PARLIAMENTARY DEBATE
Building Safety - 14 March 2023 (Commons/Commons Chamber)

With your permission, Madam Deputy Speaker, I would like to update the House on the progress the Government have made in securing commitments from developers to remediate properties with building safety defects. Last year, the major house builders signed a pledge to fix all the medium or high-rise buildings that they had built or refurbished that were unsafe. The developers also promised to reimburse the taxpayer for work already undertaken at Government expense.

This Parliament has always been clear that those with ultimate responsibility for those buildings should bear the cost of remediation. Innocent leaseholders, who are neither responsible for safety defects nor equipped with the resources to fix the problem, should not be on the hook. Those who are responsible must pay. We have worked with developers to draw up a contract that gives direct effect to the pledge that they made. I was and remain grateful to those developers who have been so keen to live up to those obligations, and I am particularly grateful to Stewart Baseley of the Home Builders Federation for his skilful work in supporting the commitments made.

We published the legal contract on 30 January this year, and I gave an initial cohort of developers six weeks to confirm that they accepted the list of buildings for which they take responsibility and then to sign the contract. That deadline expired yesterday. I can confirm that 39 developers have signed the contract. We have published a list of those developers on gov.uk and hard copies of the list have been shared with the Vote Office. By signing the contracts, those developers have committed to fixing at least 1,100 buildings. They will invest more than £2 billion in that work—money saved for the taxpayer and invested in giving leaseholders a brighter future. I thank those developers for their hard work and co-operation in helping us to right the wrongs of the past. They are making significant financial commitments and I am grateful to them.

Leaseholders who have been waiting for work to be done to make their building safe will quite rightly want that work to start without delay. I know that those responsible developers who have signed the contract understand that expectation and will be in touch with leaseholders to set out the programme of expected works as soon as possible. I take the opportunity once again to apologise to those leaseholders and others who have waited so long for this work to be done. While there is still much to do, I hope today shows that their campaigning and that of so many hon. Members has not been in vain. While the overwhelming majority of major developers have signed, some regrettably have not. Parliament has made clear what that means, and so have I. Those companies will be out of the house building business in England entirely unless and until they change their course. Next week I will publish key features of our new responsible actors scheme, a means of ensuring that only those committed to building safety will be allowed to build in future.

Those developers who have been invited to sign the remediation contract, but who have not agreed to live up to their responsibilities, will not be eligible to join the responsible actors scheme. They will not be able to commence new developments in England or receive building control approval for work already under way. The House should note that the companies invited to sign the remediation contract who have not yet lived up to their responsibilities are Abbey Developments, Avant, Ballymore, Dandara, Emerson Group (Jones Homes), Galliard Homes, Inland Homes, Lendlease, London Square, Rydon Homes and Telford Homes.

While my officials remain in discussions with several who are making progress towards signing, I am concerned that some companies do not appreciate the grave nature of the responsibility they bear. I hope the directors of those firms will now exercise the same level of responsibility as the leaders of the building industry. The reluctance so far of some companies to sign up only underlines the need for the responsible actors scheme. It will ensure that there are consequences for developers who wish to be, at the moment, neither answerable nor accountable.

I will take other steps to ensure that companies live up to their responsibilities. I will be writing to major investors in those firms to explain the commercial implications of their directors’ current decisions. I will write to local authorities and building inspectors to explain that those developers’ projects may not be started or signed off. I will notify public bodies to be prepared to reopen tender award processes or rerun competitions. House buyers will want to know what that means for them, and we will formally set out the risks involved in purchasing homes from companies that have chosen to ignore the prospect of prohibitions.

I accept that the course of action that I have set out today is a significant intervention in the market for any Government, but the magnitude of the crisis that we faced and the depth of the suffering for all those affected clearly justified a radical approach. To their credit, the leaders of the development industry have willingly accepted the need for action. The vast majority of developers, as we should all appreciate, have made undertakings to the British public to put right the wrongs of the past. I am glad we can now work together with leaders in the industry on making sure that we deliver more safe, affordable, decent homes for the country.

