Building Safety Bill (Tenth sitting)

Ruth Cadbury Excerpts

Thursday 23rd September 2021 Public Bill Committees

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

I will keep my comments brief. I want to touch on whether primary legislation is the appropriate place to set out the specification.

I fully appreciate and do not disagree with the comments that have been made on the need to see the detail. I completely agree with the comments of members across the Committee about the need to consult and to ensure that stakeholders are appropriately engaged. If we put this in primary legislation, I think there might be a slight unintended consequence of pigeonholing it too far.

My interpretation of the ABI’s evidence is that there is a need to ensure that appropriate stakeholder feedback is reflected in regulation. In other areas, it is not uncommon for insurance mechanisms such as those in clause 47 to be delegated to secondary legislation, because it allows time for that engagement and the pulling together of stakeholders. It also allows for drilling down into the detail, because that secondary legislation can focus specifically on those really important points. As my right hon. Friend the Minister has said, it is appropriate to delegate to secondary legislation, but I also agree with the points raised by the hon. Member for St Helens South and Whiston. There is concern in the industry, as we have heard, particularly about incidences of fire and the inability to obtain appropriate insurance. Clause 47 seeks to remediate that and to interlink that more widely, so that we can have the safety we have been talking about and the cultural change that the hon. Member for Weaver Vale mentioned a moment ago.

This is an important but technical debate on whether primary or secondary legislation is the appropriate place for the requirements in clause 47. Broadly speaking, I think my right hon. Friend is right, but I say to him again, and this has been echoed across the Committee, that Members are seeking to ensure the broadest level of engagement with different stakeholders as this progresses. That will be important in ensuring that the subsequent legislation that feeds off clause 47 reflects accurately what we are trying to bring about and, ultimately, that the clause achieves its aims.

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

I share the concerns about what is happening to the insurance industry in the context of building safety. I also share the concerns raised by my hon. Friend the Member for St Helens South and Whiston about the Bill’s reliance on secondary legislation for so many elements, including insurance.

I want to highlight a couple of issues that the insurance industry has raised with us. We have had submissions from AXA—one of the biggest insurers in the country—and from the Association of British Insurers, which says that it is

“concerned that significant detail is left to secondary legislation.”

The ABI has raised specific concerns about the availability and affordability of cover for fire safety works, an issue that is already hitting a number of professionals in the construction industry. It is concerned about the confusion over the definition of the accountable person and the building safety manager roles, and how that impacts on their ability to obtain professional indemnity insurance. It wants more detail so that there is no “potential for confusion”. The ABI is also concerned about the

“legal position where there may be multiple APs responsible for a building”,

and it is seeking

“a better understanding of the liabilities that flow”

from the issues of underwriting PI insurance, and particularly how those liabilities are split between the two roles.

The ABI goes on to say that

“the current market conditions make it a sub-optimal time”

—I love the term “sub-optimal”; it basically means “a rubbish time”—

“to be launching any kind of new regulatory framework requiring mandatory PI cover.”

Of course, we all want everyone involved to have adequate insurance cover in some form or another.

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

I appreciate a lot of the hon. Member’s points and I share concerns about the very difficult situation. Does she agree, however, that if the legislation is too prescriptive, we could end up restricting the industry and as a result make it more difficult for it to adjust to what are actually asking it to do?

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[Ruth Cadbury]

The hon. Member makes a good point. The problem with insurance is that it can dominate discussions about public policy because issues arise that are not covered by the original legislation and regulations. If something does not go ahead—we have seen tabloid headlines like, “Council stops children going on a school trip”—it is often not because it has been proscribed but because of the insurers. It has nothing to do with the council. We must understand the crucial relationship between the private sector and the insurance sector. The Government must be careful that any legislation on safety, such as this Bill, does not have unintended consequences.

In conclusion, the ABI wrote in its submission that

“there is no ‘silver bullet’ solution to the problem of the cost of insurance for un-remediated high-rise residential buildings…However, market-led intervention by itself will not ‘solve’ the problem—there is likely to be a need for the Government to intervene to provide support for the relatively small number of buildings that are simply too risky for the market to insure at prices that are affordable to the majority of leaseholders.”

Is that something that the Government are considering? The last thing we want is to go from the current situation of having many unsafe new homes, to one where we have no new homes.

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[Christopher Pincher]

I am obliged to the hon. Lady, and that is something that we will work through with the Health and Safety Executive and BSR as they work together to build up their specific competencies and responsibilities. That will become increasingly clear as the BSR beds in and builds out.

