Leaseholders and Cladding

To ask the Secretary of State for Housing, Communities and Local Government if he will make a statement on whether leaseholders are expected to pay for the removal of dangerous cladding from their homes.

I congratulate the hon. Member for Sheffield South East (Mr Betts), the Chair of the Select Committee on Housing, Communities and Local Government, on securing the urgent question, which is of huge interest and concern to many of our constituents up and down the country.

The question of who pays for remediation works is key for the Government and many of our constituents. We have been clear that leaseholders should not have to worry about the cost of fixing historical safety defects in their buildings that they did not cause. Tests have shown clearly that aluminium composite material—the kind of cladding found on Grenfell Tower—is the most dangerous form of cladding material. We continue to engage with building owners, regulators and the wider industry to ensure that it is removed from high-rise residential buildings as quickly as possible.

ACM remediation costs are being funded through several sources, including warranties, building owners and developers. We have provided £600 million to fund the removal of ACM where funding has been a key barrier to remediation and the Chancellor of the Exchequer has allocated a further £1 billion to be spent on removing other types of unsafe cladding over the current financial year.

It is important to remember that this is a multi-year problem. Remediation work cannot be done overnight and it must be done properly so that it makes buildings and residents safe. That forms part of the ongoing discussion that my right hon. Friend the Secretary of State has with other Departments.

However, I am clear, and I hope that the House is clear, that public funding does not absolve the industry from taking responsibility. We expect developers, investors and building owners who have the means to pay to cover remediation costs themselves without passing on costs to leaseholders, but we recognise that there are cases where that might not be possible, and cases where there may be wider costs relating to historical defects. The Government are determined to identify suitable financial solutions and remove barriers to remediation.

The Government have asked Michael Wade to accelerate his work with leaseholders and the financial sector to develop proposals to protect leaseholders from the costs of remediating historical defects wherever possible. However, we must also ensure that the bill does not fall wholly on taxpayers. We will update leaseholders on that work before the Building Safety Bill, which has just completed its prelegislative scrutiny, is introduced in Parliament.

Thank you, Mr Speaker, for giving me the opportunity to ask my urgent question. The Housing, Communities and Local Government Committee has just carried out prelegislative scrutiny of the draft Building Safety Bill. In general, the Bill is very welcome. It implements the recommendations of the Hackitt report, post Grenfell. However, clause 89 contains provisions for leaseholders to be charged a building safety charge. That could cover future costs, but it could also be used to recover the cost of dealing with historical defects, such as the removal of dangerous cladding. That is the concern.

I have a number of questions for the Minister. First, will he confirm very clearly and straightforwardly that leaseholders should not have to pay any of the costs of removing dangerous cladding from their homes, as has been the Government’s policy for some time? Those leaseholders bought their properties in good faith. They have not done anything wrong and they should not be financially distressed as a result.

If the Minister thinks that leaseholders should have to pay something—the Building Safety Minister said to the Select Committee that he thought an affordable amount was reasonable—how would he define an affordable amount? The Building Safety Minister said it was something that did not bankrupt an individual. However, if leaseholders are not going to pay—I hope the Minister will confirm that point—I accept that he should pursue developers, freeholders and others. In the meantime, if developers have gone out of business or are refusing to pay, does the Minister accept that, at least in the interim, the Government are going to have to step in and fund all the costs?

If the Minister accepts that point, does he also accept that the £1.6 billion so far made available to remove dangerous cladding will be totally inadequate? The Select Committee heard that to make all high-rise buildings totally safe and remove all defects, the total bill could be as high as £15 billion. Leaseholders should not have to pay that.

I am grateful to the hon. Gentleman for his urgent question and for welcoming the proposals that we have tabled in the draft Building Safety Bill. He asks a number of important questions.

First, the hon. Gentleman asks whether the building safety charge will be retrospective. We envisage that the building safety charge will cover ongoing costs that leaseholders may have to pay for legal costs, building safety inspections and the like. In our proposals, we have said that the Secretary of State will be able to prescribe costs to ensure that unfair building safety charge costs do not fall unreasonably on the leaseholder.

