With your permission, Mr Deputy Speaker, I should like to make a statement that allows me to update the House on the Government’s progress in making buildings safe. It is a basic requirement of any civilised society that people should feel safe in their own homes, but for too many people for far too long, that has not been the case. As I have said before, so I say again: this has been a collective failure. Those in government who made the rules did not make them clear enough. Those who built our homes did not build them well enough. Those who made the materials that contributed to the construction of those homes often made them unsafe; at times, knowingly so. Those who were to check the work undertaken did not always check thoroughly enough. Of course, those who own the buildings have sometimes managed them so poorly that people have been left unsafe, and too many of those owners have still shirked their obligations to make people safe.
The only party to the crisis who do not share in the responsibility are the blameless leaseholders and the tenants who live in those buildings. That is why it is right that this Parliament protected those leaseholders through the Building Safety Act 2022 and apportioned financial responsibility more fairly. We continue to work to ensure that those who bear the blame for the crisis also shoulder the burden of putting the situation right.
We have made significant progress. Those who put unsafe material on people’s homes must now pay, instead of the innocent residents living in them. Leaseholders need no longer fear financial ruin simply to make their homes safe, and the major mortgage lenders, thanks to their confidence in our new approach, will now lend on properties that are covered by the leaseholder protections in the Building Safety Act. Of course, they will also lend where the building is eligible for a Government or developer remediation scheme. Leaseholders are no longer hostages to their mortgage arrangements.
I welcome the statement and some of the measures announced in it, but the fact is that, five and a half years after the appalling Grenfell fire, millions of people are still trapped in buildings with dangerous cladding, in flats that are unsellable, and facing eye-watering bills. I believe that the Secretary of State is absolutely sincere in his desire to solve this problem, but he announced a year ago that he was putting developers on notice, saying that
“we are coming for you.”—[Official Report, 10 January 2022; Vol. 706, c. 284.]
Well, that is a long notice period, and for all the zeal, the reality is that the developers did not stump up the cash that he demanded, and only 7% of flats at risk of fire have been fixed. He says that leaseholders are no longer hostages of their mortgages, but if he spent five minutes reading the contents of my inbox, he would gain a very different perspective on what is the reality on the ground.
This has been another year of lives on hold, huge anxiety and countless amounts of human misery, and people are losing hope. The Secretary of State is now giving those same developers another six-week deadline to sign a contract or face penalties, but the date that matters to leaseholders is not the date by which a new contract is signed; it is the date by which the cladding will be removed or replaced. Am I right in understanding that there is no deadline for that? Am I also right to understand that the Secretary of State is not today announcing any new action against product manufacturers and building owners? If we all acknowledge their role in this, and the fact that in many instances they continue to profit from homes that are unsafe, this is not just an unhelpful omission but an immoral one. The Secretary of State said today that his Department was pursuing them through the courts, and I welcome that, but can he tell us how many of those cases have been successful? Can he also tell us—given that other Members will have inboxes like mine, full of stories of people who are still struggling and still suffering—how we can refer cases to this unit within his Department, so that the onus of taking action does not rest on the victims of this appalling scandal, but we and the Government use our collective might to do the same?
I am grateful to the hon. Lady for her constructive approach today. She has consistently taken such an approach to resolving the building safety crisis. She recognises that responsibility for the crisis must, as I have mentioned, be shouldered collectively by Government and actors—from developers through to freeholders, insurance companies and construction product manufacturers.
The contract that we are publishing is the result of detailed negotiations with developers. Developers made a number of points that seemed fair and to reflect their responsibilities. We also robustly rejected a number of points that they made during the contract negotiation, so as to ensure that we receive payment from them as quickly as possibly for the work required. There is now a clear six-week deadline to sign the contract. The fact that two major developers have already agreed to sign is welcome, as is the fact that some have already undertaken this work, as I mentioned in my statement. It was not necessary for every developer to sign the contract for that work to begin. I welcome that it has begun and that work has been completed or is being undertaken on the overwhelming majority of buildings over the height of 18 metres with aluminium composite material cladding.
The hon. Lady asked about the work to deal with freeholders and, in particular, construction product manufacturers. Again, work will be undertaken by the recovery strategy unit, which has already secured change from freeholders and is pursing construction product manufacturers. Colonel Graham Cundy is the leader of the RSU. He has a distinguished service career and a commitment to ensuring that there is no hiding place for those responsible for the building crisis. He and his team are united in how they operate. If any Member of this House would like Colonel Cundy and the recovery strategy unit to work with them and their constituents, they need only contact me and I will ensure that we have action this day.
I am a leaseholder without any problems. In 2002, 20 years ago, Parliament and the Labour Government passed leasehold and commonhold reform, but the commonhold bit did not work.
