Building Safety Bill

Matthew Pennycook Excerpts

2nd reading
Wednesday 21st July 2021 Commons Chamber

[Matthew Pennycook (Greenwich and Woolwich) (Lab)]

I very much welcome the fact that this House is acting to address the systemic problems identified in the Hackitt review. I also welcome a number of specific measures in the Bill—for example, the new standards proposed for product safety and for professionals involved in the design and construction of buildings.

What I cannot welcome and what I find particularly objectionable, given what so many have faced over recent years, is the financial cost this Bill will impose on leaseholders if left unamended. That imposition will be felt in part as a result of provisions set out on the face of the Bill. Whether it is the direct cost of the proposed building safety charge or the costs of duties imposed on principal accountable persons that will inevitably be passed on, this Bill will see leaseholders pay out billions of pounds over the coming years to finance the new regime it establishes. Imposing charges of that magnitude on already hard-pressed leaseholders cannot be right, and the Bill in my view needs to be amended to ensure a more equitable apportionment of the costs of the new regime.

This Bill will also impose costs on leaseholders as a result of what it does not contain. In his opening remarks, the Secretary of State cited the extension of the Defective Premises Act 1972, the limitation period changes and the provisions in the Bill that require landlords to take reasonable steps to recover remediation costs, but he knows as well as I do that these measures will only offer limited protection at best.

What the Bill singularly fails to do, despite, as others have said, the perfectly clear indications given by Ministers during the passage of the Fire Safety Bill that this was the legislative vehicle by which to do it, is to meaningfully protect all affected leaseholders from the costs of remediating historical cladding and non-cladding defects and associated secondary costs, irrespective of circumstance. It must be overhauled so that it does, because if not now, then when do we act to protect all those caught up in this crisis, and if not by this piece of legislation, then what other?

I have no intention of voting against the principle of the Bill today. We need a version of it on the statute book as soon as possible. But I say to the Secretary of State very plainly that without amendments to guarantee that all leaseholders are fully protected, he will not get this Bill through without a fight.

The very fact that we are legislating for a radical overhaul of building regulations and fire safety highlights just how flawed the present regime is. We cannot surely, in good conscience, ask any blameless leaseholder to pay to make good what is, after all, a failure of Government-designed regulation and of industry practice. So I urge the Government to work with Members from across the House to ensure that, come Third Reading, this Bill does right by each and every one of the victims of the building safety scandal.

Building Safety Bill

Matthew Pennycook Excerpts

Report stage
Wednesday 19th January 2022 Commons Chamber

[Christopher Pincher]

No, I will not.

We want to ensure that these matters are properly debated and properly agreed. We also want to ensure, through a suite of mechanisms such as the extension of the Defective Premises Act and working with the sector to ensure that it pays for the defects it has caused, that this issue for leaseholders, which has gone on for far too long, is finally put to bed. This group of Government new clauses and amendments make key improvements to the Bill and extend its benefits to include the whole of Great Britain. I hope therefore that Members across the House will feel able to support the new clauses and the new schedule and allow them to stand part of the Bill.

[Matthew Pennycook (Greenwich and Woolwich) (Lab)]

It will not have escaped your notice, Madam Deputy Speaker, that I have taken on this Bill in its final stages, so I must begin by thanking my hon. Friends the Members for Manchester Central (Lucy Powell) and for Weaver Vale (Mike Amesbury) for their prodigious efforts during its earlier stages. I also want to thank my hon. Friends the Members for Liverpool, West Derby (Ian Byrne), for Brentford and Isleworth (Ruth Cadbury), for Luton South (Rachel Hopkins), for Jarrow (Kate Osborne) and for St Helens South and Whiston (Ms Rimmer) for so ably scrutinising it in Committee.

The issues covered by the Bill have been extensively set out in debates on Second Reading and in Committee. I have no intention of seeking to reprise them this afternoon, but before I turn to part 5 of the Bill and the consideration of the amendments related to it, I feel it is incumbent on me briefly to restate why we believe this legislation is so important. As the House knows, on 14 June 2017, 72 men, women and children lost their lives in an inferno fuelled by the highly combustible cladding system installed on the outside of their 24-storey tower block in north Kensington. That tower block was also compromised by a range of other fire safety defects. I put on record once again our admiration for the survivors and the bereaved of the Grenfell Tower fire and for the wider Grenfell Tower community, who continue to seek not only justice for their families and neighbours but wider change to ensure that everyone is safe in their home.

[Catherine West]

Does my hon. Friend agree that it is extremely important that we give the debate the time needed to remember the loss of life and the community that survived that terrible moment in our shared history?

[Matthew Pennycook]

My hon. Friend is absolutely right. I hope that, as Members consider the Bill and amendments, they have the chance to reflect and to remember why it is going through.

