On 20th April 2021, the House of Lords debated responses to the Commons Reasons and Amendments on the Fire Safety Bill. The Bishop of St Albans tabled a further amendment to the bill, seeking to protect leaseholders and tenants from remediation costs being passed on by building owners:
The Lord Bishop of St Albans: My Lords, I give notice of my intention to seek the opinion of the House when the time comes, and declare my interest as a vice-president of the LGA.
When there is a crisis, we look to Her Majesty’s Government for radical and rapid action. Ministers are good at calling stakeholders to gather around the table. Just yesterday, in the other place, Minister Oliver Dowden said he was appalled by a situation. He promised Members that they should
“be no doubt that if they cannot act, we will … We will put everything on the table to prevent this from happening … Put simply, we will review everything the Government do to support”
this. He went on:
“We will do whatever it takes.”—[Official Report, Commons, 19/4/21; col. 676.]
Indeed, this situation is so important that it is said that the Prime Minister has decided to rearrange his busy diary and intervene personally to hold a round table to resolve the problem. The trouble is that the radical action being talked about concerns the European Super League, not the hundreds of thousands of people who, at this very moment, are facing desperate dilemmas.
I deeply regret having to come back; I know that it is a nuisance and that people are fed up. But this is the first time in my ministry that I have been stopped on the street in St Albans three times in a week by people saying, “Thank you for what you are doing”. So, I come back hugely reluctantly. I want to see this Bill get on to the statute book, I really do. I hope that we will do all we can, if necessary sitting late, to make sure that when it comes back, if it has to do so, it will get on to the statute book; I do not want to hold it up. This is a good Bill, which seeks to implement a recommendation from the Grenfell inquiry. It is of the utmost importance that our dwellings are safe and people can sleep at night.
However, the consequences of this legislation have a huge impact on leaseholders. The Government, whom I thank very much, have committed £5 billion. I accept that this is unprecedented and a wonderful thing; I want to affirm what the Government have done. However, as things stand, the promised grant and loan schemes are not even operational. I am grateful to the Minister—we have had two meetings in the last week—and I know that they are working as hard and as fast as they can, but the schemes are not operational, there are no dates and no assurance has been given on, for example, whether it will be possible to apply retrospectively.
The moment that the Bill passes, those who would ordinarily be excluded from paying for replacement cladding under the government scheme could, within months, be handed very large bills. Likewise, these bills will be handed to those who should have replacement cladding costs capped at £50 per month under the government scheme. The result, I fear, will be bankruptcies,
enormous mental health strains, and possibly worse. Part—though only part—of the problem is that there have been no assurances to prevent the remediation costs being passed on to leaseholders until the Government’s own scheme is operational. This shows the complexity of what we are facing. I do not pretend that this is easy, or that my proposal will solve everything but, for example, other historical fire safety defects not covered by this scheme still have the potential to bankrupt leaseholders. I remind the House again of the additional financial issues crippling leaseholders: interim fire safety costs and high insurance policy premiums. Just today I received an email about a building where the insurance last year was £11,963 but, in one year, has gone up to £242,400 because the insurers believe that the building is not safe.
Leaseholders face bills of around £6,000 each, to pay within days. This leaves them with a dilemma: sell their lease and take on the debts resulting from negative equity or stay in these leases and face huge debts in the form of remediation bills; or possibly, in some cases, declare bankruptcy. Surely these leaseholders, who went into this as people of aspiration—trying to get their place to live, saving for their deposits—could have had no indication that this was coming. It is one of those dreadful tragedies. Nobody is pointing the finger at the Government or anything like that; it is a dreadful tragedy that could not have been foreseen.
I agree with the Minister that the Fire Safety Bill is not the ideal place to deal with the issue of remediation costs. However, in the absence of an adequate plan or scheme to deal properly and fairly with the issues of remediation and the consequences of the Bill, I simply feel that I have no other option. I believe it is my duty as a Member of this House to stand up when I see this train coming down the track at such huge speed. Without proper protections on leaseholds, the Bill will have far-reaching consequences, negatively affecting thousands of innocent and aspirational individuals. I want to do what I can to prevent that happening. Whether my amendment is the best way to deal with this issue remains an open question; I totally admit that. I have tried in this amendment to the Motion to put the onus on Her Majesty’s Government to bring forward their own scheme rather than find a solely legislative solution to the matter.
