Building Safety Bill (Fourth sitting)

Marie Rimmer Excerpts

Tuesday 14th September 2021 Public Bill Committees

[Mike Amesbury]

Q Various Ministers have promised 17 times. The language has slightly changed. Originally, it was

“to protect leaseholders from historical remediation costs”,

and then it was “unaffordable costs”. Does this Bill do that? What key things are missing from the Bill?

Dr Glen: No, I do not think it does, because the Bill says that historical costs can be levied on the leaseholders at 28 days’ notice et cetera. I heard in an earlier session about whether that would really help. It could increase costs, because we will have two separate charges now. We might want to touch on that later. No, it does not. There are some amendments around. As we said, the polluter pays is part of the amendments, because we need to try to figure out where the money is coming from. I go back to my earlier statement: the only way I can see it happening, unless we are going to be here in four years’ time still discussing this, is something big like Government—I think the Government are the only size that can do this—to make sure that we front-fund pay. Then, absolutely, Government should figure out how to get the money back to protect the taxpayer. So I do not think it does it, in short.

Martin Boyd: I agree. I have nothing to add to that, it is just not going to do it.

[Ms Marie Rimmer (St Helens South and Whiston) (Lab)]

Q On a similar line to my colleague on the right, will the Bill deliver what we are looking for in the future? We are talking about a Bill for the future and not historically. Does it handle the design of buildings? Does it adequately answer the questions about construction, materials and insurance? Will it prevent future incidents such as Grenfell?

Martin Boyd: No. Judith Hackitt said the problem is that we need a fundamental culture change in the industry, but I have to defend the industry. If you are providing into a market that says, “You have liability for a product for two years. After that two years, the liability moves over to a warranty scheme for another eight years, and then after that you walk away scot-free,” how does that encourage developers to produce high-quality products? The Bill reinforces that because, again, we have a new homes ombudsman. For two years, we are not proposing to change in any way the idea that somebody builds a building, keeps quiet for two years that they have problems with it, and then says, “I’m sorry, Mr Customer, you are not protected by the normal Consumer Protection Act rules because this is a property, not a toaster.”

[Ms Rimmer]

Q Thank you. Do you concur, Dr Glen?

Dr Glen: I do. As we discussed earlier, if you look at the Law Commission reforms on enfranchisement, right to manage and promoting commonhold, you see that a drive of Government is for self-determination of a block. Looking at future blocks, where you have lay boards trying to unpick something that happened 12 years ago with a plc developer, I do not see that as a realistic scenario, so I do not think the Bill works.

The other issue is that there are many things in the Bill and in the Hackitt reforms that are admirable in helping, protecting and improving safety for new builds going forward, but what on earth do we do with the 4.6 million-plus leaseholds that we currently have?

Martin Boyd: May I add one thing? We have a problem in this country. If you buy a leasehold flat that is new, it is never surveyed. You do not have a survey of that building. In other countries that have a commonhold system, part of the conditions of the initial purchase is that a completely independent survey is carried out that validates that the building has been created to a reasonable standard. We are proposing part of that within the Building Safety Regulator, but there does not seem to be a final sign-off that says, “Here you are, Mr Customer. We have checked the building for you as the customer.” That would make things an awful lot easier than creating yet another ombudsman, who in reality will do like most other ombudsmen do, which is reach some small decisions but find it very difficult to reach big decisions.

[Shaun Bailey (West Bromwich West) (Con)]

Q Forgive my ignorance in asking some of these questions, but I want to go back to your response to my colleague Siobhan Baillie and look a little more at the responsibilities of the freeholder. My experience and understanding is that developers sometimes sell freehold a block that they develop. I am conscious that there are many different ownership structures and different types of freeholder, and I am acutely aware, for example, of the pressures on social landlords. As part of the broader conversation that the Bill is bringing about, do we need to re-examine how we look at freeholders? I want to try to square this circle a bit. If I am a freeholder with a lucrative portfolio of tower blocks and properties, how do we square that with the pact with taxpayers, particularly in my constituency, which is the 14th most deprived borough in the country, who would look at that and say, “We are paying to remediate this for you?”

