Select Committee none the wiser over cladding forced loan schemes

Lord Greenhalgh, the housing minister responsible for cladding, appeared before the Communities Select Committee – but it was left none the wiser over the government’s proposed £50 a month forced loans to leaseholders in sites that have cladding but are lower than 18 metres.

Lord Greenhalgh told MPs from all parties: “This financing scheme is not with the individual leaseholder. It does not affect their credit rating. It is held at the building level and a contribution of the leaseholder is no more than £50 a month.

“Of course, it is contribution but it is a small contribution for the likely total cost of the remediation and it means that leaseholders are not facing large up-front cost with only 28 days to pay.”

The Communities Select Committee hearing can be seen here, and 16:50 is where these questions were asked:

Parliamentlive.tv

Subject: Cladding Remediation – Follow-up Witness(es): Lord Greenhalgh, Minister of State for Building Safety and Communities, Ministry of Housing, Communities and Local Government; Richard Goodman, Director-General Building Safety, Grenfell & Net Zero, Ministry of Housing, Communities and Local Government Subject: Cladding Remediation – Follow-up Witness(es): Lord Greenhalgh, Minister of State for Building Safety and Communities, Ministry of Housing, Communities and Local Government; Richard Goodman, Director-General Building Safety, Grenfell & Net Zero, Ministry of Housing, Communities and Local Government

Pressed in questioning by Florence Eshalomi, Labour MP for Vauxhall, Bob Blackman, Conservative MP for Harrow East and the Select Committee chair, Clive Betts, Labour MP for Sheffield Attercliffe, Lord Greenhalgh said that he knew MPs would “like it that all these costs were borne by the taxpayer”.

Richard Goodman, the director general of building safety at the MHCLG, said: “We have set this into the context of the existing costs leaseholders are having to pay. So, for example, the average waking watch payment could be in the region of £180 [a month?]. In that context, we recognise that £50 is an imposition on that leaseholder but it would represent a net saving compared with some of the costs of some of the interim measures which individuals have to pay.”

Richard Goodman

Richard began his career in tourism before moving into policy roles in the Civil Service. In 2011 Richard joined the UK Border Agency as director of international operations, leading the agency’s overseas security work and visa operations. After a spell in the Middle East he became policy director at the Financial Ombudsman Service.

Both Lord Greenhalgh and Mr Goodman emphasized that the £50 loan scheme would provide certainty for leaseholders and lenders alike, giving a limit to the costs faced by owners of the leases in a building.

But MPs appeared unsatisfied by these explanations.

Clive Betts asked whether the leaseholder, the freehold or the leasehold unit would have liability for the loan.

“Is the government going to cut across the current legal rights of freeholders, and legislate so that they can’t pass these costs on to leaseholders?”

LKP’s alternative funding scheme based on sector-wide levies is here:

As 17% of cladding leaseholders consider bankruptcy, LKP funding proposal offers alternative to successive crises facing flat-owners

Bob Blackman reminded Lord Greenhalgh that it had been stated [by Chris Pincher, another housing minister], that the detail of the forced loans would be outlined in the Budget.

Lord Greenhalgh acknowledged that it hadn’t been.

In answer to questioning by Clive Betts, who raised the possibility of freeholders “walking away” from their buildings rather than take on large loans, Lord Greenhalgh replied: “We are not asking any of the building owners to make any contribution to the remediation costs.”

To which, many leaseholders facing forced loans for build defects they did not create, might ask: “Why not?”

Lord Greenhalgh acknowledged in his answers that many leasehold properties are presently worth zero, which means the freeholds of these buildings are, too.

So why are the owners to have value restored to them with taxpayer gift or loan, but contribute nothing at all?

Clive Betts concluded: “The loan scheme is a work in progress and you hope you can solve it.”

The minister was also questioned about EWS1, and he referenced the RICS issuing reformed EWS1 criteria today, which would remove “half a million leaseholders” from the burden of requiring an EWS1.

The scheme had got out of hand and was even being asked for on “a thatched cottage”, said Lord Greenhalgh.

The RICS statement on EWS1 today is here: