Building Safety Bill, Second Reading, House of Commons, 21 July 2021

The most controversial aspect of the Bill remains the question of who pays to remediate the consequences of twenty years of systemic failure in building safety.


Key messages

  • The LGA welcomes the introduction of the Building Safety Bill. We are confident that it will strengthen the building safety system in the UK, especially in relation to new buildings. It is, therefore, an important step in the right direction.
  • The Bill impacts councils as duty holders and as regulators and impacts fire and rescue services as regulators. Our comments and concerns about the Bill are dealt with under separate headings below. However, the most controversial aspect of the Bill remains the question of who pays to remediate the consequences of twenty years of systemic failure in building safety.
  • The Bill establishes a Building Safety Regulator (BSR) within the HSE to implement the new, more stringent, regulatory regime for higher-risk buildings (defined as residential buildings over 18m. Care homes and hospitals over 18m are also covered at the design and construction stage). 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.
  • New buildings will have to pass through three regulatory Gateways in relation to safety – at the planning stage, at the final design stage (before construction can begin) and immediately before occupation when construction is complete.
  • 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. Leaseholders will have to pay a Building Safety Charge (BSC) that covers the costs of operating the new regime.
  • The BSC does not cover the cost of remediation works that are required as a result of BSR interventions. These will be chargeable under existing arrangements, which vary according to leases, but generally allow APs to pass costs on to leaseholders. The Bill will prevent APs doing this until they have considered other options such as warrantees, government funds and litigation. However, this will not force APs to sue builders before they can pass costs on to leaseholders.
  • The Bill also extends the period action can be taken under the Defective Premises Act 1972 and enacts section 38 of the Building Act 1984. There is uncertainty as to whether either of these measures can assist leaseholders.
  • The BSR will rely on council building control services and environmental health teams 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 first stage of the new regime is the introduction of Planning Gateway One in August which will require those planning to build buildings in scope of the new regime to produce a fire statement to ensure applicants have considered fire safety issues as they relate to land use planning matters (for example layout and access).

Further information

Funding remediation

  • The Government has made large sums available to remediate dangerous cladding on buildings over 18m. 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. 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 refused to fund these.
  • In the social sector this will prevent councils and housing associations from making a greater contribution to providing the housing the nation requires, improve the existing housing stock to modern standards, meet energy targets and make buildings safe.
  • In the private sector leaseholders are facing the costs of interim measures, rising insurance charges and remediation bills that could bankrupt them in some cases, while thousands of flats are unsellable. As set out in our position statement on leaseholder costs, the LGA is concerned that the failure to protect leaseholders will leave councils to pick up the pieces as homeowners are made homeless and dangerous buildings left unfixed, a blight on our towns and cities.
  • The Bill seeks to alleviate this problem in three ways:
    • Schedule 7 excludes remediation costs from the Building Safety Charge; however, this does not in itself prevent remediation costs being passed on.
    • Sections 125 and 126 extend the scope and the duration of the Defective Premises Act (DPA). However, the DPA has seen relatively little use to date and the ability of contractors to go out of business to avoid being held to account for inadequate work means that it is unlikely to offer much assistance against smaller concerns, while large developers and contractors will be better able to afford lengthy litigation than leaseholders or most Accountable Persons.
    • Section 124 (4) requires Accountable Persons to seek alternative sources of funding before imposing remediation costs on leaseholders. This reflects existing practice under the Building Safety Fund and is not expected to benefit many leaseholders, although it may help in rare cases where owners have chosen to charge leaseholders rather than access Government funds. We understand it is the Government’s intention to allow Accountable Persons to charge leaseholders before seeking alternative funds and reimburse them if such funds are secured. As the works involved are often required by law, this raises the prospect of APs – including councils - being obliged to make leaseholders pay up front costs for works the AP is simultaneously claiming in court are the responsibility of a third party. This will put our members in an impossible position.
  • The LGA has been calling for several years for the Government to fund remediation costs in the first instance and then seek to recoup those costs from those responsible. We would echo the HCLG Select Committee’s recommendation for proposals for funding all historical building safety remediation works, that “These proposals should impose no costs on leaseholders and explicitly acknowledge that in the short term the Government must foot the bill, until such time as mechanisms for cost recovery have been developed.”

The alignment of the Bill and the Fire Safety Act

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.

