Examination of Witnesses

Building Safety Bill – in a Public Bill Committee on 14th September 2021.

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Martin Boyd and Dr Nigel Glen gave evidence.

Photo of Philip Davies Philip Davies Conservative, Shipley 2:00 pm, 14th September 2021

We will now hear from Martin Boyd, chair of the Leasehold Knowledge Partnership, and from Dr Nigel Glen, chief executive of the Association of Residential Managing Agents. I remind colleagues that we have until 2.45 pm for this session. Would the witnesses introduce themselves for the record, starting with Martin?

Martin Boyd:

Good afternoon, everyone. My name is Martin Boyd. I am chair of a charity called the Leasehold Knowledge Partnership. We also act as the secretariat for the all-party parliamentary group on leasehold and commonhold reform.

Dr Glen:

Thank you very much, Chair, and thank you for the opportunity to present today. My name is Nigel Glen, the chief executive officer of the Association of Residential Managing Agents, a not-for-profit trade body with about 325 members who manage about 1.6 million leaseholds between them.

Photo of Mike Amesbury Mike Amesbury Shadow Minister (Housing, Communities and Local Government)

ThankQ127 you, Martin, and thank you, Nigel; it is good to see you both. Is extending the scope of the Defective Premises Act 1972 retrospectively to 15 years the game changer it is made out to be?

Martin Boyd:

No. You have heard two witnesses already tell you that the National Audit Office has reached the view that it will not actually work very often. The problem is that there are limited circumstances in which you can apply the Defective Premises Act. It seems like a welcome idea, and of course it is—six years is not sufficient—but there are very few leaseholders who are going to be able to take action using that facility.

Dr Glen:

I would concur with that. If you think about the practicalities of lay leaseholders taking on a plc on a block-by-block basis, just having the financial capability to do that, let alone the expertise and the time, is beyond them. It is one of those things, I hate to say, that sounds good, but in the real world will be very difficult and does not help.

Photo of Mike Amesbury Mike Amesbury Shadow Minister (Housing, Communities and Local Government)

Q At the moment, it is six years or so, isn’t it? Is there much evidence of people pursuing their claims successfully under the current regime?

Martin Boyd:

No, there is very little. We were aware of one London site that began to go down that route, but the developer agreed to settle before court proceedings were served.

Dr Glen:

Likewise, I concur on that.

Photo of Ian Byrne Ian Byrne Labour, Liverpool, West Derby

WelcomeQ to both of you as well; it is good to see you both. Can I ask quite a broad question: will this Bill protect leaseholders from any future financial impairments?

Dr Glen:

I will start off on that one, seeing as Martin started on the last one. No, if you look at it, there are many aspects of it that will not protect. Inside the impact assessment, you will see that the cost is an estimated £200 per leasehold per annum, which does not sound much, but for some people that is the difference between having food on the table and not. Also, outside of that is the cost to remediate any defects that could be found, and I believe the estimation there was £9,000, of which only a third—33%—was the external wall system. Let’s say the building safety fund covers that: that potentially still leaves £6,000.

There is also the issue of the additional layers that are being put in: a building safety manager is not going to be a cheap resource. One of the things that we would be very keen on is a consideration of this. We are absolutely for increased safety, but we have to make sure that people can afford it, and that it is proportional as well. There are quite a few aspects of this that are going to be an unpleasant surprise for many leaseholders. I am a leaseholder: it is going to be a surprise for me as well when it finally comes through.

Martin Boyd:

The Government have said from the outset that leaseholders should not pay. This Bill ensures that even if there were some possibility that they might not have to pay before, they will now. It is a very regressive system. It may be okay if you own an expensive million-pound flat in London, but if you have a £120,000 flat that you bought somewhere up in the north-east or north-west, and particularly if you are a shared ownership buyer, it is going to destroy your life.

Photo of Ian Byrne Ian Byrne Labour, Liverpool, West Derby

Q What would be the solution in your eyes, Martin?

Martin Boyd:

Unfortunately it begins, “I wouldn’t start from here.” We have got ourselves into a very difficult position, principally because the Government did not react quickly enough in 2017, so we now have huge problems with the housing market. It is very difficult to sell flats. There is a great deal of uncertainty about what is going to happen. We thought we had just got used to the external wall system and we are now moving towards EWS being replaced by the British Standards Institution publicly available specification 9980. Any market needs confidence, and at the moment we are not doing anything to get that confidence.