We will consult local authorities in developing any regulations. As they are subject to the affirmative procedure, Parliament will of course have to approve them.

[Ruth Cadbury]

I was not sure when it was best to ask this question, so I will ask it now. It is a genuine question that I do not know the answer to. The hon. Member for North Devon rightly raised the concern of small districts. “Saddled” is the wrong word, but they will have increased responsibilities, require increased technical knowledge, and have a wider range of responsibilities. There is also the crossover with their other responsibilities mentioned in the clause. Many authorities, particularly small ones, share functions, departments and teams across more than one authority. Does the Bill take account of that—for instance, where an authority does not have its own building control team or one of the other safety teams, but shares it with another authority? Has the Bill taken this issue into account?

[Christopher Pincher]

I am obliged to the hon. Lady. Yes, I believe it has. As we know, local authorities share services and a variety of functions, some of which are statutory. They are able to share those functions across geographies and still execute their statutory responsibilities, and I do not foresee any issue here. She is quite right to say that smaller authorities often have challenges with resources that do a multiplicity of things. One of the reasons why we want in the Bill to see the development of multidisciplinary teams—the Building Safety Regulator and its functions, fire and rescue services, local authorities —is to ensure that even smaller authorities that have in-scope buildings are able to use those multidisciplinary teams to do the work that the Building Safety Regulator will require of them.

I hope that Members will agree that these regulations serve an important purpose and will support the clause. I commend the clause to the Committee.

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[Rachel Hopkins]

It is appropriate that I mention my entry in the Register of Members’ Financial Interests; I am a vice-president of the Local Government Association.

I welcome the opportunity to move this amendment. The Minister will recognise my deep interest in housing and in ensuring that everyone can live in a good-quality, secure, safe home that they can afford to live in. The amendment would place in the Bill, rather than in regulations, an exemption for social housing from the levy introduced by the clause.

The levy is designed to meet building safety expenditure. That expenditure is not the ongoing cost of the new building safety regime, which is met through the building safety charge; it is designed to cover the cost of Government support for the remediation of unsafe cladding. That support is provided to leaseholders in buildings with unsafe cladding systems, either through the Building Safety Fund or through a system of low-cost loans for buildings under 18 metres, the details of which are yet to be announced.

For the most part, that support is not available to social landlords, other than to alleviate costs that they may otherwise have to pass on to leaseholders. With the exception of buildings with aluminium composite material cladding, social landlords have been denied access to those funds. For councils, remediation costs therefore fall on the housing revenue account and must be recouped either through rent increases or by diverting funds away from improvements to council housing or the provision of new council housing.

In contrast to many private developers and freeholders, social and council housing providers were the quickest to react post Grenfell. Analysis has shown that housing associations have paid six times more than developers to remediate dangerous cladding. According to G15, the group of London’s largest housing associations, overall, associations have set aside nearly £3 billion for historical remediation costs, far more than the half a billion pounds that the private sector has provided.

[Ruth Cadbury]

My hon. Friend is making really powerful points. I have a number of blocks in my constituency managed by housing associations, but they were generally built by volume house builders, and the housing associations are having to deal with the costs that she mentions. Ultimately, as she says, those costs are falling on leaseholders, many of whom are shared owners and people on fixed incomes, and on the future social tenants of the housing association, because the costs impact the association’s capital programme. Does she agree that that means a slowdown in what is already a very slow social housing new build programme, and concerns about other repairs and capital works to existing social rent homes in the portfolios of the housing associations?

[Rachel Hopkins]

I thank my hon. Friend for making those key points so well. I will reiterate them: the Local Government Association and housing associations have warned that building safety costs will put at risk their ability to build much more affordable housing, as she pointed out. The required subsidy per affordable home currently sits at approximately £50,000; £3 million spent on remediation costs would mean 58,000 fewer homes over the next 10 years. Shelter also estimates that we need 90,000 new social homes a year to fix our housing crisis, and that does not go into what is needed to get social homes to a decent standard or reach our net zero targets, which the Minister will know we discussed in the Housing, Communities and Local Government Committee earlier this week.

The Local Government Association—or should I say the Conservative-led Local Government Association—stated in its written evidence:

“Imposing the developer levy on councils would leave council tenants paying for the failings of private developers. If the Levy is imposed on social providers, their ability to deliver the improvements and additions to the housing stock that the Government requires will be put at risk.”