One does not pre-empt the Grenfell Tower inquiry’s conclusions in stating that the horror of that dreadful June night was the product not only of pernicious industry practice, but of state failure—the failure of successive Governments in presiding over a deficient regulatory regime, and the failure to act on repeated warnings about the potential lethal consequences of that fact. The Hackitt review detailed a deeply flawed system of regulation and argued for a radical overhaul of it. To the extent that the Bill delivers on the recommendations of Dame Judith’s report, we remain supportive of it and want to see a version of it on the statute book as soon as possible, given that four and a half years have elapsed since the Grenfell tragedy; however, the House knows we have serious concerns about what is missing from the Bill, and particularly its failure as drafted to provide robust legal protection for leaseholders facing ruinous costs—a point already made by several hon. Members on both sides of the House—for remediating historic cladding and non-cladding defects. In the absence of such protection, the Opposition are clear that the Bill will fail to meet what Dame Judith described as

“The ultimate test of this new framework”,

namely,

“the rebuilding of public confidence in the system.”

As we have heard, part 5 deals with remediation and redress, as well as assorted provisions relating to safety and standards. In Committee, my hon. Friends raised concerns about the limitations of clause 126, which seeks to ensure that landlords take “reasonable steps” to pursue other potential means of recovering the costs before passing them on to leaseholders. We of course believe it is right that landlords be forced to exhaust all means of funding remediation works other than passing on costs to leaseholders, whether that be seeking redress from the original developer in cases where the two are not the same, exploring a claim against a warranty, or applying for grant funding; however, we remain of the view that this provision gives leaseholders extremely limited protection in practice and we want that to be supplemented with additional provisions for maximum legal protection against the costs of remediating all historical defects—an objective that I know is widely shared across the House, as evidenced by the numerous amendments on the amendment paper today relating in one way or another to leaseholder protection. I will speak on that issue in more detail later in my remarks.

Clause 128 relates to limitation periods and makes changes to the operation of the Defective Premises Act. We supported the proposed expansion of the Act but remain of the view that there are considerable practical obstacles to leaseholders’ successfully securing redress via that mechanism—a point made by the right hon. Member for Hemel Hempstead (Sir Mike Penning) and my hon. Friend the Member for Blackley and Broughton (Graham Stringer)—not least given the prevalent use of special purpose vehicles precisely to avoid liabilities of this kind. We believe that the Government are in general overplaying the significance of litigation as a solution of the building safety crisis.

[Hilary Benn]

While of course we all welcome the extension, in practical terms, our constituents who have, staring at them from the table, bills for sums of money that they cannot afford, will not be in a position to start a legal action that may take several years, at enormous cost and risk and with no guarantee that it will reach a satisfactory conclusion, as my hon. Friend is so ably pointing out. It is not an answer to the problems that so many of our constituents are facing now.

[Matthew Pennycook]

My right hon. Friend, as so often, is absolutely right that it is an uphill struggle for leaseholders to get together to begin legal action of this kind. He also raises the highly pertinent point that there is nothing in the Bill that prevents freeholders today from passing on costs to those blameless victims of the crisis.

[Kate Green (Stretford and Urmston) (Lab)]

Does my hon. Friend agree that there is a real opportunity here for the Department to link up with the companies registrar and companies law, and to use the options that exist there to take action early against directors who repeatedly set up these special purpose vehicles, repeatedly carry out substandard developments, and repeatedly liquidate those companies, leaving no assets for leaseholders to act against, and who it appears are in no way acted against, either proactively or reactively, under companies law or by Companies House?

[Matthew Pennycook]

My hon. Friend makes a very good point, which she has made in other debates in this place with regard to unscrupulous developers operating in her constituency. Changes to company law certainly warrant further consideration in that respect.

[Sir Peter Bottomley (Worthing West) (Con)]

May I add the problem that leaseholders do not have an interest in a brick of their building and that a claim would need to be made on their behalf by the freeholders to the landlord, who would require indemnity costs from the leaseholders who cannot pay?

May I, through the hon. Gentleman, suggest to the Government that between now and the House of Lords they consider taking a right to take the potential claims by the landlords on behalf of leaseholders into a public agency which can make a public claim against the developers, builders, architects, surveyors, building specification and building controllers, so that money can be brought back from those who were responsible, not the innocent leaseholders who are not?

[Matthew Pennycook]

I thank the Father of the House for that intervention. That is a very good suggestion, which I hope the Minister will take on board and give some considered thought to.

Notwithstanding our concerns with regard to the limitations of the Defective Premises Act, we argued forcefully in Committee for the Bill to be revised so that the period for claims under the 1972 Act be extended from six to 30 years, rather than from six to the 15 years the Government proposed. In response, the Minister urged my hon. Friends to withdraw our amendment on the grounds that a 15-year limitation period was appropriate and indeed that any further retrospective extension beyond 15 years would increase the chances of the legislation being tested against the Human Rights Act and found wanting. Because that argument was never convincing, we are extremely pleased that the Government have reconsidered their position on this matter in the light of the case made by my hon. Friends in Committee, and have brought forward amendments 41 and 42, which provide for that 30-year limitation period, as well as changes to the initial period. We fully support both amendments.