Martin Boyd: A similar issue cropped up during the passage of the Water Bill, where it was argued that leasehold properties should be excluded from the protections of Flood Re because it was a commercial policy taken out by the freeholder. Everyone in the leasehold sector tried to explain to the Government at the time that that is not how it works. The bills are all being paid by the leaseholders; it is just that the landlord is deemed to pass this on.

The difficulty we have with freeholders in the leasehold system—you heard from Richard Silver this morning—is that they have no interest whatsoever in the quality of the building. It makes not a cent of difference to their profit line whether that building is falling down or is in pristine condition. The only people who are concerned about it are those who live in it. The freeholders will say, “We have a long-term interest in the estate,” which is rather interesting because Long Harbour has been in existence for less time than we have, and we have not been around for a huge amount of time. I have owned my flat for twice as long as Long Harbour has been in existence. So you have the problem that until we move to a commonhold structure, you have a conflict of interest between somebody deemed to be the building owner, who is only interested in how they make a profit from the building. and all the people who live in the building, who want to ensure that it works for them. Some will want to reduce costs, some will want to invest for the future, but they will all have an interest in the building and about the fact that it is in good condition.

Dr Glen: As I mentioned earlier, it is a very complex situation. If we look at the portfolio of ARMA members, where we know who owns the building—is it leaseholder-organised, with residential management companies and right-to-manage companies, or is it third-party landlord? —in 60% of the cases we know about, there is a leaseholder structure. So when you say the landlord should pay, in many cases that is going to be the leaseholders, because they actually own the freehold.

I remember an interesting discussion I had with a colleague of yours, Hilary Benn, about the idea of a compulsory purchase order. We took him through the economics. As Martin alluded to earlier, you see this big building and you think “Gosh, that must be worth a fortune,” whereas in fact it is really a financial instrument. The value of that to the freeholder is typically what the ground rent is over a certain period of time. If the ground rent is £200 and there are a hundred units there, that is £20,000 a year. So if you go to somebody and say, “Unless you pay £2 million to remediate this building, I will compulsory purchase order you,” and that somebody is thinking, “Well, I only get £20,000 a year,” that person will kiss you and say, “Give me market rate, CPO me, and you have now just taken on a £2 million problem.”

So although it sounds good, I do not think that is the route. The danger is that by saying “Ooh, yes, we can get the freeholders to do it,” unfortunately all that means is that it gives false hope because there is not that bucket of money there. So again, be careful, because many RMCs and RTMs are also the freeholder and we do not want to put them in the firing line either.

--- Later in debate ---

[Mike Amesbury]

Q Thank you, Matt, for everything that you and your members do. What is missing from the Bill? What would genuinely make buildings safer, and things a damn sight easier for your members?

Mr Wrack: A single system of regulation would be better than what is proposed. I understand that there may be a need for a phased approach, but I am not sure that is what is in front of us. I think that the 18-metre cut-off point is incorrect, too. There should be a move towards an elimination of private-sector interests in building control. The idea that people can choose their own building control system is wrong, and appears wrong to many people. Finally—this relates more to the background to the Bill—resourcing is a huge issue for us in the fire service, for local authority building control, and for the HSE.

[Ms Rimmer]

Q That covered part of my question, which was: were the Government right to retain the duty holder’s power to choose a building control body? Will the reforms in the Bill fix the problems identified by Dame Judith Hackitt?

Mr Wrack: We welcome the commitment in the Bill to driving up standards. Regrettably, we in the union attend inquests, sometimes on the deaths of members of the public and sometimes on deaths of our members. There have been incidents in which our members have died and it has emerged that the fire risk assessor in the building had no qualifications. That is quite shocking. It is a sign of a deregulated sector.

We welcome the drive to improve and professionalise standards operating in a whole number of areas; if you listen to the shocking evidence to the Grenfell Tower inquiry, you find it relates to fire safety awareness among architects, to fire risk assessors, and to building control. We have from day one opposed the privatisation of local authority building control. If you listen to the evidence from Grenfell, there have been unprecedented cuts in local authority building control teams. That was reflected in the harrowing evidence given to the inquiry by an individual who reported that his team had been slashed completely. He kept a notebook by his bed because he could not keep up with the scale of work.

