Building Safety Bill (Second sitting)

Ruth Cadbury Excerpts

Thursday 9th September 2021 Public Bill Committees

[Siobhan Baillie]

Q This might be a question for the Minister, but do you feel, given how the Bill and the regulations are going, that there will be scope for that wider definition and the performance-based work? Do you think the groundwork has been done and that we can fit around it?

Peter Caplehorn: I think there is a lot of work to be done in this area. We have been working closely with the MHCLG team as this has developed, but I still think that we probably need to map out a number of practical examples so that when the regulations eventually emerge we have the right practical answers. That might be in the form of guidance, but it certainly needs a little more development before we have a system that I could vouch for to deliver the outcomes needed.

Dr Steedman: There are interesting lessons from other sectors. The medical devices industry, for example, faces those challenges the entire time. Whether it is a sticking plaster or a heart device, there is a whole difference in the level of risk, so the way in which that type of product is regulated and the standard developed is another place to look. I agree with Peter that we need to take our time. The architecture of the Bill is there to do this, but there is a lot of work to do in developing the guidance and secondary legislation.

[Ruth Cadbury (Brentford and Isleworth) (Lab)]

Q I asked the previous panel this question about construction products, but I should have held it for these two witnesses. By the way, I think that far too much plasterboard is used in homes anyway, and not for safety reasons but just because of quality of life, but that is another issue. The Bill does address construction products and future-proofs for products that we do not yet know about. That is fine, but quite a few historical building failures have resulted from the interrelationship—chemical, physical or whatever—between products that only emerged over time, or that should have been tested in the past. The products are safe on their own but not when put together in a certain way with other products. Could the Bill do more in that regard?

Peter Caplehorn: Thank you for that question, because it is of concern and it has been historically, as you said. The Bill as set out does start off in the right place. We have the structure to pursue those issues. In parallel, a lot of work is being done on the quality of testing and on verification of product quality. We are starting a new road that will start to address some of that, but equally, I would raise the move towards greater competence across the industry. Clearly, some product combinations will cause trouble and they can be seen by somebody fairly early on in the process who is competent in analysing those criteria. I would put designers and engineers firmly in that spot.

Some more difficult inherent problems that occur over time are in the province of the testing and research and development areas of product manufacturers themselves. They do a lot on research and development on products because, clearly, it is in nobody’s interest for things to emerge later on that will cause problems. None the less, we do see them.

Back to our central subject of the Bill, it does set out the framework, and I believe that with the secondary legislation coming along behind it, it will give us more opportunity to ensure that products are fully tested in combinations, to ensure that we reduce the prospect of any failure like that happening in future. None the less, it is a challenging arena.

Dr Steedman: It is important to remember that we are focusing on safety here, and that means human safety affected by a physical object, and not necessarily quality. The Bill will not necessarily transform the quality of the industry—that is a different thing all together. You are absolutely right that if you look at historical failures of engineered structures, in many cases it is to do with communication between different parties involved in a very complex industry and the long chain that Peter described. The failure to understand the consequences of the assumptions of the person who did that piece of work leads to an issue in years to come that people cannot diagnose. There are some very famous examples of that.

Perhaps one of the additional points worth making is on the digital information. New standards are being developed today on digital management of fire safety information, for example, and new tools—there is a BSI identifier tool to allow a persistent and enduring identifier to be applied to individual products, so that downstream, you could walk around a building in years’ time and identify precisely what that was, and if an issue had arisen you would be able to trace it back.

Dame Judith Hackitt’s recommendation on the “golden thread”, the digital trail of construction products and how they are assembled, and the ownership of the building through life management are a vital part of the culture change that will enable a much easier identification of problems in future. As Peter says, the physics is relatively well understood; if people do the right tests, they will find the problem, but sometimes things surface many years on and we want to catch that at the earliest possible stage, to make sure we avoid safety issues.

[Ms Rimmer]

Q I am particularly interested in the building safety fund. It is not accessible for properties that have social tenants in them. How does that impact on housing associations? I understand that 40% of all social housing built last year was without grant. If the building fund is not accessible, how do they finance it?

Dr Steedman: I am very sorry, but I cannot really address any questions about the funds. I am not an expert.

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[The Chair]

This will probably have to be our last question to you and is from Ruth Cadbury.

[Ruth Cadbury]

Q It is the case for both of you that your competencies go across the building trade, yet the genesis of the Bill is residential buildings. Do you agree that the regime should be restricted? You have talked about buildings in scope—we are talking about residential buildings—yet there are fire risks to other tall buildings, including hospitals, student accommodation, care homes and offices, such as the BSI building in Chiswick. Do you think the fact that the Bill mainly focuses on residential buildings will cause problems down the line for the construction industry? We will start with Dr Steedman.