We also believe that new clauses 11 and 12, proposed by the hon. Members for Stevenage (Stephen McPartland) and for Southampton, Itchen (Royston Smith), warrant support. If the Government genuinely believe that litigation has a significant part to play in helping to fix the building safety crisis, they need to give serious consideration to permitting a limited class of claims relating to pure economic loss, rather than just actual physical damage.

Clauses 129 to 134 concern the new homes ombudsman scheme, the creation of which we support, albeit, as the Minister will know, with some concerns about its operational independence and the composition of the new homes quality board. While we remain unconvinced that the new ombudsman and the new code will lead to a step change in developer behaviour and thus a marked increase in the quality of new homes, we see no issue with the scheme being expanded to cover Wales and Scotland, so we support the various Government amendments to that effect under consideration today.

Finally, I want to turn to amendments relating to the fundamental and contentious issue of leaseholder liability. I know I need not detain the House for any great length of time on why it is essential that greater legal protection for leaseholders be put on the face of the Bill.

[Janet Daby]

My hon. Friend is making excellent progress. My constituents living in unsafe homes due to unsafe cladding feel trapped and isolated in their homes. Does he agree that the Government need to work with lenders to see if properties caught up in the cladding scandal can be sold and re-mortgaged?

--- Later in debate ---

[Matthew Pennycook]

My constituency neighbour, who shares many of the same case load issues relating to the building safety crisis as I do, is absolutely right. A lot that flows from the Secretary of State’s statement last week depends on lenders, insurers and other stakeholders agreeing with the Government’s approach. We wait to see whether that bears any fruit. We know there have been occasions when the Government have made announcements and the industries in question have not responded as the Government expected.

For many leaseholders across the country, lots of whom are first-time buyers who diligently saved to purchase their homes, all but the most superficial remediation and secondary costs will simply be unaffordable. The reason the building safety crisis has caused and continues to cause such abject misery is because so many blameless leaseholders not only feel trapped in their homes physically, mentally and financially, but because they feel let down by the Government. Despite allocating significant public funds to cover the costs of remediation for some buildings and repeatedly promising that all leaseholders should be fully protected, the Government nevertheless, until very recently, had only committed to shielding a proportion of leaseholders from unaffordable costs, which were defined by one Minister a few years ago, if memory serves, as “anything short of bankruptcy.” I must make it clear to this Minister that it has come as a bitter blow to the countless blameless leaseholders across the country who have already been hit with huge bills, both for remediation works and for interim fire safety measures, that the Secretary of State made clear in his statement last Monday that the Government have no plans to secure retrospective financial redress for them. We think that Ministers need to think again about that issue. However, he did commit in that statement, repeatedly and clearly, to bringing forward amendments to the Bill to provide leaseholders with the “most robust legal protection”, extending to

“all the work required to make buildings safe.”—[Official Report, 10 January 2022; Vol. 706, c. 291.]

Given that he rarely misspeaks, that clearly suggests historic non-cladding and historic external wall-related defects. I hope that the Minister can confirm as much today when he responds on this group of amendments.

That robust legal protection for leaseholders is what this legislation must contain, and it is disappointing that no Government amendments providing for it have been tabled for consideration today.

[Jonathan Edwards]

rose—

[Matthew Pennycook]

I am going to make some progress, if the hon. Member will forgive me. That legal protection must be delivered as a matter of urgency and in a way that brings immediate protection for leaseholders, because, as I have said, there is currently nothing, aside from the limited clauses in the Bill requiring them to take reasonable steps before they do, to prevent even more freeholders from passing on costs, as we know many are in the process of doing, even now, including several in my constituency, such as the Comer Group in the case of Mast Quay in Woolwich. As well as providing for the establishment of a building works agency, which we believe remains necessary if the Government are to ensure that the pace of remediation across the country is accelerated and that works are properly carried out and certified, our new clause 3 seeks to provide the maximum legal protection possible for leaseholders facing potential costs to fix historic cladding and non-cladding defects, irrespective of circumstance.

[Jonathan Edwards]

I fully support Labour’s new clause 3 and if there is a vote on it, I will be supporting it, particularly as subsection (6) would protect the small buy-to-let landlords the right hon. Member for Leeds Central (Hilary Benn) has referred to and I referred to in an intervention. As the hon. Gentleman knows, the scheme in Wales will be administered by the Welsh Government, so may I take it and inform my constituents that new clause 3 will be the basis of the scheme that we see apply to Wales, where Labour is in government?

