My Lords, I have listened carefully to the debate and will take this opportunity to address noble Lords’ comments and concerns in more detail. I start by addressing Amendment 2B. I again thank the noble Lord, Lord Kennedy of Southwark, for his constructive engagement with me on this. I reiterate again that the Government remain steadfast in their commitment to deliver the Grenfell Tower inquiry phase 1 report’s recommendations in full. It is understandable that the House wants to see visible progress on this and to have a better understanding of the timing of next steps and of the proposals that we will bring forward.
Today, the Government published their response to the fire safety consultation. This is an important and clear demonstration of our progression towards implementing the inquiry’s recommendations. I am clear that, subject to the Fire Safety Bill gaining Royal Assent, the Government intend to lay regulations before
the second anniversary of the Grenfell Tower inquiry phase 1 report that will deliver on the inquiry’s recommendations. These will include measures around checking fire doors and lifts.
I am also committed to seeking further views, as soon as practicable, through a further public consultation on the complex issue of personal emergency evacuation plans. We already know that some of our proposals from the consultation will require primary legislation. They include strengthening the guidance relating to the discharge of duties under the fire safety order and the requirement for responsible persons in all regulated premises to record who they are and provide a UK-based address. We intend to include these measures, and possibly others that come out of the consultation, to strengthen fire safety in the building safety Bill, which will be introduced after the Government have considered the recommendations made by the Housing, Communities and Local Government Select Committee, and when parliamentary time allows.
I thank the noble Lord for, I hope, not pressing this matter to a vote. He is right in his role to hold the Government to account for delivering on the Grenfell recommendations, and I am pleased to have provided the reassurance that he sought.
I also thank the noble Baroness, Lady Pinnock, for not pressing her amendment. I understand her interest in this area. More generally, we are looking at specific information-sharing provisions in the regulations and later in the building safety Bill, which we see as a first step to meeting the Grenfell recommendations on this issue.
In response to the noble Lord, Lord Kennedy, the other reason for resisting the public register amendment is that anyone from the general public would be able to access fire safety information about a building, which poses a security risk in the event that the information were accessed by someone with malicious or criminal intent. But the Government do agree with the principle that residents should be able to access critical fire safety information for the building that they live in, and we include proposals for this in the fire safety consultation.
I will now address Amendments 4B to 4F. First, I reiterate the intention conveyed in the other place that we share the concerns around the costs of remediation and the need to give leaseholders peace of mind and financial certainty. I have always been clear that all residents deserve to be and to feel safe in their homes. My right honourable friend the Secretary of State for Housing, Communities and Local Government has committed to taking decisive action to deal with the cladding crisis, and, through the Government’s five-point plan, to provide reassurance to home owners and build confidence in the housing market.
First, as has been commented on, the Government will provide an additional £3.5 billion to fund the removal and replacement of unsafe cladding on residential buildings. This will be targeted at the highest-risk buildings—those over six storeys or above 18 metres—that have unsafe cladding. This is in line with long-standing expert advice on which buildings are at the highest risk. This brings the Government’s investment in building safety to an unprecedented £5 billion or more.
Secondly, we have been clear that leaseholders in lower-rise buildings, with a lower risk to safety, will gain new protection from the costs of cladding removal through a long-term, low-interest, government-backed financing scheme. Leaseholders in a residential building that is 11 to 18 metres in height with unsafe cladding will never pay more than £50 per month towards this remediation.
It is important that this government funding does not excuse building owners of their responsibility to ensure that buildings are safe. We have been clear that building owners and industry should make buildings safe without passing on costs to leaseholders. They should consider all routes to meet cost—for example, through warranties and recovering costs from contractors for incorrect or poor work.
As the Minister for Building Safety and Fire Safety, I will ensure that we drive forward to ensure that remediation of unsafe cladding is completed. I am clear that we have an ambitious timescale to do so. In response to the noble Lord, Lord Kennedy, progress has not been as fast as we would have liked, but we are making great progress, particularly given the constraints of the pandemic this year. Around 95% of high-rise buildings with Grenfell-type ACM cladding identified at the start of 2020 have completed remediation or have works on site to do so by the end of the year.