We will of course look very carefully at the 80-page report from the Select Committee. I think there are somewhere north of 40 recommendations in the report. We want to look at it carefully and considerately, because we recognise it forms an important part of our answer to the challenge of building safety. I hope that we can develop a cross-party approach to our further scrutiny of the Bill when it comes before Parliament.

The hon. Gentleman asked me whether leaseholders will pay any costs at all. The point of introducing £1.6 billion of public money is to make sure that in the buildings that are most at risk and where there is no means to pay, the state steps in and supports those leaseholders, but, fundamentally, we expect developers and owners to step up and execute their responsibility to pay where buildings have been defective.

I cannot say that there will not be some costs at some point related to some defect in historical building safety that will not fall upon the leaseholder, but we want to make sure, through the public money that we are spending and through the work of Michael Wade, that we find innovative solutions to make sure that such costs are as minimal as possible. We cannot write an open cheque on behalf of the taxpayer. That would send the wrong signal to developers and those who are responsible for these buildings that they do not have to pay because the taxpayer will.

The hon. Gentleman asks about my noble Friend the Building Safety Minister in the other place. I can tell him that Lord Greenhalgh is working round the clock to find solutions to the challenges that face leaseholders up and down the country. He is determined, with the work that he is doing with insurers, developers and the financial services sector, to ensure that we come up with those solutions, and I look forward to working with him closely as the Bill, which he will introduce to Parliament, works its way through both Houses.

It is on record that I am a leaseholder, but I am not affected by these proposals or problems.

The hon. Member for Ellesmere Port and Neston (Justin Madders) and I chair the all-party parliamentary group on leasehold and commonhold reform. We give our support to the work of the Select Committee, which, in this report, as in its previous one on lease renters, has laid out starkly one of the problems of some particular tenants. Social tenants do not have to pay, ordinary tenants do not have to pay; it is leaseholder tenants who have been lumbered with unimaginable anxiety and with costs beyond possible chance of payment. Until we get a full grip not just on the very high buildings and the aluminium cladding but on all the problems, including the developers who used wood for balconies in ways that were against the house building regulations, we are going to be left with a frozen part of the housing market in every single one of our constituencies.

We are grateful for the work that my right hon. Friend and his colleagues have done, but he should go on paying attention, as I think Lord Greenhalgh has, to the work of the Leasehold Knowledge Partnership, which was the first campaigning charity to get a grip of the scale of the problem. Also, will he say a word about waking watches, which are going on too long and at too high a cost?

I am grateful to my hon. Friend for his contribution and for his ongoing interest in and commitment to this very important area of work. As I said earlier, we do not want leaseholders to carry the burden of these costs. That is why we are working with Michael Wade, who has a 40-odd-year history in the insurance market, to find innovative solutions to what is a very complicated problem. It is why we have also put aside a significant amount of public money in this financial year to remediate the buildings that are most at risk where the owners have no other means of paying.

My hon. Friend also asks about waking watch. We have published data on the costs of waking watch so that leaseholders are able to see the relative differences in charges by waking watch providers. It is entirely wrong that some providers charge so much, and I would point leaseholders to that data so that they can better understand where they may get better service. They may also know that alarm systems can pay for themselves within seven weeks and obviate the need for waking watch.

The Housing, Communities and Local Government Committee’s scrutiny report on the draft Building Safety Bill, published today, makes powerful yet sobering reading, not just for Members across the Chamber but, importantly, for the hundreds of thousands of leaseholders who are trapped in this living nightmare, left to foot the cost of a broken building safety system that they did not create. Before this, we had another powerful HCLG Committee report, a Public Accounts Committee report and a National Audit Office report, which repeatedly made it clear that, well over three years on from Grenfell, where 72 people lost their lives, the Government need to step up and step in to make buildings safe with a greater sense of urgency.

