My Lords, I am pleased to contribute to this debate. We certainly have many important issues bound up in one group. I will focus particularly on government Amendments 76 and 107 and my Amendment 107A. I will use this as an opportunity to open up more widely some of the issues that have already been raised in the debate so far, particularly by my noble friend Lady Pinnock and the noble Baroness, Lady Neville-Rolfe—who I suppose I can call a noble friend on the other side—who is the chair of the Built Environment Select Committee on which we both serve. I thank her in particular for her Amendment 147. There was no agreement, discussion or co-ordination between us, but I hope that she will think that my Amendment 107A and my words in support of it strengthen the case for the Minister agreeing to her amendment.
I am not going to get into the Latin stuff. My top result was 26% and I was referred back to the previous set. Incidentally, the Latin teacher at the time was a Conservative alderman—but I have not held that against him too much since.
On a serious note, this group brings into focus the really big picture on this. It is a set of proposals from the Government that, taken overall, completely tears up the normal rulebook about what Governments do to private sectors. The Bill gives a power to deliberately stop a business from functioning, and that is pretty rare. Sometimes legislation prevents businesses from functioning, but it is usually an accidental by-product of something else. This is, quite clearly, the power to stop a business from functioning if it fails to behave in a certain way.
That is robust and unprecedented and, given the scale and depth of the problem, it is certainly proportionate and necessary for building work in the future. It is also certainly right for products that go into buildings in the future to be treated in the same way. They must be safe and there must be compellingly strong reasons for those who make and install them to do so correctly, in the knowledge that they may face draconian penalties if they do not.
Even for that forward-looking case, Amendment 147 from the noble Baroness, Lady Neville-Rolfe, is certainly right: there must be an impact assessment published before any regulations are tabled for the implementation of that regime. Certainly, we on this side strongly support robust action being taken, but we also want to understand the consequences of doing it, and we want an opportunity for your Lordships to see that the consequences have been examined properly and to judge proposals in the light of that.
My Amendment 107A looks forward but looks backward to the last 30 years as well. It is a probing amendment—or, I might say, a “tip of the iceberg” amendment. It is about product liability rather than construction liability. I also think that everything I say in aid of my amendment applies just as much to construction liability as it does to product liability.
In a previous life, I spent part of my 20 years in the construction industry inspecting work prior to handover to assess whether it had been completed to specification. Most building contracts then had—and still have—a defects liability period, which means that six months after the handover somebody walks around for a second time to see whether any outstanding defects have been remedied properly so that the final moneys can be released. During my time, I did some of both those kinds of inspections, in each case on behalf of the client.
My job when I made those inspections was therefore to reveal and not to conceal. I see that the noble Earl, Lord Lytton, is nodding his head; he has the same experience. That was back in the 1970s and 1980s, and I would say that anyone who believes that standards back then were higher than they are now is mistaken. Actually, they were no higher in the 1870s or 1880s either, despite what the Minister told us in our first
sitting. You only have to remember what slum clearance was all about to realise that poor building standards have always been with us.
In my professional experience, disputes were common and hugely pivoted around various benchmarks when the inspections took place. Was something done exactly as designed or not? Was it in strict compliance with the regulations or not? Was it better or worse than industry standard practice? And, as the noble Earl, Lord Lytton, said a moment ago, had they made reasonable endeavours or not?
I never let through anything that was not fit for habitation, as referenced in Amendment 107, nor a building safety risk, as set out in subsection (4) of Amendment 66 in the next group. However, there was always a lot of scope for argument over definitions, which is highly relevant to this legislation. I once attended a fire door test that was put in place because I had objected to a fire door which blew to bits in a wind. That is when I learned two important things, one of which is that to pass a one-hour fire door test a fire door has to resist fire for only 40 minutes. The one hour is when the frame drops out. The second lesson was never to go to a fire test in your best suit.
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My first question is to the Minister is, can he point to a definition of what “unfit for habitation” in the Bill means? I cannot see it in the Bill or the amendments, but I may not be looking in the right place. Is it the same as the definition used in the Defective Premises Act or the one in the Public Health Act or is it something else?
My second question is, can he spell out the difference between “unfit for habitation” in government Amendment 107 and “building safety risk” in subsection (4) of government Amendment 66, which we are coming to in the next group? I need to ask that because I have no impact assessment or explanatory note to help me on any of those points and the interweaving of the various clauses and amendments is far from transparent.
Government Amendment 76 in this group introduces a building liability order to be handed down by the High Court, no less. I am pretty sure that the High Court will want answers to the same questions before it hands out any building liability orders. What is the basis on which those judgments are going to be made? I think a building liability order is somewhat analogous to an unexplained wealth order: it is intended that however hard you try to disguise it, this problem is yours and you will pay for it. As we know, unexplained wealth orders have mostly been a disappointment, except for defendants.