If we are to take building safety seriously, we need to provide adequate resources to those organisations tasked with delivering it, and that needs to improve standards. In the fire and rescue services, cost-cutting has reduced fire safety specialist teams and the provision of training. In the fire and rescue service, over the past 15 or 16 years, there have been reductions in training across the board—from the initial training that firefighters receive on joining the service to the training they receive when they enter specialist teams, such as fire safety departments—and, in our view, reductions in standards. If we are talking about driving up standards, we need to invest in the provision of adequate training and support for people to adopt those standards.

[Ms Rimmer]

Q In the Health and Safety at Work Act 1974, there is a duty to provide adequate training to anyone carrying out a role in their employment. It seems to me that the resources have not been there to enable that training to be given. Where does the duty lie to resource people to do the training that, in law, must be given to everybody carrying out their role? You must be adequately trained to carry out your duties.

Mr Wrack: One of my roles, unfortunately, is to attend, participate in and support inquests and other inquiries. In virtually every inquest on the death of a firefighter we have ever dealt with, certain common themes emerge: command and control, resources and training. There are clear requirements under the Health and Safety at Work Act, which relates primarily to the internal workforce, and a raft of other legislation for public bodies such as the fire and rescue service to provide adequate standards in their outward-facing responsibilities to the community.

[Ms Rimmer]

Q Do you think placing the Building Safety Regulator within the Health and Safety Executive might improve the situation or do anything to address it?

Mr Wrack: It certainly will improve, because the current state of affairs is pretty abysmal. For us, one gap in fire safety and building safety policy is the lack of the broader structures that used to exist in the British fire service, from 1947 to 2004, whereby various stakeholders came together to look at legislation, changes in the built environment, training requirements and so on, and could develop best practice in the sector. We used to have the Central Fire Brigades Advisory Council. That no longer exists and, as a result, there is a big gap in fire safety policy development in the UK.

It may be that the building advisory committee can play some of that role—precisely how that will unfold is a bit unclear, but it might play that role to some extent. But yes, the Health and Safety Executive potentially will improve things. As I mentioned, the key issue is resources.

[Ms Rimmer]

Q Is there still the facility to conduct desktop emergency incidents like the one at Grenfell Tower?

Mr Wrack: We would oppose the approach taken that enabled desktop sign-offs to be conducted. I am not clear whether that would be enabled under the Bill once it has been implemented, but it certainly should not be.

One of the problems highlighted by Grenfell is the weakness of the testing regime. The ability of manufacturers and developers, in effect, to design their own tests goes against the normal, everyday, common-sense approach to testing that people expect. You do not design your own MOT for your car; you go to a registered MOT provider and they test it for you. You do not choose your own driving test examiner; they are appointed for you. I would argue that in areas where a lot of money is involved as well as huge issues of public safety, you should have stricter systems of regulation, not more lax ones.

[Brendan Clarke-Smith (Bassetlaw) (Con)]

Q There was mention earlier about pressures on funding and capacity, and so on, and you were asked whether there was anything that you would add to the Bill or that is missing in terms of relieving pressure. Do you not feel that the Fire Safety Act 2021 adequately dealt with many things?

Mr Wrack: I think we welcome both as steps forward. As I say, hopefully this is a turning point in the debate on public safety and building safety in Britain; however, I do not think there has been the relief on the financial pressure on fire and rescue services that I mentioned, and that runs as a theme throughout this.

I do not see how you can cut in the London Fire Brigade, for example, 25% of your fire safety inspectors and not think that that will have implications for public safety. Something like 20% to 25% of fire safety inspecting officers have gone over the past 11 years, and something like 40% over the past 20 years. That is a very significant reduction, and it clearly will have, and has had, an impact on the ability of fire and rescue services to conduct the level of inspections or audits that people would want them to undertake. We welcome that legislation and this Bill, but—you would not expect us to say any different—we think it should go further.

--- Later in debate ---

[Ian Byrne]

Q Eric, given the scale of potential mortgage defaults because of the debts being unfairly loaded on to leaseholders, what would that outcome mean to the health of the housing market?

Eric Leenders: That is quite a difficult question to answer. The first point to make is that the housing stock is of the order of 28 million to 30 million properties, and only about 9 million have mortgages; you could perhaps add another couple of million for buy-to-let properties, so about a third of the overall housing stock would be affected. The composition of the housing stock is about much more than the most at-risk properties. What the Bill looks to address, based on the input from the fire experts, is a risk-based approach that would potentially look to address higher risk properties above 18 metres—there are probably about 1,400 or 1,500 of those properties in the UK. The impact on the overall market might be relatively modest, but the chief point is that for individual homeowners and those that have mortgages—those constituents—the impact is significant and is more than financial. It also has an emotional consequence as well.