What has happened in other countries, which seems to be slightly more successful, is for the Government to make decisions about which buildings they think are of higher risk and which are of medium and lower risks, and prioritise the work. In some instances here, we are remediating low-risk aluminium composite material buildings more quickly than ACM buildings that are still fully clad 51 months after Grenfell.

Photo of Daisy Cooper Daisy Cooper Liberal Democrat Spokesperson (Education)

Thank you, Chair, and excuse me for being slightly late to arrive. In your second point in your written evidence, Dr Glen, you say that ARMA has publicly supported the polluter Q pays principle. As I understand it, the way this principle works is that the Government would fund remediation up front and they would then endeavour to recoup that money from those who are responsible, reducing the impact on the taxpayer. There would be a role for a regulator to determine whether something was or was not compliant at a particular point in time, and, by going through the regulator, litigation would be reduced. This process would sort out remediation quickly, protect the public purse, go after those who are responsible and avoid going to the courts. I would welcome thoughts from both of you on this particular principle, particularly any reason why a Government would not want it.

Dr Glen:

It follows on from what Mr Byrne was saying about how do you think we can get around this. At ARMA, we have always said, right from probably a week after Grenfell, that time is the issue and not the money, and that we should get people safe first and worry about who pays later—but here we are four years later and we are still dithering around about exactly who should pay and who should not.

For me, because of the scale, the only way to get people safe is for Government to put the money forward to forward fund it, because other schemes might require a time delay while funds are brought in or while disputes go on. However, I do not think the Government or the taxpayer should pay in full. There is some culpability where, for example, having oversight has failed, but there are instances where the Government and the taxpayer have nothing to do with it and should not foot the bill.

Let us get people safe first by providing that funding, and then find out who should pay, perhaps people who have pushed forward products that are not fit for purpose or people who have constructed badly. There will be instances, I am afraid, where leaseholders might have to pay. If we have a 15-year-old building, we have taken the cladding down and sadly the concrete is 15 years old, it is going to need some repair work. It is nobody’s fault apart from Father Time. In that instance, maybe the leaseholders should pay for that. It is a different question if they might not be able to, in which case let us have some grants available.

I am staggered that four years on from Grenfell I am answering the same questions with the same answers. That is why we support the polluter pays Bill, because unlike some other amendments we have seen in the past that show that leaseholders should not pay, which we absolutely agree with, it provides a route to pay. One thing about leasehold service charges is that if there is no money there you cannot do anything. Finding people who should not pay does not help remediate the buildings. It just makes it more difficult, in a way.

Martin Boyd:

We put forward a proposal last year for a levy scheme to introduce £12 billion into the system. It was a project that was primarily developed by a former Bank of England economist, and the proposal was that the money would be provided. and then would begin to be repaid after five years. The Government would have five years to decide who should contribute, and that would obviously be a mixture of the developers and the material providers, and possibly even the leaseholders—who knows?

Unfortunately, at the time the Government wanted to develop their own levy scheme, so we have the proposed £2-billion developer levy, but that does not get us enough; we still need to put £12 billion to £15 billion into the system. It cannot come from the magic money tree. We need to have a rational policy. Leaseholders have been screaming for ages that they want a solution. None of them thinks that the taxpayer should pay for this. Perhaps some do, but most of them are realistic in accepting that we need to find a financial solution that gets us out of the mess, because if we do not the housing market will stay in crisis for years.

Photo of Daisy Cooper Daisy Cooper Liberal Democrat Spokesperson (Education)

Q Thank you for explaining why you support this principle. A small supplementary. To play devil’s advocate—I am perhaps inviting you to do the Government’s job for them—do you think there are any reasons the scheme would not work? Can you see any holes in it, or problems with it? Is there any reason why you think anybody might object to this particular proposal?