I welcome what my right hon. Friend has said and I hope that the House will manage to pass the Law Commission’s proposals on the reform of leasehold and commonhold and that we will be able to make progress. Incidentally, that would make the value of leasehold properties higher and the revenue would in part go to the Treasury, so his colleagues in government should be helping him to get this legislation brought to Parliament, not hindering it.
I also welcome what my right hon. Friend has announced on commissions. Can he find a way of ensuring that leaseholders who pay for buildings insurance become a party to the insurance policy, so that when things go wrong they can appeal to the insurance ombudsman and not be cut out because they are only paying and do not own the bricks?
Those responsible for the defects all had insurers, including the developers, architects, surveyors, component manufacturers, building control and, as my right hon. Friend has said, the Government in setting standards. I suggest that he re-engage with the insurance industry, because if people can take over the claims from those who have had losses—including the leaseholders and, for that matter, some of the landlords—and have a class action, the insurers will have to contribute significantly more than they are at the moment. There is much more progress to be made, so will he and his colleagues ensure that they carry on listening to the leaseholders and their representatives, and hopefully, in time, to the representatives of commonholders too?
Order. Please can I ask everyone to focus on asking single questions? Otherwise, it will be well after 1 o’clock before we get on to the Adjournment debate tonight.
Leaseholders have no better champion in this House than the Father of the House, and we absolutely will proceed along the lines that the Law Commission has outlined. I know that colleagues in His Majesty’s Treasury will appreciate the benefits that will accrue to the whole national economy through reform. The points that my hon. Friend makes about the insurance sector are well made, totally understood and will be acted on.
I thank the Secretary of State for giving me advance sight of his statement. He has rightly said the quiet part out loud—namely, that faulty and ambiguous Government guidance is to blame, alongside those who exploited a broken system. But his statement was light on the support that will be given to those who are carrying out remediation works. He knows that I have a constituency interest in this regard, with Bell Building Projects carrying out work. What help will be given to companies carrying out remediation works in relation to insurance? He rightly says that insurance companies are throttling the market, so can he say a bit more about what he is doing to assist those who are carrying out the remediation work? Will he give us an assurance that they will be paid on time by Homes England, for example, and that their issues will be timeously dealt with? Will he meet me to discuss some of the issues that this company has been faced in the recent past?
I am grateful to the hon. Member. The statement refers specifically to action in England, but we have been working with the Scottish Government, the Welsh Government and the Northern Ireland Executive to see what can be done to make buildings safe in those jurisdictions. On his point about remediation work, a number of companies in the private sector across the United Kingdom are contributing to this work and I have already raised with the chairman and chief executive of Homes England the importance of ensuring that they are paid for their work in a timely fashion. I will investigate further to make sure that progress is being made, particularly in the areas of insurance that the hon. Member mentions.
What actions will the Government take to make it more likely that people will set up new construction companies and grow smaller companies, since we clearly need more capacity and more competition to get high-quality work done?
My right hon. Friend is absolutely right, and many of the provisions in the Levelling-up and Regeneration Bill are designed explicitly to aid the entry of new small and medium-sized enterprises into the construction sector. Many of those provisions follow on from the excellent work of my hon. Friend the Member for South Norfolk (Mr Bacon), who as a champion of self and custom builders has done more than anyone else in this House to help to ensure diversification in housing supply.
I welcome the progress made so far. In a couple of weeks’ time, the Levelling Up, Housing and Communities Committee will be looking further at the omissions that probably still exist in the system, including how the Secretary of State will actually get the money out of the product providers, on which he has not given details.
Today’s big omission is social housing. Help for leaseholders is very welcome, but social housing providers, housing associations and councils are challenged with disrepair problems and the need to make their homes more energy-efficient, on top of which they now have the building safety work. Apart from on ACM cladding, there is no help at all for social housing providers. Why can the Secretary of State not remedy this unfairness?
The Chairman of the Select Committee makes an important point. I am grateful for his support for the progress we have made. I am well aware of the pressures on the social housing sector and of the need to work collectively to ensure it can discharge its obligations. I hope to say more about how we can do so in the weeks ahead.
I congratulate my right hon. Friend on the progress he has made. If he does reform the freehold and leasehold systems, what provision will he make so that people with short leases are able to take over their freehold without having to pay huge charges for extending their lease, which is the current situation?
My right hon. Friend makes an important point, and we need to make sure there is a fair valuation so that, as the Father of the House rightly said, those on short-term leases do not have to pay over the odds to acquire freehold or commonhold status if the value of the property increases.
