PARLIAMENTARY DEBATE
Building Safety Bill (Second sitting) - 9 September 2021 (Commons/Public Bill Committees)

Thank you, Chair. I would like to draw attention to a possible interest: my husband is an estate agent at Hayman-Joyce.

Excuse me, Mrs Miller, but a number of us are having difficulty hearing on this side.

Q We have received a fairly hefty chunk of evidence from a number of different industry players who have set out to us the new regulations, the new technical frameworks and the new qualifications that will affect their bit of the industry, and quite a lot of it is statutory. I was particularly struck by the evidence that we received from the Construction Products Association, which mentioned only a competence framework and a code for construction, both of which appeared to be forms of voluntary “regulation”.

I noted that in your evidence you urged us to

“resist the consequent serious danger of disproportionate reaction.”

I was very struck by that because it was a very different piece of evidence than we received from almost every other actor in the sector. I would be grateful if you could set out whether you believe that those voluntary forms of regulation are sufficient, and what a disproportionate reaction would look like in relation to your part of the industry.

Peter Caplehorn: What I was trying to do was to set the scene. We fully appreciate and support all the statutory moves that are being made. Equally, I wanted to emphasise that industry and a lot of organisations across construction have also been working in the same direction. Perhaps I did not express the point clearly. It was not a case of saying that the other non-statutory initiatives are more important; it is simply the fact that this body of work is going on. I think that that is really important because the objective is to reform, enhance and have culture change across the whole industry. That is brought about by having good statutory powers, and by having the attention of industry and making it move of its own accord.

On the point about overreaction, I wanted to keep my evidence fairly succinct, to be honest, but I was referring to the issues in the industry with insurance. All of us will be concerned about the various reports in the media about insurance issues, and the impact of those. This has to do with the analysis of buildings. Some are clearly in need of remediation, but a lot have been given that label because the industry has overreacted to things that have been going on with regard to safety.

We need regulation; it is crucial. Way back when we started, there was a strong deregulatory movement, and that was unfortunate; it led us to this position. We need good, proportionate regulation, but there should be an equal measure of activity and seriousness from the industry to ensure that its morals, obligations and ethics are in tune with what we all want. I hope that sets the scene for you.

Dr Steedman: I support Peter warmly. It is all about standards, including the regulations. We are looking to achieve a generational change in the culture of an industry, and that will be quite a long process. I applaud the work of the Department and the Ministers here, and their engagement that has brought the Bill to this stage, but we are designing a new structure of powers, which will include standards set out in regulation, standards set out in statutory guidance, supporting regulations, standards that will come from industry, and codes of practice used at an operational level. All of those need to be integrated so that they work together as a full ecosystem.

However, in the end, as Peter says—I totally support his point—you need the industry to want to do this. It needs to want to improve. You cannot police it on every nut and bolt; we know of countries where that happens, and it just does not work. If you want to achieve industry transformation, you need the industry to aspire to become better. We have seen that in important areas, including health and safety, where a change in approach has led to significant improvement in the health and safety of operatives on construction sites. This is an even greater task, in a sense. It is all about creating a system of standards, including higher-level regulatory powers and voluntary standards, that lead to the outcome that we want as a country.

Q I am pleased to hear both of your answers; thank you for them. If I may get to the nuts and bolts, we all agree that there has to be culture change—we have heard that from a number of people—and we all recognise that it will take some time. Given your language—you warn of the “danger of disproportionate reaction”—can you point to any specific measure in the Bill that does not go far enough or goes too far, because that is the issue that members of the Committee have to grapple with?

Dr Steedman: My immediate reaction is that I think the Bill is proportionate, but there is a lot more work to do, and we look forward to working with the Department and industry on the supporting regulations and statutory guidance. They really ought to come along together—that would be very useful—but in so far as we are seeing the approach today, it is proportionate, and I welcome that. I do not think that it goes too far.

Peter Caplehorn: I absolutely support Scott in his analysis, which is exactly right. I add that it is important that industry sees that the Government are moving the agenda forward. I can point to several programmes in the past—nothing to do with building safety, of course—where the Government have announced a programme, industry has invested heavily, and then the programme has faltered. I think that is a shame. Many people with a memory of those circumstances will now see the Bill laid out in the way that it is, with all the elements to it.

Again, I reiterate that I do not think it is disproportionate; I think it sets the scene extremely well, and we can all see how we can work from it going forward. In fact, many people have already taken that up, but it is important that this is now a key moment, so that all the energy and effort from industry really get pushed forward. That is crucial.

Q Are the new regulator, the proposals, the powers, the responsibilities and, indeed, the resources appropriate, and is anything missing from the Bill?

Dr Steedman: There are some points that I think are missing. The regulator role is complex. I think we need a new regulator. In the work that we have done recently on competence standards, it is very clear that there needs to be a regulator. I think that the Health and Safety Executive is the right place to put the Building Safety Regulator. However, this goes beyond a regulator role; it turns into an enforcer role. Part of the complexity of this subject is the risk of creating a two-tier structure where you have structures that are in scope and structures that are out of scope, and a regulator that is regulator and enforcer for some buildings but just an ordinary regulator for other buildings.

I appreciate that building control is supporting this, but on the relationship between the Department and the regulator, in its role as regulator and enforcer for the buildings in scope and ordinary regulator for the buildings not in scope, and where determination will lie if someone is disputing the regulator’s role as an enforcer, that kind of complexity will not help the industry. It needs to happen and we need to work it out, which will take time, but the role as specified is extremely important and well defined, and I think it is being taken up very earnestly. The people involved are extremely excellent. Peter Baker is a well-respected individual, and I think we are in good hands with him.

Peter Caplehorn: Again, I support entirely what Scott has just said. To contextualise this a little, one of the issues that has been upon us for at least the last 20 years is the lack of oversight and sanction that Dame Judith Hackitt pointed out clearly in her review, to such an extent that I think the generality of customer practice across the industry was that regulation can be treated with a certain degree of lip service—that we do not really need to focus on the essence of a lot of regulation, simply because nobody will pick up on it and there will be no real sanction.

This is a key turning point in where we need to go, because the industry needs to recapture a respect for regulation and for compliance. The regulatory situation that is mapped out in the Bill starts to address that, but I share the concerns that Scott has expressed over the complexity. We have to start somewhere. To me, there is a bigger question here about how we reform the whole industry and the mechanisms that come into play. At the moment, that is set out in terms of a definition of higher-risk buildings, with different implications for other buildings. We have to look forward to the prospect of a regime that would be the same in addressing all buildings. That would start to simplify some of the current complexity, but we have to start somewhere.

Q The Bill gives the Secretary of State the power to regulate construction products. Does the Bill contain enough information about the new regime? Is there enough certainty about what products or types of products will be regulated?

Peter Caplehorn: The issue there is that we fully recognise that this legislation is needed and fully support it, but there is an ongoing conversation to be had with regard to the definitions. We have looked at how you would define a safe product and, indeed, a safety-critical product, and there is quite a bit of work to be done to balance out the needs of the regulations with the practicalities.