Martin Boyd:

On the specific “polluter pays”, we have not seen the detail yet, so we do not know. The difficulty, as has been referenced in a number of witness statements to the Committee, is that a lot of the developers have used special purpose vehicles, so we do not know yet what proportion of the market would be able to recover from this anyway. The building in which I have a flat is 20 years old. I have to accept, in reality, that even if my developer had done something wrong it is rather stretching things to think that I could go back and take action against them.

Dr Glen:

It is a very complex situation. If it wasn’t, we would have found the solution a long time ago. Is it perfect? No. Is it a good start? Yes, and I am very happy with good starts.

Photo of Siobhan Baillie Siobhan Baillie Conservative, Stroud

This is such a difficult area, and it has been very distressing for people who have been affected by the fire. We heard some really compelling evidence about the safety of high rises, and how to strike a balance of proportionality with the legislation, which is not easy. I think nobody expects the taxpayer to pay up front for everything. You have just said that, Mr Boyd, and that is completely right.Q

I was interested in your point about grants, Dr Glen, because ultimately we know that quite a lot of businesses have gone bust. Your proposal that we effectively get the taxpayer to foot the bills upfront, knowing that there will be a big gap potentially, is a problem. I am just playing devil’s advocate. On your point about grants, you are suggesting that the taxpayer pays. That is a point of concern for people who are not affected by this and are thinking about the overall financial purse.

Dr Glen:

I understand that. The specific example that I was using for grants was that we strip a building down, take the cladding off, look at the building and say, “Oh my gosh. Something has happened to the concrete.” I completely understand why the Government should not be making every building as new. It is the practicality, because the way that service charges work means there is no profit margin in them. If there is any leftover at the end of the year, you give it back. If there is a deficit, you demand it.

This is the problem: let us say that you, Siobhan, are a leaseholder in a particular building, and I say, “Terrible news: we’ve found that there’s a bit of problem with the concrete, so we need to do some work on that. It’s not applicable for the building safety fund because it’s nothing to do with the cladding; it’s just Father Time.” If you then say, “I’d love to—I can understand where you’re coming from—but I just don’t have £2,000,” what do we do? If you do not pay, the others should not pay for you surely, so suddenly I am £2,000 short. That means that I cannot do anything as a managing agent, because I cannot place that contract. I am talking about short-term mechanisms to mean that we can get that building safe. That is why it is a complex situation with no absolute way forward.

On should the taxpayer pay—I am a taxpayer and would like not to pay—it is undeniable that, under successive Governments, there have been changes in regulation where, perhaps, a developer has said, “I would like to put this material up—it’s not cheap— can I?” and the local council has said, “Yeah, it’s fine”. That same local council and, in fact, sometimes the same person, is now saying, “Actually, you shouldn’t have done that”. Is it right that the developer or whoever in good conscience who did what they thought was right at the time should pay, or is that something where we should say, “Sadly, there are some things that taxpayers should front up for”? It is a very complex situation. I come back to it again: there is no single solution. The only one I can see is to let the Government pay now and then figure out how to get the money back later.

I would like to think a bit further than that. This will not be the last issue we have in housing over the next decades. Let us form this fund, so that when whatever it is that next comes up, whether it is something toxic that we did not know about or something else, money is in the bank so that we can start moving on these things straightaway. Let’s think forward as well.

Martin Boyd:

I have a letter sitting here from officials in December 2017, after we had written to Ministers saying it is very urgent that Government intervene early on or we will end up with leaseholders going through a rather nasty experience that will drag on for years. I did not think at the time it would be so many years. The assumption was that, well, of course, the law will allow you to take your building owner, as we keep saying, to court and make them pay. It has not happened. The law was never ever going to make that happen.

The statements that we made have been made in Parliament too, and said that building owners should do the right thing. It is not what the law says they should do. They are under a fiduciary duty to represent the interests of their company. If you happen to own ground rent investment and therefore are deemed to be the building owner, which will only represent possibly 1% of the property value, or even less, how on earth are you expected to pay to remediate the cladding? It was never, ever going to happen. Grants have been the only way the system would work from the very beginning. I think it is still the only way that we have left.

Photo of Mike Amesbury Mike Amesbury Shadow Minister (Housing, Communities and Local Government)

Q Various Ministers have promised 17 times. The language has slightly changed. Originally, it was

“to protect leaseholders from historical remediation costs”,

and then it was “unaffordable costs”. Does this Bill do that? What key things are missing from the Bill?