[Ms Rimmer]

Q Are the Government right to introduce a new building safety charge on residents by which building owners can recover the costs of building safety measures?

Eric Leenders: We see two sides to this. One element is the extent to which there is a discrete building safety charge; the other is the extent to which that is combined perhaps with a service charge. There are pros and cons to both approaches. The overarching issue for lenders is the extent to which the pre-existing commitments—not just the loan commitment but individual household budgets—would remain affordable if there are additional remediation costs. As I mentioned, I know that the MHCLG team has been very thoughtful about that consideration in relation to introducing loan support for properties between 11 and 18 metres. There might be some read-across in the context of the detail of the Bill.

[Ms Rimmer]

Q Does the Bill protect leaseholders from unaffordable costs?

Eric Leenders: I think it goes some way to doing that. It is quite difficult for me to give you a direct answer on that specific question, because clearly one issue is cladding external wall systems and, equally, we are aware that there could be remediation requirements around, say, fire systems and internal remediation works as well. I am unfortunately unable to give you a categoric answer on that point.

[Ms Rimmer]

Q The Government say that the purpose of the service charge is to cover the ongoing costs of the new regime, not historical costs. Do you think that is explicit in the Bill as drafted, and could the Bill permit building owners to recover historical costs through the service charge?

Eric Leenders: That is a very astute observation. We have found that aspect of the Bill quite complex and technical. To the extent that the intent is to avoid those retrospective costs, one dimension that we have been considering and have not necessarily been able to clarify is where a property was built prior to the enactment of the Bill but the issue was identified after its enactment. Some further scrutiny is probably required on that aspect. Our overarching view would be that it should be very clear for homeowners and leaseholders to understand where they might have a potential liability, and therefore this retrospection point is really quite important in that context.

[Ms Rimmer]

It is not clear, then. Thank you very much for that.

[The Chair]

If there are no further questions, I thank you, Eric, on behalf of the Committee for your time and for your evidence.

Examination of Witnesses

Alison Hills and Steve Day gave evidence.

--- Later in debate ---

[Daisy Cooper]

Q At the very beginning, you both outlined the potential size of the bill you are facing for remediation work, but over the course of the past year or so, particularly in relation to the Fire Safety Act 2021, which came before this Bill, we have heard from leaseholders who talked about all sorts of costs. Could you talk us through the different kinds of costs that you have incurred and the cumulative impact they have had? Do you feel that the Government are addressing the issue with the necessary level of urgency?

Alison Hills: First of all, once we had our intrusive survey undertaken, we had a waking watch implemented on is, which was at a cost of £400 per leaseholder. I have to say that a whole new crisis has been created as a result of the advice note and the EWS1 process. It is ineffective, it is placing leaseholders under an unacceptable level of financial risk. Personally, I felt more unsafe while they were in the building. They were undertaking activities such as smoking underneath flammable cladding. They were falling asleep. This sounds awful but they were peeing in our car park. We have also heard stories of other leaseholders across the country where single females have been harassed by them, which is completely unacceptable. That is just the first point, which is on waking watch alone.

In addition, we have had to pay increased service charges, which amounts to an extra £200 a month each. Our insurance has absolutely skyrocketed. I have heard of a leaseholder based in a block in Runcorn where it has increased by 1,400%. People are going bankrupt as a result of these interim measures alone, and that is before we even get to the remediation costs. As we have seen already, Hayley Tillotson was a leaseholder who has gone bankrupt as a result of these extortionate costs.

Leaseholders’ finances are being completely wiped out. It is completely unacceptable to put us under this level of financial risk and burden—in the middle of a pandemic as well, one might add, which only adds to the financial and mental health distress. There have already been reported suicides as a result of this crisis. I have to say that my mental health has seriously deteriorated, to the point that I have had to move out of my flat, because I could not sleep, eat or concentrate. It was an horrific situation to be in. Those are the sorts of things that are happening, and that is before we even get to any remediation costs.

