Leaseholders: Safety Remediation Costs

Lord Stunell Excerpts

Thursday 4th November 2021 Lords Chamber

Moved by

[Lord Stunell]

That this House takes note of the situation of leaseholders who are facing substantial bills for fire and building safety remediation work; and of the need for safe, green and affordable housing.

[Lord Stunell (LD)]

My Lords, I start by reminding the House that I am a member of your Lordships’ Built Environment Select Committee and an honorary fellow of the Institution of Civil Engineers, and served for two years as Minister with responsibility for building regulations, between 2010 and 2012.

I make no apology for bringing back to your Lordships’ House the unfinished business arising from the dreadful tragedy of the Grenfell Tower fire, which killed 72 men, women and children and ruined the lives of many others. Consequent upon that, fire inspections have been held at thousands of buildings in the UK to check whether they are compliant with all relevant fire safety rules. In the event, many have been found not to be compliant. One estimate is that up to 1.5 million households may be living in a home that has fire safety deficiencies. It is not just combustible cladding that must be taken down and replaced; other literally vital, life-saving features such as cavity barriers, fire stops and fire doors have been wrongly installed. All must be replaced or repaired.

We know that the cost will be huge, and that the burden falls unfairly. I, my noble friends and other noble Lords will today challenge the Minister and the Government on how that burden falls. However, this debate, held while COP 26 is meeting in Glasgow, is also about another, even wider issue: ensuring that all our homes, both existing ones and those still to be built, are safe, sustainable and affordable. That also requires massive investment and a new approach to design and construction, including cutting heating bills with better insulation and decarbonising heating systems, while ensuring that neither affordability nor safety is compromised. Towards the end of my remarks I will say something about the challenges faced in achieving that, and give some words of advice to the Minister on how to make a good start.

These two seemingly separate imperatives—fire safety and climate resilience—are closely linked. Both require strong government leadership to set the long-term regulatory and investment climate. Both require new skills and expertise to deliver. Both will require strong oversight and evaluation to guarantee successful outcomes. I want the Minister to join the dots and undertake to learn the lessons that we painfully learned from the Grenfell Tower crisis to deliver on the climate change crisis successfully. I also want him to acknowledge that his Government have much more to do on both fire safety and climate resilience before they can begin to claim to be delivering safe, green, affordable homes for all.

The inquiry into the Grenfell Tower disaster exposed many shocking failures of design, manufacture, testing, installation, supervision, inspection and regulation. There have been failures by clients, developers, suppliers, contractors, subcontractors and inspectors. There is a very long list of people who made mistakes or, worse, deliberately cut corners to save time, money or face. The residents and leaseholders of Grenfell Tower paid a high price indeed for those multiple failures, for which they bore no blame; indeed, they did their best to prevent them.

In the aftermath, many hoped that it was simply some horrible combination of rogue circumstances that could be never repeated. Sadly, that is not true. We now know that thousands of homes in hundreds of high and medium-rise blocks have many of the same deficiencies in their construction. Again, it is about not just combustible cladding but missing cavity barriers, fire stops and fire doors. One estimate, by the British Woodworking Federation, is that 600,000 fire doors need remediation.

There will be long lists of people and organisations to blame in each and every failure, but on none of them will the names of the leasehold residents who live there appear. Yet, in every one of those defective blocks, it is the leaseholders who are expected to foot the bill. The remediation costs being passed on to leaseholders are typically multiple thousands of pounds each. The magazine Inside Housing ran a survey of leaseholders. They reported huge bills. Some 60% of those who replied to that survey faced a bill more than £30,000, with the top 15% facing bills of more than £100,000. On top of that come the huge service charges for waking watch provision and massive rises in insurance premiums. With sometimes a nil valuation on their property, leaseholders cannot raise mortgage funds to cover the cost; nor can they sell up and leave.

The Government’s response, after a wobbly start, has been to move forward with the Fire Safety Act and now the Building Safety Bill. They have tabled plans for some financial assistance, but those plans are not only manifestly well short of what is needed, they are themselves moving at a snail’s pace on delivery. For instance, four years after the fire, only £79 million of the £200 million set aside to help private leaseholders has been spent. There are still no details published on how to apply for the loan scheme for leaseholders trapped in low and mid-rise blocks, announced by the Minister with great fanfare nine months ago.

The Government have repeatedly sent out confused messages that have made the situation facing leaseholders worse. The initial EWS1 scheme was intended for use only on high-rise blocks, those over 18 metres. It provided a way for mortgage providers to underwrite transactions on those properties. It was a struggle to do so because there were far too few fire risk assessors to cover the 1,700 buildings in scope, so there were long delays. But the Government’s January 2020 consolidated advice note, stating that combustible cladding on any height of building posed a fire risk, immediately led to EWS1 certificates being demanded of every building, increasing the demand for fire risk assessments from 1,700 to several tens of thousands. That created an enormous backlog of EWS1 assessments.

