Building Safety Bill

Paul Blomfield Excerpts

Consideration of Lords amendments
Wednesday 20th April 2022 Commons Chamber

[Paul Blomfield (Sheffield Central) (Lab)]

I am grateful to the Minister for giving way. He has, to some degree, covered the concerns that I was going to raise about those people who have exercised the right to manage. Yesterday, in a letter to us, he and the Secretary of State acknowledged that Lords amendment 117 identified a real problem. Frankly, at this stage, a consultation will give very little comfort, but could he try to assure leaseholders in that position by saying how long that consultation will be undertaken and when they might expect some conclusion?

[Stuart Andrew]

I appreciate the hon. Gentleman’s point. I want to ensure that we get the consultation under way as quickly as possible. I accept that people have deeply held concerns, so we will do our best to get that done speedily, but we do need to consult. We need to get the evidence and know exactly what the picture is, in order to know how best to deal with that situation.

Lords amendment 184 inserts a new schedule 8, titled “Remediation costs under qualifying leases”. It sets out the circumstances in which costs cannot be passed on to leaseholders. The Government’s original proposals set out that where the building owner is, or is linked to, the developer or can afford to meet the costs in full, they would be prevented from passing costs on to leaseholders.

It is worth stressing just how wide these proposed protections are. If a building is still linked to the developer, that building owner and the landlord will be liable for the costs associated with non-cladding defects and their leaseholders will pay nothing. If the building owner or landlord is not linked to the developer, but has the wealth to meet the costs in full, their leaseholders will pay nothing. If a leaseholder property is valued at less than £175,000, or £325,000 in London, the leaseholder will pay nothing and, if the leaseholder has already met interim costs that exceed the contributions cap, they will pay nothing.

Based on that “waterfall”, the Government’s assessment is that the vast majority of leaseholders would pay less than the caps and many would pay nothing at all. However, it is important to remember that not all landlords are evil. Where the building owner or landlord is not at fault, where they have no link to the developer who created those defects and they do not have the wealth to meet the remediation costs in full, and only in that situation, we propose that leaseholder contributions towards non-cladding defects can be recovered, subject to the fixed caps.

--- Later in debate ---

[Royston Smith]

That is an excellent suggestion. The Government have been very successful in talking to developers and persuading them to sign up voluntarily, and there is no reason why they could not have similar conversations with insurers.

I do not want to make a case in defence of developers. I have made the case throughout that they should pay, but we need to be a bit careful about the possible unintended consequences of only going after them. I am pleased to note that they are taking responsibility for their own buildings, although they should have done that in the first place and they are a bit late to the party. Asking them then to remediate buildings that are not their responsibility will have all sorts of effects, not least in making them think about whether they will want to be in that particular market any more. I doubt that they will ever withdraw from the house building market, because it is their business, but if we want to ensure that we can build 300,000 homes a year—a proportion of which would, I am sure, be high-rise—we should bear in mind that some developers will now be saying, “This may not be for us in the future.”

I promised that I would not speak for too long, because we want to get through this business as quickly as possible, so I will end my comments by thanking the Minister again for what he has done and welcoming the changes that have been made. Given the Minister’s assurances today, I will be supporting the Government.

[Paul Blomfield]

It is a pleasure to follow the hon. Member for Southampton, Itchen (Royston Smith). I pay tribute to him and to the hon. Member for Stevenage (Stephen McPartland) for the work that they have done in this regard.

As others have said, we have made considerable progress, but it is a disgrace that, so long after the Grenfell tragedy exposed the scandal of cladding and fire safety issues, the Government have yet to provide the comprehensive response that would address all the issues faced by the thousands of leaseholders caught up in that scandal across the country. This evolving Bill—it was clearly still evolving yesterday, with a body of new amendments tabled by the Government—and, indeed, the Secretary of State’s announcement in January were significant steps, but they still fall short of the Prime Minister’s promise—and I think we all know how much that is worth—that no leaseholders should have to pay for the remediation of problems that are not their responsibility. Moreover, there is still too much uncertainty surrounding the Government’s proposals, which in itself is frustrating progress on making buildings safe.

Let me give just one example. Mandale House, in my constituency, faces a range of problems, and has secured £3.4 million from the building safety fund towards the necessary remediation. However, that falls short of what is needed, and Mandale House is left with £7.4 million to find in order to complete the work. The building’s original developer is one of many to have gone into liquidation, so the building management are on their own. The builders who had been scheduled to carry out the remediation works have now pulled out because of the uncertainty over whether they would be paid. That leaves no foreseeable prospect of the building’s being made safe. The building management are now worried that if the money they have been granted from the building safety fund is not used promptly, it may be withdrawn. I understand that that has happened in respect of other buildings, and I would welcome the Minister’s confirmation that it will not happen in this case—as well as his advice on how Mandale House leaseholders should now proceed to make their building safe.