Dr Steedman: I made a few comments earlier about the complexity of the scope and the risk of a two-tier system. Peter and I both commented that you have to start somewhere; and it is a very high-risk place where you have members of the public living in buildings in multiple forms of ownership. It is a very complex and highly sensitive issue. I think, in terms of somewhere to start, that higher-risk residential buildings are the right place to start, but I have no doubt that over the years ahead the principles laid out in the Bill will enable us to approach other higher-risk buildings and assets and eventually to encompass much more of the built environment.

Peter Caplehorn: Absolutely. There is danger in complexity, and we do have to start somewhere, but I see the Bill also laying out reform in the whole of the construction sector. The focus is on buildings in scope, but there are quite a few provisions in the Bill about changing a lot of other aspects of the regulatory framework, and that is really important. I would like to see us moving forward as quickly as possible, actually ditching the higher-risk category and using the momentum, using all the issues that we have discussed in this session, to push forward so that everybody can be clear that all buildings are addressed to the same technical standard, all buildings are safe and all buildings will be proven to deliver the performance.

Can I just add another point? While this is absolutely about safety and, in particular—as Scott said—structure and fire, we have a big problem in terms of climate change and reducing carbon. Buildings in future must also take into account those issues. With all the groundwork we are now putting in place, I would hope that people will be equally—

[The Chair]

Order. I am afraid I am going to have to draw your comments to a close there, Peter. I am so sorry to interrupt you; we are strictly governed by the rules here. Thank you so much for the point you were making.

We have come to the end of the time allotted for this panel. I thank the witnesses, who have spent such a good deal of time with us today, providing such incredibly useful information—a huge thank you to both of you. That closes the third of our panels. Thank you very much.

Examination of witnesses

Victoria Moffett, Kate Henderson, Martin Taylor and Councillor David Renard gave evidence.

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[The Chair]

That is brilliant; thank you. This is working well so far, with hybrid technology; thank you to our witnesses.

I will bring in Ruth Cadbury now.

[Ruth Cadbury]

Q This is a question for Martin Taylor; apologies if you have effectively covered this issue, Martin, but if you did, you did so very briefly. I asked a head of building control what his perspective was in terms of the way the system had gone in the last few years. He went back to the privatisation and choice-based system of building control, whereby building inspectors, including local authority building inspectors, had to compete on cost. Cost comes down if you have fewer visits on site, and he said that that was one of a number of causes of the failure that we have had in construction and buildings in recent years. Do you recognise that as an issue? Do you feel that the Bill addresses the competition to have less time on site for adequate inspection?

Martin Taylor: It is an excellent question. Yes, we have long maintained that there should not be competition in building control. In case members of the Committee are not aware, anyone who procures building work can choose who regulates them through the building control process. It could be a local authority building control team or a private sector approved inspector. As far as we are aware, that is the only regulatory function where you can actually choose who regulates you. It is a bit like marking your own homework at school. That means local authorities have to compete against the approved inspectors in respect of their big project. Those approved inspectors submit quotations of how much they think it will cost them to deliver that building control service. It goes without saying that anyone procuring building work will look to go with the lowest cost provider of that building control service.

Local authorities do not enjoy the facility of being able to offer a quotation. Their charge can only be based on what it costs them to deliver those services. Local authorities have to compete with the private sector, but they do not have a level playing field. We fundamentally disagree with that, but you could say we are bound to, because we represent local authorities rather than approved inspectors.

On the second part of your question about whether the Bill addresses this issue, it will very much address it, but only in respect of high-risk buildings. Local authorities will support the regulator in the delivery of building control services in respect of high-risk buildings. That will then intensify the competition for buildings that fall out of scope. The first intention of the Bill is that approved inspectors will not be able to support the regulator unless local authorities do not have the capacity, but that will intensify the competition for these lower-rise, smaller buildings and further intensify the problem. It will address it in respect of high-risk buildings, but not all risky buildings are over 18 meters—look at low-rise care homes and hospitals. I think I have answered your question. It will help, but only in respect of high-risk buildings.

[The Chair]

Witnesses should not feel compelled to speak to every question. That was a relatively specific one. Unless anyone has anything else to add, I will move on to Daisy’s questions.

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[Rachel Hopkins (Luton South) (Lab)]

Q My question is a reflection on something Councillor Renard said about the implications for leaseholders who may be hit with a significant lessee charge or safety charge, but have only a small amount of time to pay it and then cannot pay. They will be evicted, or bankrupt and evicted; fall on their councils, who are already stretched; and end up homeless. Is there sufficient means of redress for leaseholders and residents, so that they can challenge elements of that charge, and is the provision requiring payment within 28 days reasonable? I would like some thoughts on that.

