9 September 20239 September 2023 derek

Our Meeting with Secretary of State, Michael Gove and the Department of Levelling Up, Housing and Communities

Politics

Our meeting with Secretary of State, Michael Gove and the Department of Levelling Up, Housing & Communities 

On Wednesday 6th September 2023, we met with Michael Gove, Lee Rowley and DLUHC officials. Twenty months since the Secretary of State’s reset on building safety and fourteen months since the leaseholder protections came into force, we wanted to ensure that Mr Gove is fully aware of the serious challenges with the Government’s approach to building safety and that homes are not being fixed as quickly as we need and deserve. 

The meeting was a follow up to our July letter to Mr Gove, which highlighted our Five Asks to end this crisis permanently, which are supported by The Sunday Times and Inside Housing. In the short time available, we prioritised key areas based on this agenda.

Comprehensive risk assessment standards

We started by highlighting our ask for comprehensive risk assessment standards for all building heights and all types of defects. We have long emphasised that it is essential for clear and consistent standards to be in place to enable a full assessment of the scale and scope of the building safety crisis. 

Buildings under 18m can still be constructed using combustible materials, effectively being B1-rated upon completion; while those under 11 metres are trapped by completely different assessments of risk from fire engineers, lenders, insurers and other stakeholders, despite the Government’s view that they are out of scope for building safety remediation (and any funding help). 

We also underlined the lack of clear guidance for internal defects. At a recent roundtable, developers who have signed the Government’s “self-remediation contract” said that it is challenging to remediate internal safety defects and they do not know what standards are in place, because there is no equivalent to the PAS 9980 standard that exists for external walls. Furthermore, there is still a mis-match between what is deemed life-critical by developers and overall fire safety.

We recognise the challenge of ensuring that the guidance reflects the full range of problems on the ground; however, as we noted to Mr Gove, the context is that he has explicitly accepted that “faulty and ambiguous government guidance allowed the scandal to happen”. 

As it was the Government’s failure to ensure the regulations were robust and overseen effectively, it is now incumbent on the Government to ensure there is sufficiently wide-ranging, risk-based guidance in place with standards which will be accepted by all relevant stakeholders – from developers fixing their own buildings, to lenders, valuers, insurers and regulators. 

Mr Gove confirmed that the Department is working with the British Standards Institute, which will create a new set of standards for internal assessments “in the coming months”. We stressed that this is a very live area of contention with multiple parties all working to different standards, and that leaseholders are bearing the brunt of this deficient approach. 

Mr Gove then noted the agreement from the major mortgage lenders to lend against properties where fire risk assessments had been completed, even if those assessments meant work was required – but we reiterated that this is not happening on a consistent basis in practice, as lenders are still requesting confirmation that a plan and timetable for the remedial works is in place. 

We are aware that the Department has used representative examples that we have shared with them to intervene with at least two lenders, to ensure their processes reflect the commitments they have made, and we were asked to continue to share specific cases where banks will not lend against properties with fire safety defects.

Oversight of developer contracts and grant funding schemes being fit for purpose 

Our discussion moved on to the important issue of ensuring effective delivery of the Government’s building safety strategy. Our firm view remains that the Government’s grip appears to be weakening over the developers that have signed the self-remediation contract, as they continue to focus on their profits over our safety and seek to minimise the scope of work required to make homes safe. We repeated our longstanding concern over the mismatch between the definition of a life-critical fire-safety defect in the developer contract versus a ‘relevant defect’ in the Building Safety Act. 

Since February, we have been pushing for firm oversight of the contracts to ensure that leaseholders and residents – who are too often caught between trying to get information from their building owner or contracted developer – have a process to escalate their concerns and have their voices heard. We have been told that mechanisms for this will be put in place, but there continues to be little in the public domain evidencing this. 