The second point that I want to make concerns enfranchised buildings. I urge the Government to think again about Lords amendment 117, and I hope to persuade them to do so by citing the case of Wicker Riverside, another building in my constituency, whose residents were evacuated just before Christmas 2020 because of safety concerns.

It is not good enough for the Secretary of State to write to us, as he did yesterday, saying that the amendment highlights a real problem which must be addressed, but then to reject it without putting anything else in its place. I welcome his late announcement today of a consultation, but it should have been possible four years on, and after all the months of knowing that this remained a problem following the Government’s January announcement, to include an amendment that addressed the concerns and provided a solution that the Government felt was robust, along with the bundle of amendments that were added yesterday.

Let me illustrate the problem. In 2019, Wicker Riverside leaseholders took their freeholder to court after years in which building maintenance had been neglected, with the freeholder also failing to provide proof of whether the money collected through service charges had actually been spent on the building. The freeholder did not even turn up for the court case. The leaseholders then exercised their right to manage, and took over responsibility for the building. Now they are being penalised for doing so. By treating right to manage companies in the same way as institutional freeholders, the Government are excluding them from the protections that exist for other leaseholders, such as the remediation bill cap. I would like us to go further and provide zero liability for leaseholders, but the fact remains that the cap is there for some and is not there for those in Wicker Riverside. They should qualify for the same protection as others, because without it they will face unmanageable costs, and as a result the building will not be made safe.

The Government must set out their plans. If they will not accept Lords amendment 117, I respect their concerns, but the Minister needs to explain—and I hope that he will, in his closing remarks—exactly what they intend to consult on to ensure that right to manage leaseholders are protected. I hope the Minister will also give a clear guarantee that the outcome of the consultation will be that those leaseholders will have the protection that is being provided for all others.

[Rebecca Long Bailey (Salford and Eccles) (Lab)]

Like many Members on both sides of the House, I welcomed the Secretary of State’s assurances to Parliament earlier this year that leaseholders

“are blameless, and it is morally wrong that they should be the ones asked to pay the price.”—[Official Report, 10 January 2022; Vol. 706, c. 283.]

However, despite the progress that the Secretary of State and Members across the House have undoubtedly made on this issue, there are still inadequate legal protections in the Bill to ensure that residents and leaseholders do not bear the costs of a crisis that they did not cause. I therefore support Lords amendments that seek to widen the scope of the Bill, including the amendment to reduce leaseholder contributions to zero, tabled by Baroness Hayman, and the proposal for an extension of leaseholder protections to buildings of all heights, tabled by the Earl of Lytton and supported by Lord Blencathra and Lord Young. I thank Members of this House for their hard work, and I thank all the cladding campaign groups, many of whose members are present today. I want to mention in particular Manchester Cladiators, which has supported residents throughout Greater Manchester through rain and shine in their hour of need.

Those campaigners have to keep going, because the sad reality is that many residents in my constituency still fall through the gaps in the proposals that the Secretary of State has outlined so far. Indeed, a recent survey by End our Cladding Scandal of more than 2,200 properties and buildings over 11 metres tall shows that more than 64% of leaseholders outside London and more than 83% of leaseholders in London will not be protected from the costs of non-cladding fire safety defects. The recent pledges from developers to remediate the buildings that they have built over the last 30 years sadly do not go far enough, and there is continued ambiguity about the treatment of non-cladding fire safety defects. Leaseholders in buildings that are under 11 metres remain unprotected, and there is still no funding commitment from house builders for the £4 billion required for the remediation of buildings where the developer no longer exists. As we have heard today, there also remains a huge question mark over social housing.

Further to that, we still do not know what residents who have already received devastating demands for payment should do. There is no detail at all on how to recoup any sums of money already spent by residents, as sinking funds are depleted to catastrophic levels. For example, one development in my constituency has been unable to receive support from the waking watch relief fund simply because the residents acted proactively to try to reduce the cost of their waking watch by agreeing to fund the installation of a fire alarm system. Because they did this prior to the waking watch relief fund’s cut-off date of 17 December 2020, their application to the fund was rejected. Sadly, had they waited and incurred even more waking watch costs, their application probably would have been successful. The Minister must agree that that makes no sense at all, and this is just one case.

The Secretary of State informed Parliament in January that he would pursue statutory protection for leaseholders, and that nothing would be off the table. The Bill does not give that protection, and all I ask today is that the Government support the amendments that would protect leaseholders and go some way towards providing that statutory protection that they all deserve.