Kate Henderson: We welcome the emphasis from Government on ensuring the costs associated with building safety through the building safety charge are proportionate and kept as low as possible for residents. We are very committed to that. At this stage, it is quite hard to know what those costs are going to be without knowing the specific competencies of the building safety manager, the skills base and what that will cost.

On your question about protections for leaseholders, I must first say that as housing associations, we want to see all our residents sustain their homes, so we will do everything we can to support them with remediation costs—in pursuing funding from Government, pursuing developers or pursuing warranties. We will absolutely do that. On the building safety charge, the Bill suggests that it is separate from a service charge, and that you pay it within 28 days. Having looked at that, we think it places more vulnerabilities on leaseholders. With a service charge, there is case law, so you can hold your landlord to account, and that is an important point to address. If the building safety charge was transparently and openly included within the service charge, the leaseholder would have a right to redress through case law under service charges.

The other point here is that, if the building safety charge is within the service charge, it can be paid not within 28 days, but on a monthly basis. It would be estimated for the year ahead and then divided up by 12 months, as with service charges. You would then get to the point in the year when you compared budget with actuals and readjusted, and if that cost were to go up and your leaseholders were unable to pay it, you would work out an affordable repayment plan. Our recommendation is that there should not be 28 days. The charge should be included as a provision within the service charge, but in an open, accountable and transparent way, so that the leaseholder has not only a right to redress, but a more manageable payment plan.

[Ruth Cadbury]

Q My question rolls on from the last. The building safety charge is merely for leaseholders; I do not even know whether it depends on whether you are a leaseholder of a private developer, a housing association or even a local authority, and we are just talking about permanent residential housing. There are already many differences, and we already have the current difference in the building safety fund, which only applies for leasehold homes. Even housing associations cannot claim on it for their social rents, so they have to use funding for refurbishment or new build social rent housing to address those deficits. Do the panel members, particularly from the federation and the LGA, feel that if there was an indemnity scheme on freeholders, developers and builders, it would be more transparent and easier to claim, irrespective of who the user is or who the main building manager is, in terms of which sector?

Victoria Moffett: To be honest with you, that is an arrangement that we have not considered at all. Rather than answering on the hoof, we might have to go back and give that some thought. We can certainly do that and write to the Committee.

Councillor Renard: We will also provide a written answer to that. It is a really good question, and we will give it some thought and respond to the Committee.

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

Q I want to touch on accountable persons. As we discussed earlier with clause 84, accountable persons have to “take all reasonable steps” to ensure safety. I know this might sound like I am asking you to pick your shopping list, but what do “reasonable steps” look like? We have these debates all the time, and I know this is coming out in secondary legislation later. To dovetail into that, on the duty to co-operate, we know there are some quite complex ownership structures. In my patch, we have a situation whereby you will often have a tenant management co-operative, which is an arm’s length body of the council but is a separate organisation in its own right. In that scenario, how do you ensure there is not responsibility shunting? It seems that there is a risk there. In that scenario, how do we ultimately ensure that we have the accountability that the Bill, and the subsequent legislation, is trying to achieve?

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[The Chair]

Are there any other questions from colleagues?

[Ruth Cadbury]

Q I have a couple. Like many Members, I have a lot of affected leaseholders. The McPartland new clause 4 proposes a building safety indemnity scheme, equivalent to the Motor Insurers’ Bureau. Will that address some of the challenges about who ultimately pays for the historic defects in buildings that leaseholders are living in? Do you feel that will be suitable to apply to leaseholders, whether they are leaseholders of private owners, housing associations, councils or other providers?

Liam Spender: Yes, is the simple answer. The building safety indemnity scheme would be one way of creating a pot of money into which all stakeholders would pay to ensure there was money available to fix buildings with issues, in whichever sector they are in—private, public—and whatever tenure they are in, whether they are rented or held on long leases. That would seem to be an equitable way of doing it. It is one implementation of the idea that the polluter should pay and that there should be a social insurance scheme in the same way that there is for uninsured drivers. I will let Giles add to that answer.

Giles Grover: I have nothing to add to the specific point on that amendment. I have tried to read the Building Safety Bill, the impact assessment and the explanatory notes many times, but I have not managed to make it right through to the end. Having read the amendments and interrogated those, the McPartland-Smith amendment is one that helps us. The simple point is about better protection for current and future leaseholders by ensuring that the limitation periods are extended, by using legislation such as the Housing Act 1985. That would help us.