[Matthew Pennycook]

It does apply to England and Wales, and I think that as a general point the Government need to co-operate much more closely with the Welsh Government on action on the building safety crisis.

As I was saying, new clause 13, proposed by the hon. Members for Stevenage and for Southampton, Itchen, does the same and we fully support it, as well as their new clauses 5 and 6. We will seek to divide on new clause 3 today, simply to reinforce to the other place the importance we attach to the issue of leaseholder protection, but we do want to work constructively with the Government on this matter in the period ahead, in the light of the change of tone and approach signalled by the Secretary of State last week. We hope that the absence of Government amendments providing for robust leaseholder protection today simply reflects the fact that they are not yet finalised and that we can expect them to be tabled, perhaps along with an amendment implementing a version of the polluter pays proposal, in the other place in due course. The Minister has had a couple of chances to answer this point and obfuscated to a certain extent, so I would appreciate it if he would clarify whether that is indeed the case in his closing remarks on this group, because many leaseholders across the country are seeking certainty on that point.

[Mr Betts]

Does my hon. Friend agree that there is a fundamental point here: if for individual blocks of flats we cannot track down the developer or whoever else was involved in the construction and get them to pay through the legal process, and if the Secretary of State’s charm offensive does not persuade the industry as a whole voluntarily to cover these costs, would it not be absolutely wrong if the costs were, effectively, passed on to the social housing sector through cuts in the Department’s budget? Is the alternative, therefore, to look at an extension of the levy or taxation scheme to make the industry pay if it will not voluntarily agree to do so?

[Matthew Pennycook]

The Chair of the Select Committee is absolutely right; it would be a travesty if the Government or this Department were forced to raid the affordable homes programme to cover the costs of fixing the building safety crisis. In those circumstances, they would have to look at other options, such as those he has set out.

I will finish by using this brief opportunity to put to the Minister four issues relating to those expected Government amendments on leaseholder protection that arise directly from the commitments made by the Secretary of State last week. The first issue relates to the point mentioned by my right hon. Friend the Member for Leeds Central (Hilary Benn) in his intervention: which leaseholders will any such robust legal protections cover? The Secretary of State’s statement last week caused a great deal of confusion in that area, so can the Minister clear up the matter today by making it clear that any such protections will apply to all leaseholders, not just leaseholder-occupiers and certainly not just the leaseholders that the Government deem, based on some unknown or unworkable criteria, to be deserving?

--- Later in debate ---

[Mr Deputy Speaker (Mr Nigel Evans)]

Before I call Matthew Pennycook, I ask colleagues who are trying to catch my eye that they please make sure that they address the new clauses and amendments in the group before us, not those in the previous group.

[Matthew Pennycook]

Scintillating they may not be, but it is still a pleasure to respond for the Opposition to the remaining proceedings on consideration. I will first deal briefly with several of the non-Government amendments selected, before taking the opportunity to ask the Minister several specific questions relating to Government new clause 19, new schedule 1 and various other amendments relating to special measures and protections against forfeiture. I hope he is able to answer at least some of them.

New clause 1, which stands in the name of my hon. Friend the Member for Oldham East and Saddleworth (Debbie Abrahams), who sadly cannot be in her place today because she has contracted covid, is a straightforward amendment that would place on the Secretary of State an obligation to review the effects of behaviour in the construction industry that have a negative impact on building safety, such as contract terms and payment practices that prioritise speed and low-cost solutions, and to report findings to this House. We support the new clause fully and urge the Government to give it due consideration.

New clause 18, which stands in the name of my hon. Friend the Member for Kingston upon Hull West and Hessle (Emma Hardy), would establish minimum standards for property flood resilience measures in new-build homes. In response to my hon. Friend last week, the Secretary of State made it clear that “more could be done” on this issue. I hope my hon. Friend gets a chance to make her case in more detail in due course, and that the Minister will give serious consideration to her new clause and to what might be done through future planning legislation to drive up standards when it comes to flood mitigation and resilience.

New clause 15, which stands in the name of my hon. Friend the Member for Hammersmith (Andy Slaughter), would extent the electrical safety inspection duties that currently apply in the private sector to social landlords. It is straightforward and we believe it warrants support.

New clause 16 would extend the same duties to leaseholders. Although we do not want extra burdens to be placed on leaseholder-occupiers—those who sub-let are of course required to have the relevant certification anyway—and we do want further assurances that the provision would not duplicate powers and duties that the Bill confers on the building safety manager, we support in principle steps to ensure the safety of electrical installations in high-rise buildings and to reduce the risk of fire spreading between flats.

[Andy Slaughter]

My hon. Friend is a logical and fair man, and he will appreciate that there is an anomaly here. If a leaseholder rents out their property, as we have heard some are forced to do, they will be a private landlord and will be obliged to carry out these checks, but they will not be if they are living in the property themselves. In the name of safety, there has to be consistency. Not only landlords of high-rise blocks but social landlords and resident leaseholders need to do this, and the cost is estimated to be about £30 a year per flat.

