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Lords voice support for polluter pays clause for cladding remediation

  • 05/11/2021
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Lords voice support for polluter pays clause for cladding remediation
Members of the House of Lords have come out to support the Polluter Pays amendment for the Building Safety Bill in order to push the funding for cladding remediation on to “responsible parties” rather than leaseholders.


In a debate yesterday, Lord Young of Cookham, the Bishop of London, Lord Shipley and Baroness Pinnock voiced their support for the Polluter Pays amendment to the Building Safety Bill.

The amendment uses the same principle as the law for contaminated land and would allow the government to claim remediation and interim safety costs from responsible parties in the construction industry, including developers and builders, rather than leaseholders or homeowners.


Proposed government levy ‘provides little comfort for leaseholders’

According to Lord Young of Cookham the government’s proposed four per cent levy on developers’ profits over £25m, which should raise £1bn for cladding remediation over the next five years, would fail to generate enough money to tackle the problem given that there was already a £10bn shortfall between the £15bn estimated cost of repairs and the £5bn of funding the government has pledged to offer.

Lord Young also said that the levy would be paid by developers who were producing homes to much higher standards who may have played no part in selling defective flats. These costs could be passed on to future homebuyers.

Instead he wants the government to impose a £5bn retrospective levy on the developers of defective flats and provide a further £5bn from the Treasury.

“I believe a solution along those lines would enable us to begin to draw a line under this problem and relieve thousands of leaseholders of the nightmares they now suffer from,” he said.

The Bishop of London said that the residential property developer levy “provides little comfort for leaseholders”.

She added that unless more funding is found leaseholders could face substantial bills that they may not be able to afford, which could lead to them losing their homes and negatively impact their health and wellbeing.

The “only comprehensive solution” was the polluter pays amendment, she said, which was supported by UK stakeholders and had garnered international support.


Benefits of the amendment

The Earl of Lytton explained that the way the polluter pays amendment would work would keep cladding issues out of the mainstream courts as much as possible and create a more even-playing field. It would also remove special purpose vehicles which developers use to ring-fence their liability.

The amendment would also require the government to employ industry experts to check that buildings were being built to the required standards, if not then the burden of proof would be on contractors to evidence that building regulations were met at the time of construction.

He said: “[The Polluter Pays amendment] would draw on a vastly greater resource than the government currently propose under their levy, and it would not impose a blanket levy on the many good and conscientious builders and their development teams. But it needs government to get ahead of the current freefall in risk-averse reactions and broker a pan-sector approach.”

“As a consequence, if this was taken forward, it would in fact set in place a legacy that would restore confidence and counter the perversity of the race to the bottom in construction standards and the culture of getting away with things if you can, rather than doing a good job and going that little bit further,” he added.

Baroness Blake of Leeds said that a “cautionary note” for the amendment was the difficulty in finding culpable parties. She said this could be seen in other sectors where a similar concept had been used and “some of them simply disappear off the face of the earth, and they will be difficult to pin down”.

She proposed a new building works agency should be set up that would group together building safety experts to evaluate and identify work to “ensure that this situation could ever happen again”.


Government response

Lord Greenhalgh, minister of state for building safety, leasehold, resilience and emergencies and communities, said that the government was “well aware” of the amendment and that it was in touch with Steve Day, leader of the Polluter Pays campaign group.

He said: “Officials in the department are working closely to see whether we can work with the principle that he [Steve Day] has worked up. We are looking for all ideas that can bring about a strengthening of redress and ensure that the polluter does pay.”

Lord Stunell, who chaired the debate, said: “All I will say is that, should the government not come forward with an equitable scheme beforehand, the minister can expect a difficult time when the Building Safety Bill reaches your Lordships’ House.

“It remains a central responsibility of this government to ensure that the blameless victims of this terrible episode are not left swinging in the wind, exposed both to fire risk and financial calamity.”

A debate is scheduled for next week.

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