As those developers have rightly argued, we in Government will also do more to pursue freeholders who have yet to live up to their responsibilities and construction product manufacturers, who also bear heavy responsibility for unsafe buildings. I will have more to say on that in the days and weeks to come. For the many thousands of people whose lives have been blighted by the failure properly to address building safety in the past, today’s update brings us one more step closer to at last resolving the issue, and for that reason I commend the statement to the House.

I am grateful to the hon. Lady for the thoughtful and detailed way in which she has responded to the announcement, and for the support from her and colleagues across the House for the work that we have undertaken.

The hon. Lady asks about contracts and the speed with which they have been signed. Again, just to inform her and the House, we ensured that developers were given a copy of the contract on 30 January, when it was published. A final version was sent to developers with minor alterations on 21 February. The execution version of the contract depended on the developers themselves providing the Department with a list of affected buildings, so it was the work of developers, not of the Department, that led to the late signing of contracts, but I am grateful to all who have now signed.

The hon. Lady asks about the responsible actors scheme, when it will be implemented and the effect it will have. We will lay details of the responsible actors scheme next week. I want to allow some of the 11 who have not yet signed a little leeway to ensure that they live up to their responsibilities. The letters that I have written to the directors of the companies concerned will, I think, help to concentrate their minds to ensure that they have a chance to sign before we lay the responsible actors scheme details next week.

The hon. Lady asks if the powers in the 2022 Act will be used for those who will not have signed by that time. They absolutely will. She asks if we will fix all critical features. All life-critical features in medium and high-rise buildings will be addressed by developers. It is the case that with buildings under 11 metres, there are some fire safety issues, but we have to look at them case by case—some will be life-critical; some will not. Our cladding safety scheme, which addresses mid-rise buildings specifically—those between 11 and 18 metres—should, I hope, deal with the delay, which she rightly points out, in dealing with the fire safety issue for that crucial section of our housing sector.

The hon. Lady makes the point about foreign developers and the need to tackle them, and I quite agree with her. It is important that we use all the tools in our power, and we are exploring sanctions, criminal options and others. The one thing that I would say is that there is one jurisdiction—not a foreign jurisdiction but an adjacent one—where action has not been taken to deal with some of those responsible, and that, of course, is Wales. I ask her to work with me to ensure that the Welsh Labour Government take appropriate steps to deal with the situation in Wales. We stand ready to work with them and with all parties in that regard.

The hon. Lady also asks about the need to abolish the invidious and feudal system of leasehold. As someone who was born in Scotland—mercifully, a country free from that system—I can say only that this is one area where I hope that England at last catches up with one part of the United Kingdom that is, in that respect at least, more progressive.

I declare an interest in having a leasehold property—although I have no problems with it—and I also have minor shares in some building companies so that I can get at their boards when necessary.

I thank the Secretary of State for his continuing work. May I reinforce a question asked from the Labour Front Bench: how many buildings beyond the 1,100 still need a way forward? Can we agree that leaseholders and others want to know that their own homes are safe and saleable? We know that the task is to find the problems, fix them and pay for them.

I put it to the Secretary of State that the one group that seems to be left out of this is that of the insurance companies who covered the developers, the architects, the builders, the component suppliers and, for that matter, those who did building control. I believe that leaseholders’ potential claims need to be put together, and that we need to get the insurance companies round the table and say that the surplus money will come from them, or else they can have expensive litigation backed by a Government agency, which they will lose.

I am grateful to the Father of the House, who has been indefatigable in his efforts on behalf of those affected by this crisis and of leaseholders more broadly. I should say, for his benefit and that of the House and the Opposition, that developers will be updating leaseholders on progress towards remediation quarterly on 31 January, 30 April, 31 July and 31 October each year—that will be public accountability.

I should also say for the benefit of my hon. Friend and the House that 96% of the most dangerous buildings—those with aluminium composite material cladding—have either completed or started remediation work.[Official Report, 27 March 2023, Vol. 730, c. 5MC.] There are other high-rise buildings with other forms of unsafe cladding—1,208 such buildings. They are in the building safety fund. More than 350 of those buildings have now been addressed, and more than £1.7 billion of Government money has gone towards making those buildings safe. Progress, but not at the pace that either of us would have liked. His point about insurance companies is well made, and I will follow up subsequently.

