Clause 27 - Fees and Charges

Building Safety Bill – in a Public Bill Committee at 10:30 am on 21st September 2021.

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Photo of Clive Efford Clive Efford Labour, Eltham

With this it will be convenient to consider Government amendment 8 and clause 27 stand part.

Photo of Christopher Pincher Christopher Pincher Minister of State (Department for Levelling Up, Housing and Communities)

Let me begin by speaking to amendments 7 and 8. They are minor and technical, and they align the language on the charging powers in clauses 27 and 56—the hon. Member for Liverpool, West Derby will be taking close note—by inserting additional references to charges alongside fees. We will say more about that in future. The intention is to avoid any unintended ambiguities or inconsistencies in the charging provisions created by the Bill. The context is that clause 27 contains important provisions enabling the Secretary of State to introduce regulations that enable the Building Safety Regulator to charge.

Charging powers are necessary to deliver Dame Judith’s recommendations in the independent review that the regulator should charge, and to put the regulator on a sound financial footing. The amendments ensure that there is no ambiguity that regulations under clause 27 can allow the Building Safety Regulator to make charges as well as levy fees. Charges are a slightly broader concept than fees, because fees typically relate to a service. Someone provides me with a service, so I pay them a fee. A charge could go wider by covering additional activities, such as regulatory interventions needed to bring the regulated party back into compliance with the regime. The recommendations of the independent review indicated that where possible, regulated parties should bear the cost when their behaviour results in additional regulatory activity. When the regulated parties have caused such activity, they should potentially bear the cost. We therefore want the Bill to allow charges that meet the recommendations of the independent review to be applied. Fees and charges provided for in regulations under clause 27 will of course remain within the bounds set by “Managing Public Money”.

Let me turn now to clause 27 itself. The Government are committed to ensuring that the Building Safety Regulator receives the funding required to enable it to deliver.

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

I am very grateful to the Minister for giving way. What he was outlining was extremely interesting. Are we establishing the polluter pays principle?

Photo of Christopher Pincher Christopher Pincher Minister of State (Department for Levelling Up, Housing and Communities)

The hon. Gentleman is attempting to lead me down a path that I suspect he will return to later in the Committee’s deliberations. As I said, we want to ensure that should a regulated party engage in behaviour that results in additional activity for the regulator, the regulator should be able to charge. I will confine my answer to that very specific set of grounds.

Photo of Mark Logan Mark Logan Conservative, Bolton North East

It is great to serve under your chairmanship, Mr Efford. Will the Minister explain a little more how leaseholders will be protected from unfair charging in relation to regulator fees?

Photo of Christopher Pincher Christopher Pincher Minister of State (Department for Levelling Up, Housing and Communities)

Yes, of course. Let me be really clear—we will discuss the building safety charge specifically in future deliberations—that we certainly do not want such costs to be passed on to individual residents or leaseholders. The point of the clause is to ensure that where regulatory activity is required by the Building Safety Regulator as a result of an identified party’s actions, that identified party pays for the cost. That certainly should not be passed on to leaseholders or other residents.

Photo of Shaun Bailey Shaun Bailey Conservative, West Bromwich West

I am incredibly grateful to my right hon. Friend for giving way; his characteristic generosity is shining through. I do not wish to lead him astray, but I am conscious of the broader spirit of what we are debating. We have just deliberated over clauses that talk about fines and sanctions. Will my right hon. Friend consider using the funds raised from that, and ensuring that they can be fed through to the regulator? I am sure he will agree that when it comes to funding, a holistic approach is a good way to ensure that we can maximise the resources this vital regulator needs.

Photo of Christopher Pincher Christopher Pincher Minister of State (Department for Levelling Up, Housing and Communities) 10:45 am, 21st September 2021

I will make some remarks about that as I advance through my speech on clause 27, but we certainly want to make sure that the Building Safety Regulator can recover associated costs from the regulated parties involved.

The independent review recommended that the regulator for buildings in scope of the new and more stringent regulatory regime should fully recover its costs from those it regulates. The recommendation reflected that duty-holders who require the most intervention by the Building Safety Regulator should pay more. The principle of charging within the building safety regulatory system is not new. Local authorities can already charge for building control work under the Building Act 1984, as can approved inspectors. The Bill needs to enable the charging of fees by the Building Safety Regulator, both to implement the independent review’s recommendation and to put the Building Safety Regulator on a firm financial footing.

