Plenty of precedents even in the last few weeks of where government has had to intervene to right obvious injustices such as the cladding and build safety disaster facing thousands of mainly young families
By Liam Spender
Liam Spender is a Trustee of the Leasehold Knowledge Partnership. Personally affected by the cladding scandal, Liam is a Solicitor-Advocate and Senior Associate at Velitor Law practising commercial litigation and arbitration in the City of London. Views in this article are personal and do not constitute legal advice.
The government saw a further rebellion on the Fire Safety Bill today, as it shuttled between both House of Commons and House of Lords. The government is running out of time to pass the law before the current session of Parliament ends on Thursday, 29 April.
In the Commons, the government saw its majority halved to 64 in a vote to throw out leaseholder protection added by the Lords last week (story here: https://www.leaseholdknowledge.com/lords-push-governments-fire-safety-bill-to-the-edge-as-parliamentary-session-nears-end/).
The 64 vote majority today was down from 69 when the bill was last in the Commons on 22 March 2021 (see story here: https://www.leaseholdknowledge.com/bottomley-leads-tory-rebellion-of-29-mps-but-government-defeats-amendment-to-fire-safety-bill/)
Sir Peter Bottomley, Co-Chair of the All-Party Parliamentary Group on Leasehold Reform, led a rebellion of 31 Conservative MPs, with 9 abstentions, to slash the government’s majority down from the 145 expected.
Thirty-one Tory MPs voted against the government over a move stop residents bearing the cost of safety work.
In a point of order at the end of the debate, Sir Peter urged the government to take heed of the halving of its majority and to move an amendment to break the log-jam in the Lords.
Sir Peter did not get his wish. This evening the Lords agreed by a vote of 326-247 (majority 82) to insert a revised version of the Bishop of St Albans’ amendment to protect leaseholders. The amendment was revised by Labour’s spokesman in the Lords, Lord Roy Kennedy.
The bill will now have to come back to the House of Commons, likely on Thursday. The government must pass the bill by the end of Thursday or else it will run out of time.
Powerful speeches in the Commons
There were a number of powerful speeches in the Commons, many of which referenced the LKP’s own research into the falling prices of flats affected by cladding. MPs, including Hilary Benn, Royston Smith and Daisy Cooper, all highlighted the clear and present danger to the housing market posed by leaving the cladding scandal unresolved.
Minister of State for Housing Chris Pincher spoke for the government in the Commons. He repeated many of the government’s well-worn explanations that the bill had to pass to implement Sir Martin-Moore Bick’s recommendations in his Phase 1 Grenfell Inquiry report.
Mr. Pincher also attacked amendments proposed by the Bishop of St Albans and Dr Liam Fox as “ineffective and defective” Mr Pincher dismissed both amendments because they would see the taxpayer paying for low-cost upgrades to fire alarms and the like.
In one welcome comment, Mr Pincher did agree that protection from forfeiture was important. The government proposes to include measures in relation to forfeiture in its forthcoming leasehold reform package.
The Bishop of St Albans amendment would ban leaseholders from paying for any costs attributable to the revised Fire Safety Order until the government created a statutory scheme to protect leaseholders from such costs.
Dr Liam Fox’s amendment is modelled on the government’s determination powers under the Environmental Protection Act 1990. It would remove limitation periods and require the government to allocate costs among those responsible, including developers, building inspectors and material suppliers. The Environmental Protection Act already sees the government allocate responsibility for clean-up costs between former owners and users of contaminated land.
Similar provisions are found in the Pensions Act 2004. In 2017 that law saw Philip Green pay £360 million toward the failed BHS pension scheme, despite thinking had had sold on the risk years earlier. Both existing laws provide a viable blueprint for the government to force those responsible for the cladding scandal to pay.
The Fox amendment was welcomed across the house, including by a number of other Conservative backbenchers, among them former Leader Sir Iain Duncan-Smith.
Sarah Jones, Labour’s Shadow Fire Safety Minister, roundly condemned the government. Ms Jones claimed that the government appeared more interested in protecting the interests of its donors than leaseholders, singling out European Land Property Limited.
The Conservatives have received more than £11 million from some of the UK’s richest property developers and construction businesses since Boris Johnson became prime minister last July, an openDemocracy investigation has found. Donations to the Tories from the property business increased significantly over the past year, with more than 120 individuals and companies connected to the sector giving money.