I call the SNP spokesperson.

I thank the Secretary of State for advance sight of his statement. I have a couple of quick questions.

On the developers who have not signed, the Secretary of State is obviously talking about the situation in England. Does he intend to share that information with the devolved Administrations? Those companies may have interests in devolved areas.

What happens if a non-compliant building has defects that extend beyond fire performance matters? Further defects are often discovered only after the opening works have commenced and cladding has been removed—I am thinking particularly of acoustic and thermal non-compliance. Could the Secretary of State tell us which independent bodies will manage the work to identify such defects, and how will developers be held to account for them?

Finally, what is the Secretary of State’s plan when owners and/or developers of non-compliant buildings cannot be traced?

We will certainly share information with the devolved Administrations. As I mentioned briefly, we want to work with the Welsh Government, and indeed with the Scottish Government, to ensure that everyone is in a safe building and that businesses that are not operating in accordance with their responsibilities cannot wriggle out of their responsibilities. I look forward to working with the new First Minister—whoever she is—in due course to achieve progress.

On non-compliant buildings, the hon. Gentleman is certainly right that, as we replace cladding, new faults are sometimes identified. Developers have a responsibility to deal with those if they were the original responsible actor. That brings me to his third question. Where it is not a developer who takes responsibility but a freeholder, our recovery strategy unit is working to identify all the freeholders responsible. It is only in the very last instance that leaseholders may be liable for costs, and even then, they are firmly capped under legislation that this House passed.

Given the shortage of capacity, what steps are the Government taking to encourage more businesses and people to come forward to provide good-quality building and construction work?

My right hon. Friend makes an important point. We need to ensure that we have in the development sector, and indeed in the building safety sector, a range of companies and actors determined to do the right thing. Some of the changes that we are making—to the national planning policy framework, for example, and other steps that my right hon. Friend the Chancellor will announce in due course—are designed to ensure that we have a diverse and energetic private sector market helping consumers and leaseholders.

I call the Chair of the Levelling Up, Housing and Communities Committee.

I thank the Secretary of State for his statement. Clearly, any progress in this matter is welcome for the leaseholders who are still sat there, wondering when something is going to happen to their unsafe homes. The Under-Secretary of State for Levelling Up, Housing and Communities, the hon. Member for North East Derbyshire (Lee Rowley), is coming to the Select Committee next Monday. I apologise in advance that, for personal reasons, I cannot be there, but I am sure the scrutiny will be just as effective under the oversight of the hon. Member for Harrow East (Bob Blackman).

A number of issues have been raised with the Select Committee. First, in terms of the agreement that developers are signing, it was said to us that the remediation standards developers will have to work to will not be as strict as those under the Building Safety Act. Can the Secretary of State confirm whether that is true? Secondly, the Committee spoke to product manufacturers the other week, who said that they had had no contact with the Department for the last 12 months. Is that true, and if so, when will that contact be renewed, so that they can be held to account?

Finally, the Minister says, “I’m going to look at this” every time I ask him. Kate Henderson of the National Housing Federation told the Committee on Monday that the cost of remediating these matters will be £6 billion for social housing providers. They have only had a tiny bit of money under the ACM cladding measures. Will the Secretary of State look at that again? Otherwise, there will be cutbacks to the house building programme that they all want to engage in.

I thank the Chairman of the Select Committee for his questions. I note his apology for not being able to be there to cross examine my hon. Friend the Minister for local government and building safety next Monday. I know that my hon. Friend the Member for Harrow East (Bob Blackman) will do a brilliant job. They are the Morse and Lewis of—

Which one’s which?

Well, quite. I know that they will show endeavour in asking the right questions.

On remediation standards, I do not believe it is the case that the developers are being held to any less high a standard than that which exists in the Building Safety Act, but I look forward to working with the hon. Gentleman and others to identify any gap between what the Act makes provision for and anything that developers have committed to do.