Photo of Brendan Clarke-Smith Brendan Clarke-Smith Conservative, Bassetlaw

May I say once again what a pleasure it is to serve under your chairmanship, Mr Efford? My right hon. Friend mentioned the independent review’s recommendation that the regulator for higher risk buildings be funded by this full-cost recovery approach. Can the Minister explain why the Building Safety Regulator is going to charge fees and how those fees compare with those of other regulators?

Photo of Christopher Pincher Christopher Pincher Minister of State (Department for Levelling Up, Housing and Communities)

The Building Safety Regulator will charge fees in the normal way, and there will be a mechanism to levy that charge on an identified party. It will be the identified party’s responsibility to pay in the normal way. The fees are consistent with the sorts of fees that are paid through other regulatory mechanisms that local authorities, for example, employ, too. That comes with the caveat that we want to ensure that full-cost recovery is achieved by the Building Safety Regulator, so the charges will rather depend what the costs are. I trust that if there are charges for additional regulatory activity on the part of the Building Safety Regulator, it is in the interests of the identified parties not to cause that additional regulatory activity. That is another means of ensuring that everybody behaves appropriately.

Clause 27, alongside clause 56, provides the legal basis for the charging of fees by the Building Safety Regulator. It enables the Secretary of State to make regulations authorising the Building Safety Regulator to charge fees and recover charges from those it regulates.

Photo of Christopher Pincher Christopher Pincher Minister of State (Department for Levelling Up, Housing and Communities)

As I wish to maintain my 100% record of interventions, I will give way on this occasion.

Photo of Marie Rimmer Marie Rimmer Opposition Whip (Commons)

I am grateful to the Minister for giving way. Could he explain how we will prevent these charges being passed onto leaseholders? Is there anywhere in the Bill we can tie it down?

Photo of Christopher Pincher Christopher Pincher Minister of State (Department for Levelling Up, Housing and Communities)

We will discuss the building safety charge in later clauses. I will make it absolutely clear at that point how appropriate costs may be passed on to leaseholders, what the caps are and what it is not appropriate to pass on, such as the examples I am giving here.

Photo of Christopher Pincher Christopher Pincher Minister of State (Department for Levelling Up, Housing and Communities)

I am grateful to the hon. Lady.

The clause enables regulations to be drafted to allow fees to be charged for the Building Safety Regulator’s general functions in part 2 of this Bill, its functions regulating the higher-risk buildings in occupation and its functions under the Health and Safety at Work etc. Act 1974. The Government’s approach will ensure that fees and charges are appropriate. In line with the principles set out in “Managing Public Money”, the Building Safety Regulator will not make a profit on fees and charges for its regulatory activities. They are merely a means of cost recovery.

Setting out fees in secondary rather than primary legislation and allowing the Building Safety Regulator to put certain details in a charging scheme will ensure that fees can change over time. I hope that helps to address the questions that my hon. Friend the Member for Bassetlaw asked.

Initially, the Building Safety Regulator will have to use assumptions to develop fees, but once set up it is standard practice for a public body setting a fee for cost recovery to recalculate fees based on actual experience. This allows the regulator to learn from experience and change the way it charges fees over time to ensure they are both effective in recovering the appropriate amount of money, and proportionate and fair to those charged. Making provision for fees in regulations allows for regular scrutiny of proposed charges through consultation and, importantly, by Parliament. To deliver the recommendations of the independent review and put the Building Safety Regulator on a firm financial footing, we expect that the regulator will charge the accountable person for regulating their actions under part 4.

We will have an opportunity to debate all the issues about which costs the accountable person should fairly be capable of passing on to leaseholders when we come to part 4. However, I will briefly reassure the Committee that part 4 of the Bill ensures that any costs associated with enforcement action by the Building Safety Regulator or resulting from any negligent or unlawful act by the accountable person cannot be passed on to leaseholders through the building safety charge, so the potential costs we are talking about in the clause cannot be passed on to a leaseholder in that way.