Dr Glen:

No, I do not think it does, because the Bill says that historical costs can be levied on the leaseholders at 28 days’ notice et cetera. I heard in an earlier session about whether that would really help. It could increase costs, because we will have two separate charges now. We might want to touch on that later. No, it does not. There are some amendments around. As we said, the polluter pays is part of the amendments, because we need to try to figure out where the money is coming from. I go back to my earlier statement: the only way I can see it happening, unless we are going to be here in four years’ time still discussing this, is something big like Government—I think the Government are the only size that can do this—to make sure that we front-fund pay. Then, absolutely, Government should figure out how to get the money back to protect the taxpayer. So I do not think it does it, in short.

Martin Boyd:

I agree. I have nothing to add to that, it is just not going to do it.

Photo of Marie Rimmer Marie Rimmer Opposition Whip (Commons)

On a similar line to my colleague on the right, will the Bill deliver what we are looking for in the future? We are talking about a Bill for the future and not historically. Does it handle the design of buildings? Does it adequately answer the questions about construction, materials and insurance? Will it prevent future incidents such as GrenfellQ ?

Martin Boyd:

No. Judith Hackitt said the problem is that we need a fundamental culture change in the industry, but I have to defend the industry. If you are providing into a market that says, “You have liability for a product for two years. After that two years, the liability moves over to a warranty scheme for another eight years, and then after that you walk away scot-free,” how does that encourage developers to produce high-quality products? The Bill reinforces that because, again, we have a new homes ombudsman. For two years, we are not proposing to change in any way the idea that somebody builds a building, keeps quiet for two years that they have problems with it, and then says, “I’m sorry, Mr Customer, you are not protected by the normal Consumer Protection Act rules because this is a property, not a toaster.”

Photo of Marie Rimmer Marie Rimmer Opposition Whip (Commons)

Q Thank you. Do you concur, Dr Glen?

Dr Glen:

I do. As we discussed earlier, if you look at the Law Commission reforms on enfranchisement, right to manage and promoting commonhold, you see that a drive of Government is for self-determination of a block. Looking at future blocks, where you have lay boards trying to unpick something that happened 12 years ago with a plc developer, I do not see that as a realistic scenario, so I do not think the Bill works.

The other issue is that there are many things in the Bill and in the Hackitt reforms that are admirable in helping, protecting and improving safety for new builds going forward, but what on earth do we do with the 4.6 million-plus leaseholds that we currently have?

Martin Boyd:

May I add one thing? We have a problem in this country. If you buy a leasehold flat that is new, it is never surveyed. You do not have a survey of that building. In other countries that have a commonhold system, part of the conditions of the initial purchase is that a completely independent survey is carried out that validates that the building has been created to a reasonable standard. We are proposing part of that within the Building Safety Regulator, but there does not seem to be a final sign-off that says, “Here you are, Mr Customer. We have checked the building for you as the customer.” That would make things an awful lot easier than creating yet another ombudsman, who in reality will do like most other ombudsmen do, which is reach some small decisions but find it very difficult to reach big decisions.

Photo of Shaun Bailey Shaun Bailey Conservative, West Bromwich West

Forgive my ignorance in asking some of these questions, but I want to go back to your response to my colleague Siobhan Baillie and look a little more at the responsibilities of the freeholder. My experience and understanding is that developers sometimes sell freehold a block that they develop. I am conscious that there are many different ownership structures and different types of freeholder, and I am acutely aware, for example, of the pressures on social landlords. As part of the broader conversation that the Bill is bringing about, do we need to re-examine how we look at freeholders? I want to try to square this circle a bit. If I am a freeholder with a lucrative portfolio of tower blocks and properties, how do we square that with the pact with taxpayers, particularly in my constituency, which is the 14th most deprived borough in the country, who would look at that and say, “We are paying to remediate this for you?”Q

Martin Boyd:

A similar issue cropped up during the passage of the Water Bill, where it was argued that leasehold properties should be excluded from the protections of Flood Re because it was a commercial policy taken out by the freeholder. Everyone in the leasehold sector tried to explain to the Government at the time that that is not how it works. The bills are all being paid by the leaseholders; it is just that the landlord is deemed to pass this on.