Steve Day: Our service charge has doubled because of the waking watch and insurance. It is due to lack of trust in building regulations. The insurers do not trust, the lenders do not trust. That is devastating when you are doing a start-up as well. I do not have the salary that I used to have, and I do not have the savings I used to have because they have all gone on service charge. That is a huge risk.

Let me tell you something else. It is not just about the money for waking watch. I think we forget what it is about. Can you imagine people staring at your home 24/7 because they are so concerned that there is going to be a fire? Can you imagine what that does to you? You go to sleep wondering what on earth these people are doing staring at your building, going up and down the stairs. They are doing their job but their job is very concerning. They are so scared that they might miss it that they are checking things and all the rest of it. Then, there are some who do not do their job. You are in a total stress, non-stop.

It is all to do with the root cause. This is where I come back to the simple scheme that we have come up with. Let us restore trust in building regulations. EWS1s, PAS 9980s—it is a new way of showing building regulatory compliance, because the trust has gone from the lenders and insurers. Let us restore that trust. Full redress is the only way to do it. This is a unique situation, the costs are high and we need you, Parliament, to step up and put in this scheme.

There is so much support for the scheme—you will see that because we will put it out there to you guys as much as we can over the next few weeks. It is growing: we have bishops behind it, the Earl of Lytton and the Intermediary Mortgage Lenders Association. You have heard that the Association of Residential Managing Agents backs it and we have quite a few people that I cannot remember, but I am happy to write to you.

The support is only going to grow, because as we go through the Grenfell inquiry and we see some of the things that come out, maybe in module 6, full redress will come up again and again. If you want to give out loans to people and you let the industry off with a levy, they will never forgive you, because you did not go for full redress when you could have, and that is what I urge you to do.

Yes, it is unusual to have a leaseholder here coming out with a statutory scheme, but it is not just me—there is a load of experts helping me, all for free, because they believe passionately that we cannot let a levy system and a loan system go in when we have not tried full redress. It is possible, it is simple and it is fast, and we are working hard to limit the judicial review risk to the Government. We will be sending Mr Pincher and his team a new draft from Daniel Greenberg as soon as we can and hopefully getting something in to them, and then we can update you.

Alison Hills: I alluded to this earlier, but this is a very complex issue. There is liability against a number of parties—not just the Government for poor regulation, but developers, manufacturers, people such as Kingspan who mis-sold their products, insurers, Buildmark warranty providers. There are so many people involved here, but it is glaringly obvious that this Bill contains no repercussions at all for those people. The only people who have been legally held to account are the innocent leaseholders. As I see it, the fundamental role of Government is to protect victims and hold perpetrators to account, but this Bill does the exact opposite of that, and it is unacceptable.

[Ms Rimmer]

Q This is a building safety Bill; it is not about redressing the cladding or the issues with that. If anything, on the Select Committee on Housing, Communities and Local Government it was said that the introduction of the building service charge brought about the highest level of anger and scepticism they had ever experienced. That is all that the people affected can see in this Bill, so it goes nowhere near addressing anything like that. If anything, it has caused a concern: would they—could they—use the building service charge to recover historical costs from the leaseholders? We have heard from witnesses that they think it is not clear that that is not the case.

It seems to me that polluter pays is the only suggestion that can go forward. We are not saying that the present Government are responsible for all this, but do you know of any other way than the polluter pays mechanism? Is it New Zealand that has the public safety emergency, where the Government have addressed that? It does not seem able to be addressed. Has anyone put forward to you any other schemes or other ways of addressing this? There are hundreds of thousands of family units in these properties—I do express my sympathy; I sincerely empathise and sympathise—but this simply must be addressed.

Alison Hills: Yes, thank you. It does have to be addressed. Obviously, there are the McPartland-Smith amendments, which protect leaseholders to some degree. There are some very helpful amendments—for example, the imposition of implied terms in residential building contracts to ensure that all buildings are adequately designed, comply with building safety regulations and use materials of satisfactory quality. New clause 5 also creates accountability for future builders by importing consumer rights protection into housing law. I fully support the amendments and new clauses, and I think they should be implemented in the Bill, but in terms of how to get the most amount of money from those responsible, the polluter pays Bill is the way forward, because it ensures that the right people are held to account and building safety regulations are adhered to in future. Obviously, Steve has worked very hard on this over the last nine months, so I will pass over to him at this point.