It is no surprise that the current edition of the trade magazine Building reports that the CEO of Persimmon, the housebuilder, has already written to the department claiming that all of this would be unlawful and that the CEO of Redrow is reported in the same article as saying that these threats are unrealistic. They are evidently not planning to come quietly, it seems. That article has more of the same in it. I want to hear from the Minister that, contrary to their views, these proposals are lawful, realistic and in compliance with the Human
Rights Act, which is also prayed in aid by one of them in that article. I want to hear that the Government are prepared and ready, if necessary, to use the provisions in Amendment 76. I have heard the Minister say that he is discussing this, that it is open and that he wants to hear what we all have to say, and no doubt he will want to hear what Persimmon and Redrow have to say as well, but I look forward to what he has to say about that.
That brings me to government Amendment 107 and my Amendment 107A. They relate to product liability and, in particular, to how wide the scope of that liability will be. On the best reading I can make of the Government’s amendments as a whole, that liability will certainly exist for any higher-risk building constructed in the past 30 years where there is a building safety risk and where defective products are the cause or a contributing cause to that building being unfit for habitation. Do other government amendments that widen the net of the building safety levy to all buildings, not just to higher-risk buildings, mean that a producer or supplier may be on the hook not just for 40,000 higher-risk buildings, but for 24 million other buildings? It seems uncertain in the Bill. My amendment would limit their risk simply to higher-risk buildings. Can the Minister tell us whether there is or is not a clear connection between levy liability and product liability? If the 30-year product liability is to come in for the higher-risk buildings, there are some significant practical problems that I will come to in a moment. If, on the other hand, it applies to all 24 million buildings, then not only are the practical problems multiplied but a wide door opens for what the Construction Products Association has described to me as “ambulance chasers”.
The call to the house owner goes something like this: “Has your home had an extension in the last 30 years? You may be entitled to a refund. Press one to learn more.” In neither case—whether higher-risk buildings or all buildings—is it at all likely that the records of who specified the defective product 30 years ago will exist. That will be the test, of course, because making a product is not the offence; the offence is having it in the wrong place or fixed in the wrong way.
In a discussion she asked to have with me, Kim Motruk, the chief executive officer of the Office for Product Safety and Standards, or OPSS, talked about the scope of that agency in running and organising this scheme. She raised a number of issues that are not relevant to this amendment but she did talk about how in parallel legislation, as it applies in health and safety legislation, there is a capacity to impose unlimited fines with civil action or up to two years in prison with criminal action.
What will happen in future is specified—at present, anyway—in paragraph 7(1)(i) of Schedule 11 on page 215, which makes it clear that that liability will exist in future. However, if it is to exist in the past, there will be an uninsurable risk on the hands of all those who have produced, and may have installed, these products in the preceding 30 years. Of course, that is an uninsurable risk not just for the bad and the guilty but for every supplier of products to the construction industry in the past 30 years, as well as for every builder who put those products into use.
The Construction Products Association is keen to understand what the Government believe a construction product is, because that is by no means a simple single list. There is reference in the legislation to things being “safety-critical”; it turns up in Schedule 11 and elsewhere. The definition of that may include or exclude certain products, or perhaps it is not relevant at all, but the Construction Products Association and I certainly do not know the answer to that. Again, this needs to be sorted out.
As I am sure noble Lords will understand, there is talk of this driving SMEs in particular out of business—or, as an alternative, driving a need for the Government to establish a reinsurance or bond mechanism, perhaps analogous to the business reinsurance available in Northern Ireland in respect of terrorism. In commenting on the Bill, the Delegated Powers and Regulatory Reform Committee noted in paragraph 14 of its report that, although initially subject to the affirmative procedure, Schedule 11 will subsequently not be so. In view of what I think is going to turn out to be its central importance in answering some of the questions I have asked, I suggest that the Minister might want to give assurance on that point.
When responding to this group and my Amendment 107A, I hope that the Minister will be able to throw some light on each of these points. I also hope that he will be able to tell me that he intends to engage with the organisations that supplied me with the information I have put in front of the Committee; they include Build UK, the Construction Products Association, the Association for Project Safety and the Construction Industry Council.
I make it clear that these Benches very much want this legislation to succeed in its primary objective of delivering safe buildings at no additional cost to their existing occupants. However, we also want to see mechanisms and provisions in place that are realistic and deliverable, where any unintended consequences are clearly identified and then mitigated—or, better still, avoided altogether.