The difficulty we have with freeholders in the leasehold system—you heard from Richard Silver this morning—is that they have no interest whatsoever in the quality of the building. It makes not a cent of difference to their profit line whether that building is falling down or is in pristine condition. The only people who are concerned about it are those who live in it. The freeholders will say, “We have a long-term interest in the estate,” which is rather interesting because Long Harbour has been in existence for less time than we have, and we have not been around for a huge amount of time. I have owned my flat for twice as long as Long Harbour has been in existence. So you have the problem that until we move to a commonhold structure, you have a conflict of interest between somebody deemed to be the building owner, who is only interested in how they make a profit from the building. and all the people who live in the building, who want to ensure that it works for them. Some will want to reduce costs, some will want to invest for the future, but they will all have an interest in the building and about the fact that it is in good condition.

Dr Glen:

As I mentioned earlier, it is a very complex situation. If we look at the portfolio of ARMA members, where we know who owns the building—is it leaseholder-organised, with residential management companies and right-to-manage companies, or is it third-party landlord? —in 60% of the cases we know about, there is a leaseholder structure. So when you say the landlord should pay, in many cases that is going to be the leaseholders, because they actually own the freehold.

I remember an interesting discussion I had with a colleague of yours, Hilary Benn, about the idea of a compulsory purchase order. We took him through the economics. As Martin alluded to earlier, you see this big building and you think “Gosh, that must be worth a fortune,” whereas in fact it is really a financial instrument. The value of that to the freeholder is typically what the ground rent is over a certain period of time. If the ground rent is £200 and there are a hundred units there, that is £20,000 a year. So if you go to somebody and say, “Unless you pay £2 million to remediate this building, I will compulsory purchase order you,” and that somebody is thinking, “Well, I only get £20,000 a year,” that person will kiss you and say, “Give me market rate, CPO me, and you have now just taken on a £2 million problem.”

So although it sounds good, I do not think that is the route. The danger is that by saying “Ooh, yes, we can get the freeholders to do it,” unfortunately all that means is that it gives false hope because there is not that bucket of money there. So again, be careful, because many RMCs and RTMs are also the freeholder and we do not want to put them in the firing line either.

Photo of Shaun Bailey Shaun Bailey Conservative, West Bromwich West

Q That is really useful. Coming back to a point that Mr Boyd made, which I wrote down, would you say that one of the things that we have to combat with this Bill and subsequent legislation is around “market culture”? That is what I wrote down. Effectively, Mr Boyd, you said in your comments that a freeholder does not really care about the condition of that building. It does not matter because the profit margins are still the same. It ties in with the point you made, Dr Glen, about commonhold, in that it is this engagement piece and the power structure. We lauded commonhold when that first came out as a brand new, fantastic way we were going to do this, but if we are being honest, it has flopped, has it not? It has not really been taken up in the way anyone thought it would be. Do you think there is scope here, or should there be some way we can mandate better engagement between those different structures—developer, freeholder and leaseholder? Do you think that would go some way to deal with that market culture—those behaviours that really do seem to be at the core of some of these issues?

Martin Boyd:

I have to declare an interest in this. When we started the meetings in Parliament in 2014 that looked at commonhold again, we were quite agnostic. The view was it had failed in this country, and we were quite surprised when we got to our first meeting and while the officials all told us “No, the market does not want this,” the whole sector told us that the Government had messed up the legislation; it did not work. So the initial big developments that were started in Milton Keynes had to be stopped halfway through because the law just could not cope.

I do not think that there is ever a way of joining the interest of the landlord and the tenant; very often, they have fundamentally opposing interests. I am part of the landlord of our site. We bought our site from our previous landlord for £900,000 in 2013, after several years of court battle. The site is worth about a quarter of a billion pounds. We still hold our freehold on the books at £900,000, but it is now actually worth diddly squat, to use an inappropriate phrase, because we commuted the ground rent. We therefore do not have an asset in the freehold. All the asset is held within the flats. We have a structure that copes within the leasehold system, but it would work much more effectively if it was a commonhold system.