To give the Committee an example, if we were to take a sheet of plasterboard, it can be used in many different applications. If it is just used as a finishing element, I would suggest that it is not anywhere near a safety-critical item in most cases. Whereas when that same sheet of plasterboard is used in a compartment wall that is used to fire separate two areas of a building, then it very much is a safety-critical product, so there is that diversity within the product sector.

Equally, some products are clearly safety critical and should be strictly controlled and monitored. We need an ongoing conversation as the team develops the regulations, to ensure that the guidance and, eventually, the list of safety-critical products are clearly usable in a practical sense, and also so that there is complete clarity as we go forward.

Dr Steedman: It is an excellent question. We have to think of products as forming a system, and sometimes products that are completely safe in one system might be completely unsafe in another. Electrical cabling, for example, might be suitable in one jurisdiction, in one country, but if you mixed it up with electrical systems in the UK you would have a disaster on your hands. So this concept of safe products is very difficult to define, because products really have to be seen in context.

The onus should perhaps be on performance-based criteria, so we look to specify the performance of a product and them to demonstrate that that performance has been achieved, and not just by the class of product but by the actual individual product placed in the structure, ensuring that compliance is rigorous. This concept of shaping performance requirements and then allowing industry to innovate in order to achieve those requirements is very important. If you prescribe every detail—the diameter of everything, the thickness of this and that—rather than making things safe, you actually lead yourself down the path of blocking innovation and stifling progress.

We want to balance all of that out, and the best way of doing that is through performance regulations, with standards managed independently, that are required to be used in safety-critical situations to demonstrate that the products will actually do the job that the designer wants to achieve.

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.

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.

Q My concern is whether, under the Building Safety Bill, there is a risk of building safety being built for tenure, rather than risk.

Dr Steedman: Sorry, for?

For tenure. If you own a property or if you are a social tenant, it is not available for your home.

Dr Steedman: I would anticipate that the building is designed, constructed and managed regardless of who the occupants are, or how the occupancy is structured. I would sincerely hope that the outcome of this Bill will be to achieve a building that meets our national expectations for public safety, regardless of who is in it or the ownership structure of the apartments inside. It would be entirely wrong if the Bill were to somehow separate out buildings on those grounds, and I would be very disappointed. I have not seen any evidence of that in this Bill, which is focusing very much on the technical aspects of safety, not on the occupants.

It is about building safety systems, the priorities, and if the owners of properties just put in for any grants that they are eligible for—they are, for instance, eligible to claim from the building safety fund—they are not allocated according to risk. It is allocated based on eligibility, or is available according to eligibility, not risk.

Dr Steedman: It is an interesting point.

Sorry, I am not hearing you.

Okay.

Q I am going to be quite blunt, Dr Steedman, having just listened to the evidence you have given. You mentioned safety and you mentioned culture change, so will the Building Safety Bill as it stands fundamentally improve the building safety regime in this country and change what many see as the corrupt culture that led us to the tragedy at Grenfell?

Dr Steedman: This Bill gives us the architecture, ultimately—it will take time—to change and improve the culture of the construction industry. The construction industry in the UK dates from around the Napoleonic times: the structures, the people, and the professions that work in the industry date from hundreds of years ago. I do not want to comment on the history or any assertions about the culture, but I am very confident that the structure of this Bill—the way it is laid out, with the supporting statutory guidance—will effect change. However, in the end, it has to be the industry that makes the change, and the industry needs to lead that process. It is no good simply writing it all in a Bill and expecting some magic wand to make it happen. In the end, the industry has to step up.

Q Won’t that come from the regulation?

Dr Steedman: The outcome of the regulation, including the vast scope of industry standards, will together deliver the culture change, but regulation alone cannot deliver culture change, because you cannot regulate everything. In the end, you have to have a combination of carrot and stick that encourages people to realise that in order for companies and industries to become more successful and have more satisfied clients, they need to behave better, and they need to recognise the importance of safety in their work and the impact of their work on others.

A lot of the work that we have done on the competence standards development—the framework of new competence standards, the PAS standards that Peter referred to earlier for principal designer, principal contractor and building safety manager, and possibly for building control—is about recognising the importance of your work impacting others. Lots of people can do their work, but you can still have an unsafe situation. People need to realise that the impact of your work on others is where a lot of the big risk comes from, so that requires people to think wider than their own profession. This Bill will help us get there.

It is good to see you in person, Kate and Victoria.

Q I have the same question for all the witnesses. What is welcome in the Bill? What is bad, with unintended consequences, let us say around affordable housing and ambitions to build that? What is missing from the Bill? What should be in it?

Q I have two quick questions. The first is about how you think remediation should be funded. Some of us believe that leaseholders should not have to pay for fire safety defects that are not of their making. I note that the National Housing Federation’s evidence stated that the Government should fund it up front and then recoup some of the costs. A second proposal suggests that where those responsible are still a going concern, they should pay for it, and only where companies are not a going concern should the Government pay for it. Would you support that model, or do you still think that it should be the first model, whereby the Government fund everything?

Turning to my second question, we have heard a lot from industry players today who talk about long-term change. I have noticed that although we recognise that long-term change is needed, that is very different from the sense of crisis and urgency that we hear from our constituents who are affected. I want to hear from any of you where you feel this is on that spectrum of emergency, urgency and long-term change.

Kate Henderson: We welcome the considerable funding in the building safety fund. That is a huge commitment from the Government, and recognition of the scale of this challenge. The cost of remediation will far exceed the £5 billion that has been put forward, but it is a welcome contribution. However, that money is available based not on the highest risk but on tenure. It is absolutely right that there be support for leaseholders—we do not think leaseholders should have to pay—but we also do not think social tenants should have to pay. There will be consequences to the fact that this funding is not available to social tenants and social landlords.

Our response to your first question is that we believe that the Government should provide the up-front costs for remediation based on a risk-based approach, with the highest-risk buildings remediated first, and then recoup them. No matter who has done the work, it is about how we expedite this based on risk. That is about prioritising safety and minimising the impact on leaseholders and social residents. The consequence of not having funding for social residents and landlords—this is non-negotiable; the work has to take place—is that money is diverted away from building much-needed affordable homes and investment in existing homes and communities.

This is absolutely a crisis. It is not a crisis of our making; it is a crisis that has been made over the last 30 years. It is a failure of regulation and of construction, development and workmanship. We are going at the fastest pace we possibly can to put it right, but there are huge uncertainties and complexities. One thing I have found incredibly useful is going out on site and seeing buildings that are going through this process with residents living there, and the time it takes to get that through. We absolutely think that this is a crisis, and that work needs to take place as quickly as possible, but the complexities of access to funding and establishing liabilities means that work is not taking place as quickly as it could. The building safety fund is hugely welcome. A number of our members have bids in with the building safety fund, and some have been successful—

Q I want to touch on disabled people. You mentioned some of the tenures of the housing. BSI recently had to withdraw PAS 79-2 on personal emergency evacuation plans, because it did not cover disabled residents. We know that many disabled people perished in Grenfell. Will this Bill ensure that disabled people will be safe?

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.

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?