We shared one of the many real-world examples – a development in Essex with 570 residents, where work funded by the Building Safety Fund (BSF) was due to begin in August 2022. The Department then stopped this process and told the development’s managing agents that Taylor Wimpey would be taking over the project; however, a year later, work has still not started and the residents remain in limbo, trying to find answers about what is happening to make their homes safe.

We recalled to Mr Gove that the Department had said there would be an independent dispute resolution process in place (although the requirement for the developers to abide by this was belatedly watered down in the contract) and we urged him to ensure that there was an appropriate and visible oversight process. The current situation – with leaseholders emailing us on a one-by-one basis and our team escalating these with the relevant team in the Department, hoping that action might be taken – is not at all fit for purpose. 

Mr Gove recognised our concerns and committed to reviewing individual cases where developers seem to be using delay tactics. In the first instance, he said that it would be fair and proportionate for him to personally follow up with the Chief Executives of contracted developers where they are not meeting their responsibilities. If delays persist, he said that the Department would not hesitate in enforcing the Responsible Actors Scheme, which would have business-terminating consequences. Mr Gove agreed that developers need to be held to account in terms of remediation timeframes, and we were asked to continue to share examples with the Department, which could be used in addition to the quarterly data it is collecting from the developers directly.

We were also advised that a “caseworker function” is being built in the Department to support the Secretary of State in holding the developers to account. We welcomed direct intervention by Mr Gove as a first step but visibility that there is a firm grip of the entire process is key to demonstrating that the Government is “on our side”, including simple improvements such as updating the Developer remediation contract resident factsheet, which has not been refreshed since February. Mr Gove recognised that the Department has to “do better” for leaseholders across the country and ensure the regime in place is effective.

We then discussed the Cladding Safety Scheme being delivered by Homes England for buildings between 11-18 metres, which appears to have learned some lessons from the failures and delays of previous funding schemes, although we still need to see how it performs once there is a material volume of buildings flowing through the scheme. We have continuing concerns over the approach when safety issues are uncovered during opening-up works and variations to funding are required as a result, as this issue has caused severe delays under previous funding schemes. 

We asked for there to be transparent data released for all schemes alongside Key Performance Indicators and deadlines to monitor progress; Mr Gove said these should absolutely be in place. We noted our previous discussions with Minister Rowley in respect of making the Cladding Safety Scheme fully effective and we have asked to join a meeting with the Minister and the Programme Director of the Cladding Safety Scheme later this month.

Making industry pay

We asked Mr Gove why construction product manufacturers, who are partly responsible for this crisis, continue to profit from innocent leaseholders – for example, when their products are used in the remediation projects of our homes – and why they are not being held to account as a sector through taxation or levies, which is something we have called for since our campaign relaunch. Whilst we recognised that action against the manufacturers of products used on Grenfell Tower may be awaiting recommendations from the Grenfell Tower Inquiry, on 10th January 2022, Mr Gove had told Parliament that he would “make industry pay to fix all of the remaining problems and help to cover the range of costs facing leaseholders. Those who manufactured combustible cladding and insulation… must now pay instead of leaseholders,” so we asked why that was not happening.

We were told that it was more difficult to legislate against Kingspan, Arconic and Saint-Gobain, as they are based outside the UK, but that he had written to their boards as well as major shareholders in those companies urging them to engage with the Department, pay towards fixing the crisis and improve their ways of operating. We reiterated that we will continue to push Mr Gove and his colleagues in government to ensure there is industry-wide action to meet the expectations that he set in the Commons last year, as it is within his power to make that happen.

Building insurance premiums

We reminded Mr Gove that hundreds of thousands of innocent leaseholders had seen their premiums rise enormously for years and, despite several letters and promises of a Reinsurance Scheme and action to ban commissions, nothing had really moved forward and people were still being hit with huge demands for buildings insurance with no end in sight.