Photo of Shaun Bailey Shaun Bailey Conservative, West Bromwich West

Q Dr Glen, do you have anything to add?

Dr Glen:

I am a bit wary about looking at the ownership structure, simply because if we waved a magic wand and all those buildings were today commonhold, everybody living in them would be in exactly in the same position. It does not solve anything. You can argue, “If it was commonhold, they could maybe sell some air space and generate a few million,” but that is sort of selling the family silver. You could do that to put new boilers in.

More generally, there are things that legislation can do. I am a big fan of mandatory, independently set reserve funds because buildings deteriorate after a time. Naturally, people say, “You want me to pay for something that won’t happen for 25 years. I’m going to be out of here in five, so I don’t want to pay towards that.” We see that when dealing with boards, which naturally look at whether they can put a sticking plaster on something rather than committing to major expenditure. Other things can be done to help.

How can you resolve the relationship between landlords and leaseholders? As Martin says, sometimes their interests are diametrically opposed, and they are within the organisation. I am painfully aware of many RMCs—my firm almost used to do nothing but RMCs—where you have a dichotomy between the buy-to-lets, who want the minimum service charge possible, and the people who live there, who want the place to be nice and cleaned every single day. You will still get that conflict. The problem is people who are not related living together in close proximity. Communal living is one of the issues. I do not have an answer for you.

Photo of Daisy Cooper Daisy Cooper Liberal Democrat Spokesperson (Education)

Q I think it was Martin who, answering an earlier question, said that under the commonhold system, there is a requirement to provide a full, independent survey, and that that provides a level of accountability to leaseholders. Do either of you have any suggestions about how you would embed the residents’ voice and accountability to leaseholders and residents through the new scheme, whether in legislation or the new regulatory system? We have been grappling with that throughout the evidence sessions.

Martin Boyd:

Unfortunately, my view is that the residents’ voice section of the Bill and the HSE’s current work is the weakest element of the whole process. The Government have not dealt with the issue of the residents’ voice particularly well for a very long time. There is no system at all in either the social or the private sector for the proper representation of everyone’s interests.

As we said, the landlord is obviously sitting in conflict. Under the Bill, I get to sit in conflict with my leaseholders because I have become the accountable person. Under me, I have a responsible person—one of Nigel’s managing agents—who will employ the building safety manager. With my landlord’s hat on, I am liable if things go wrong, but I have no responsibility for any of the costs. All the residents have full responsibility for the costs, but no control. It is only because I am a landlord and a leaseholder that we get that common interest. In both the social and private sector, we have had landlords who have undermined effective resident engagement for decades.

Early in the Bill’s passage, we set out a proposal for a formalised system to create a residents’ group on every site, and the view at the time was that that sat outside the Bill’s purview, but there is no point in setting up a system for cosy little decisions to be made that filter down to the residents, where you hand them a nice little infographic saying, “Please don’t store petrol in your flat.” That is what has been done. The social sector best practice group has produced an infographic, and one of the diagrams says, “Don’t keep petrol in your flats.” Well, if that is our view of the intelligence of people who live in flats, we have a very, very long way to go.

We need to take a very different approach to resident engagement, and what I have said to officials is that, rather than take a top-down approach—assuming that we call the landlord the top of the system—it should start at the bottom with people who actually live in the buildings. Give them the facility to organise themselves and represent their common interests.

Dr Glen:

As a managing agent, I would much rather deal with a representative committee of residents than each resident individually, because obviously time is involved in that. It would be nice to think that those residents will represent everybody—that would be nirvana—although it will not always be the case.

This is a really difficult issue. It is always a surprise that people do not realise that managing agents often do not know who the resident is. Somebody will hide the fact that they are sub-letting, for a variety of reasons. They might not want the taxman to know that they are receiving rental income. They might not want to pay a sub-letting fee, or they might not bother to get around to it.

It is difficult to engage with residents when you do not know who they are, but capturing their voice means we have to do that. We also have to filter it. I will give you an unfortunate example that I read about on LinkedIn over the weekend. A firm that specialises in out-of-hours said that they had had a complaint from a gentleman. It was about an issue that did not need instant attention, because that would cost four times as much and he could wait until Monday. The firm received 155 phone calls from that person over two days, most of which were abusive.