Sir Bob Neill said it was shameful that the government was asking the Commons to vote for the third time to pass on costs to leaseholders. Sir Bob welcomed the improved fire safety requirements in the bill, but he could not agree that leaseholders should pay the costs. Sir Bob urged the government to come up with a better solution.
Hilary Benn warned the government that the clock was ticking and that leaseholders facing unaffordable costs were already running out of time.
Bob Blackman echoed Hilary Benn’s comments, saying that if the government did not agree with the amendments already proposed then it was up to the government to come up with alternatives of its own.
The full voting record for the Commons today is here: https://votes.parliament.uk/Votes/Commons/Division/1020
Real anger in the Lords
The Lords again warned the government it was on the wrong track, with a strong 82 majority vote to give the government pause for thought.
The debate in the Lords echoed warnings given in the Commons that the government’s inaction and refusal to listen was jeopardising the housing market and the wider economy as well as potentially ruining a generation of homeowners.
Lord Greenhalgh was visibly irritated that the Lords would not agree to back the Fire Safety Bill in the form preferred by the government. Lord Greenhalgh said that everyone agreed that the issues covered by the bill were important and everyone thought the bill was not the appropriate place to protect leaseholders.
The Earl of Lytton, Baroness Pinnock, Baroness Fox and Lord Adonis all joined Lord Kennedy in calling on the government to stop promising jam tomorrow and to set out a clear plan to protect leaseholders.
Lord Greenhalgh responded with a promise of jam tomorrow, saying that the Building Safety Bill would reform limitation periods and contain measures to make companies and directors responsible for buildings and potentially subject to prosecution.
The full voting record for the Lords today is here: https://votes.parliament.uk/Votes/Lords/Division/2515#not-contents
Another Tale of Two Scandals?
Last week, when the Fire Safety Bill was in the Lords, the government announced it would change the law to compensate savers who lost £240 million in the collapse of London Capital & Finance. The government conceded, following a scathing report by a former Court of Appeal judge, that the Financial Conduct Authority had negligently failed to protect investors.
Just before the Fire Safety Bill was considered in the Commons today, the government made a statement on the Court of Appeal’s decision last week to quash the convictions of 39 former postmasters.
The 39 postmasters were wrongly convicted of accounting and theft offences relating to alleged cash shortfalls at their branches. The convictions were overturned because the Post Office – which until 2005 was also a prosecutor – failed to disclose evidence regarding bugs in its Horizon computer system. The Post Office was at the time, and remains, 100% owned by the taxpayer.
Following a civil case in 2019, the taxpayer is expected to cover a £300 million compensation bill flowing from the Post Office’s decision to defend Horizon and not to disclose evidence. The figure includes the tens of millions in legal fees the Post Office incurred defending its flawed system.
Today the government announced it is looking at providing further taxpayer money to compensate postmasters wrongly jailed.
Leaseholders, LCF investors and postmasters have all faced different forms of injustice at the hands of government. The postmasters have suffered the greatest injustice of all, being jailed for crimes they did not commit because of failings of a state-owned company.
Leaseholders continue to face years of financial uncertainty, potentially resulting in the loss of their homes. It is only right that the government steps in for leaseholders, as it has for postmasters and LCF investors, to provide comprehensive relief.
The contrast between the treatment of leaseholders and the treatment of LCF investors and postmasters was repeatedly mentioned by both MPs and Peers during the debates today.
What does the result mean for leaseholders?
Today saw further significant rebellions in both Commons and Lords. In the Commons 31 Conservatives voted against their own party. A further 9 Conservatives abstained. The government’s majority fell from 69 to 64.
Although not all MPs voted, and the SNP MPs abstained, today’s result is dangerously close to the 45 Conservative rebels required to defeat the government when all MPs are present and voting.
In the Lords, the 82 vote majority shows the continued depth of feeling on the issue.
What happens now?
The Fire Safety Bill will return to the Commons, most likely on Thursday but possibly tomorrow. We can expect an announcement on that soon.
The government will again ask the Commons to vote down the amendment inserted this evening and to pass the bill in its preferred form. The bill will then have to go back to the Lords.
Can the government be defeated in the Commons?
The Fire Safety Bill applies to England and Wales only. Theoretically, English Votes for English Laws rules apply, meaning only English and Welsh MPs are able to vote in the Commons.
Excluding Scottish and Northern Irish MPs gives the government a majority of 145 across the 573 England and Welsh constituencies. A rebellion of 73 backbench Conservatives would be required to force the government to accept the amendment in the Commons on English Votes for English Laws rules.