It is the case that I have not been in touch with the Construction Products Association as a corporate body for a while. We have been pursuing individual construction product companies, but of course, our actions have to take account of the actions of others who may be pursuing them for criminal activity and liability.

On the hon. Gentleman’s point about the National Housing Federation, I have been in conversations with the Chancellor of the Exchequer about what more we can do to support the social housing sector. How richly those conversations bear fruit, we will have to see.

The Secretary of State is well aware of the situation with Cardinal Lofts. Today at 10 minutes past two, a formal prohibition notice was served, so any remaining constituents of mine in that building will be obliged to leave. One of the worst things is the lack of timescale for how long my constituents will be in limbo. They cannot plan their lives—their lives are on hold. Will the Secretary of State work with me to try to get that certainty as soon as possible and look into compensation that goes beyond covering temporary accommodation? The extent to which their lives has been affected is unacceptable. He will also know that Railpen was aware of these issues for two years before it decided to take any action at all.

My hon. Friend is right, and he has been a fantastic champion for the residents of Cardinal Lofts and other people affected by this. I think I am right in saying that Railpen is the ultimate owner of the freehold for this building. It is the pension fund for those who work in the rail sector. There are good trade unionists on the board of that pension fund to whom I appeal to show the same degree of energy in helping working people as my hon. Friend. While pension funds of course have fiduciary responsibilities and all the rest of it, it is vital that we do right by the residents of this building. I hope I will have the chance to visit Ipswich soon, to make good on that commitment.

I thank the Secretary of State for his care in this matter, but I still have hundreds of constituents who are in financial limbo and mental turmoil because of safety problems that are not of their making. Frankly, West Ham is a building site at the moment. Stratford, West Ham, Plaistow and Canning Town all have major building contracts ongoing. If the developers are not on the “goodie” list of those who have signed the right bits of paper, what happens to that development and the oversight of it? I know that my constituents would want me to ask this: what will he be able to do for those who have not been fully covered by the remediation contract?

I am grateful to the hon. Lady for standing up so well for her constituents, as she always does. Actions have to have consequences. The overwhelming majority of developers have done the right thing by signing this contract. It would be wrong for anyone who has wriggled out of their responsibilities to be allowed to continue to make a profit when others are shouldering these responsibilities. It is the case that if a company is not on, as she puts it, the goodie list, that will be it—development will have to pause, and we will make sure that their shareholders and investors pay the price for the irresponsibility of their directors.

On the broader point, if the hon. Lady, on behalf of her constituents, would like to get in touch with my Department and, in particular, our recovery strategy unit, there may well be developments or buildings in her constituency that are not covered by this where there are freeholders or other people responsible whom we need to track down. We look forward to working with her.

I warmly congratulate my right hon. Friend on the progress he is making. Leaseholders are the most important people we have to look after. There will be people who have paid out huge sums of money to companies that are on the goodie list of those who signed this contract. They will want to know what happens to them. There will be people who have received estimates for huge amounts of money they are expected to pay. What happens to them? Most importantly, there are leaseholders who reside in buildings the developers of which we do not know and are not covered by this. Will my right hon. Friend set out the position for those people and give us a guarantee that, if we cannot trace the developers, the Government will step in and put this right for the people who live in these properties?

My hon. Friend makes a very good point. One thing that I was aware of before doing this job but have become clearer on since is that there are actors in the property market operating in the UK who hide behind opaque corporate structures, operate offshore and set up special purpose vehicles in order to get building done and then disappear from their responsibilities afterwards. That is why we set up the recovery strategy unit, and it is no criticism of any of our predecessors, because we have not faced a situation quite like this before. The whole purpose of the recovery strategy unit is to identify the ultimate beneficial owner of the building who should take responsibility. Developers who are operating as responsible plcs have all signed this contract. That is great and a real step forward, but there is still more to do.

On the point about leaseholders, we have a system that we have legislated on—it is not perfect, but it is a big step forward—which means there is a cap on the individual liability of any leaseholder, and the taxpayer has committed significant sums. I think—and I suspect this is a view shared across the House—that the building safety crisis shines a light on sharp practice by a small minority of people in the broader property sector that we need to take several steps to deal with, including improved land transparency legislation and other steps that will ensure we do not have a butler economy in this country, whereby people operating in the property sector put profit ahead of people.