The simple amendment, the one that I really want to see, and which I think should be a no-brainer, is the one about VAT. I cannot remember which one it was—I am sure Liam will—but it says that the VAT that we have been forced to pay on works and on fire safety interim measures, for the last five years, should be refunded. It should mean that we are treated the same as the developers and the building owners that can apply for zero-rating. They have been told that exceptional health and safety reasons apply, so they can be classed as “person constructing” status.

Would it not be a good start to put us on that same deal and to say, “Actually, here you go—the money you have spent already, that 20% that has been added on, you can have that back”? For future cases—in instances where future remediations are funded—at the very least, that should be taxed at 0%. The Treasury has profited from VAT and from insurance premium tax. Agreeing to that amendment would be one way of showing they want to help the leaseholders who have been forced to pay these costs with the additional costs added on.

[The Chair]

Thank you, Giles. I think you were referring to new clause 1. Ruth, did you have a second question?

[Ruth Cadbury]

Q Yes. I do not know whether you heard the evidence from the National Housing Federation. One of the issues it raised was seeking an appropriate mechanism to gain limited and proportionate access to properties for essential safety works, where that is not granted by a resident. That presumably also goes for private landlords of leasehold properties, as well as housing associations.

That clearly raises a challenge for your members, whether the building manager or owner is a resident management organisation or housing association or private sector freeholder or leaseholder. How do you respond to what the federation says, and presumably other building owners and managers say as well?

Liam Spender: Yes, I did hear that evidence. From a residents’ point of view, we would have concerns about making it too easy to gain access into people’s homes, potentially for spurious reasons. You may have seen in the written evidence that we have submitted that we suggest there needs to be a very tough statutory code of practice, to make it clear when powers of entry should be used, whether or not that is accompanied with tweaks to the drafting of those clauses; that is a possibility. However, the key point is that we have a very clear set of rules saying when people can enter private property for safety issues.

After we have finished with this panel, you will hear from two eminent housing lawyers, who will probably have much more to say on this topic and will probably say it far more eloquently than I can.

I will let Giles chip in with anything he wants to add.

Giles Grover: I am not sure that I can be more eloquent than you, Liam, but I will do my best.

Having been a property manager for a year and a half—for my sins—I understand the actual difficulty of entering a property. I think that the point is that, as Liam said in our submission, there is a lease generally of quiet enjoyment. However, leases also say that for good estate management generally you can enter a building within 48 hours.

It does not feel like there are enough protections essentially to stop accountable persons who want to mitigate their own liability from abusing these powers. I do not know how every single electrical point in every single flat will be checked, as well; I defer to Liam and the lawyers you will have before you later.

[Ruth Cadbury]

Thank you.

[The Chair]

Shaun Bailey.

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[Daisy Cooper]

Thank you.

[Ruth Cadbury]

Q My first question is whether there is added complication if, in between the leaseholder and the freeholder, there is a head leaseholder such as a housing association or another property owner.

Justin Bates: Oh, yes.

[Ruth Cadbury]

Q My question is about the concern raised in the joint evidence we were sent by the UK Cladding Action Group and End Our Cladding Scandal. They use the term

“moral hazard between the roles of the accountable person and the building safety manager”,

particularly the use and misuse of concerns about fire safety to do works that are not about fire safety, and may not even be necessary. I think I was reading that they feel this legislation could be used for work that is not the intention of this Bill. Do you recognise that, and is that an issue?

Giles Peaker: I am not entirely sure that is a different position to the current one. There is the eternal struggle between freeholders and leaseholders as to what works are necessary and what works are recoverable under the lease. Again, we are not sure what would count as remedial work, so that would be specified, but undoubtedly, yes, there will be attempts to smuggle in other kinds of works that could not otherwise be charged for. I am not saying that this is right: this is just what happens, and there will doubtless be tribunal disputes as to whether that is correct. That would require leaseholders to take it to the tribunal, so I am not sure there is a great difference with the current situation on that, but the current situation is hardly great.

[Ruth Cadbury]

Q So it does not address the existing mess.

Giles Peaker: No, I would not say so.

Justin Bates: It is important to remember that this Bill is not only about fire safety. We are all talking about that because that is the current crisis, but clause 59 says that a building safety risk is:

“(a) the spread of fire;

 (b) structural failure;

 (c) any other prescribed matter.”

That is what this Bill is concerned about. It is not limited to fire safety. Suppose you had this Bill 60 years ago: it might have been the vehicle you used to deal with asbestos, for example. You could have prescribed asbestos as one of the other matters there. As I understand it—this is where the SIs would be a legitimate tool—this is intended to be a structure that you do not have to come back to for 50 years. That is why having it beyond fire makes sense, because there will inevitably be another problem that we discover in years to come. Yes, focus on fire at the moment because that is your immediate concern, but this is not a Bill limited to fire safety.

[The Chair]

Are there any other questions from colleagues?