Building Safety Bill, Committee Stage, House of Lords, 21 February 2022

The LGA has four core asks around the Building Safety Bill. These are addressed in order of priority below.

1. We ask that the Government draws a distinction between developers and local authorities to ensure Housing Revenue Accounts (HRAs) are not forced to choose between remediation and essential services.

• On 14 February 2022, the Government tabled a set of amendments to the Bill that aim to make industry pay for some building safety remediation costs. The LGA has long argued that industry must pay, not leaseholders. The amendments mean that freeholders will meet some of the costs of non-cladding building safety issues in buildings over 11 metres, while leaseholders will not pay for cladding costs in buildings over 11 metres.
• However, the Government’s amendments fail to provide any new assistance for social landlords facing building safety costs and could leave councils liable for the costs of buildings merely because they are on council land.
• The Government has made large sums available to remediate dangerous cladding on buildings over 18 metres. However, this money is only available to social housing providers in the limited case of ACM cladding or to alleviate costs that would otherwise be passed on to leaseholders. The Government must commit to covering the remediation costs of social landlords. Failure to do so will leave the housing revenue account exposed, limiting councils’ ability to provide homes for those most in need and to improve social housing.
• The LGA has separate concerns about the Government’s failure to draw a distinction between councils and developers in relation to this Bill. The Bill introduces a new levy on developers, which the LGA supports. Amendments have extended the Levy to apply to all new residential development (previously it only covered new residential buildings over 18 metres).
• However, imposing this levy on councils means council tenants will be subsidising the failures of private developers and paying the cost both of remediating council housing and private housing. The LGA worked with MPs to table amendments in the Commons to remedy this and has done the same to support Peers at Committee Stage in Lords. 
• The key role of local government is to serve communities and provide essential services. They are not driven by a will to make profit but a will to deliver for residents. If the Government fails to recognise that local authorities are not the same as developers, then councils will face heavy new costs. This in turn, will add pressure to already strained HRAs.
• If the Government fails to recognise that local authorities are not developers, then the money to fund remediation must come from somewhere and it will inevitably be at the expense of another critical service from elsewhere in the housing directorate. We must have reassurances from the Government that councils will not be forced to foot the bill for the failures of the construction, developer, and manufacturing industries.

2. We ask that the construction industry, as well as developers and manufacturers, is made to pay.

• We agree that no leaseholder should have to pay the costs of making their homes safe and the Secretary of State’s previous (10 January 2022) commitment to explore the use of the legal system to ensure developers meet their responsibilities to leaseholders is a positive step in the right direction.
• However, the construction industry must also be made to fix the fire safety defects it has built into blocks owned by councils and housing associations. At present the Government is pursuing developers and product manufacturers while ignoring the role of the wider construction industry in creating the building safety crisis.

3. It is important to expand the scope of the Bill so that the more stringent building safety framework applies not just to buildings over 18 metres, but also to those under 18 metres where those buildings are multiple occupancy dwellings.

• The LGA has always maintained that height is a poor indicator of risk. We are also concerned that by restricting the scope of the Building Safety Regulator to buildings over 18 metres, the Government risks creating a two-tier system.
• The Government has already accepted that allowing developers to choose their own regulator has undermined the regulation of building safety by disincentivising effective regulation. It has therefore removed that right in relation to buildings over 18 metres. The LGA does not recommend the continuation of this flawed model in relation to buildings under 18 metres. The LGA has worked with Peers on amendments to the Bill which would remedy this failing by removing the right of developers of residential buildings under 18 metres to choose their own regulator. Amendment 11 seeks to achieve this by making local authorities the building control authority for residential blocks under 18 metres and making developers of these buildings subject to Gateways 2 and 3 (more on these below).
• Given the volume of work involved and the capacity of local authority regulators, this reform would lead to private building control firms (Approved Inspectors) competing for local authority contracts to deliver regulation rather than competing for contracts awarded by developers, as at present, incentivising better regulation where the existing system incentivises lax regulation.

4. It is imperative that councils are funded to deliver the Building Safety Regulator (BSR).  The current BSR structure means enforcement and inspection activity will, in practice, be conducted to a large degree by councils and fire and rescue services.