I need to reiterate that I can only call Members who arrived at the beginning of the statement. It is the responsibility of Members to make sure they get here in time to hear the Secretary of State’s statement from the beginning. I assure Members that I and the other Deputy Speakers are even-handed about this.

I very much welcome this statement, but I want to ask the Secretary of State about people living in buildings under 11 metres. The Government were not prepared to extend full coverage to them but said they would look at those buildings on a case-by-case basis—a commitment that the Secretary of State repeated this afternoon. Could he tell us how that is going? How many of those buildings have had assistance? What criteria are he and his colleagues using in deciding where to offer help? Does it include, for example, cases where the developers or builders went bust years ago? Does it include buildings where the leaseholders still cannot sell their flats because mortgage companies will not lend on them, despite the Royal Institution of Chartered Surveyors advice?

The right hon. Gentleman makes a very important point. In most cases, a building under 11 metres which might, for example, have cladding on it, or might have some of the materials that in other circumstances would be systemically unsafe, does not have safety risk. We need to look proportionately at each building, and that takes time. Thanks to the energetic efforts of the Minister for building safety, my hon. Friend the Member for North East Derbyshire, we have reached agreement with a majority of lenders, which are now lending against properties, because through the engagement we have had with them, there is now a more proportionate way of deciding whether or not to lend against those buildings. As we have discussed in the past, however, let us look at individual cases, and if constituency cases and examples have come to light that the right hon. Gentleman feels are not captured by the steps we have taken so far, I look forward to working with him to address them.

I thank the Secretary of State for his statement and the progress he is making on this issue, but action is still needed to address what has become a two-tier system of building safety support for leaseholders. As has already been mentioned, leaseholders in Battersea who reside in buildings under 11 metres or in a development that has become an enfranchised building do not qualify for the support for which other leaseholders rightly qualify. They feel abandoned by this Government. If the Government are looking at this issue on a case-by-case basis, I would love to understand a bit more how it will work, because I want to ensure that those leaseholders are getting the support they need.

The hon. Lady makes a very important point. In the legislation, there is a category of non-qualifying leaseholders: people who have more than one property.[Official Report, 27 March 2023, Vol. 730, c. 6MC.] We wanted to attempt to draw the line in order to ensure that, for example, significant investors—people with significant means—were not benefiting from a scheme that was designed for every man and woman, as it were. However, I have some constituents who are in the same boat as the hon. Lady’s, and we are looking at the situation to try to make sure that we do not have people at the margins who are being treated unfairly. I cannot make any promises at this stage, but the hon. Lady raises an important point, and we are aware of it.

I address the right hon. Gentleman as a fellow Scot, and I welcome the new spirit of accord that there will surely be between himself and the new First Minister, whoever she or he is. As I drive through the right hon. Gentleman’s home city of Aberdeen, I see the high-rise flats. I do not know what condition those flats are in, but it occurs to me that a similar dialogue between a Scottish local authority such as Aberdeen City Council and a suitable one south of the border could be very constructive when sorting these problems out. Will the Secretary of State undertake to encourage that sort of co-operation?

Yes. The hon. Gentleman makes a very important point, and he is absolutely right: co-operation between councils, between the UK Government and local authorities in devolved areas, and between the UK Government and devolved Administrations is the way forward. We all deserve Governments who are working together to resolve this issue. He makes a very good point: in Aberdeen, as well as in Dundee, Glasgow, Edinburgh and some other areas, there are high-rise buildings that are in precisely this situation. It would be a pleasure to work with the Lib Dem coalition council in Aberdeen to try to make sure that that council can benefit from the experience of local authorities in England.

During the Secretary of State’s statement on 30 January, I asked about the problem of excessive insurance charges being imposed on leaseholders. He recognised the problem, and promised

“additional Financial Conduct Authority and Government co-ordinated action”—[Official Report, 30 January 2023; Vol. 727, c. 55.]

to address it. Can the Secretary of State update us on progress? By the way, he has not yet replied to my letter to him on this subject, dated 13 January.

