02 Feb 2021
This morning, government responded to yesterday’s debate, confirming that a solution to significantly increase the available funding for cladding remediation would be announced within the next few weeks. However, this would appear to be simply confirming existing work in progress, since the announcement indicated that the ‘lasting solution’ to the issue would involve input from developers, the insurance industry, mortgage providers and leaseholders. This likely to be along the lines of the solution proposed by Michael Wade, the insurance sector businessmen who have been brought in to advise government on funding cladding remediation.
It is clear from the debate yesterday that there is a groundswell of political opinion for leaseholders not to pay a ‘penny piece’. Insofar as leaseholders did not cause this problem, that seems a just position and one that IRPM supports. Notwithstanding natural justice, we remain concerned over the impact that leasehold loans would have on the value of their properties and the financial impact on leaseholders who have already suffered sometimes significantly increased costs.
The Cladding and Building Safety Campaign, led by leading managing agents, IRPM and ARMA, takes the view that all stakeholders involved in a building downstream of its sign-off, leaseholders, freeholders or managing agents, did not cause these defective buildings and should not be expected to pay for their remediation.
Yesterday, the House of Commons hosted an Opposition Day Debate on ‘Cladding and Building Safety’ was kicked off by Labour’s Shadow Secretary of State for Housing, Thangam Debbonaire MP, who laid down the motion. It was responded to in the first instance by Minister of State for Housing, Chris Pincher MP, Minister for Rough Sleeping & Housing.
The debate lasted for almost 4 hours and a total of 63 MPs spoke. A full transcript of their contributions can be found here.
The motion put forward by Labour for the debate outlined three principles:
The motion was supported by 263 MPs, with 0 votes against. The Scottish National Party, Liberal Democrats, Green Party and Plaid Cymru backed Labour’s motion, but Conservative MPs abstained in line with Government policy, despite numerous contributions in support of protecting leaseholders from high remediation bills.
While Chris Pincher reported strong progress on the remediation of buildings with ACM cladding, with 95% of all high-rise buildings either fully remediated or have seen work commenced. He also confirmed the government has received 2,840 registrations for the non-ACM Building Safety Fund. He was careful to point out that eligibility decisions had been hampered because many registrations did not include basic information such as the building height, sample lease agreements or accurate descriptions of the materials and walls. Hence the extension of the deadline to June. He confirmed it was wrong and unjust for leaseholders to shoulder unfair costs for defects they did not cause but that public funding does not absolve industry for its failings. Whilst more than half of the private sector high-rise buildings have had building owners ‘doing the right thing’, he criticised some building owners or their managing agents for simply passing on the costs to leaseholders. For this reason, he was seeking a financial solution for leaseholders, to be fair to leaseholders and the taxpayer, but confirmed that government funding alone cannot solve all the problems.
Mr Pincher said he understood what the opposition amendment was trying to achieve. However, he was concerned that the amendments were not suited to the Fire Safety Bill and indeed would impair the progress of the urgently needed bill. He opined the Building Safety Bill is the best mechanism to introduce a new regime.
Regarding the confidentiality clauses, he confirmed that leaseholders should not be gagged by standard clauses. Robustly, he recommended that leaseholders deliver “a good old-fashioned Anglo-Saxon response to any petty official who says otherwise”.
Labour called for a National Cladding Taskforce
Ms Debbonaire proposed following the Australian example of creating a task force to identify the extent of dangerous cladding and then to prioritise its remediation according to risk. Also to ensure enforcement against those who refuse to undertake remediation work. In Australia, buildings have been fixed according to risk whereas the UK has applied the first-come-first-served principal and managing agents report difficulty understanding the rationale over which buildings have successfully applied to the fund and which have been unsuccessful.
Ms Debbonaire observed the government’s recent change of language; their initial “leaseholders should not pay” having shifted to “leaseholders should not have to pay ‘unaffordable’ costs”. Overwhelmingly, contributing MPs took the view that leaseholders should not pay. Quite a number of MPs also observed that the taxpayer should not pay. Overwhelmingly, there was consensus that the developers, builders, cladding manufacturers and any other parties associated with the construction of unsafe buildings should foot the bill.
Whilst the developers were the main target for the source of funding, a substantial number of MPs called for government to make funding available in the first instance and then for government to recover the cost of that funding from those who had built unsafe buildings. In short, pay now and recover later.
Commonly, the existing £1.6 billion Building Safety Fund was regarded as inadequate. It was also repeated that the fund did not cover other fire safety defects such as internal compartmentation, fire doors, balconies, etc., nor does it cover buildings under 18 m.
Clive Betts MP, Chair of the Housing, Communities and Local Government Select Committee, pointed to the Committee’s recommendation to remove any form of combustible cladding from any high-rise or high-risk building, regardless of height. Further, he reiterated that leaseholders should not pay anything towards the cost of remediating historical building safety defects.
Concluding remarks by Eddie Hughes MP the newly appointed Minister for Rough Sleeping and Housing, suggested that government has taken a clear position and taken concrete steps to hold to account those responsible for the crisis, also bringing forward legislation to create a more accountable system, with the regulator, to improve the safety of residential buildings.
Over the weekend, Housing Sec Robert Jenrick MP announced that the Waking Watch Relief Fund is now open for applications. The purpose of the fund is to provide financial support to make residents buildings safer while they wait for remediation work to be completed. Basically, to replace expensive waking watch patrols with alarm systems that many regard as being more effective and more efficient.
£22 million of the total £30 million fund has been apportioned between the major cities, including London, Manchester and Birmingham.
The fund criteria require the building to
MHCLG intends to work closely with councils and Fire and Rescue Services and the delivery of the fund. Time limits apply and prospective applicants are advised to move quickly.