One area on which I am unwavering is the principle underlying this amendment of the need to find an alternative way to approach remediation costs, as well as all the other costs now hitting leaseholders. The Government could have extended the current scheme to cover all historical defects and delay remediation costs being passed on to leaseholders until the new scheme is operational. Leaseholders would still be in an unenviable situation if this happened, but it would be a vast improvement on the current offer—which, in my opinion is not acceptable given the costs these individuals face. However, in the time since the Bill was last in the House, nothing has changed. This is why we are left to present broad-stroke solutions to very complex issues. I have argued that the onus in this case has always been on the Government to show leadership in the face of what is so evidently a market
failure. I believe this is an occasion where the Government have not to pick up the bill but somehow to act as a backstop, to enable a solution so that these costs can be shared out and solutions found.
In conclusion, I hope that the Government will seriously take on board what we have said and try to present a way forward on this very real problem. I beg to move.
Extracts from the speeches that followed:
The Earl of Lytton (CB) [V]: The right reverend Prelate and the noble Baroness, Lady Pinnock, in her amendment, endeavour to protect the tenant and leaseholder from the effects of the Bill by saying that they shall not bear the financial burden. I am compelled to express the view that this needs to be taken further: if, as a result, the building owner as freeholder is made liable for something that they in turn cannot afford or cannot be made responsible for, beyond the assets of whatever corporate ownership vehicle holds the freehold or other superior interest, then the liquidation of the holding company and the vesting of the negative-value asset in the hands of insolvency practitioners will do little to get the building remediated. To that extent, the responsible person under the Bill might be a man of straw, and that I see as a weakness in what the Government propose.
To deal with this, one needs a scheme, and the Government have commendably said that they will introduce one to fund remediation, but this suffers from several limitations. First, it applies only to cladding. Secondly, it does not cover all buildings with claddings—even less the other fire safety issues that the Bill might also trigger. Thirdly, I very much doubt that the sum allocated is enough. That said, I am extremely grateful for the government commitment to making £5 billion in funding available, as the Minister has explained.
Apart from properties becoming unsalable, uninsurable and unsuitable for mortgage lending, in some cases they might well be so risky as to be declared unsafe for occupation, pending remediation works. Displaced occupiers will be wondering what it is in the principle of safety and proportionality in relation to their own home, given the nightmare imposition of unimaginable costs and liabilities, that justifies rendering them homeless in addition. Of course, it might well not come to that, and it is my purpose to encourage the Government to ensure that there is a scheme to make certain that it does not. The full extent of the problems may still be yet to come, but I strongly suspect that many of the responsible persons are holding on until this Bill receives Royal Assent before proceeding further.
Baroness Pinnock (LD) [V]: This has so far been a very good debate, with the noble Earl, Lord Lytton, using his expertise to detail the problems and suggest solutions to them since, as he says, they have yet to be resolved and need to be resolved, and the right reverend Prelate the Bishop of St Albans with his passionate exposé of the real difficulties facing individuals in this position.
We know that a property purchase is the largest single financial commitment that the majority of us ever make, yet the guarantees, the warranties and even buildings insurance for leaseholders fail to provide anything approaching adequate provision for those who find themselves living in a home where building regulations have been openly and plainly breached. Those living through this construction crisis and cladding scandal exposed by the awful tragedy of Grenfell are left with nowhere to find redress for the inexcusable failings of the construction companies.
That is in stark contrast to manufacturers of, for example, cars and white goods; where faults are discovered, even where the goods are out of warranty, the manufacturers call them in and make the repairs at their expense. What a difference with the construction industry, where only some of those involved have made any provision for remediation works—the bare minimum that they feel they can get away with. The total estimated cost of remediation so far is £16 billion. The Government are expecting construction companies to pay £200 million a year towards the remediation costs. With the government-funded scheme, that leaves a full £9 billion to fall on those who, throughout, are the innocent victims.
The purpose of the amendments in my name and that of the right reverend Prelate the Bishop of St Albans is to extend the principle already agreed by the Government: that this serious problem can be successfully fixed only with up-front funding from the Government that can then be recouped from developers, construction firms and manufacturers.
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The amendment in my name seeks to put right this awful wrong and to establish the rollcall of statistics of bankruptcy, homelessness, mental ill-health and worse, of relationships broken and careers lost. Hundreds of thousands of individuals and families are watching and waiting for the decision of this House. They are willing us on to help find a fair and just solution to a problem that is not in any way of their making. Yet they are the ones who are being asked to pay the price.