As a palliative, a year ago the Government set up a training scheme with RICS to train an additional 250 fire assessors. A year later, today, I want to hear from the Minister how many trained fire assessors there are and what the department’s estimate is of the backlog of assessments still to be done. The Minister may reply that, back in July this year, he announced that the EWS1 was to be withdrawn and replaced by PAS 9980 and that a new code of practice would be established with a sound, risk-based assessment procedure. However, neither the code nor the publicly accessible standard has arrived yet. Will the Minister give an assurance today from the Dispatch Box that both of those will be published before the Christmas Recess?

The procedural dithering by the department is making the position of leaseholders, already under intense financial pressure, worse with each passing day. A study by Sheffield University, funded by the ESRC, reported that for most leaseholders the financial pressures were at least as much responsible for their stressed mental state as fears for their safety in case of fire. Leaseholders have understood the brutal reality that they are more likely to face foreclosure than fire death. The Government have a clear duty to respond urgently to reassure them.

Of course, above and beyond all the administrative fumbling by the department is the overriding question of funding. Other noble Lords will have plenty to say on this, and I will listen particularly carefully to what the noble Earl, Lord Lytton, has to say about drawing on the polluter pays principle to recompense leaseholders. All I will say is that, should the Government not come forward with an equitable scheme beforehand, the Minister can expect a difficult time when the Building Safety Bill reaches your Lordships’ House. It remains a central responsibility of this Government to ensure that the blameless victims of this terrible episode are not left swinging in the wind, exposed both to fire risk and financial calamity.

A central theme of that Building Safety Bill is to establish a golden thread of responsibility for due process and good construction, overseen by a tough regulator. That is a principle I strongly endorse: indeed, I can claim to have prefigured it in the Sustainable and Secure Buildings Act that I successfully brought forward in the other place as a Private Member’s Bill 15 years ago. Of course, the Building Safety Bill rightly focuses on fire safety and the immediately presenting and very pressing issue of fire prevention in high-rise blocks, but that golden thread principle should be a fundamental part of the regulatory system for the whole construction industry. It can help to ensure that new and retrofitted homes are actually built to the standards specified, that people doing the work have the skills and capability for the task, and that when something goes wrong there is a clear audit trail.

By way of illustration, six years ago a fire broke out in the wall of a modern block of three-storey town houses in my former constituency and spread vertically to the roof. The fire spread through the roof space, and three homes were gutted. Missing fire stops and cavity barriers were the facilitators of the fire spread. It happened 10 years and one month after construction—important from the warrantee angle at the time. Of course, there was no paper trail, or digital trail, on who did what or why during construction. According to the Greater Manchester Fire and Rescue Service, which attended that fire, this absence of cavity barriers is a very common fault to find in the timber-framed house fires it attends. At the time, it told me it supposed that it would be a national problem. When I inquired, the then Minister said that a study was being commissioned by the department. Can the Minister here today tell us whether that happened and what it reported? He might find it interesting—or maybe not—but it could well provide long-term evidence of a long-term problem.

Less dramatically, there have been multiple reports of people moving into new homes and finding the roof insulation still rolled up in the loft, and the level of basic faults in newly completed homes remains unacceptably high. We are going to see the wholesale introduction of modern methods of construction—prefabricated and timber-frame construction—aimed at high levels of home insulation. We are targeting a complete revolution in the technology used to heat our homes. All these and much more are on the menu as zero-carbon homes are seen as the gold standard to achieve in the coming decades. All will need higher skills and closer supervision than they are currently getting if there is not to be disappointment at best, or catastrophic failure at worst, in achieving the ambitious numerical and sustainable housing targets that the Government espouse.

Grenfell Tower had many contributing causes but the absence of clear regulatory oversight of the sort now proposed in the Building Safety Bill was, sadly, an enabler of the failures that happened. So too was the absence of trained and qualified staff and workers. So, my final ask of the Minister is that he should keep clearly in focus the case for learning from this horrible episode the need to ensure that the golden thread principle is not just seen as a one-off response to a wholly exceptional problem, but as a vital necessity for delivering safe, green and affordable homes in the future. I beg to move.

--- Later in debate ---

[Lord Stunell (LD)]

My Lords, I thank all those who have participated in the debate, particularly for the new ideas that have been brought—and pushed—forward. I say simply that I am looking forward to the debate with the Minister in the coming months to make sure that we get the answers, and I would not mind a letter explaining the difference between “relatively shortly” for the loan rules being produced and “shortly” for PAS 9980 being produced. On that note. I thank all noble Lords.

Motion agreed.