Q The Minister knows that the Government have introduced legislation to do with putting broadband into buildings where freeholders do not respond. The Government have introduced a presumptive duty, where you can put broadband into a building if the absent freeholder has ignored repeated requests. Might that principle enable that kind of work? Rather than having “take reasonable steps”, if you had a presumptive duty whereby you could have access if an absent freeholder ignored repeated requests, would that help?

Victoria Moffett: That sounds like an interesting concept. We would want to have further discussion of it. It is an interesting comparison. Some of our members have raised the fact that the presumption of access for broadband could minimise the compartmentation that is there to contain a fire to a flat of origin, but the presumption for access in this scenario could be quite a helpful thing.

Q Dan Hewitt from ITN has been involved in a campaign—an exposé, really—on some of the standards across the sector. By your own admittance, they are not acceptable. Will this new building safety regime actually start to alter that landscape with the regulatory framework?

Kate Henderson: Thank you for highlighting the campaign, which is specifically around damp, mould and disrepair in homes. There have been some really unacceptable examples, which are being put right. It is absolutely incumbent on anyone, whether they are a social landlord or a private landlord, to ensure that residents have safe and secure homes.

On that and specifically on damp and mould—I know that is not what this Bill is about—context is important in terms of there being a consistent improvement in the quality of homes. Around 5% of housing association properties have some kind of damp or mould. It is higher in the private rented sector, but is still not good enough and we are working on it. Two per cent. is structural—that is a separate conversation about regeneration—and 3% is about things like condensation. Again, it is never the resident’s fault, but there is more we can do to support that.

In addition to the question of the physical buildings, that investigation perhaps raises the issue of how residents are treated and rights to redress, transparency and accountability. There is some welcome provision here about communication, with resident engagement as part of the Building Safety Bill, but the consumer regulation that will come through the Social Housing White Paper is the really important place for ensuring that we get the right regulatory framework. It is interlinked with this regulatory framework, but it will also come through the regulator of social housing with new consumer regulation. On that front, there is an absolute commitment from us about being open, accountable and transparent, and wanting to have a really strong and positive relationship with residents in the social housing sector.

Q It is good to have both witnesses here. As many MPs have done in their constituencies, I have spoken to people in my constituency of Luton South who are affected by unsafe cladding and other fire safety defects. I note that in your written evidence, you set out a number of key flaws, including in particular something that I have experienced myself. During the passage of the Fire Safety Act 2021, many of us asked questions about covering all remediation costs for leaseholders, and we were told that that was not the right Bill because those matters would fall within the scope of the Building Safety Bill. However, your evidence suggests that that is being palmed off again. Can you elaborate a bit more on that so that we understand it, and do you think there are any other flaws in the Bill?

Liam Spender: Thank you for the question. As you have picked up on, we set out in our written evidence quite a lot of detail about the flaws we saw in the Bill. The fundamental issue is the one that you have identified: we were promised a solution that has not materialised in the Bill. In many ways, the Bill makes things worse. The key way it makes things worse is that it removes any legal doubt that leaseholders and residents of those buildings, who had no part in their design, regulation or construction, will be held responsible for past, present and future costs when things go wrong. That is an appalling failure of public policy.

The panel before ours touched on all the difficulties with the complicated machine that is being set in motion, with building safety charges, accountable persons and building safety managers. I fear that we are heading for a situation where the Building Safety Bill will become a jobsworths charter, and leaseholders will be seen as one giant blank cheque.

Giles Grover: I will not take too long, because a lot of this is about the history since the catastrophic events at Grenfell, after which we had many years of Government—Prime Ministers and Ministers—saying that we must be protected from all those costs, which we played no part in creating, as Liam said. Those promises carried on for a couple of years, but it is kind of clear that as the scale of the issue has widened and more buildings have become trapped in it because they have been built so unsafely, the Government have rowed back on that.

In 2020, that promise was changed to “unaffordable costs”. Before a Select Committee in November of last year, Lord Greenhalgh, the building safety Minister, could not really give an answer on what affordability meant; it was a case of, “Hopefully, people won’t go bankrupt.” Sadly, that has already happened to a number of people, who have lost their homes or had to sell at a massive discount. The really frustrating thing, and what has really shocked us—perhaps we should not be so surprised—is the number of promises that were made during the Fire Safety Act ping-pong process. A number of Ministers—including Lord Greenhalgh again, and Kit Malthouse in February—kept saying that leaseholders should be protected, but that the Fire Safety Bill was not the correct legislation and that the Building Safety Bill would address that.

Despite many months of promises and many months of Ministers telling potential rebel Conservative MPs that they would address the problem of historical costs in the Building Safety Bill, the Bill is here and does nothing to address that problem. There is a little bit of tinkering, and something positive for the future of the Defective Premises Act 1972, but we will still have to pay tens of thousands of pounds in costs—sometimes hundreds of thousands—for issues that go far beyond cladding, as the Government and the Secretary of State have known for a couple of years, if not longer. I could go on, but I will leave it there for now.

Q Thank you, Chair. Following on from that, I will ask an open question, as we have limited time with you. If there were one thing you would improve in the Bill, what would it be?

Giles Grover: The one thing is for the Government to hold true to their word over the years and legislate to ensure that we are protected from historical remediation costs. The intention to protect us was in the draft Bill and in the impact assessment, but it has now been taken out, with the aim of transparency for the building safety charge, and there is still nothing to help people across the country who are being forced to pay bills for tens of thousands of pounds that are landing on our doorsteps daily. We need legislation that finally protects us. I am sure Liam can go into the McPartland-Smith amendments that will do just that.

Liam Spender: I think what is missing from the Bill is everything that is set out in the McPartland-Smith amendments. In particular, the Bill makes it very clear what the legal responsibilities of leaseholders are—the people living in these buildings—but does nothing to make clear what the responsibilities are of the people who put these buildings up and designed them. A critical part of what McPartland-Smith does, as well as providing money for current faults, is to provide a clear legal remedy if buildings are not built properly in the future. I think that is something that stands out like a sore thumb in the current draft of the Bill. That is what is missing, and that is what I would like to see added.

Q In my constituency of St Albans, I have a number of constituents who have been affected by this issue and are facing crippling costs to do with fire safety remediation. They have told me about the impact it is having on the decisions they make about their lives, such as not being able to start families because they cannot move house, and about people who are suffering from severe mental ill health. Liam, you mentioned that this Bill makes things worse in some respects. Can you expand on that particular point and talk to us about the real-life impact it is having on people who are affected?

Liam Spender: You are quite right that the situation is worsening by the day. People are facing existential questions—do they carry on with their property or not? They are facing unpalatable choices. I think one of the ways that the Bill makes things worse is in relation to works that are required to remove building safety risks, an example of which could be cladding. The Bill makes clear that they are all recoverable through the ordinary service charge mechanism, so it removes any doubt that leaseholders have to pay for other people’s misdeeds and mistakes.

We are already seeing the consequences with cladding, so imagine what it will be like with the next thing that comes down the road. You have seen the stories in the newspaper and on “Newsnight” last week that people are already facing six-figure bills, some people have committed suicide and others are declaring bankruptcy. There is a pall hanging over these people and it is a blight on the housing market, which the Bill does nothing to address. I will let Giles add more colour to that answer.

