Leaseholders: Safety Remediation Costs

Lord Thurlow Excerpts

Thursday 4th November 2021 Lords Chamber

[Lord Thurlow (CB)]

I add my voice to the thanks to the noble Lord, Lord Stunell, for tabling this debate. I want to make the House aware of my interests in the register. I have been involved in the property market for 40 years, and a member of the RICS for most of that time. I own two buy-to-let flats in London but, mercifully, I do not believe that either is affected by the cladding problems. In my comments, I wish to address the first of this debate’s two sections: the situation of leaseholders affected by the need for remedial work.

First, I repeat that the £5 billion made available by the Government is not enough and inadequate. It is not nearly enough for remediation. The noble Lord, Lord Young, and others have mentioned this. The impact on residents’ lives applies equally to those in the 11 to 18 metre-high buildings—the noble Lord, Lord Stunell, mentioned this in his introductory remarks—and, indeed, those in the four-storey buildings below 11 metres. There are some tragic stories and huge costs there, too. There is help from government in other ways, but the costs are enough to bankrupt thousands of the home owners we have just heard about.

This will not go away. The long-term political fallout from it is likely to be severe. It is nothing to do with which party is in power. There is simply widespread outrage, nationwide, that the Government have failed to provide remedy. This is of course unreasonable but it reflects a wider and deeper difficulty: the entitled society. We should be extremely proud—indeed, we are —that we provide a roof over everyone’s head, free education and healthcare, a minimum wage and unemployment benefit, but removing personal responsibility, which is a risk, can have corrosive side-effects. This nanny state is creating an entitled population, looking to apportion blame at the feet of government for any misfortune. I do not propose to abandon the welfare state, but perhaps some reflection is worth while to restore personal responsibility and some common sense.

I fear that this cladding misfortune will rest with government, rather than the fault lying with the manufacturers of the faulty materials or those responsible for faulty construction or supervision. The Government are expected to step up. I believe the right way forward is for the Government to establish the structures to enable the compensation system to work in protecting individuals from huge costs. They should not write the cheques themselves unless their own supervisory systems have failed the taxpayer.

Manufacturers of faulty materials are generally large corporations. Individuals cannot afford to sue them. Companies and their insurers spend millions of pounds every year in legal fees protecting shareholder returns. It is their job. The Government should create a structure that gives leaseholders a voice and recourse to law, without ruinous financial consequences.

There is an escape route for government. We have heard it several times already: the “polluter pays” principle. The French manufacturer Saint-Gobain, a huge PLC, sells its dangerous cladding in the UK through its subsidiaries. Even after withdrawing it from sale in France, having discovered that it was unsafe, it went on selling it here. Where is the moral compass in that? It should have been sued, yet curiously the Government have not done this. It should have funded a large part of the compensation, reducing the taxpayer burden. With this in mind, the increase from six to 15 years in the statute of limitations period proposed for claims in the Building Safety Bill is an excellent start—but the problems stemming from faulty materials will not go away. Manufacturers must be held responsible, not taxpayers.

Finally, will the Minister please explain why the Government do not appear to be bringing legal action against the manufacturers of faulty, combustible materials used at Grenfell and other developments—cladding that has to be removed at great expense? It was in use throughout the country. Instead, Her Majesty’s Government are spending hundreds of millions of pounds of taxpayers’ money, and the taxpayers’ bill is bound to keep rising. The Government are the only entity capable of taking on the funded firepower of legal action against multinational corporations. I believe this is where taxpayers’ money should be spent—not on financial remedies, which are the province of corporations and their insurers.