There are too many aspects of the building safety crisis to mention: the cost of remediation being passed to leaseholders and, yes, the interim costs such as waking watch; the snail’s pace of the work; other safety issues, such as firebreaks and wooden balconies not covered by the funding; the lack of prioritisation according to risk other than simply the height of buildings; and the ongoing saga of the external wall survey forms, despite this weekend’s botched announcement by the Secretary of State. How many reports are we going to need?

By my count, the Government have promised 11 times in this Chamber and beyond that leaseholders should be protected from the cost of remediation. Now we witness Minister after Minister shifting sand, referring to “affordable” costs put on the shoulders of leaseholders and enshrining in the draft Building Safety Bill the building safety charge—clause 89, there in black and white for people to see. Will the Minister tell me and the House what additional invoice paid in 28 days he defines as “affordable” or, as referred to at the Dispatch Box today, “reasonable”? Will he please answer that question?

Finally, will the Minister explain why those companies and developers that knowingly engineered false test results for insulation and cladding products, then riddled thousands of homes with flammable materials, are getting away scot-free?

I am obliged to the hon. Gentleman for his questions. It is not true to say that leaseholders are being left to foot the bill. He and the House know full well that the taxpayer is spending £1.6 billion in this financial year to help remediate those buildings most at risk where the owners are unable to pay. Of course, those discussions across Government are ongoing. We keep the situation under review. However, I remind the House that it is not fair simply to place such a burden on the taxpayer. Developers and owners must step up and play their part.

The hon. Gentleman raised the question of the external wall system 1 form, which he knows is a form produced by the Royal Institution of Chartered Surveyors; it is not a Government form. I am pleased that, as a result of the negotiations undertaken by my right hon. Friend the Secretary of State and Lord Greenhalgh, the EWS1 form will no longer be necessary for those buildings that are not clad. The industry has made that clear. That will be to the benefit of about 450,000 leaseholders. But there is more to do, and we will continue to do it.

The hon. Gentleman asked me what affordability is. It is a very subjective matter, because what is affordable to one person is not to another. We want to ensure that, as a result of the work that my noble Friend is doing with the financial services sector and the insurance sector, we come up with appropriate and innovative solutions to ensure that unfair costs do not fall on leaseholders for defects that may be identified down the line.

The hon. Gentleman also referred to commentary on lies told about fire safety tests. I entirely agree that that was wrong. It was outrageous. When firms have been proven to lie, they must of course receive the full force of the law.

Order. I note that we have 62 people to get through, so I am concerned. I recognise that everyone needs to get in, because they all have personal circumstances, so if we can help each other, that might just get us through.

While I welcome the fact that a number of responsible property owners have taken the necessary steps, supported by Government funding, to remove dangerous cladding from their buildings, the leaseholders and residents of Paddington Walk in my constituency are still under pressure from their buildings’ owner, European Land, to pay for the works required to remove ACM cladding. As those residents said to me in an email sent this morning: “Manufacturers are responsible for defective kettles or cars. Why is it different for the most expensive purchase anyone will ever make in their life?” Does my right hon. Friend agree that, given the billions of pounds being made available by the Government, it is now inexcusable that many building owners have still failed to remove dangerous cladding and are still trying to pass the cost and, indeed, the buck to leaseholders, who have suffered enough in this living nightmare?

I quite agree with my hon. Friend. The buck ought to lie with the owners, their developers or the warrantee holder. She will know that we have spent a great deal of public money to remediate those buildings that are most in need of it, as I have described, but the responsibility of the developers—there are some very good developers out there—must be fully understood by us in this House and by them as an industry to remediate buildings that need it and to restore the reputation of their sector.

I congratulate the hon. Member for Sheffield South East (Mr Betts), the Chairman of the Select Committee, on securing the urgent question.