Giles Grover: Again, everything is a long story. A lot of us have been trapped since very soon after the events at Grenfell when buildings were assessed for ACM, and everything has just snowballed and got a lot worse. Every so often, there are incremental positive steps in terms of funding, but you have to fight tooth and nail for those. As Liam said, and as you said in your question, Daisy, it is families, first-time buyers, pensioners—people from all walks of life who just wanted to fulfil that very British dream of being a homeowner or a flat leaseholder; a leaseholder is not necessarily a homeowner. Just the other day, someone told me that because she is so worried and because there is no detail about the loan scheme, she has accepted an offer that is £35,000—it will not pay off the mortgage—on an under-18m building just to be able to move out. She has a little child as well. That is just in Manchester, but it is happening across the country.

As Liam said, there have been suicides, for a mixture of reasons as well, but people just feel helpless. We are currently trapped. You start off being financially trapped, and everyone focuses on the finances. But then, especially during the pandemic, for a year and a half you are sat in your flat looking at the walls and not able to sleep at night from thinking, “What happens if there is a fire?”

This is people in buildings of all heights and all tenures, with defects of all types. As much as it started as a cladding scandal—we are called End Our Cladding Scandal—it has become a building safety crisis. It is not just cladding; it may be balconies, internal compartmentation or lack of fire protection for steelwork. With all these issues, once they are identified and once you have a proper fire risk assessment—a type 4 intrusive one—you start uncovering the lack of regulations, the lack of oversight and the poor development practice, but we are still being made to pay for it. We are still the ones on the hook for it, despite it being none of our fault. It is an absolute disgrace, and it is unfathomable that it is still happening. Government have done something, but not enough to solve this issue once and for all, to provide that certainty to leaseholders and the housing market, and to help us move on with our lives.

Q It is good to see you both, from afar. I have a question for you both: does the Bill ensure that the polluter pays? They are still receiving billions of pounds of Government subsidies. Is that clearly outlined in any provision in the Bill to ensure that leaseholders are protected and the polluter pays?

Liam Spender: No. The same builders that have put up buildings with the horrific array of defects that we are seeing are still perfectly entitled to draw on the Help to Buy scheme and the recently announced subsidies for affordable housing. There has been no accountability or payment from the polluter. All that has been offered, which is not in the Bill, is the residential property developer tax, which we do not know the details of. But it is wholly inadequate that it will recover only 13% of the estimated £15 billion cost. The bulk of the cost of the current crisis and/or future crises is being dumped on leaseholders, which is what this Bill does.

Giles Grover: I agree with Liam. It is not holding them to account at all. The latest figures are approaching £15 billion, and developments have made £2 billion since the catastrophic events at Grenfell. Government have supported them through the Help to Buy scheme and through instantly having a stamp duty land tax relief, and there is a mortgage guarantee scheme for first-time buyers that is open to everyone. The figure that always bothers me more than anything is the amount of money that the Exchequer loses every year—billions of pounds—to the zero rating of VAT on construction.

A lot of those things have laudable aims, but do they actually help the supply side? They do not; they are all about demand. Government are happy to praise the economic effects—the jobs, the flow of taxpayer money—and it certainly pans out to support the construction industry. The collective state of industry failure is affecting hundreds of thousands, if not millions, of people. It has taken two and a half years of kicking and screaming to get a bit of money out the Government every so often. Every year there is a little bit more. They keep telling us, “We’re not going to give you any more; we aren’t going to help you out”, but then we get further. There will be a point next year, hopefully, when the Government will say, “Here’s a little bit more”, but everything is a little bit here and little bit there. We are not being helped.

Why are we being forced into a planning tax loan scheme? Why are the Government not forcing the developers to pay that? The simple point goes back to: it was never our fault, it was never anything we did. The regulations are terrible, weak and inadequate. A lot of people knew that for years; the Government were advised of that for years. Builders were allowed to do whatever they wanted and to cut corners. Dame Judith Hackitt says there is a race to the bottom, focusing on profits over safety. But now, we are the ones on the hook to make that right. I do not get how that is at all fair. We need more funding from Government, we probably need more funding from the developers, and we need more funding from the product manufacturers as well. Leaseholders should finally be protected.

Q Good afternoon. Broadly, what are your views on the responsible person or persons? What do you think of the responsibilities placed on them? More specifically, is it reasonable to expect all accountable persons to be sufficiently knowledgeable to assume the responsibilities in the Bill?

Liam Spender: I think the whole responsible person regime has not been properly thought out. You cannot see, as parliamentarians, the full detail—that is being developed behind closed doors with industry. You are being asked to put this through without seeing how that very important relationship will work. The fundamental issue with the accountable person and building safety manager is that you would expect to find that regime in a petrochemical refinery, not in a residential building. It is totally unsuited to what needs to be done, massively over engineered, and the cost of it will fall on residents. The Government need to go back to the drawing board and come up with a much more tightly defined set of duties for these people, in order to avoid a situation where we end up with the advice notes, on steroids—which is a real risk.

Giles Grover: I would echo those comments. The difficulty is, again, that the legislation and the guidance are still not really there to help us understand how it will work. There are potentially moral hazards between the roles of those accountable persons—the building safety managers—in terms of how they will coalesce. There might be different accountable persons, or responsible persons, depending on the building. It still feels like there is no effective control. I do not think anybody wants to be an accountable person right now; the competencies required are a pretty wide skill set, and I fear that they will not be able to get insurance. I think we need a lot more work on how the accountable person will interact with the responsible person.

Q Thank you so much for coming today, Giles, and for your candour. I want to talk about how the Bill addresses some of the inherent power and structural inequalities that we see, particularly when it comes to the industry. Broadly speaking, we have heard some positive overtures about how we change behaviours and the possibilities that are there. How do you think this Bill should go further to do that? From a personal perspective, I have seen what those inherent inequalities do day to day; I have lived through that. What it sounds like from your responses is that there is a system that needs to be ripped apart. How do you think, within this Bill and subsequent legislation, that can be done?

Liam Spender: Thank you for that excellent question. There are three critical things to address. First, there need to be leaseholder resident representatives on the rule-making bodies. This avoids a situation where industry and Government make rules that suit them, and pass the bill on to leaseholders who are left with the inadequate tool of challenges to the building safety charge and service charge, to contest bills that have already been paid. Secondly, the Government are trying to perform some sort of Frankenstein operation, with the Building Safety Bill, on a system that has had its day—namely, leasehold. There is a fundamental imbalance of power in the leasehold system in favour of landlords. Until you address that, you will not solve the problem of rules being made to suit landlords and bills being passed on to residents with no oversight, and no control. Thirdly, Dame Judith Hackitt identified in her report the culture of box ticking in the industry, the race to the bottom and value engineering—all that sort of stuff. Until that changes, nothing changes; buildings will continue to be built that are not fit for occupation and we will end up repeating the cycle at some point in the future. Those are the three things that need to be changed. I think that the McPartland-Smith amendments go a long way towards changing them, by introducing clear, legal routes to recovery against builders if they do not do their jobs properly.