[Matthew Pennycook]

I agree there is an anomaly, and I agree that we need consistency. I very much hope the Government give further thought to what might be done to achieve that objective.

The Opposition support new clause 23 and amendments 73 and 74, which derive from the Select Committee’s recommendations, and I hope the Minister will constructively respond to them in due course.

On Government new clause 19 and new schedule 1, which will replace clauses 104 to 113, and various related amendments, we fully accept the need for special measures in cases where a given accountable person fails to discharge their duties under the new regime, including the appointment via an order secured by the regulator at the first-tier tribunal of a special measures manager who will take on the management of risk in a given building in such instances.

We also support the changes made to the special measures arrangements by new schedule 1, such as the change to enable the regulator to provide financial assistance to the special measures manager by way of loans or grants. However, we would be grateful if the Minister provided some clarification on those parts of the new schedule that allow for payments to be made by the accountable person to the special measures manager if expenses exceed what can be raised by way of the building safety charge. Will he give a commitment this afternoon that those additional payments will not be able to be charged to leaseholders?

Building height was debated extensively in Committee and warrants a brief mention in relation to this group of Government amendments, because the Bill’s arrangements for special measures still apply only to higher-risk buildings, defined as those of at least 18 metres in height or of at least seven storeys—I note that new clauses 24 and 25, in the name of the hon. Member for St Albans (Daisy Cooper), directly address this.

Eighteen metres has always been a crude and arbitrary threshold that fails adequately to reflect the complexity of fire risk. It is absolutely right and long overdue that the Government made it clear last week that 18 metres will no longer be the difference between whether an affected leaseholder is protected by the state from the costs of remediation or made to take on a forced loan and long-term debt, although leaseholders will still face ruinous costs for the remediation of buildings under 11 metres. That requirement will not be entirely resolved by the withdrawal of the January 2020 consolidated advice note, and we urge the Minister to ensure those people are also protected financially.

Leaving aside whether a more proportionate approach to fire safety risk results in a reduction in the number of medium-rise buildings that ultimately require remedial works, many of them will clearly remain designated as high risk and will therefore require remediation. Can the Minister confirm that it is the Government’s intention eventually to bring high-risk buildings under 18 metres into the purview of the regulator and the gateway system once the regime has been given a chance to bed in and deal with the most complex high-rise cases?

Lastly, amendment 29 will extend existing protections against forfeiture of a lease on the ground of non-payment of a service charge to non-payment of a building safety charge. We do not oppose this amendment as it rebalances, even if only marginally, the disparity in power between a landlord and leaseholder when it comes to the building safety charge. This directly relates to our previous debate on part 5. No provisions prohibiting forfeiture would be necessary if the House had accepted any amendment, whether it be new clause 3, new clause 13 or potential forthcoming Government amendments, that provides sufficiently robust legal protection for leaseholders in all circumstances.

The difficulty of considering amendments on Report when other amendments that are likely to have a direct bearing on their operation, were they to be accepted, have not yet been tabled is that, if no amendments are made to provide legal protection for leaseholders against the costs of remediating historical defects, we would be concerned that amendment 29 could inadvertently incentivise freeholders to sue for unpaid building safety charges. I therefore ask the Minister and his officials to consider revising the amendment to make it clear that failure to pay a building safety charge can never be used as a basis for forfeiture, rather than merely regulating the process by which forfeiture takes place, as the amendment does in its present form.

[Peter Aldous (Waveney) (Con)]

New clause 2 and amendment 1, which stand in my name and are kindly supported by the hon. Member for Kingston upon Hull West and Hessle (Emma Hardy), add “the protection of property” to the list of purposes for which building regulations may be made under the Building Act 1984, and require the Building Safety Regulator to carry out its work

“with a view to furthering the protection of property”.

In many respects, in terms of drafting, these are tweaks to the Bill, but they could have far-reaching and positive consequences. Modern methods of construction and the increasing compartmental sizes of industrial and commercial buildings are leading to more challenging and larger fires, which put lives at risk and also cause enormous social, economic and environmental consequential damage. That is exactly what happened at Wessex Foods in Lowestoft 11 years ago, in July 2011. If adequate property protection measures—in the form of sprinklers, in that instance—had been in place, a huge amount of disruption would have been avoided, and the firefighters would have been back at their station in four minutes.

If the consideration of “property protection” were added to the Building Act and the building regulations, we would secure a significant double dividend: greater safety for people, including firefighters, and more sustainable buildings. It is far better to be preventing fires than to be putting them out. I should therefore be grateful if the Minister gave serious consideration to accepting new clause 2 and amendment 1, so that the Building Act can be amended to provide for the protection of property. These proposals have the support of professionals across the fire sector: the National Fire Chiefs Council, the Fire Sector Federation, the Fire Brigades Union, the Fire Protection Association and the Institution of Fire Engineers.