• We are also concerned about the new Building Safety Regulator (BSR) and the implications of this for local authorities. The BSR will be within the Health and Safety Executive (HSE). The BSR will oversee the safety and performance of all buildings and assist and encourage competence among the built environment industry, and registered building inspectors.
• However, the BSR will rely on councils and fire and rescue services to deliver the regime for higher-risk buildings. Once up and running the system relies on cost recovery; but there is a need for funding in the next few years to increase skilled capacity in local authority building control and in the fire service.
• Without this funding we doubt the ability of the BSR to assess all high-rise buildings safety cases by the end of the decade. Moreover, we are concerned that the fire service could be left with conflicting objectives under the National Framework and the Bill, potentially undermining a risk-based approach to the allocation of Fire Rescue Service resource.
• A significant proportion of the fire safety failures uncovered in the wake of the Grenfell Tower disaster are not related to cladding and the Government has, so far, refused to fund these. Funding must be forthcoming to social landlords to addresses non-ACM cladding related risks.
• Through our debate briefings, written and oral evidence to the Public Bill Committee, and briefing work at Second Reading, we have continually sought to strengthen the Bill for both local authorities and residents.

• Amendment 35 will make social housing providers exempt from the additional financial burden of the Government's proposed levy, to prevent council tenants from subsiding the failures of private developers.
• Clause 57 of the Building Safety Bill gives the Secretary of State powers to impose a new Building Safety Levy in England, that will contribute towards the Government’s costs for remediating historical building safety defects.
• This will apply to developers making an application to the Building Safety Regulator for building control approval, the new “Gateway two” process to be introduced in building regulations. However, it will also be imposed on councils who are already facing additional financial pressures due to COVID-19.
• Imposing this levy on councils means council tenants will be subsiding the failures of private developers and paying the cost both of remediating council housing and private housing.
• If the Levy is imposed on councils, it will increase the cost of building or refurbishing social housing or increase rents, yet the benefits to funds will not be available to the tenants who would otherwise have benefitted from lower rents or better housing.
• The LGA therefore supports amendment 35 tabled by Baroness Sue Hayman, Baroness Pinnock and the Lord Bishop of St. Albans that will make social housing providers exempt from this additional financial burden.

• Amendment 11 will ensure that the more stringent building safety framework applies not just to buildings over 18 metres, but also to those under 18 metres where those buildings are multiple occupancy dwellings.
• The Building Safety Bill in both its original draft and the draft as amended at Committee Stage fails to robustly confirm whether the Gateway system will apply to buildings under 18 metres where there are multiple occupancy dwellings.
• This will create a two-tier system where buildings below 18 metres will face less rigorous safety regulations than buildings over 18 metres.
• Amendment 11 tabled by Baroness Sue Hayman and Baroness Pinnock will ensure that Gateways 2 and 3 are applied to multi-occupancy dwellings under 18 metres not just buildings over 18 metres. The LGA supports these amendments.
• If these amendments pass, to avoid issues with capacity that may arise for the Building Safety Regulator (BSR), for buildings under 18 metres, the local authority would be the building control authority, not the BSR. Local Authority Building Control will cover the operation of the Gateway system at all heights below 18 metres.
• The amendment also removes the ability for developers to pick their own regulator for multi-occupancy buildings under 18 metres because Local Authority Building Control (LABC) will be the sole regulator. This prevents a two-tier system developing in building safety.
• The amendment removes concerns that the Government may fail, or take a long period of time, to expand the higher-risk regime to include more buildings.

There are two core issues to highlight with regards to the BSR. Firstly, as mentioned, the new building safety regime is dependent on council building control and the fire service, and currently they do not have the funding to increase skills or capacity. Secondly, linked to this, the capacity of the HSE to deliver a successful BSR.

Funding for the BSR

• In occupation, buildings will need to be registered with the BSR and will require a safety case. The Accountable Person (AP) (essentially the owner or managing agent) will need to maintain a ‘Golden Thread of Information’ about the building and submit a safety case to the BSR. The AP will have a duty to listen to residents who raise building safety concerns – and if residents feel ignored, they can raise issues with the BSR.
• The BSR will rely on councils and fire and rescue services to deliver the regime for higher-risk buildings. The Bill places the HSE and local regulators under a duty to cooperate and gives the HSE the power to direct councils and fire services. The latter power is to be used only in exceptional circumstances and the Bill provides safeguards to prevent it becoming a default option.
• The Bill also brings about a number of new burdens for councils. Firstly, the current BSR structure means enforcement and inspection activity will, in practice, be conducted to a large degree by councils and fire and rescue services. While there are cost recovery mechanisms in the legislation, evidence from an LGA survey in 2016 appears to confirm that authorities do not generally cover the costs of administering new regulations. We therefore believe that levels of charges should be worked out and set locally.