Giles Grover: I will just echo the comments on the fact that the whole leaseholder structure means that you are still at the bottom of the food chain. There is all this talk about the building safety charge, but, as Liam said, ultimately it is about leasehold law—despite the Government thinking there might be protections in landlord and tenant law, we have seen that there are not the supposed protections there should be, because all the cases are based on the terms of the lease, which are always written against us. There needs to be an overarching look at the fact that it is not just the building safety charge, it is about service charges and how they are levied. There needs to be a bit more control over that, so that there is the actual ability to challenge it, rather than saying, “You can potentially go to the tribunal.” Ultimately, the cases we have seen do that just end up being rebuffed.

I am still concerned about the insurance issues we are facing now. There does not seem to be enough control. We have seen buildings insurance soaring by hundreds of per cent. I am not sure what protections there are against that happening. We have tried to report it to the FCA and the CMA, but are simply told that the responses are not as constructive or helpful as they could be.

Everything needs to be looked at again—even the building safety charge itself. When it was first drafted, I remember a meeting with one of the deputy directors of MHCLG where they said they did not really know much it was going to be. It was an academic exercise. Even the numbers in the current impact assessment say it will be £16 a month. It might be £42 or £26 a month. For existing buildings it should be more. No one really knows. As some industry figures have started to look at it, it might well be hundreds of pounds a month. There needs to be an overarching, holistic look at service charges and building safety charges. That would be the first thing.

To go back to Liam’s point about the McPartland-Smith amendment, that is what we are hoping the Conservatives will look at and realise that, yes, residents must be protected now, because they are the innocent people.

Q Thank you, Liam and Giles, for the extremely powerful evidence. I really hope you are listened to when we come to the amendment stage of this process. I want to touch on the voice of residents, which we have not really talked about. How important is the engagement of residents to the operation of the occupation phase of the new building regime? Does the engagement process outlined in the Bill do what is required?

Giles Grover: Thank you for the question, Ian. Resident engagement is key. As we saw last night—those of you who watched “Grenfell: The Untold Story”—if there had been sufficient resident engagement in 2015 and 2016, would the events of June 2017 have happened? I do not think they would have. It is important to have resident engagement, but, as we have seen, as lot of these things are very much tick-box exercises. Recently—or not so recently—the National Fire Chiefs’ Council updated its guidance on simultaneous evacuation and interim measures such as waking watch to say that residents should be consulted and cost-benefit options should be explored. That never happens in practice.

What is there actually to make it happen? The Government do not want to legislate for a resident group in each building. I can understand the reasons for that, but what is to stop the responsible person, the council entities, from just saying, “We have tried to engage residents. We put a few flyers up and gave a form out.” There needs to be a more positive obligation on them to actually engage residents than there seems to be now.

Liam Spender: I wholeheartedly endorse all of that. The answer to Ian’s question is that the residents engagement strategy in the Bill is not up to scratch. The problem is that the rules are being made now by statutory instruments in close consultation with industry. There is no amount of resident engagement strategy or vision that can overcome that issue. Once the regulations are made, there will be limited room for manoeuvre. I think there needs to be resident representation on the rule-making bodies to ensure we actually have a genuine residents’ voice, rather than a couple of cul-de-sacs that freeholders, managing agents, responsible persons—whatever title they are being given in the Bill—can lead residents down without there being any meaningful input.

Q I just want to come back on the really good question that was asked about resident and tenant representation, because we know that when that is done well, it ensures that people can live in safe communities and make the representations that they need to. We also know what it looks like when it is done horrendously wrongly and the power of a few is collated around a small minority, who seem to dictate what happens for everyone else in a community.

May I just ask you both: where should the driver be to ensure that tenant representation is effective? Should it be prescribed from national Government, in the context of this Bill? Should there be a mix? We have so many different types of ownership and of tenant model; I have three that are utilised in my own local authority alone. How do we ensure that every single person who needs that representation actually gets it, and where should the prescription for that come from—from national Government downwards, or from local government upwards? How do we do that? As you said in response to me before, the core of this is the importance of ensuring that those communities are accurately represented. So I am interested to hear from you both your thoughts on that.

Liam Spender: Thank you for the question and for engaging with the detail on this; as you say, it is vital. There is no one better placed than the people living in buildings to have a view on what is safe and what they think needs to be done to make those buildings safe.

I think there needs to be clearer language in the Bill about taking into account the resident’s voice, because at the moment a lot of the language in the Bill is passive; it is about residents being given information and not particularly good rights of consultation. There needs to be something in the Bill that creates a genuine partnership between the managers and the people living in the buildings.

To reiterate the point that I made in previous responses, residents need a voice on the groups and committees that make the rules, so that from the ground up and from the get-go the rules are shaped by that voice as they are being made, rather than just presented at the other end.

The last point I will make is that there needs to be better and more readily accessible advice for leaseholders and tenants. Perhaps specific programmes can be set up to provide that advice, so that people know where to go to get help when things are not working, and we do not end up with relationships breaking down, and so that we can have a genuine partnership. I think that would be a helpful addition.

I will let Giles add anything that he wants to add.

Giles Grover: I echo all those comments. Again, I have seen for myself the difficulty of engaging all residents; there is the turnover of residents as well, and you might have absent leaseholders. I appreciate that it might be difficult to do it on a statutory basis, but a lot more guidance and help could be provided to those responsible persons. In general, whether at this point there is that engagement with residents, or whether it is about tackling the issues that we are still facing, in terms of fire safety in our buildings, there probably needs to be a lot more partnership with local government and central Government. Local government—local authorities—and the fire service are able to be more reactive. They are on the ground and already have that relationship with the responsible persons and the managing agencies. That whole approach of saying, “Okay, this is what central Government are doing and this is what local government is doing, supported by the fire services,” could actually help drive a lot of it forward. Councillors have that local knowledge, as they are the ones residents turn to directly, as well as their MPs. Engagement with all stakeholders could be a lot better than it seems currently designed to be.

Q Have you considered or anticipated any possible increases to service charges or rent as a result of the Bill? If so, do you have any idea what that impact might look like to you as leaseholders or tenants?

Liam Spender: I think the simplest answer to the question is that we can expect the cost of living in higher-risk buildings, however defined, to be significantly higher in the future than it is today. We cannot really give any credence to the Government’s estimates that it will be between £9 and £26 a month. If you read the press articles, some of which quote industry figures you will be talking to next week, they are already talking about £500 a year extra just to pay the administrative costs of the new regime. That might not sound like a lot of money, but for some people—particularly shared owners who struggle to get on the ladder—it is make-or-break money. It is a lot of money if you have not got it—that is one way of describing it.

If that sort of burden were being imposed on a company, there would be uproar about it and there would be a great deal more scrutiny of it, but billions of pounds of costs are being loaded on to leaseholders as a result of the new regulatory regime, and the question that needs to be asked is whether we really need to spend that money. Do we really need to spend other people’s money—people who may struggle to pay—on this particular issue? I will hand over to Giles and let him add anything he wants to add.