The new clause and amendment would provide an appropriate framework for the future fire safety of building design, and we would therefore know that homes, schools, care homes, student accommodation and all industrial and commercial buildings had adequate property protection and fire prevention measures built in at the start, so that we were not putting people—including firefighters—and property at risk. As I have said, I should be grateful if the Minister considered these proposals.

--- Later in debate ---

[Matthew Pennycook]

I would like to start by thanking the Bill team, the Clerks, the House staff and the Library specialists for facilitating the debates in the House on this important piece of legislation, as well as all those hon. and right hon. Members who have contributed to the proceedings, particularly those on both sides who took it through Committee over a great many weeks last year.

The impetus for this Bill, and what I am sure has been at the forefront of our minds throughout its passage to date, is the horrific fire at Grenfell Tower four and a half years ago. As I suggested on Report, it is not pre-empting the Grenfell Tower inquiry’s conclusions to state that the horror of that dreadful June night in 2017 was the product not only of pernicious industry practice but of state failure: a failure that involved successive Governments presiding over a deficient regulatory regime, and a failure to act on repeated and clear warnings about the potentially lethal consequences of that fact. That is why the Government and industry have a shared responsibility to make all buildings safe and to resolve the building safety crisis fully and finally, in a way that protects all those living in dangerous buildings who bear no responsibility for it whatsoever.

To the extent that the Bill implements the recommendations of the Hackitt review, provides for a stronger regulatory framework for building safety and ensures clearer accountability on the management of risk in buildings over their lifecycle, we support it. We welcome the improvements made on Report, and we want to see a version of the Bill given Royal Assent as soon as possible,

However, this Bill leaves a range of fire safety issues unresolved, from the lack of a national strategy on how to evacuate high-rise buildings to the absence of a requirement to plan for the escape of disabled residents. The Bill is not in itself a panacea for the building safety crisis. Even on its own terms, we have argued that it could and should have gone further in several important respects, whether in relation to the arbitrary definition of height or the issue of product testing.

We have concerns about the Bill’s implementation, specifically whether the new building safety regime will be able to function as intended and whether the new building safety regulator within the Health and Safety Executive, which the Bill makes responsible for all aspects of the new framework, has the resource and capacity to perform all the complex tasks assigned to it.

Hoping that the hard deadline will conjure the necessary outcomes, whether in relation to building control, skills shortages or ongoing concerns about indemnity insurance, is not good enough and we intend to monitor closely whether the new regime operates effectively in practice. We are disappointed that, despite the clear strength of feeling across the House and following our extensive debates, we are being asked to send this Bill to the other place without changes having been made to provide robust legal protection for leaseholders who are facing ruinous costs for remediating historical cladding and non-cladding defects. The Opposition have been clear throughout the Bill’s passage that, without changes to provide for such robust protection from all costs, it will fail what Dame Judith described as the “ultimate test” of any new framework, namely the rebuilding of public confidence in the system.

The House will have noted the extremely legalistic language that the Minister used on Report in response to several questions on whether the Government will table amendments in the other place on leaseholder protection, on when they plan to do so, on what those amendments will look like and on whether this place will have sufficient time to debate them. Do not underestimate the degree to which expectations have been raised by the repeated and unambiguous commitments the Secretary of State made last week to amend this Bill in pursuit of protection for leaseholders in relation to all the work required to make buildings safe.

For all the gaps raised by the Secretary of State’s statement and all the obvious gaps that remain in his new plan, leaseholders across the country who are caught up in this scandal drew comfort from his words, believing them to be a signal that the Government are finally prepared to honour the promises given by successive Secretaries of State and Ministers from the Dispatch Box that leaseholders will be fully protected.

That the blameless leaseholders at the centre of this crisis should be protected is, we believe, incontrovertible. The mental and financial toll this crisis has taken on them is incalculable. Lives have been put on hold, relationships have broken down, retirements have been ruined and countless hours have been forever lost as a result of spending evenings and weekends researching, lobbying and campaigning. In far too many cases, savings have vanished entirely and homes have been lost to bankruptcy.

The Secretary of State spoke last week of the injustice of asking leaseholders to pay money they do not have to fix a problem they did not cause. He was absolutely right, but if it is unjust that leaseholders pay in the future, it surely follows that it is unjust that so many have already paid or are being asked to pay now. The Government must look at financial redress and how it might be secured.

When it comes to protecting leaseholders in the future, we forcefully made the case throughout the Bill’s passage for the maximum legal protection for all those facing potential costs to fix historical defects, irrespective of circumstance. On Report we asked the Minister to give serious consideration to several issues of concern arising directly from the Secretary of State’s commitment to amend the Bill to achieve that.