If the right reverend Prelate the Bishop of St Albans wishes to divide the House, the Liberal Democrat Benches will fully support him. If, however, he chooses not to do so, then I will wish to test the opinion of the House.
Baroness Fox of Buckley (Non-Afl): I commend the right reverend Prelate the Bishop of St Albans, the noble Earl, Lord Lytton, and the noble Baroness, Lady Pinnock, for their perseverance in
pushing this issue. I do not think that they are well-known trouble-makers or going out of their way to be sectarian—it is because this matters. The amendments would not solve every problem and leaseholders would still shoulder ongoing safety costs, but at least it would ease some of the financial burden. It would also give the Government some breathing space to resolve the myriad other challenges without ruining people.
No one here pretends that these issues are easy to solve. Costs are spiralling; even the Government’s estimated remedial costs of £9,000 per leaseholder looks naive when the real figures of tens of thousands are the reality. Sadly, any new regulation creates new layers of bureaucracy; there are consultants all over this. Then there is the risk aversion, leading to sky-high insurance premiums, a reluctance to sign off EWS1 forms and lenders’ reluctance to accept them.
I know that there is a lot to tackle, but I want to say to the Government, “You aren’t alone”. This is not a blame game or a party-political issue; it is a case maybe of unintended market failure, and it requires the sort of collective state-backed intervention that we have seen from this Government with issues such as furlough. It needs a bailout or safety net, and the Government are more than capable of doing that.
Lord Newby (LD): Last time around, the Minister, as he has today, accepted that something more was needed. Last time he said that it was
“unacceptable for leaseholders to have to worry about the cost of fixing historic building safety defects.”
He also acknowledged that the Government believed that
“building owners and industry should make buildings safe without passing on costs to leaseholders.”
So far, so good. But when it came to actually dealing with removing that worry, in his response to the amendments from the right reverend Prelate the Bishop of St Albans and my noble friend Lady Pinnock, at great length and somewhat repetitiously he explained why the Government had no plans to fix the problem.
The reasons were as follows. First, the Minister said,
“it would be impractical and confusing to include remediation measures in the Bill.”
Well, it would not be confusing if they were clear. Secondly, he said that it was too soon to include comprehensive measures in the Bill. He said that it was
“important to ensure that the practical implications of any legislation are properly worked through, rather than being rushed”.
Well, we would not want the Government to rush to solve the problems of people who are being forced into bankruptcy today, would we?
Baroness Warwick of Undercliffe (Lab): My Lords, I declare an interest as chair of the National Housing Federation, the representative body of housing associations in England. The fact that these issues are before the House again demonstrates the enormous concern that blameless leaseholders should be protected from suffering the costs of those building safety remediation works that have come to light since the tragic fire at Grenfell Tower almost four years ago. Like others, I pay tribute to the commitment and tenacity of the right reverend Prelate the Bishop of St Albans, the noble Earl, Lord Lytton, and the noble Baroness, Lady Pinnock, for keeping the Government’s feet to the fire.
Housing associations have worked tirelessly since 2017 to uncover and put right the urgent building safety issues with which since the Grenfell tragedy we are now all too familiar. The safety of their residents is an absolute and immovable priority for the housing association sector. They are also acutely aware of the stress and heartache that leaseholders have experienced and have pursued every avenue available to them to ensure that those responsible, the developers of these buildings, pay for their mistakes. The funds that the Government have already made available for building safety works have a very important part to play in tackling this crisis, but they are by no means a complete solution. It is just not acceptable that under the established scheme some costs will still fall to leaseholders.
Lord Adonis (Lab): My Lords, the right reverend Prelate the Bishop of St Albans will have heard the strong support across the House for his amendment. He said at the beginning of his remarks that he intended to press the matter, and I would strongly encourage him to do so. It looks to me as if he will have a commanding majority across the House.
The Minister’s speech was very odd. Indeed, it was so odd that I cannot think that he actually wrote his own speech. It must have been written by some political adviser in his department, who just put together a set of remarks that he thought would basically tell the House of Lords to get lost. That was the gravamen of his argument, presumably hoping that, the third time around, we would not press this—indeed, that we would not even get into the arguments.
The Minister said—I noted it down carefully—that the proposal in the amendment in the name of the right reverend Prelate the Bishop of St Albans was “inappropriate and unworkable”. I was waiting for him to describe to the House why it was inappropriate and unworkable, but he did not. He said that he would not comment in detail at the beginning, but would do so at the end. That is not much use to us, because the debate takes place before his closing remarks, not afterwards, and we have no means of replying to them. That argument is clearly of no account, unless the Minister has such compelling arguments against the right reverend Prelate that, on hearing them, we will be completely silenced.