Giles Grover: It is difficult to consider it, because last year it slightly changed. Last year, it included the historical remediation costs, and there were some vague, wide-ranging, heavily caveated figures about what it might be. Those figures are still heavily caveated. I suppose the difficulty I have is thinking about the future building safety charge when I have to pay a lot more already. A lot of people are already paying hundreds of pounds, so it is hard to have this conceptual thought about what may be put in place when they are already facing hundreds of pounds a month. Until there is more clarity about what it actually is, until there is more control over the building safety charge, and until the problems I am facing right now and the thousands of pounds I have to pay right now are resolved, I will not really consider it fully.

Q Thank you, Chair, and welcome to our witnesses. I have an easy question for you. Will the Bill fundamentally improve the building safety regime in this country and change the culture of profit over safety that we have witnessed over the last 30 years? If not, what will?

Q I have a question about statutory instruments. One of the issues that many of us are trying to grapple with is what should be in primary legislation and what should be in secondary legislation. We have heard from representatives of the Cladding Action Group and other leaseholders that they want to have a voice when it comes to fleshing out the statutory instruments. At the moment, they see it as a stitch-up between the Government and the industry. On the other hand, we have received evidence from industry bodies that this is a necessary evil, because they think they will have to flesh out some of these things as they go, and the critical thing for them is to ensure that there is sufficient scrutiny of statutory instruments. I would welcome your view on where you are on that spectrum. Do you see the process moving forward by giving residents a voice or having further scrutiny?

Justin Bates: There is probably no way of doing this without significant SIs, because to legislate at the level of detail that you probably need, you would have a 10,000-page Bill—you guys would still be in Committee at Christmas. There is also a value to doing it by SI for an element of future-proofing, because it will be easier to update it as things change. I do not see why you could not have at least a draft of the SIs to accompany the Bill, to be considered as part of the scrutiny. One assumes that the thinking as to what will be in the SIs must be reasonably advanced. The moment you have them, this Committee or some other Committee is as well placed as anyone else to do that kind of scrutiny and to bring in the leaseholder and external voices. At the risk of sounding like a typical lawyer, I suspect I am sitting somewhere in the middle.

Giles Peaker: I think I would agree. There are very significant operational elements of this Bill that will be done by statutory instrument, so we are largely in the dark about the way in which it will play out and operate, inasmuch as we have no idea what will be in the SIs. The difficulty with scrutiny of SIs is, I suppose, a parliamentary problem rather than a legal one, but I support Justin’s suggestion that at least drafts, indications or outlines of where the SIs will be going would be significant at this point.

Q I am slightly repeating what I asked earlier, but on clause 84 of the Bill and reasonable steps, from your perspective as lawyers, is there a way to scope the drafting of this legislation, either through primary or secondary legislation, so that we limit the need for judicial intervention later on? The phrase “reasonable steps” always strikes fear into me, and we could end up just going round and round. Is there scope there to try to define that, either in the body of existing precedent or from what we know from a policy perspective, to try to scope that definition of reasonable steps in respect of this legislation?

Giles Peaker: I suspect that would be a matter for guidance; guidance would not necessarily avoid the risk of litigation on the issue, but it would mitigate it. The risk for all involved, particularly those who will end up paying for it, is that “reasonable steps” will be seen to be taken as doing every single thing possible to avoid any prospect of being sued or losing one’s insurance, and with that sort of risk avoidance there is a clear risk, particularly when you are looking at potential criminal liability in some aspects. We need some sort of clear guidance on the extent of “reasonable steps”. The difficulty is, of course, that you are looking at a wide range of potential safety issues, and I do not think you could draw a bright line under every single one. Inevitably, without something beyond clause 84, the accountable person will be running scared of what the potential consequences for them will be, if they do not do literally everything.

Justin Bates: The phrase “reasonable steps” is one that the draftsman of this Bill really likes, because it crops up in quite a few places. Contrast clause 84 with clause 124, inserting proposed new section 20D(9) into the Landlord and Tenant Act 1985. That is the one about how you regulate service charges, and in that one the Secretary of State is giving himself a power expressly to issue guidance about what will be reasonable steps. I cannot see that he has done the same in clause 84. He is making the accountable person go back to the prescribed principles, but prescribed principles are not the same thing as guidance. I do not see why you could not add a new subsection (6) to clause 84, stating that the Secretary of State may issue guidance from time to time about what constitutes a reasonable step for these purposes. That would be quite useful—and if you wanted to make him lay it before the House before it takes effect, you could even scrutinise it.

Q Good afternoon, gentlemen. Which parts of the Bill do you feel will be the key areas of interest for the legal profession? Following on from that, which do you think will take the most time to understand and prepare for?

Giles Peaker: It will partly depend on who you act for.

Justin Bates: It will depend on who you act for and what you do. For both of us, our primary focus is on residential property law—leasehold, freehold, tenants and so on—so I am really interested in from about clause 120 onwards, the service charge and the building safety charges. Those are all my Christmases come at once, in terms of the amount of litigation you are creating for me, which is probably not what you intended. I want to come back to who you act for. If you act for a developer, one of the things that will worry you is the extension of limitation periods under the Defective Premises Act 1972. At the moment, it is six years from building control sign-off and, in practice, very few people know enough about the problem within that timeframe. 15 years is obviously better than six. If you have developer clients, you will advise them to do as much building as possible through SPVs and then wind them up, once finished, because your exposure after the Bill will be much more significant. That is even more true for refurbs, because you are extending the Defective Premises Act to include refurbishments, not just new builds. That is an aspect that will very much interest the legal profession.

I think there is a lot here that will end up in litigation, and there is not a lot you can be done about that because this is a pretty significant change to the structure of how buildings are regulated, and to the structure of the landlord-tenant relationship. You cannot lawyer-proof this, but you might not need to be quite as generous to lawyers as you are being. In a moment, we will come on to where you could be more exacting with your wording, to be clearer about what you want.

Q What more could be done to protect leaseholders from historical remediation costs and ensure that those responsible for this mess are pursued and pay? You have referred to suing them. How would you strengthen the role?

Giles Peaker: The extension of limitation is a start. The problem with suing developers and builders has always been twofold; limitation is one, because problems usually do not manifest themselves within the first six years. The other problem is finding somebody worth suing, and that is the big problem. I get a lot of inquiries about potential new build cases. Most of them are out of time, but most of them also do not have anybody they can actually sue, because developers have liquidated or wound up. One thing that could be considered—although it is difficult and goes against some fundamental tenets of English company law—is to allow tracing profits, to make parent companies liable for special purpose vehicles. That would be one way to cut out the simple “take the profits and run” approach. Justin suggested properly enabling the suing of building control; that is currently off the table, but it might improve the attention to detail, although the professional insurers are already going bust.

Justin Bates: Again, if you are feeling adventurous, you could make directors liable for the acts of their companies—make them personally liable for any building defects. That is not as radical as it sounds—you did that to directors of rogue landlord companies in the Housing Act 2004 and the Housing and Planning Act 2016. I appreciate that every company director hearing this is having a wince and every company lawyer is pulling their hair out, but you have done it twice in relation to rogue landlords, so it is not that big a stretch to go to rogue developers.