20 of 64 shown
We have also reopened and turbocharged the building safety fund for new applications and are piloting our medium-rise fund, paid for from a levy on developers, to ensure that dangerous cladding will be removed. Leaseholders can rest assured that their buildings will be made safe. Where remediation is required and building owners are sitting on their hands—even when money is being provided by the Government—we will use powers under the Act to force the owners to fix their unsafe buildings. Members should be in no doubt that there will be significant consequences for those who fail to comply with their legal obligations.
Leaseholders should know that the law is on their side. Today, we make further progress on delivery. In April last year, I announced that the largest house builders had signed a pledge committing to fix all life-critical fire safety issues, internal and external, in buildings over 11 metres that they had a role in developing or refurbishing in England. Developers also committed to reimbursing the taxpayer where that work has already been done and subsidised by the taxpayer. In the summer, my Department published the draft contract that will bind developers to honour that pledge. Since then, my officials have been working through that contract line by line to ensure that it codifies the pledge in a way that is fair and transparent, committing developers to fixing buildings for which they are responsible as swiftly as possible and therefore keeping residents and leaseholders informed about that work. I am grateful to all the developers who work with us and to the Home Builders Federation and its chairman, Stewart Baseley, who have worked so hard in order to ensure that this contract can deliver. Today, we are publishing the final contract that I expect housing developers to sign. A copy of the contract has been deposited in the Library of each House and it is available on gov.uk.
Let me be clear: if you are one of the developers we invited to submit comments on the contract, I now expect you to sign it within the next six weeks—by 13 March. That includes every company who signed the original pledge as well as several companies who have regrettably not done so. Now is the time for all of them to make a binding commitment that will not only see them doing right by those whose homes they have blighted, but help them to maintain their credibility with those who may seek to contract with them or who may consider buying their homes in future. Those who fail to step up and make this commitment will suffer the consequences that this Parliament has so clearly spelled out.
Using powers provided by the Building Safety Act, I will lay regulations this spring to create a new responsible actors scheme. Those regulations will set out which developers, by signing the contract, will be eligible to be members. We expect those who built unsafe buildings to sign the contract. To join the scheme, they will have to sign and comply with the terms of the contract published today. Of course, we will invite developers to join the scheme in order to ensure that we do right by leaseholders.
Anyone who fails to sign the contract will be prohibited from carrying out future development and from receiving building control sign-offs for buildings under construction. A developer who fails to sign this contract will have to find another line of work. I say to all developers who have built unsafe buildings over 11 metres, “I am putting you on notice. You will be asked to step up.”
I will consult in due course on how we expand the responsible actors scheme to make sure that we capture all those who built unsafe buildings and should now fix them. Altogether, I expect developer remediation to be worth more than £2 billion of investment in safety and to protect people in hundreds of buildings. I am grateful to those in the development community who have got on with assessing and remediating their buildings without waiting for the final form of contract; I welcome their constructive engagement.
All developers should recognise that in signing the contract, they are taking a big step towards restoring confidence in the construction sector and providing much-needed certainty to all concerned. Those who sign will confirm that they are responsible companies. I know from the positive discussions that I have had that many are now keen to sign; I particularly thank all those developers who have today confirmed that they will sign. Accepting their new responsibilities will allow developers to plan ahead in the knowledge that they now understand the full extent of their legal obligations.
When these buildings are safe and a full reckoning has been made, we can then look to the future with a new clarity and confidence in our construction sector, but until that point, my determination will be to ensure that buildings are fixed, to do what we must all do to achieve that, and not to waver. My Department has a recovery strategy unit, which is relentlessly targeting those who have consistently failed to do the right thing. As well as targeting developers, it has also begun legal action against recalcitrant freeholders. It has active investigations under way into the conduct of various companies, including contractors and construction product manufacturers that bear responsibility for this crisis.
Let me again be clear to freeholders, from this Dispatch Box: if you are holding back work to make buildings safe, even where the Government have made sufficient money directly available to you through the building safety fund, you must fix your buildings or we will take action, including through the courts. To those freeholders who are trying to bully leaseholders into paying service charges that the Building Safety Act has already proscribed, let me spell out the law. Invoices issued before the Act came into force must be scrapped. New bills must comply with the law, including our new leaseholder protections.
While buildings await remediation, I know that many leaseholders continue to suffer spiralling insurance bills. Last year, I asked the Financial Conduct Authority to investigate the market. The serious issues that it uncovered concerned me greatly. It is simply unacceptable for managing agents, landlords and freeholders to profit from commissions secured out of the pockets of innocent leaseholders as bills spiral, so I can confirm today that I will take action to ban property managing agents, landlords and freeholders from receiving commissions and other such payments from insurers and brokers, replacing them with more transparent fees.