Scope of the Bill

  • The LGA has expressed concern about the scope of the Bill, the speed at which its scope can be expanded and the constraints on its expansion. We have argued that height is not an effective determinant of risk and that for example care homes under 18m should be included in the new regime.
  • Part 4 (sections 62-7) defines higher risk buildings as those over 18 meters or 6 storeys is too simplistic. Height is only one factor in determining risk. Others include issues such as the vulnerability of occupants (care homes tend to have a large proportion of residents who cannot self-evacuate, for example); the number of protected means of escape; the provision of fire alarms; and the means of construction.
  • The problem with the height-based approach is not only that it will omit a number of dangerous buildings from the scope of the regulator, but that it will include a number of less dangerous ones. This will use scarce resource unnecessarily which could be deployed to life-saving effect elsewhere.
  • For example, the current scope would not have covered the Cube student residence in Bolton. In December 2019, the flammable cladding at the Cube rendered the only staircase untenable within half an hour and a resident was rescued from the top floor of the building moments before the flat from which she was rescued was destroyed by fire. This suggests that had the fire taken place later in the evening when more residents were asleep, it would probably have resulted in fatalities.
  • In addition to the Cube, we have already seen serious fires in Barking and Worcester Park and at a care home in Crewe, among others, which have demonstrated the very real danger that the failings of modern construction pose to residents in buildings under 18m.
  • Given the UK’s lack of capacity in building safety we accept that extending the higher risk regime to cover buildings over 11m is not something that can be done immediately, but we are concerned that without a clear timetable for this expansion, nothing will be done to provide the capacity required to make such an extension possible.
  • The HCLG Select Committee called on the Government to set a clear timetable for extending the Bill’s scope, but the Government has argued that as the Bill requires the regulator to monitor the scope of the regime continuously, such a timetable is unnecessary. We believe it is necessary. Requiring the regulator to monitor the scope of the regime does not provide the political will to extend it nor will it provide the momentum required to bridge the skills gap that currently denies residents of lower-rise buildings the protection afforded to others. The case for the higher risk regime extending to buildings over 11m (ideally via a definition of high risk that considers additional factors listed above), has already been demonstrated and it is only the UK’s shortage of the requisite skills that justifies the limited scope in the Bill. The extension of the Bill’s protection to those buildings under 18m that require it on the basis of risk needs to be hardwired into the legislation.
  • The extension of the Bill’s system of Gateways to cover care homes and hospitals over 18m will add very few buildings to the scope of the Bill and there is a case for abolishing the height limit in regard to these buildings.

The conflict between the new building safety system and the Planning White Paper

  • We set out our concerns regarding Gateway One and its conflict with the Planning White Paper in our evidence to the HCLG Committee’s pre-legislative scrutiny of the draft Building Safety Bill. The Government has taken welcome steps to address these concerns, but we would welcome further assurances that it is determined to ensure no loophole is left unguarded.

The adequacy of the product safety provisions

  • The LGA is concerned 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 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.
  • When products fail it is virtually impossible to get redress from manufacturers who can simply cease trading and when test houses provide bad advice there appears to be no redress – both issues have been raised in relation to fire doors. Customers struggle for clarity as manufacturers hide behind commercial confidentiality.
  • 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 limited removal of competition in building control

  • The failure of the building safety system that this Bill seeks to remedy owes much to the ability of duty-holders to choose their building control regulator. Part 3 of the Bill rightly removes this, but only in relation to buildings deemed in scope (S.31). The Government has rejected the HCLG Select Committee’s recommendation that ‘duty holder choice be removed entirely from the building control system and replaced by a system of independent appointment’.
  • By requiring regulators to remain in competition with ‘approved inspectors’ for the majority of buildings, the Bill leaves in place one of the root causes of the current crisis. Compliance with regulation cannot be a commodity and local authority building control should not be left to tackle non-compliance in buildings over 18m while simultaneously having to compete with private businesses for work in out of scope buildings, often owned by the same developers.
  • This shortcoming in the Bill could result in local authority building control being starved of work on buildings that are not in scope. This in turn could result in the decline of local authority building control functions, to the point where they are no longer able to deliver the Bill’s objectives in relation to in scope buildings.