There is a danger in asking litigation lawyers for policy advice because every problem that I see involves suing people. That is what I do for a living, so take everything I am about to say with a large pinch of salt. Fundamentally, Parliament has to decide what is the nature of the current building safety crisis that it is dealing with. Is it one that requires a collective response or an individual response in individual buildings? The Bill is about individual buildings. If you are lucky enough to be a leaseholder or freeholder who benefits from the Defective Premises Act 1972 extension and you can find someone worth suing, there is some good stuff for you in here. I personally think that would be, at most, 15% of affected buildings at the moment, and you have got the June 2020 National Audit Office report if you want to see MHCLG’s response to that. It thinks that even that would be a higher figure.

Likewise in clause 120 and the restrictions on when you can pass service charges on. There will be some buildings that benefit from that, but it is all happenstance. You are not solving the collective problem. You are creating some remedies for some buildings. If you think this is a collective problem, the only way is for some collective body to take control of it, such as central Government, to fund works, at least up-front—that would be one solution—and then recoup.

You could have a scheme, which I understand is a variant of what is in Australia, whereby central Government fund works on affected properties but a condition of the funding is that it requires all affected parties to assign their rights to central Government, who then get round to suing when they feel like it, because central Government do not really care if their litigation takes five years to work through. Central Government will still be here in five years’ time, whereas individual leaseholders do not have five years to wait for cases to pan out. There is lots you could do if you want to adopt a more collective approach, but you need to be clear that this is a very individualistic response here. That will help some people, but probably not many.

Q Could you expand on how, or even if, clearer accountability for a building across its design, construction and occupation will help improve safety?

Justin Bates: If the Bill works in the way it is envisaged, you should at the end of the construction stage of the building be able to go to one place and have all the documents relevant to that building. You should have the plans, the design and so on. One problem that you have seen coming out of the Grenfell inquiry, for example, is that no one had all of the plans for the building. Firefighters went in and discovered there were two floors that did not exist on the plan that they had. If this works, this will be better for pulling together a centralised and collective set of records, which will help. That is the obvious one that I can think of, comparing it with a problem that we know exists. Can you think of any others?

Giles Peaker: There will be more accountability via the accountable person, certainly from the point at which the building is occupied. I am not clear how far that accountability will transfer back to the people actually responsible for the problems, if there are problems. The basic idea of having a person accountable for the building’s safety is in itself a good idea, but the complexities that follow on are immense. I am not sure that the issue of establishing who is the accountable person, particularly in properties where there might be multiple people who would be candidates or would fall under the list of who would be an accountable person, has been adequately solved.

How can I put it? I am fine on the principle; I am less certain about the practice, particularly as we are still waiting for statutory instruments—quite a lot of them—on how the accountability will be seen through. A lot of it will be down to the approach taken by the regulator. As we have seen with the regulator of social housing and so on, that can be quite a variable approach.

Q You said, “if this works”. Could you expand on the risks around that?

Justin Bates: Until we see all the secondary legislation, you cannot start to work out where all the problems will be. You have Dame Judith Hackitt’s report in the background. Dame Judith effectively concludes in her interim report that we have a building industry that cuts corners and throws up the cheapest buildings it can, to sell for the most profit as quickly as it can. That is the cultural problem. If you have still got that culture, people are going to find a way to get around the law. That is what they do. If you are really worried about building standards, you have to address that cultural bit first.

I am not saying that I have any answers to that, which was one of the earlier questions. Legislation by itself cannot make people be morally good, but you can impose enormous and painful penalties on people who do bad things. For example, building control is liable to pay damages if it turns out it was negligent in some respect. That will focus a lot of minds. It will end the practice that is rumoured to exist of some building control being very keen to say yes, because it does not want to get the reputation of being the person who says no, because then they do not get any other work.

Giles Peaker: There is indeed case law on building control signing off on non-existent flats without having seen them. Despite being clearly negligent, and potentially fraudulent, no liability was found. Yes, there is certainly a case for focusing building control’s minds on what it is they are doing.

Q The Bill as drafted would to my mind enshrine a legal principle that leaseholders who are not at fault have to pay for defects not of their making. Could you talk us through the legal implications of that in terms of what leaseholders may choose to do if the Bill goes ahead unamended, and for housing and building law in general?

Giles Peaker: The current position on leaseholders potentially having to pay for building defects is somewhat hotch-potch. By and large, for the huge majority of leases, they will have to, because it will be under the lease. There will be some leases where that is less than clear and some where they may not have to. So far, there have been no such successful cases at the first-tier tribunal or the upper tribunal, but it is theoretically possible—I am not ruling it out.

The Bill certainly takes as read that the cost of remedial works will pass under the service charge. There is no envisaging otherwise; it is simply the case, as far as the Bill goes. In terms of inserting, for instance, a direction by the regulator, it makes it 99.9% certain that the costs will indeed pass under the service charge. Not so much by specifying but by presenting the framework by which the remedial works will be assessed under the serviced charge, yes, it does enshrine that principle.

Justin Bates: Clause 124 is the critical one for this. Clause 124 assumes that the leaseholder is going to have a contractual liability under the lease, and it is right to make that assumption. In 99.9% of leases the starting point position will be that the leaseholder pays. By one route or another, there will be a clause in the lease that could be used. I agree it is theoretically possible that you have a lease that does not allow for that. I do not think it is very likely.

Clause 124 does not actually do anything to stop that. It takes the contractual position—that the leaseholder pays—and says, “We are going to ameliorate that in a relatively limited way.” First off, it only applies to a particular type of work, which is going to be specified by the Secretary of State in regulations. We do not actually know what kind of work it will apply to yet. I know it is not just cladding we are talking about here, but for simplicity’s sake let us say the Secretary of State passes an SI that says it applies to cladding replacement. In those circumstances, the Bill puts the freeholder under an obligation to look at alternative sources of funding. He has to go and look at granting funding—building safety fund money would be an obvious example. He has to look at insurance funding that might be available. He has to look at any other third parties that might have to pay because the developer could sue them, and he has to look at anything else the Secretary of State specifies, which is why it would be useful to know what the Secretary of State intends to specify. But it is only a duty to take reasonable steps to see whether any of those parties can pay up. What will reasonable steps mean in these circumstances? Once the building safety fund is exhausted, there is no publicly announced plan for any further grant funding. You know the building safety fund will get exhausted, because the Select Committee has done the work on that.

On insurance, it is good to have it enshrined in law that you should be looking to your insurers to pay up—frankly, case law has got there already, so it is not much of a development but it is always useful to have it confirmed in one place. The one that troubles me is the idea that the freeholder has to take reasonable steps possibly to sue third parties. What will reasonable steps mean here? Presumably, the freeholder will go and get legal advice from someone, and lawyers being what they are, they will say the prospects of success are somewhere between x and y. If he says there is a 51% chance of success, does the freeholder have to do it? Bear in mind that the legal costs of a failed claim will almost be certainly be a service chargeable cost. If he says it is 70%, does the freeholder have to do it?

