Leaseholders and Cladding

Rushanara Ali Excerpts

Wednesday 12th February 2020 Westminster Hall

[Hilary Benn]

The hon. Gentleman, who has great expertise in this matter, is correct. I will come to what the Government have said about the responsibility of freeholders, but I think the point we are all making is that this is not the fault of the leaseholders, who never expected when they bought that first dream home that this burden might fall upon them.

[Rushanara Ali (Bethnal Green and Bow) (Lab)]

My constituency, like my right hon. Friend’s, has a lot of high-rise blocks—among the highest number in the country. One of the major issues is getting the Government to finance the work that needs to be done ahead of any further tragedies and fatalities, and ahead of the Budget statement. Does my right hon. Friend agree that two years after the appalling, horrific tragedy of Grenfell, the Government need to step up and create a fund so that those works can be done, and should then go after the freeholders to make them—rather than our constituents—pay when they are able to do so? That should be our focus and priority, as we said time and again in the last Parliament. I hope that we do not have to keep saying this. I hope that the Government heed our advice and make sure that the Chancellor puts some money into those works in the March Budget.

[Hilary Benn]

I agree with my hon. Friend. When the problem of ACM cladding was first identified, the Government quite properly said that it all has to come off and be replaced. Importantly, they also said that however it was done, leaseholders should not have to pay. On 29 November 2018, the then Secretary of State for Housing, Communities and Local Government said:

“Everyone has a right to feel safe in their homes and I have repeatedly made clear that building owners and developers must replace dangerous ACM cladding. And the costs must not be passed on to leaseholders.”

I agree with that. The Secretary of State repeated that point on 9 May 2019, when he said:

“Leaseholders find themselves in this position through no fault of their own, and this is not morally defensible.”—[Official Report, 9 May 2019; Vol. 659, c. 688.]

Again, I agree. It would be monstrous to expect people who are entirely blameless to pay for the mistakes and errors of others. It has been pointed out that if our constituents had bought cars or washing machines that were a fire risk, no one would dream of saying to them, “Sorry, you are going to have to pay for the cost of replacement.” Their problem is that they bought the home of their dreams.

I acknowledge the responsible way in which some freeholders, including in Leeds, have accepted that they need to foot the bill to replace the cladding. That work has either been done, is in progress, or we are told it is timetabled. However, despite the Government’s policy, there are freeholders who have not lived up to their responsibilities. That is why the Government eventually realised they could not carry on, because otherwise ACM cladding would not be removed.

On 9 May last year, the Government announced the £200 million fund to support the removal of ACM, to protect those leaseholders from bearing the cost. There have been problems with that fund—slow disbursement, bureaucracy and the like—that are for another debate, but I welcome that decision. It showed unreservedly that the Government were determined to uphold the principle they had established: leaseholders should not have to pay. However, what is now happening in respect of buildings with other types of unsafe cladding completely contradicts the principled position that the Government have taken until this point.

Why is this happening? First, the Secretary of State said on 20 January that he had received advice that ACM cladding was much more dangerous than other types of cladding. Anyone who has seen the film of student accommodation in Bolton going up, convulsed in flames, might wonder whether that is the case, since that building was covered in high pressure laminate. It was the Government’s review that brought in the new advice, and that advice toughened the standards, leading to other buildings being peered at, prodded and having bits taken off them when people discovered the problems with HPL and other systems. Nobody knows how many such buildings there may be, but the point is that leaseholders in buildings with other types of cladding find themselves in exactly the same position as people who are living in buildings with ACM cladding, except for one thing: the Government’s fund does not cover the removal of their cladding.

Secondly, the idea of differential risk is not applied by the West Yorkshire Fire and Rescue Service. It does not distinguish between different types of cladding when it issues notices that say, “This building is unsafe. Start a waking watch now, or you are going to have to move out. Give us a plan for how you are going to replace this cladding.” The chief fire officer of West Yorkshire fire service put it to me this Monday that

“it is our view that there is no difference between unsafe ACM cladding and unsafe HPL cladding.”

Why, then, are the Government seeking to distinguish between the two when it comes to the position of leaseholders? I say to the Minister that that position is completely unsustainable.

Thirdly, Ministers have rightly been adamant that unsafe cladding has to be removed. They have set up the fund and said that they are going to name and shame freeholders who do not get on and do it. The latest building safety data says that 174 ACM-clad private-sector residential buildings are still yet to be remediated. What is those Ministers’ position on other types of dangerously clad buildings? Are the owners of those blocks going to be named and shamed—and if not, why not?

When the Secretary of State was pressed on that point in the House on 20 January, he indicated that the Government were considering further help. In answer to my hon. Friend the Member for Hackney South and Shoreditch (Meg Hillier), he talked about the possibility of loans. If those loans went to the freeholders, that might possibly be a way forward, but only if the Government could guarantee that none of the costs would be passed on to the leaseholders; if they just got a bill for it through their service charge, that would breach the principle that the Government set out. However, it was clear from the Secretary of State’s reply to my hon. Friend that he was talking about loans to leaseholders, because he referred to existing examples of building owners who have provided low-interest or zero-interest loans on a hardship basis. He went on to say:

“There may be a role for the Government in ensuring that that works, that the loans are affordable, and that it is done as quickly as possible.”—[Official Report, 20 January 2020; Vol. 670, c. 33.]

However, that would be another change of policy, because on 9 May last year, when the then Secretary of State announced the grant fund, he was specifically asked about loans. He said:

“We looked at questions such as whether a loan arrangement could work but ultimately, given the complexity, the time that would have been involved and the need for all sorts of different consents, and given that my priority is providing a sense of assurance for leaseholders and getting on with this, we decided to adopt this structure.”—[Official Report, 9 May 2019; Vol. 659, c. 695.]

By “this structure”, he meant grants. If that was the view then, what has changed? Perhaps the Minister can explain in her response. When the Secretary of State talked about hardship, when leaseholders are on low incomes or do not have any savings, the implication was clearly that if a person does not fall into one of those two categories, they will bear the total cost themselves.

The problem with the idea of loans is that it completely breaches the principle that the Government set out at the start of this crisis—and believe me, it is a crisis. That principle was that leaseholders living in buildings with unsafe cladding should not have to pay for the cost of its removal, because that would create two classes of leaseholder: one whom the Government would seek to protect from the cost of replacing cladding, and another to whom the Government would say, “I’m terribly sorry, you’ve got to pay.” That would be completely unfair, which is why many of us are calling on Ministers to extend the coverage and size of the fund to all buildings with unsafe cladding of whatever type. We have already heard those calls today, and I am calling for that as well, because it is the only fair way forward and the only way in which the objective of removing all dangerous cladding, with which we all agree, can be achieved.

Unless that happens, in situations where freeholders cannot or do not find the money and leaseholders clearly do not have the money, the nightmare will continue. They will go on living in an unsafe building; the only way they will be able to stay in it will be to go on and on paying for a waking watch, as the cladding will never be removed because there is no one to pay for it. Eventually, that will bankrupt them.