We support the passage of the Bill tonight because we want the recommendations of the Hackitt review to be implemented and a stronger safety regime to be put in place as soon as possible, but we await the tabling in the other place of the promised amendments on leaseholder protection. We sincerely hope that when the Secretary of State says he intends to protect leaseholders from paying any costs, he truly means it, and that consequently the Bill will not be yet another forestalling, but will deliver justice finally for all the blameless victims of the building scandal.

[Several hon. Members rose—]

Building Safety Bill

Matthew Pennycook Excerpts

Consideration of Lords amendments
Wednesday 20th April 2022 Commons Chamber

[Madam Deputy Speaker (Dame Rosie Winterton)]

I call shadow Minister Matthew Pennycook.

[Matthew Pennycook (Greenwich and Woolwich) (Lab)]

This Bill has been a long time in gestation. First published in July 2020, it was subject to extensive pre-legislative scrutiny and was examined in exhaustive detail over five long weeks in Committee in the autumn of last year. Then, in January this year, the Government accepted that the approach they had taken to the building safety crisis over a period of more than four years following the Grenfell fire had not worked, and they announced that it would change. We raised a series of questions and concerns about what that change of approach would mean in practice, but we welcomed the fact that it had finally happened. It is of course right that we seek to ensure that those who profited from the sale of unsafe buildings and construction products pay their fair share when it comes to putting things right, that every developer and freeholder who can shoulders the financial burden of fixing their own buildings, that we restore common sense and proportionality to the assessment of building safety in general, and that leaseholders are properly protected from the costs of remediating all historical cladding and non-cladding defects. Labour has urged the Government to act on all these fronts, and more, for years, and we are pleased that we are now finally making progress toward some semblance of a comprehensive solution to the building safety crisis.

However, the manner and the pace at which this already complex and technical Bill has been overhauled to reflect the Government’s belated change of heart has been deeply problematic. Large sections of the Bill have been completely rewritten on the basis of hundreds of Government amendments tabled in the other place that the noble Lords had relatively little time to consider carefully or properly scrutinise. We welcome many of those amendments, particularly the removal of the building safety charge and the abolition of building safety managers, and we also welcome the important concessions the Government made in the other place in response to Labour amendments—for example, to exempt social housing providers from the levy. But that does not detract from the fact that this is no way to make good law, and I want to put on record the Opposition’s serious misgivings about the way the Government have gone about revising the Bill. As a result of the way it has been modified, it is now, by all accounts, something of a mess, and the five pages of complex Government amendments tabled yesterday afternoon, which again provided hon. and right hon. Members in all parts of the House with little time to properly consider them, do little to remedy that fact.

Nevertheless, the Opposition have always maintained that we want to see a version of the Bill on the statute book as soon as possible. As such, our focus is now on ensuring that its most glaring remaining defects are addressed so that it can be passed in what remains of this Session. To that end, there are five specific issues to be considered today: the duties placed on the Building Safety Regulator with regard to reviewing safety and standards, protection for leaseholders in buildings below 11 metres in height, protection for leaseholders in enfranchised buildings, the issue of buildings held in trust, and the proposed leaseholder cap.

The first can be dealt with very quickly. As well as having the resource and capacity to perform all the complex tasks assigned to it, it is critically important that the new Building Safety Regulator within the Health and Safety Executive be clearly tasked in the early years of its operation with assessing the benefits and costs of a range of measures in relation to safety and standards. Lords amendment 6 specified four—fire suppression systems, the safety of stairways and ramps, the certification of electrical equipment, and provision for people with disabilities—and we supported it. Having maintained in the other place that the amendment was entirely unnecessary, the Government yesterday tabled an amendment in lieu of Lords amendment 6 that almost entirely mirrors its provisions. On that basis, we will support that Government amendment.

The second issue is protection for leaseholders in buildings below 11 metres in height. As I argued on Report on 19 January, 18 metres was always a crude and arbitrary threshold that not only failed to adequately reflect the complexity of fire risk but was an entirely unsound basis for determining which blameless leaseholders were and were not protected by the state from the costs of remediation. The same argument applies to the 11-metre threshold. The blameless leaseholders who are trapped living in unsafe smaller buildings deserve the same protection as those in mid and high-rise unsafe buildings. As the Earl of Lytton argued in the other place:

“There seems no good reason for height exclusion on any moral, economic, safety or practical ground.”—[Official Report, House of Lords, 29 March 2022; Vol. 820, c. 1508.]