If he does have to bring litigation, in the meantime, what will you do about the actual work on the building, because suing someone does not get a building made safe? In the meantime, all the leaseholders—your constituents who write to you about waking watches and higher insurance premiums—will keep paying that while the freeholder and the developers have a fight about who should pay the ultimate work.

I understand what it is trying to do: it is trying to give freeholders a meaningful kick to make sure they exhaust other sources of funding before they go to leaseholders. I just see this generating a lot of litigation to achieve very little.

Giles Peaker: To follow that through, clause 124 appears to make it an obligation for the accountable person to actually carry out works in the meantime while searching for the other sources of funding. Where is that money coming from? It is not going to happen. There will be no money, unless they charge the leaseholders in the meantime and then refund them, but they cannot do that.

If you are looking at potential litigation by the freeholder, I do that kind of work—you are looking at two or three years before there is an outcome, whether successful or not. Costs of failed litigation could be immense and will go through the service charge—that is entirely right under this Bill. But if the accountable person does not bring litigation, you are looking at the leaseholders prospectively bringing a challenge in the tribunal that they do not have to pay the remedial costs, whatever they are, as specified in the statutory instrument, because the accountable person has not complied with the relevant section of 20D. You are then asking the first-tier tribunal to reach a finding on what the landlord’s reasonable prospects of success would have been had they pursued a claim against the developer, as a condition of whether the charge has to be paid. That is a huge stretch for the FTT. How do you evidence that? The leaseholders bring along someone like me who says, “I put it at 70%.” The freeholder brings along their solicitor who advised them and said, “It’s a 40% chance.” What is the FTT to do? I cannot see that working. It is years and years of litigation one way or another.

Q To ensure that this is absolutely right for the parliamentary record, am I right in saying that, if the leaseholders want their freeholder to take reasonable steps and the freeholder refuses, they might end up having to pay for litigation to prove that the freeholder has or has not taken reasonable steps? If the freeholder then does take some reasonable steps and gets some legal advice, they then may choose to take action or not, and if they take a decision that the leaseholder disagrees with, that may also end up in litigation. If the freeholder decides to try and take legal action against those who they deem responsible, and that fails, the leaseholder may have already gone through one or two stages of the investigation, and if that fails, they are then facing the costs, as you said. I do not know whether you said “epic” or “massive,” but there was a word you used—

Giles Peaker: Immense.

Immense—there you go. I was almost there. They are facing immense costs on top of that. Am I right in saying that those are the choices you have just outlined facing leaseholders under this Bill?

Justin Bates: All of those scenarios are plausible on clause 124 as drafted, yes.

Thank you.

Q I just want to follow on about the interaction between the Fire Safety Act and the Building Safety Bill. When you have those complex structures, the accountable person and the responsible person under the fire safety legislation could be different, and the Government are suggesting that this is addressed with the duty to co-operate. As someone who has been a councillor for a long time and is no fan of the duty to co-operate—it does not work, and I am pleased to see it being ditched in the planning White Paper—I am surprised to see this duty to co-operate appearing here. Do you think this will work? Could it be problematic?

Giles Peaker: I suppose that it would be straightforward in a number of situations, because the building safety manager would, in effect, be appointing the person to carry out the fire risk assessments and would effectively work as the responsible person. However, there is obviously the potential for adding yet more people with yet more responsibilities in relation to the building.

Justin Bates: I am not sure that is a question for a lawyer, because a lot of it depends on the personalities involved. Joint working can work: think of the GLA’s taskforce, for example, which is doing good work on fire safety at the moment. They have local authorities and the fire brigade working together. There is no inherent, logical reason why joint working is bad. Much of it depends on the personalities involved and the political will behind each organisation to make it work. I am afraid that I am probably not the person to help you with that question.

Q Could a developer facing potential litigation utilise human rights legislation?

Giles Peaker: We have been wracking our brains about this one. I know the clause that you are referring to. We are not entirely sure why it is there. I think it is probably just to avoid there actually then being a human rights challenge to BSA on whatever relatively spurious basis. I cannot see a valid human rights challenge, and certainly not in terms of the removal of the six-year limitation. A limitation defence is not a property for the purposes of article 1 of protocol 1; they could not pull an article 1 complaint.

I do not think that there are any article 6 issues, because limitation does not stop you being liable; it just stops you being sued. You are still responsible for the problems. If the period for which you can be sued is extended, where is the article 6 problem? You will still get your fair trial in court. After wrestling with it, I cannot see one.

Justin Bates: What has almost certainly happened is that because we are designing for legislation with retrospective effect, the draftsman of this has realised that retrospective law is something that does flag up human rights concerns. You can do it—your Parliament is sovereign; you can do whatever you want—but it does flag up human rights concerns. Rather than having a fight about whether there is a human rights defence or not, the draftsman has said, “If anyone ever manages to succeed in one, this will be the outcome”.

These words could be hostage to fortune, but I suspect that it is a clause that will not go very far because you would see more litigation about whether the defence was available at all. This assumes that the defence is available, and it has decided what the outcome will be. I can understand why it has been put in there, because if it is not in there and a developer brings a human rights defence and wins, what happens is that the developer is still liable in damages, but a declaration of incompatibility is made, and you then have to deal with your incompatible legislation. I can see why the possibility of that has been headed off at the beginning, but I do not think it will go anywhere. I know that Giles takes a slightly different view.

Giles Peaker: I do take a slightly different view. I have a horrible feeling that that clause will invite people to try, which would inevitably mean at least three to five years of litigation on that issue, but we will see.

Q I want to return to Rachel’s question on the duty to co-operate. Just to push back a little bit, it is not really about joint working; it is about a legal obligation to work with another party. The reason why it is such a headache in planning law, as I am sure you know, is that you often have two authorities that are diametrically opposed in terms of what they are legally obliged to do. Both are legally obliged to build more houses, and they both want to offload onto each other. It is possible that they might both fail their duty to co-operate.

My question, to follow up on Rachel’s point, is this. Based on what is currently published in this Bill, are you able to ascertain whether or not there is a situation in which the two roles that Rachel mentioned—the responsible and accountable people—might be diametrically opposed in what they are legally obliged to do, or are you simply of the view that not enough has been published to ascertain that?

Justin Bates: At the moment, I would lean towards the latter. I do not think the planning analogy is a good one, because this is not like two elected bodies, each with their own political concerns, fighting over where the houses should be; it is between two supposedly neutral public authorities. I see the co-operation duty as closer to the duties that exist under the Housing Act 2004, whereby local authorities and fire brigades have to work together when they are doing certain kinds of inspection.

I am not for a second pretending that you do not get areas of conflict. In pure housing law disputes between district councils and county councils about homeless children, you get enormous fights—a very common fight is about whether it concerns housing or social services—so I am not saying that there are no fights to be had. As far as I am aware, that problem does not come up under the Housing Act. That is probably the closest analogy. Can I think about it and send something in afterwards if I think of any particular problems?

Please do. Thank you very much.