I apologise to the Chair of the Work and Pensions Committee for the discourtesy. I will have a word with my private office team; it is my fault that he has not received a reply.

I hope to update the House shortly on the progress we are making with the FCA and others on insurance costs. When I made the statement last time around, I explained the steps we are taking with managing agents and intermediaries, but the right hon. Gentleman is right—as is the Father of the House, my hon. Friend the Member for Worthing West (Sir Peter Bottomley)—that there are broader issues in the insurance market that we need to address.

It is important that we see which developers have actually commenced or completed works, not just signed up to the contract. My understanding is that only 11 of the non-ACM buildings in England have been remediated and signed off, so will the Secretary of State publish a full list of the works that are under way from different developers?

Secondly, the Secretary of State made a bit of a gibe at Wales, but the reality is that we need to work together across the UK on this issue. What is he doing about the pipeline of contractors and surveyors? A remediation project in my constituency had to be stopped recently because a contractor was having an issue separately in England. This issue does not require gibing between the two Governments: it requires working together.

The hon. Gentleman makes two very important points. On the first, we will work with those who have signed the contract to publish an update on the work that has been done, and as I mentioned, we will share quarterly updates with the House and with everyone affected in order to hold developers to account. Given the willing heart with which most have signed, I am very confident that we will see good progress.

On the point about the situation in Wales, again, I always enjoy working with Ministers in the Welsh Government to achieve our common ends across the United Kingdom. I absolutely take the hon. Gentleman’s point in good part.

Looking at the finer details of the developer contract that some developers have signed—I think the Secretary of State said 39 had done so—I see that it does not cover all the fire defects laid out in the Building Safety Act. Why is that, and who is going to pay for that work?

That point has been made by other hon. and right hon. Members. I do believe that developers are living up to their responsibilities to deal with life-critical safety defects in medium and high-rise buildings, but as we have discussed, some buildings fall outside those categories. We are working on bespoke solutions for those.

As the Secretary of State knows, not only are developers frustrating leaseholder rights. In response to his last statement, I raised the case of Mandale House in my constituency; leaseholders in Daisy Spring Works have the same, or a similar, problem. The common factor is the managing agents, Y&Y Management, which also has freehold interests. That company is not simply denying leaseholders their rights: it is doing so on the basis of challenging the legality of the Secretary of State’s own legislation. Those leaseholders do not have the resources to challenge Y&Y’s lawyers, so I have shared the relevant information with the Secretary of State’s Department. Can he reassure me that he will use all of the resources at his disposal to tackle Y&Y and ensure its leaseholders get the rights under the Building Safety Act that he intended?

Absolutely. I want to be really fair to the hon. Member: he is doing the right thing. He has highlighted an abuse and has contacted the Department in a co-operative and detailed fashion. The Minister for Building Safety, my hon. Friend the Member for North East Derbyshire, has been looking closely at that case. There is more that we can do, and I thank the hon. Member on behalf of his constituents for being tenacious in trying to get a good deal for them.

I have a Galliard development in my constituency, and my constituents will be concerned that Galliard has not signed. They would like to hear from the Secretary of State what that means for them. They have life-critical safety defects in the building, which is shocking, because that building construction was paused as a consequence of the tragedy at Grenfell, yet Galliard went on to develop a building that has those defects. What does today’s statement from the Secretary of State mean for my constituents who are waiting to hear from Galliard about the state of their buildings?

This is a sad note on which to come to the conclusion of the statement, because Galliard is one of the companies that has been the most recalcitrant throughout, and I sympathise with the hon. Gentleman’s constituents. Other companies have done the right thing and have done so with a willing heart, but Galliard has held out—it has briefed against the Department and all the rest of it. Unless Galliard signs, it will face consequences, and its business model will be fundamentally challenged by the legislation that we in this House have passed. Ultimately, with a company such as Galliard whose owners, directors and investors are determined not to play ball, the consequences will come for it. I want to be clear with the hon. Member and this House that Galliard will face condign consequences if it does not act.