I will not permit people to hide charges in obscure invoices; I will require service charges to be issued to leaseholders transparently with clearly labelled statements. I will not allow building owners and landlords to charge their leaseholders to pay for their own legal bills, even to pay for settlements when leaseholders win their cases. Together, these steps will ensure that leaseholder insurance costs are fairer and more transparent, and they will empower leaseholders to challenge dodgy bills. I am also pleased to see that the FCA has committed to investigate broker practices and to consult on further regulatory changes to protect and empower leaseholders.
Leaseholders also now need insurance premiums to be reduced significantly—and urgently—so I expect the FCA to report on what further actions it will take to ensure that there is a fairer and more competitive market by the summer, and to continue its monitoring of this sector. I welcome work from within the insurance industry on launching a UK-wide scheme to reduce the most severe premiums for leaseholders and buildings with fire safety issues, but I must stress the urgency of this work: leaseholders need support now.
As we right the wrongs of the past, we must ensure that we can say with confidence that the future will be better. We want a culture of high standards that will transform not only the attitudes of people working in the construction sector but, ultimately, our whole built environment. Working together, we can put standards and safety first, and that means listening to the tenants and leaseholders who have suffered so much. Their experience is what matters, and their views must be at the heart of our approach. When everyone’s interest is aligned with the interests of tenants and leaseholders, everyone will benefit in the long run.
Government must play their part through clear regulation, but also through leadership that holds current wrongdoers to account. The new building safety regulator that we have established will oversee a culture of higher standards, and over the coming year my ministerial team and I will present an ambitious programme of secondary legislation to set the regulator on firmer foundations. Building owners and managers should already be preparing for the first requirement, due to come into force soon—the requirement to register higher-risk buildings with the regulator.
In the last year, we have made significant progress. When we were told that there was an impasse, we managed collectively in the House to break through. When we were told that leaseholders must pay, we ensured that they were protected; we were told that developers would never pay, but billions of pounds are now being pledged by developers to help those in their buildings. That demonstrates what can be achieved when people accept responsibility in a spirit of good will and collective endeavour. While there is much more to do, today is a major step forward, and I commend this statement to the House.
While I am asking the Secretary of State about omissions from the scheme, can he tell us why foreign developers are off the hook? Within the last few hours it has been reported that two major house builders have indicated that they will sign the contract, but it is also reported that they are only doing so after he watered it down to limit their liability, restrict the work that is covered, and prevent the Government from revisiting the contract at a later date. A quick read of the contract on gov.uk appears to confirm that he has retreated from his previous position and returned to the provisions agreed with his predecessors last summer, which, he said on retaking office, simply were not good enough.
Inside Housing quotes a senior house building industry source as saying:
“Our view is the contract is now just committing us to things we’re already doing.”
Persimmon has since confirmed that it believes that the contract simply reflects its existing commitments. Did the Secretary of State receive legal advice on the implications of the changes? In the spirit of greater transparency, will he commit to publish that today? We welcome action to help leaseholders challenge dodgy bills, but has he stopped to consider for a moment why on earth they should have to do so? Why on earth do we continue to tolerate those sorts of industry practices? Most of all, why on earth do we continue to tolerate leasehold—an arcane, feudal form of tenure that has no place in a modern country? If the sorry saga that millions of people have been forced to live with over the last five and a half years has done anything, it has lifted the lid on the reality facing millions of leaseholders in this country. No ifs or buts—leasehold ought to be abolished.
I was encouraged to hear the Secretary of State agree with that sentiment yesterday, just as I was when the Government first committed to it in 2017. If he legislates to ban leaseholds on new builds and to phase out existing leasehold in favour of commonhold tenure, he will have the Opposition’s full support. Will he commit to not just introducing that legislation in the final Session of this Parliament, but to passing it? The right to a decent, safe and secure home is non-negotiable. Too many people have been denied that for too long. No more excuses: it is time to get on with the job.
Foreign developers and those who operate opaque structures that enable individuals to profit and to evade their responsibility, which the hon. Lady referred to, are precisely and squarely within the remit of the RSU. I would be delighted for Graham and his team to brief Opposition Front Benchers and others on our approach. Some of the work undertaken requires a degree of commercial confidentiality, but I would be delighted to share that work.
Finally, the hon. Lady asked if we will maintain our commitment to abolish the feudal system of leasehold. We absolutely will. We will bring forward legislation shortly. But I gently say that the urgency with which she makes the case for change was not an urgency exhibited by the last Labour Government. In 1995—[Hon. Members: “You can’t blame us for this!”] I think we can, actually. In 1995, this brilliant document entitled “An end to feudalism” was published by the Labour party, then during all their years in power, the Labour Government did nothing to end feudalism. We need a Conservative Government to do that, and that is what we will do.