When we read the amendment, it is impossible to see how it could be described as inappropriate and unworkable. The right reverend Prelate proposes, first, that the costs may not be passed on to leaseholders or tenants—an argument in its absolute state, which the Minister has objected to, and I understand his arguments. However, the crucial part of the amendment is subsection (2) of the proposed new clause:
“This section has effect only until a statutory scheme is in operation which ensures that leaseholders and tenants of dwellings do not have to pay for remedial work attributable to the provisions of this Act.”
What is inappropriate and unworkable about that? The right reverend Prelate proposes simply that the Government’s own scheme, which one assumes will not be inappropriate or unworkable, must be before Parliament and subject to consideration before people are faced with costs—unless I have missed something in the arguments. The right reverend Prelate is nodding in agreement, and the Minister has not said anything to the contrary.
Lord Greenhalgh (Con): By way of clarification to the right reverend Prelate the Bishop of St Albans, the building safety fund does exist and the money is being accessed. It is clear that the additional money the Government have announced will be added to that fund. We are in danger of running out of money, frankly, in a matter of months, without the additional amounts committed by the Government. The other things I mentioned will happen, but none of them requires statute to implement, so it is simply not the case that a statutory solution is the only way forward.
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I thank the right reverend Prelate the Bishop of St Albans for his engagement over the last few weeks, but I am afraid that his amendment will not work either. It would orphan liability. We have looking to assign liability to freeholders or orphan liability of works until such times as a statutory scheme is in place that pays for the work directly attributable to this Bill. I have already talked about the difficulties of defining which works might be directly attributable to the Fire Safety Bill provisions and which might not.
Some of the works that may be required will be low cost, where anyone would reasonably expect leaseholders to pay. Does the right reverend Prelate really want to stop the passing on of relatively minor costs, such as for a new smoke alarm? The amendment does not differentiate between the costs of the work which could lead to delays in important minor works. He is talking about stopping something even as minor as putting in a smoke alarm as a consequence of the amendment. No taxpayer scheme for such minor works would be forthcoming, and we would reach an entirely avoidable impasse.
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I ask that noble Lords exercise sound judgment, listen to the will of the democratically elected other place and recognise that, while this amendment and others may be based on good intentions, it is not appropriate or a means to solve very complex problems. This is the wrong place for this kind of legislation, and in any case the amendment is likely to be ineffective
and possibly risky. It is a big risk; in answer to the noble Lord, Lord Newby, I say that the risk of litigation is not something to pooh-pooh, because the risk is not only that is it an additional cost that leaseholders potentially face paying but that the remediation will not be carried out. I must emphasise once again that all the solutions put forward will in no way solve this problem. The Government certainly cannot support them.
I finish by reminding noble Lords that the Government have provided an unprecedented level of support for leaseholders, in excess of £5 billion. Noble Lords have a choice; it involves supporting getting this highly important Bill on to the statute book and not delaying its implementation any further, which will allow the Grenfell recommendations to be implemented and help make homes safer.
The Lord Bishop of St Albans: My Lords, I am hugely grateful for the extraordinary range of speeches made today. I acknowledge what Her Majesty’s Government have done; I take the point that this is unprecedented and a major contribution towards trying to sort out this very difficult problem. The Minister knows that I have said on many occasions that I am terribly naive about all this. I was hoping Her Majesty’s Government would help solve it because I am just an amateur paddling around in the shallows. I am hugely grateful to people such as the noble Earl, Lord Lytton, who is a real expert in this area.
I still believe that my amendment is a practical, helpful and just way forward which is in the spirit of what Her Majesty’s Government want and have committed to. I was hugely grateful to the noble Lord, Lord Adonis, for quoting the Minister in the other place. I am still sufficiently positive—noble Lords will probably say naive—about our political system to believe that this amendment could well commend itself to people in the other place when they see that it is within the spirit of what the Government want to do. I hope that it will be taken back to the other place and considered there, or that the Government will wish to introduce something like it, to help us move this forward. I would like us to get this on to the statute book as quickly as possible but, in the light of what I have heard, with reluctance I feel I have no other choice but to divide the House on this Motion.
Amendment approved following a vote.
The Church of England in Parliament 
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