State various regulation-making powers to create a levy or levies but does not set a maximum limit on what the levy might be. From my experience in the Delegated Powers Committee and the legal advice we received, any general levy-making power in regulations is highly vulnerable to judicial review and challenge unless the Secretary of State is operating within maxima parameters. It does not matter what those maxima are so long as they are in the primary Act. That means that any levies set by the Secretary of State under that maximum cannot be challenged on the grounds that they are unreasonably high.

The big building companies have already promised— I think I read this in an article last week—to challenge Gove and throw millions at lawyers to sabotage the whole levy system and claim that regulations setting the fees are ultra vires. The levels I have set out in my amendment may seem excessive; I doubt that the Secretary of State would ever need to set a levy at that rate, but it legitimises any levy he sets under that maximum parameter.

My Amendment 39 simply states that

“‘person’ includes bodies corporate including a holding company or special purpose vehicle”.

In reading the Bill and the government amendments, I think that where the Government have used “person”, it includes bodies corporate, so I will not labour that point. I would just like an assurance that in every circumstance where the Bill talks about the obligations on a person or a levy on a person, it would include bodies corporate.

My Amendment 78 seeks to insert a new clause into the Bill setting out what I call the “Fire hazard remediation objectives”. As I said about my Amendment 148, these objectives may not be perfect, but I am adamant that the general concept of them is.

This very important Bill started as a bit of a dog’s breakfast, amending various Acts and introducing the idea of a regulator—not a coherent Bill in itself but one that amends this, that and the other. However, since the Bill left the Commons, the Government have rightly—I approve of it—hijacked their own Bill by introducing all these amendments, which give the Bill a whole new importance. But they are scattered around it, and there is no coherence. That is why I repeat my Second Reading plea that the Bill team and the Office of the Parliamentary Counsel reorder this Bill for Report and put all the new clauses relating to leaseholder protection measures and perpetrator pay measures into two new parts at the front of it. It would not just be window-dressing; it would make a statement to all the companies involved in building construction that we, the Government and this Parliament, are taking very seriously all aspects of making the perpetrators pay and protecting leaseholders. I suggest that it would also make the Bill a dashed sight easier to read.