Steve Day: I think the building safety charge is another sign of not trusting building regulation compliance. The heart of polluter pays is not just to solve the crisis now; it is to restore trust in building regulation compliance. We have a set of functional regulations. B4 requires that

“the external walls of the building shall adequately resist the spread of fire”.

It should be very possible, then, with the approved documents, to show and to prove whether someone is liable for those defects.

We are getting very confused in this crisis. We need to bring it back to the two boxes of developments. We have one where the builders just did not keep to the regulations. We do not need to worry about the quality of the regulations—they just did not keep to them, not using the right fixings. Metal should be on firebreaks but they used plastic. Some are missing firebreaks. It is very simple stuff, which is very unappealable and very easy—low-hanging fruit. That is the box of not conforming to the regulations at the time—guilty. Not guilty, for the developers and the manufacturers, is the other box where the regulations were complied with at the time, but post Grenfell those regulations have changed. It is almost a retrospective liability, changing the goalposts. That is a failure of regulation, so that is where the public money would come in.

All we want is £5.1 billion of public money. We do not want to go to the Treasury unless we have to. We want to get that pot as big as possible for all those defective buildings—it is simple stuff, remember, such as fixings, adhesive pattern, firebreaks and so on—to make that £5.1 billion go further. That is what we are doing. I hope that our proposal shows that we have thought about how this might work with existing precedents. There is some discussion on whether the Environmental Protection Act 1990 and the apportionment process could be open to judicial review, because you might say, “If you’ve got a set of percentages and you’re just giving x per cent, y per cent, and so on, that could be open to challenge.” We have listened to that and we are working with Daniel Greenberg on a different, and much simpler, approach, which we will make you aware of, that will not be open so easily for judicial review.

We also heard Mr Pincher’s comments in the Chamber on how many determinations we have to do. Remember that we are proposing that it is a public body, potentially under Homes England, and we have a de minimis limit. We do not have the reports that MHCLG has but we have a mechanism. It can set what the de minimis limit is before we have those determinations, and then basically there is a control mechanism for how this works. We have created the scheme so that in the primary legislation the scheme requirements are set out. It has to be in place six months after Royal Assent, but we do not prescribe exactly all the parts of the legislation; that will be done in subordinate legislation. We are prepared to do that work as well, because that is how much we believe in this.

I cannot answer all your questions on this today, but Daniel Greenberg has said that when the conference season is over, we will book a meeting room in Parliament and invite MPs and peers to come and hear our proposal, with the depth required so that you can scrutinise it properly. Perhaps the Earl of Lytton might come and help as well.

[Siobhan Baillie]

Q Thank you both for coming. You are very compelling witnesses, and you have a great skill in being able to talk about something that is incredibly emotional to you, for understandable reasons, and give us a really clear account of what you are seeking to achieve and why.

I want to move you slightly off the redress issue. We have heard witness evidence today that, over two decades, multiple Governments of all colours have failed to address building safety issues. That is high rises and all sorts of things.

This Government are genuinely trying to do their best with the Bill, and we have had evidence that says that it is moving quite a few mountains and is proportionate. You are so expert in this area—although I am sure neither of you want to be such—what do you know about the accountable person part of the Bill? It is suggesting that for a block there would be somebody who would be in charge of things such as fire safety certificates and the gas certificate. They would be the point person. We have heard evidence today from the Fire Brigades Union that was really positive about such a role in terms of the person that they can contact, and similarly the management agent said it was really good to have a single person as a point of contact. We have also heard evidence that no one will take on that role—because it has so many duties and responsibilities that no one will be interested. What is your view? I fear that you two may be that role because you are so expert. Knowing your kind of neighbours, do you think somebody would take that role on if the Bill is enacted?

Alison Hills: First and foremost, there is a lot of information in the Bill about an accountable person, a responsible person, but there does not seem to be a clearly defined role for each of those roles and responsibilities. I think that needs to be done. Secondly, our management agents already have a certain amount of responsibility in terms of building safety. As leaseholders, we do not want to be in a position where we are potentially paying twice for the same service. The Bill needs to contain clear definitions of the responsible person, the accountable person, the management agent and the role of the leaseholder. In my view, each of those roles needs a clear definition.