I want to be clear that, while this issue is vital, it would be impractical and confusing to include remediation measures in the Bill. This is because the fire safety orders are a regulatory framework that sets out the duties of a responsible person in relation to fire risk assessments. It does not cover the relationship, including potential financial obligations or prohibitions, between freeholder and leaseholder. The Bill is so important because it allows for effective enforcement where responsible persons are not abiding by their responsibilities. It addresses the situation where responsible persons refuse to remediate, which is an issue that I am sure the whole House wants resolved as soon as possible.
In contrast, the draft building safety Bill is the appropriate legislative mechanism for addressing the issue of who pays for mediation. Through the building safety Bill, the Government will strengthen the whole regulatory system for building safety, and ensure that there is greater accountability and responsibility for fire and structural safety issues throughout the life cycle of buildings within the scope of a more stringent regime. That Bill’s provisions will put the management of risk front and centre. It is important that remediation is addressed using its proactive mechanisms for managing fire and structural safety issues, such as the safety case. Remediation and costs to leaseholders should be dealt in the context of the Fire Safety Bill to ensure that legislation is coherent with the aims and scope of the new regime.
In response to the right reverend Prelate the Bishop of St Albans, I point specifically to Clauses 88 and 89 in the building safety Bill, which relate to charges. These clauses facilitate regulations that would amend the building safety Act and the Landlord and Tenant Act. We will add to what is already in the draft Bill, including additional duties on the accountable person to seek alternative funding before they pass costs on to leaseholders.
While I appreciate the desire that many noble Lords have for a quick legislative solution to the “who pays” issue, we also have a duty as parliamentarians to implement a clear framework and transparent legislation to support fire and building safety reforms. Even more than this, it is important to ensure that the practical implications of any legislation are properly worked through, rather than being rushed on to the statute book in this Bill. In this vein, I am clear that these alternative amendments do not work.
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I thank the right reverend Prelate the Bishop of St Albans for his amendment in lieu. However, it does not take into account remedial works that arise outside the fire risk assessment process—for example, costs identified as a result of a fire or building works taking place. Such cases would not prevent costs being passed on. Further, the amendment is insufficiently detailed and would require extensive drafting of primary legislation, thereby delaying the implementation of the Fire Safety Bill and the crucial measures it puts forward to improve the fire safety regulatory system.
If the amendment were to be added to the Bill and became law without the necessary redrafting, the Government and taxpayers might be exposed to protracted action by building owners and the courts. Building owners could use litigation to claim for costs that they feel they are entitled to pursue from leaseholders under the terms of a lease agreement. While litigation is ongoing alongside disputes over where costs should be, there would also be delays to construction work to carry out urgent remediation and, possibly, interim safety measures.
I also thank the noble Baroness, Lady Pinnock, for her amendment in lieu. However, as with the amendment from the right reverend Prelate the Bishop of St Albans, there are concerns that it would fail to achieve the intention of prohibiting costs being passed on. There are significant legal risks in trying to prohibit the passing of remediation costs through service charges, including an increased risk of facing legal action from landlords without the sufficiently robust legislative detail to override possible conflicts with the terms of existing lease agreements. This, and the need for extensive drafting of all primary legislation, is likely to result in delays, and defects identified outside a fire risk assessment will continue to be passed on to leaseholders.
Moreover, the amendment may be too narrow in its scope by focusing on service charges as the primary site to prohibit landlords passing on remediation costs. They might find other ways to pass remediation costs on to leaseholders, for instance, through additional or exceptional fees and charges, which they might be allowed to pass on to leaseholders under the terms of existing lease arrangements. As such, the amendment has laudable intentions. However, it is unlikely to generate beneficial outcomes for leaseholders.
I have touched on the legal problems that could arise from both the alternative amendments on remediation. I reiterate the complexity around remediation costs, which I believe supports the case that this is not the right Bill to consider these concerns. As I mentioned in my specific points concerning the amendments from the right reverend Prelate the Bishop of St Albans,
there are concerns about contractual disputes and potential litigation impacting the Government, the taxpayer and leaseholders. Stating in legislation what the landlord can and cannot recover from leaseholders could contradict the provisions set out in the contractual terms of a lease. As a result, it would be unclear where the costs should lie, rather than being determined by the terms of the lease.