We repeated that there was still no clarity on what the forthcoming Reinsurance Scheme would look like and how successful it would be in bringing down premiums, particularly as the insurers were now blaming escape of water for soaring insurance costs despite having previously told us and the Government that the premiums were due to the “fire risks associated with the buildings”. We gave an example of a building where remediation had completed but premiums had not reduced and told Mr Gove that this could simply not become the new normal. 

Work is required from a range of stakeholders, including the ABI, the British Insurance Brokers’ Association, the FCA and the Government. In its September 2022 report, the FCA had recommended that the Department “consider the Government providing financial backing of the risk-pool.” HM Treasury has profited from the misery of innocent leaseholders, through Insurance Premium Tax on higher premiums and the VAT on interim measures and remediation, so there is no moral or economic excuse for not providing this financial backing, which has been assessed as being cost-neutral to the Government. 

In our view, as we stated, there is little point in giving leaseholders more rights and information when there is currently no effective means of enforcing those rights, and any package of measures must go hand-in-hand with regulation of Freeholders/Landlords and managing agents.

Mr Gove said that the Department was considering a new approach, but that it was not in a position to share any information at this stage, however the Department appreciated the need for a comprehensive and speedy solution. 

Social landlords and issues impacting shared owners

We highlighted the very serious issues facing housing association shared owners, with examples of accidental landlords unable to meet increasing costs because it is only the housing associations who can set the level of rent. The examples included where people were suffering losses of up to £1,000 a month, with severe health and mental health issues as a result, as well as specific examples of shared owners unable to afford huge mortgage increases at the end of their fixed rate mortgage deals and the egregiousness of also having to cover the housing association’s loss if they were able to sell.

We asked the Secretary of State to take action to address these concerns and find solutions to alleviate the considerable financial pressure the building safety crisis has added to those who joined a government-backed “affordable housing” scheme. These individuals are now at the sharp end of the crisis.

We want social landlords to be given equal access to Government funds, but this must be conditional on them being required to help shared owners, including by offering buybacks. We requested further meetings with DLUHC officials to discuss specific issues affecting shared owners.

Mr Gove sympathised with the situation, confirming he had constituents who were facing similar challenges. He said that there is more the Department could do with regards to housing associations and the concerns outlined.

Non-Qualifying Leaseholders

Mr Gove told us he knows there is a “big issue about non-qualifying” leaseholders and that, whilst he could not make any promises, the Department is looking to see if anything more can be done to improve their position. We noted that we had provided a range of cases and that Mr Gove had previously acknowledged the force of the arguments we had made to try to ensure that more ordinary people were protected than currently are. 

Alongside our sister group, Non-Qualifying Leaseholders, we will continue to push on this point and provide a range of workable improvements, such as apportioning jointly-held leases, that would ease the pain and burden being suffered by this cohort of leaseholders with more than three properties, who are as innocent as all other leaseholders.

Equally, we will continue to press the Government to ensure there are better ways to help people in buildings under 11m than the current case-by-case approach, which is only adding to the uncertainty and fear faced by people in those buildings. 

There were other important issues we wished to discuss regarding Non-Qualifying Leaseholders and areas where the Department could help, including updating the September 2022 Leaseholder Certificate FAQ page. We will be looking for much more engagement on these and other important issues for all excluded leaseholders following the meeting.

We closed the meeting by asking Mr Gove to help us arrange a meeting with the Chancellor, as our June letter to Mr Hunt has not received a response, and Mr Gove agreed to help with this. We also asked Mr Gove to meet Manchester Cladiators during the Conservative Party Conference in October, and he said if time cannot be made during the conference, he would arrange to meet leaseholders and Lucy Powell, MP for Manchester Central, another time.

Please help us to help you by emailing DLUHC and copying us in. For full details on how to do this, please see the first Call to Action here. Whilst the replies from the Department can be slow and are not always as constructive as any of us would hope they might be, having sight of robust information and supporting documentation from leaseholders helps us to escalate specific cases within the Department and use the evidence that we receive to build our case for policy changes and operational improvements. With your help, we can fight for better outcomes for everyone.

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