Something I put in my paper was that we need somehow to figure out how to filter this. The example I gave was someone saying, “It’s a bit dark in this corridor.” Is that a complaint? Is it just ruefully saying, “My eyes are getting old,” or do I, as a managing agent, have to log that, report it to the regulator, track it and bring in somebody to install new lighting at the cost of £2,000 that weekend? I do not know.

This is a difficult area to get into, but the more we, as managing agents, can get a collective response, the less admin you are doing trying to deal with absolutely everybody.

Photo of Ruth Cadbury Ruth Cadbury Shadow Minister (Housing, Communities & Local Government) (Planning)

I want to ask you both about the issues we were exploring in the earlier sitting on the capacity, skills and responsibilities of the accountable person and of the building safety manager. Martin, your situation is relatively unusual—certainly, in my casework, I am not aware of leaseholders also jointly owing the freehold of their block. Some of them are resident management organisations, so they contract the managing agents but do not have an ownership responsibilityQ . Is it clear in all circumstances who the accountable person or persons will be? Has adequate thought been given to the skills and responsibilities of the accountable person and the building safety manager?

Martin Boyd:

The answer on whether it is fully clear—I think we would fully agree on this—is that when you get into complex sites with mixed private, social sector and commercial, you are going to have a number of accountable people, a number of responsible people and, potentially, a number of building safety managers. The potential for conflict there is enormous.

The issue I have with the Bill is this: I can accept that you want to make me accountable if I get something wrong, but the Bill, if we use the analogy of cars, is trying to make me responsible for the fact that Mercedes produced a diesel engine that broke the rules. I did not design the building. I did not build the building. I am responsible, and fully accept I should be responsible, if we do something wrong with the management, but we, effectively, are non-exec directors. At any large site, that is how it will be.

Residents do not run their own building unless it is very small; they will contract and employ a professional managing agent. In turn, there is no such thing as a building safety manager at the moment. I do not see why they are needed at all in the occupation phase, because what a professional property manager does is contract a relevant expert when they are needed. If the air conditioning system, the lift system, various plant and machinery or the fire alarms need to be updated, they will go out to a relevant expert.

The idea that we are somehow going to put that expertise in one individual and that they will make the decisions is just going to cause conflict. The property manager will be trying to budget for how they plan to look after the building for the next five years, and the building safety manager will have a different set of priorities. As far as I understand it, the building safety manager wins—so what happens if the building safety manager spends all the money and there is nothing left for the property manager to spend? The answer is that they will just have to put up their bills, so we will have one set of building safety charge bills getting bigger and bigger, and another set of normal service charges getting bigger. It will cause problems.

Dr Glen:

A big worry for me about the impact of having an accountable person, particularly where there are lay boards, is, to put it succinctly: who in their right mind would agree to be a director with that level of accountability? What are we going to do in those circumstances?

We have talked about potentially bringing in professional directors—that is one possible route, if the lease allows it, and that would be a cost, again. That is going to be an issue, I believe, for anybody in their right mind taking on that level of responsibility. What this might mean is that there are no leaseholder-led boards—they might appoint a professional who then appoints and instructs the managing agent accordingly, but you might see residents’ management companies and right-to-manage companies disappearing.

Martin Boyd:

I think there is a risk, because if you want to make me responsible for Mercedes, you need to put me in charge of Mercedes. I am not going to do that, so I am stuck. People who sit on the boards of RMCs usually consider the matter quite carefully. You are taking on a serious responsibility, helping to look after the lives of other people. But you are doing it as a non-exec.

I make it clear to the rest of my board on regular occasions: “You do not interfere in operational matters.” We employ professional managing agents to do that. I think that the legislation needs to be structured to allow that non-exec position to continue because if you want to say, “I am suddenly going to make you criminally liable for matters you don’t control,” Nigel is right: who is going to be stupid enough to take that role? More importantly, a representative of the Association of British Insurers will be speaking to you in a while and I think you are going to struggle to find anyone who will insure that role or those of the building safety manager and the responsible person.

Photo of Philip Davies Philip Davies Conservative, Shipley

If there are no further questions, I thank the witnesses and we will move on to the next panel.