Despite the building safety programme applying only in England and Wales, its advice is still being used by insurance companies and mortgage providers in Scotland to guide decisions. This is leading to many people north of the border ending up in the same position as those south of the border: essentially mortgage prisoners and having their properties valued as worthless. The Minister knows that this is not just an issue of commonality for buildings over 18 metres; it includes those under 18 metres, too. So what measures will the Government be bringing forward, particularly with an eye to tomorrow’s spending review? What discussions has he had with lenders and insurance companies to make it clear that applying this process to Scotland is unfair? Will he agree to meet a delegation of Scottish MPs to look more closely at the issue impacting our constituents in this regard?

The problems for leaseholders arising from the 18-metre rule raise the question: why is the archaic and often unjust institution of leaseholding continuing in England at all? Might this, therefore, be an opportunity to follow Scotland’s example and abolish this outdated practice and the negative consequences that are so common with it?

I am obliged to the hon. Gentleman for his questions. I will touch on two points that he raised. He is right: the financial services sector has commonalities throughout the United Kingdom, not simply in England but in Scotland, Wales and Northern Ireland. That is why the Secretary of State and Lord Greenhalgh have held a series of meetings with UK Finance and other components of the financial services sector. It is why an agreement has been reached that the EWS1 form should not apply to buildings without cladding, which, as I say, will help 450,000 or so leaseholders around the country. There is more work to do. I trust that the Scottish financial sector will take note of the advances we have made very recently in England and which we will continue to make. The hon. Gentleman raises the question of 18 metres. That is the guidance provided to us by Judith Hackitt and her committee and we are following that guidance. He also refers to leasehold reform. A leasehold reform White Paper will be forthcoming. Perhaps we may, at that time, be able to debate the advantages and disadvantages of the Scottish system and see where we are able to learn from them and possibly they are able to learn from us.[Official Report, 26 November 2020, Vol. 684, c. 9MC.]

A number of constituents in a low-rise block of flats in Southend West have been unable to get their properties insured because of cladding issues. It will cost £400,000 to remove the cladding and their service charges will escalate. Will my right hon. Friend please reiterate the principle that those costs should not be passed on to tenants or leaseholders?

I am happy to reiterate that point to my hon. Friend. Lord Greenhalgh has had a series of meetings with the insurance industry to make sure it fully understands and takes on board that point. He will continue to do so, as my hon. Friend will continue to campaign doughtily on behalf of his constituents.

I have to say to the Minister that I never dreamed that, three and a half years after my friend Khadija Saye died with her mother in Grenfell Tower, I would be here begging him to sort this problem out. I have over 1,000 residents in the Tottenham Hale Village in my constituency, a development built by Bellway Homes, which made £500 million in profits in 2018 and another £500 million in 2019, and has shown complete disregard for my constituents living in these buildings with combustible cladding. What is the Minister going to do about leaseholders in that situation when it is clear that his building safety fund is inadequate to meet the task? Will he meet me and my constituents, so we can sort this three and a half years after the Government promised it would be fixed?

I am obliged to the right hon. Gentleman for his question. I sympathise with him for his personal loss and the loss of many of his friends and associates at Grenfell Tower. He asks what is being done to accelerate the pace of remediation in London, where there have been challenges that are unique to our capital. Lord Greenhalgh convened a summit of the London Mayor and the London Fire Brigade back in September to address an action plan to accelerate the work of London remediation. There was a further progress tracking meeting last month, and there are case conference meetings to address specific buildings in the capital and beyond. I remind the right hon. Gentleman that there were some 2,700 applications for the £1 billion that we put aside for non-ACM cladding. We will work through those. We have now agreed that a significant number of them meet the criteria, and the first funding of those applications is about to begin. I am confident that the funding will be fully allocated by the end of the financial year in 2021, for which the money was made available.

This is an issue of huge concern to many of my constituents in Portishead. It must be an absolute principle that leaseholders must be protected from the cost of remediation for safety issues that were not their fault. I welcome the Government’s support and approach. A £1.6 billion taxpayers’ commitment is huge, but the taxes of working families up and down the country should not be used to absolve developers, insurers and owners from their proper responsibilities. When will my hon. Friend come forward and set out how these responsibilities will be enforced?