The Government maintain—the Minister said as much again in his remarks—that there are no systemic building safety issues with buildings under 11 metres, yet we know from the devastating incident at Richmond House in Worcester Park in 2019 just how dangerous to life defective buildings under this height threshold can be. The Government further maintain that buildings under 11 metres in height that are dangerous are few in number. I suspect that is almost certainly the case, but all the more reason, then, to provide financial support to those blameless leaseholders who find themselves living in them rather than leaving them without protection. I noted what the Minister said when he gave a commitment that the Government would review such buildings on a case-by-case basis, but it begs the question: why will the Government not act by amending the Bill to cater for the exceptional circumstances that he spoke about?

[Rushanara Ali]

On that point, does my hon. Friend agree that if the Government do not act to safeguard such blocks, the people who live in those kinds of accommodation will find it very difficult to be insured and to get mortgages? This is a short-sighted response, when the Government could address these issues in the round.

[Matthew Pennycook]

My hon. Friend is absolutely right, and it has been a consistent position of ours that we ensure that all leaseholders affected by the building safety crisis are protected irrespective of circumstance, including what height their building happens to be. For that reason, we will oppose Government amendment (a), tabled yesterday to Lords amendment 94, and seek to ensure that the Lords amendment remains unmodified.

I turn to the third issue we are considering this afternoon: enfranchised buildings. Under the Bill, enfranchised leaseholders will, in effect, be treated as freeholders when it comes to the costs of remediation. That cannot be right. Buildings that have exercised a right to collective enfranchisement, or those on commonhold land, may be few in number, but it has been the policy of successive Governments to encourage leaseholders to enfranchise and to promote the right to manage. Indeed, the Government have promised legislation in the next Session to make it easier and cheaper for leaseholders to buy the freehold of their building, yet the Government have put forward no solution whatever to the issue of enfranchised buildings in the Bill as it stands, and they are seemingly content, at least until this afternoon, to see such leaseholders completely excluded from the protections enjoyed by those in buildings that remain unenfranchised. We vehemently disagree with that position. It is imperative that such leaseholders are afforded the same protection as those who do not collectively own or manage their buildings. As Lord Young put it in the other place,

“it would be perverse if the legislation before us today put enfranchised leaseholders in a worse position than leaseholders who are not enfranchised”.—[Official Report, House of Lords, 29 March 2022; Vol. 820. c. 1509.]

It is essential that the service charge protections set out in schedule 8 to the Bill apply clearly to enfranchised buildings and buildings where the right to manage has been exercised, which is another reason why we cannot support Government amendment (a), tabled yesterday to Lords amendment 94, and why we will seek to divide the House on it. The Minister is right to say that pressing the amendment to a vote is not enough, and that at some point the Government will have to go further than simply accepting Lords amendment 94 or a version of it, because the Bill in its current form would not prevent resident-owned companies from making unlimited demands on leaseholders in their capacity as shareholders, to cover the costs that they would be unable to pass on via service charges if the Lords amendment, or a version of it, were to remain part of the Bill. So the Government will have to act.

I noted what the Minister said about a consultation, but I have to say that I agree entirely with my hon. Friend the Member for Sheffield Central (Paul Blomfield). It is too late in the day to consult on this matter. Four and a half years after Grenfell, the Bill needs to be amended to reflect and deal with this issue.

I turn to the fourth issue we are considering this afternoon, which is buildings held in trust. As it stands, buildings held in trust on behalf of a third-party investor, where the landlord is a professional depository or custodian regulated by the Financial Conduct Authority, or buildings owned on trust by what I can only describe as ground rent grazers—almost invariably based offshore—do not meet any of the association tests or the net wealth test in the Bill. Unless the Bill is revised to capture such trustee arrangements, they will escape the so-called waterfall system as set out in schedule 8, and the leaseholders will find themselves picking up a proportion of the costs of non-cladding remediation. The Minister is right to say that, in the other place, the Government accepted that the Bill needed to be so modified, and yesterday they tabled an amendment to Lords amendment 98 as a result.

Let me be clear that the inclusion of Lords amendment 98, as amended in the way the Government propose, would make for a better Bill than one that has no provision addressing the trustee loophole whatever. However, the Government amendment tabled yesterday afternoon has serious deficiencies, which are almost certainly the result—I make no charge against the officials involved—of the hurried timescale in which it has been drafted and tabled. Let me take the two most obvious problems with it. First, the Government amendment covers only partnerships or bodies corporate that are a beneficiary of a trust; private individuals are entirely excluded. That cannot be right, and they must be brought within the scope of these arrangements.

Secondly, the Government amendment makes no distinction whatever between types of trusts. A local authority pension fund, for example, will be liable under the waterfall system in precisely the same way as an offshore ground rent grazer. We believe that that is wrong and that the Government should think further about how they might better protect trusts where there is a clear public interest in doing so. We will not oppose Government amendments (a), (b) and (c) to Lords amendment 98, but I urge the Minister and his officials to go away and consider whether the flaws in the Government amendment as currently drafted can be rectified as the Bill progresses.