Capacity of the BSR

• The BSR will rely on councils and fire and rescue services to deliver the regime for higher-risk buildings. The Bill places the HSE and local regulators under a duty to cooperate and gives the HSE the power to direct councils and fire services. The latter power is to be used only in exceptional circumstances and the Bill provides safeguards to prevent it becoming a default option.
• The Bill also brings about a number of new burdens for councils. Firstly, the current BSR structure means enforcement and inspection activity will, in practice, be conducted to a large degree by councils and fire and rescue services. While there are cost recovery mechanisms in the legislation, evidence from an LGA survey in 2016 appears to confirm that authorities do not generally cover the costs of administering new regulations. We therefore believe that levels of charges should be worked out and set locally.

The effect of the Bill cannot be divorced from the impact of the Fire Safety Act (FSA) and associated changes to the Fire Safety Order (FSO), for example:

• The FSA will require building owners to review fire risk assessments on many residential buildings.
• Regulations will be introduced later this year relating to premises information boxes; personal emergency evacuation plans; fire door checks and lift checks.
• The FSA and FSO apply to all residential buildings with more than one dwelling.
• The concept of the Responsible Person under the FSO needs to be aligned with that of the Accountable Person in the Building Safety Bill.
• For regulators there may be anomalies that arise meaning council or fire service officers can charge for an activity or use a power when acting for the building safety regulator, but not at other times.

• The LGA is keen to ensure that the Construction Product Regulations dealt with in Schedule 9 take account of recent experience of the failure of the existing system. We have direct experience of the failure of the construction product testing regime in two respects: the testing of cladding systems and the testing of fire doors.
• The LGA’s experience of the product testing system as it applies to fire doors is that there is a lack of capacity, a lack of choice and a high cost. In addition, when test houses get advice wrong, there seems to be no effective recourse for manufacturers and their customers. The Bill does not address these issues.
• In the 14 February Government amendments, it was welcome that Cost Contribution Orders will be able to be placed on manufacturers who have been successfully prosecuted under construction products regulations. These orders will require them to pay their fair share on buildings requiring remediation. It is wrong that, until now, a manufacturer could be found guilty of misconduct but could not be charged to fix the problems they caused in selling defective products.
• In our experience tests do not always reflect real-world conditions. For example, the BS 8414 cladding system test takes too little account of proven installer incompetence, the effect of wind and of smoke toxicity, and fire door testing makes too little allowance for the effect of daily use. The 8414 test is also too vulnerable to manipulation and fraud – especially when assessments in lieu of tests (‘desktop studies’) are permitted - and standards are not always clear, for example confusion around what ‘Class 0’ means. Most testing is cost prohibitive for many local authorities.
• An effective product safety system needs to be based on reform of the testing system that address these issues; there must be real consequences for the owners and managers of companies that miss-sell products. The new regulator must have real powers and sanctions and the regulatory system must be properly funded. Trading Standards services are not currently armed with either the resources or the powers to take on large product manufacturing firms and unless this changes the Bill will fail to provide an effective system. In addition, too often, even when taking on enforcement action, Trading Standards authorities have found themselves caught between costly and complex arguments between test houses about the correct approach to testing, with no way to resolve them.

• The LGA raised concerns raised by the London Fire Brigade about the implications of Special Purpose Vehicles (SPVs). This issue arises when where developers open subsidiary companies or special purpose vehicles to be responsible for new development or refurbishment. That company is then closed down after completion of the project and the parent company rarely has any ongoing legal liability for the premises or remediation.
• We therefore welcome the Government’s amendments that seek to ensure courts will also be given new powers to allow developers to be sued where they have used shell companies to manage specific developments, so they can avoid taking responsibility for their actions

Jonah Munn, Public Affairs and Campaigns Adviser

[email protected]