Funding

  • We agree that the regulator should be able to charge for its activities and be funded through cost recovery. However, the establishment of the regulator will not be covered by this approach and must be properly funded.
  • We are concerned that underfunding could delay the expansion of the scope of the higher-risk regime, leaving large numbers of dangerous buildings under 18 meters under-protected. We want to see a commitment to sufficient funding for this expansion. This is one of the reasons why we feel there should be a commitment to expansion on the face of the Bill.
  • The structure of the Building Safety Regulator means that its enforcement and inspection activity will, in practice, be conducted by councils and fire and rescue services. This in itself is not something we object to, but it does raise two issues. First, over the relationship between councillors and fire authority members who are democratically accountable for their services and the Building Safety Regulator which has separate powers to direct those services. Second, we are concerned that local services may not be adequately funded for carrying out work on behalf of the regulator. We object to the model set out in the legislation.
  • Clause 27 of the Bill allows the Secretary of State to make regulations allowing the Building Safety Regulator to charge fees and recover costs. The levels may be set in regulations or by the regulator (in the latter case the regulator will be expected to publish its charges).
  • Clause 15 allows the Secretary of State to make regulations allowing for Fire and Rescue Services and councils to be reimbursed for Building Safety Regulator work and it empowers the Secretary of State to decide what is an appropriate amount.
  • In our experience, where central government sets fees and charges nationally, cost recovery does not work, and this results in a series of local shortfalls. One example is the planning system, where councils have been subsidising building developers by hundreds of millions each year because they must use the national charges set by the Secretary of State which do not cover their costs.
  • Similar issues also exist within the licensing fees regime. Fees under the Licensing Act 2003 have remained at the level set by the government when the Act first came into effect in 2005. Whilst the intention of the Act (in common with other licensing frameworks) is for fees to achieve full cost recovery for licensing authorities, concerns have been raised ever since the Act was first introduced that councils are experiencing a shortfall in licensing fee income relative to costs. Evidence from an LGA survey in 2016 appears to confirm that authorities are not covering the costs of administering the Act and are running a deficit. This deficit is estimated to cost a total of £10.3 million every year.
  • We therefore believe that levels of charges should be worked out and set locally. This could be agreed between the Health and Safety Executive, councils, and fire services. If the Health and Safety Executive is not satisfied that local regulators are charging correctly, it can raise this in its annual reports and request direction from the Secretary of State, so there are already safeguards in place.
  • If the regulator has to publish a set of charges, there is a risk that this will not allow for legitimate differences in costs between different council areas. Apart from regional differences, this may reflect the shortage of skilled fire engineers in the country which could prove more expensive in some places than others.
  • If the charging scheme set out in the Building Safety Bill does not allow local regulators to recover costs this will act as a deterrent, undermining the policy objectives of the Bill. We have raised these issues with the Government and HSE and continue to work constructively with officials to find the best possible approach.

Competence and capacity

  • In addition to the question of fees and charges for day to day work, there will be considerable cost both to the Health and Safety Executive and to local regulators in setting up the Building Safety Regulator. This will include training and the provision of extra staff. The National Fire Chiefs Council has been given some funds to improve protection services and some of this has been passed to fire services. Councils have yet to receive funding for the improvements that will be required.
  • One of the challenges we are most concerned about in building safety is the lack of expert capacity to address safety issues. This includes a lack of fire engineers, a shortage of surveyors and assessors with sufficient knowledge of both high-rise structural safety and cladding systems, and the difficulty in obtaining Professional Indemnity Insurance experienced by those who do have expertise in these areas. This lack of capacity could delay the implementation of the Bill and limit its scope. As we argued in response to the Bill’s initial publication a year ago, the UK needs to invest in addressing this skills shortage as soon as possible.

Councils as duty-holders

  • The Bill was accompanied by a transition plan. It remains to be seen how realistic its timetable is. An extensive programme of engagement with duty holders will be required to ensure landlords are able to meet their obligations under the new system, which accompanies significant new duties under the Fire Safety Act. While these changes are necessary and the LGA supports them, social housing providers need support in adapting to them. Issues that need to be covered in this process include:
    • Establishing and maintain a ‘Golden thread’ of information about the building.
    • Putting together a safety case for buildings.
    • Defining where accountability sits within social housing provider structures and how clear lines of responsibility for safety are established.
    • Best practice in resident engagement.
  • We are also concerned that councils may be subject to the developer levy (S.57 of the Bill), placing an additional cost on the provision of essential social housing.

Contact

Jonah Munn, Public Affairs and Campaigns Adviser

jonah.munn@local.gov.uk