English Votes for English Laws rules were suspended last year as a result of the pandemic. Last time the bill was in the Commons, all Conservative MPs in Scotland voted, although the SNP abstained. MPs for the Northern Irish parties also voted.
What options does the Lords have?
When the bill arrives back in the Lords, the arcane procedural rules of Parliament mean that each House of Parliament may only insist on the same amendment to the same bill twice (the “double insistence” principle). If that happens then the bill will fail and have to go through all Parliamentary stages again.
That principle means that the McPartland-Smith 2/Bishop of St. Albans amendment cannot be tabled in exactly the same form again.
The Lords has three options. The first is to give up the fight, which will mean the bill passes. The second is to try a revised version of the McPartland-Smith amendment. The third is to try a different amendment.
The second and third choices involve the Lords agreeing to add the amendment and sending the bill back to the Commons, which will then have to consider it again later this week, either tomorrow or on Thursday.
Isn’t time running out to pass this bill?
Yes. The government announced last week that it intends to conclude the current session of Parliament at the end of business on 29 April 2021.
If the Fire Safety Bill is not passed by Thursday then it will fall and be lost. The government will then have to try again in the next session of Parliament, which starts on 11 May 2021, to try to pass the bill again.
Are there any other options?
Yes. Normally when faced with strong, repeated opposition like this, the government offers concessions or commits to changes to avoid losing bills.
The government at the moment is playing chicken. It may be the case that it is prepared to see the bill fail and to try again in the next session of Parliament, which starts on 11 May 2021.
What does the Fire Safety Bill do?
The bill amends the Regulatory Reform (Fire Safety) Order 2005. The amendments make clear that the external walls of all buildings with 2 or more sets of domestic premises must be assessed for fire safety. The amendments also include the front doors of flats – which are often the responsibility of individual leaseholders – in that assessment.
Depending on the guidance the government issues on these assessments, the government’s own figures suggest up to 2 million residential buildings may need to have external wall assessments.
Judging by the government’s track record with the Advice Notes (explained here: https://www.leaseholdknowledge.com/government-use-of-extra-statutory-powers-has-made-the-cladding-crisis-far-worse-than-in-australia-or-possibly-scotland-writes-lkp-trustee/) issued since 2017, we may be in line for further moving of the goal posts to suit the government’s headline driven agenda.
The Fire Safety Bill also removes any doubt that leaseholders are responsible for paying these costs. Not all leases currently allow this type of cost to be passed on to leaseholders.
That is why amendments to protect leaseholders from these costs are so important.
How did we end up here?
The text of a bill must be agreed by both Houses of Parliament before it can become law. That is unless the government uses the Parliament Acts 1911 and 1949 to force through a law. This happens rarely in practice, as explained in this House of Commons Library paper: https://commonslibrary.parliament.uk/research-briefings/sn00675/
The Fire Safety Bill has been passing backwards and forwards between the Lords and the Commons since February 2021. This is because the government will not accept changes to the bill to protect leaseholders from the ruinous costs of replacing cladding and repairing internal fire safety defects.
We are in unusual territory here. It is rare for the Lords to keep holding up a bill for as long as this.
What happens if the amendment is lost and the Fire Safety bill passes?
If the Fire Safety Bill eventually passes with no amendment to protect leaseholders then the forthcoming Building Safety Bill will be a chance to try to amend the law again.
There are also other potential glimmers of hope for leaseholders. The British Standards Institute is currently consulting on a new standard for Fire Safety Risk Assessments involving external walls.
This new standard, called PAS 9980, will apply to Fire Safety Risk Assessments conducted under the new Fire Safety Order.
PAS 9980 is a far more sophisticated approach than that employed in the EWS1 process. The draft PAS looks at a wider range of factors and assigns risk ratings to each factor to produce an overall result. EWS1 is largely a pass/fail system.
Assuming PAS 9980 is adopted in its current form and is applied correctly, this may reduce the number of buildings in scope for expensive remedial works and large insurance increases. That assumption may take time to play out in practice.
You can see more information about PAS 9980 here: https://standardsdevelopment.bsigroup.com/projects/2020-01838#/section
The bottom line? Leaseholders still have everything to fight for. Affected leaseholders should get on to their MPs, urging them to vote in favour of the amended Fire Safety Bill when it comes back to the Commons.