Furthermore, the amendments do not reflect the complexity involved in apportioning liability for remedial defects. There are a range of views as to how costs should be distributed among leaseholders, freeholders, developers, construction industry contractors and other parties. It would be remiss to introduce legislation that places liability firmly on the landlord without adequate discussion about where the costs should lie or how they should be disbursed.
In response to the right reverend Prelates the Bishop of St Albans and the Bishop of London, the noble Baroness, Lady Pinnock, and the noble Lord, Lord Newby, we have announced measures with greater nuance concerning the distribution of costs. This approach combines government funding, repayments from leaseholders, and contributions from developers and industry through an upcoming tax and levy. While the merits of this approach can be discussed separately, one thing that we can agree on is that the simplistic approach of passing these orphan liabilities entirely to landlords despite the terms of existing lease agreements is not the right manner in which to proceed. Not only would the decision to pass all these costs to building owners be overly simplistic, it would also be counterproductive. It would be self-defeating if landlords who have paid a small amount to collect ground rents from flats decide simply to walk away when faced with remediation bills of this size.
Many freeholds are held in special-purpose vehicles to limit the liability held for the individuals involved, and in these cases they could simply activate an insolvency procedure to avoid the debt. This also highlights the lack of robust detail in this amendment, as it contains no due consideration of what would happen to the liabilities at this point. If these owners walked away, leaseholders would be left in the same position, continuing to live in unsafe properties and with no further clarity as to where these costs should lie or who is responsible for payment.
Working through these types of issues in a proper way will require much more extensive drafting of primary legislation. We must avoid encouraging an escalating quantity of contractual disputes and litigation from landlords who feel that the legislation runs counter to their rights and liabilities, as laid out in existing lease agreements.
However, I agree with the noble Earl, Lord Lytton, that we must look at radical ways of improving the recourse to redress mechanisms, and I thank him for his contribution to this debate. I invite the noble Baroness, Lady Pinnock, to find out more about the building occupied by George to see whether we can help that building access the available funds, such as the waking watch relief fund and the building safety fund, to help support the funding of remediation costs. I also note the problems highlighted by the noble Baroness about Sarah, the resident of Royal
Quays. We are aware of this development and the difficulties that it faces. I sympathise greatly with the problems raised. We are working alongside Liverpool City Council to do what we can to support the building. This includes considering eligibility for public funding.
I also point out to the noble Baroness, Lady Warwick of Undercliffe, that if housing authorities have to pass costs on to leaseholders, they can apply to the building safety fund, so the leaseholders in housing associations have the same access to funding and will be protected in the same way as those in private housing. I am happy to meet with the right reverend Prelate the Bishop of London and any members of the Archbishops’ Commission on Housing who want to discuss these issues in greater detail.
Let me be clear: it is unacceptable for leaseholders to have to worry about the cost of fixing historic building safety defects. These are recent issues, but not just of the last 10 years, but the last 20 to 25 years. This is not something that has cropped up in the last couple of years; it is a generational problem, in many ways. However, I ask noble Lords to recognise that while these amendments are based on good intentions, they are not the appropriate means of solving these complex problems. On invoking “Yes, Minister”, yes, we need political will, but we also need a political brain to recognise that these problems will not be solved by a simplistic intervention, by orphaning liability or by assigning liability to a freeholder who can subsequently walk away from playing any part in remediating the costs of making the building safe.
For practical reasons, these amendments are likely to be ineffective and may even make the situation worse for some leaseholders. Litigation arising from disputes over what landlords can and cannot recover from leaseholders, where legislation runs contrary to the provisions in existing lease agreements, and where there are disagreements over who should pay costs based on the source of a particular safety defect, is likely to be substantive and problematic. This might result in crucial remediation and even interim measures to protect residents from being delayed. I therefore hope that these amendments will not go to a vote.