That safeguard provides a financial incentive for the accountable person to do the right thing, as I indicated to my hon. Friend the Member for Bassetlaw, because the accountable person will bear the Building Safety Regulator’s costs when it has to tackle serious failures. The Government are working closely with the Health and Safety Executive to develop these proposals, building on its strong track record of successfully delivering cost recovery regimes—a track record that dates back to 1975, so it has some 46 years of experience.

The Health and Safety Executive rightly aims for the Building Safety Regulator to become a world leader in its field and to share best practice and expertise with international partners on a commercial basis. That is another means by which some funds can be raised. Subsection (6) enables the Secretary of State to approve commercial charging by the Building Safety Regulator. This power will be used only with the consent of the Secretary of State and in line with Government guidance on charging.

We believe the clause is vital to ensuring that the Building Safety Regulator has the funding required to enable it to do its critical work, that the accountable parties do the right thing and that any costs associated with these clauses are not passed on to leaseholders or residents through the building safety charge. I commend the clause and the amendments to the Committee.

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

I thank the Minister. The amendments are a tidying-up and technical exercise that we quite naturally support. I heard what the Minister said about fees and charges, and obviously there have been a number of questions about those fees and charges potentially being passed on to leaseholder residents. I know that where there is a regulatory failure, and fees and charges are passed on to the accountable person, those cannot—I am seeking clarity on this one—be passed on to leaseholders. Is that the same for service charges as well?

Photo of Shaun Bailey Shaun Bailey Conservative, West Bromwich West

This might seem quite a technical clause and set of amendments, but it is an important one. I speak as the Member for the 14th most deprived borough in the country. I am conscious that we have to strike a balance, and I was quite reassured by what my right hon. Friend the Minister said.

Starting from the beginning, it is not uncommon for bodies to charge fees in respect of their activities, where necessary, and in particular bodies that exercise a function such as the regulator. In a way, clause 27 and the accompanying amendments are not uncommon in the nature of what we are discussing. The broader point, which has been made by Members on both sides of the Committee, is that we have to ensure proportionality. That was the key point made by the hon. Member for Weaver Vale.

We need to find a way to ensure that the regulator itself is financially stable and can carry out its work properly; it has to be able to undertake tasks that will be so important in keeping residents safe, and in ensuring that the industry knows it is being regulated and watched. A lot of the detail will be set out in secondary legislation, and it will be incumbent on all of us across the Committee to grasp the detail of that to ensure that it is done in the right way. I think of the leaseholders in my constituency who would not be able to afford ridiculous levels of service charge; it would not strike them as proportionate. However, there is clearly a balance to strike.

I listened to the intervention from the hon. Member for St Helens South and Whiston. She is a distinguished former council leader, and at some point she will have had to make decisions about what to charge for council services. It is difficult, when leading a public body, to decide how to balance those charges with the needs of the public. I do not envy anyone in that situation. Ultimately, we all agree that we want to deliver a public service in the way that has the least impact on the livelihoods of the people trying to use it. They are taxpayers too; they want to feel that they receive that public service when they pay their taxes.

Clearly, as my right hon. Friend the Minister has articulated, the key principle is ensuring that the regulator can carry on. What I am trying to express to my right hon. Friend—something that he has articulated in his contributions—is the need to be open-minded in terms of how that operates. We all accept that there has to be a fee-charging regime, but we have to ensure that it is proportionate and accepts the fact that the people at the right end of that are leaseholders and residents, and those are the people we are here to protect and serve. We need to make sure there is the right balance. I get the impression from the contributions made from across the Committee that there is acceptance that this has to be done. It is probably broadly agreed that the methods proposed in the clause are the way we need to do this but, as with much of our deliberation of the Bill thus far, the detail will come afterwards in the secondary legislation.

I am conscious of the need to ensure that we have a regulator that is well funded but that does not impact too much. We want to encourage proper behaviour in the marketplace. It is important in this clause to ensure that that is done in the right way. I support the Government amendments and the clause. I am heartened by what my right hon. Friend has said thus far and I appreciate that we will deliberate further on these matters: I do not want to be called to order. I just want to get on record that we should keep as open a mind as possible as we progress, but the detail, particularly with clause 27 and the amendments, will be in the secondary legislation, which I await with interest.

Photo of Christopher Pincher Christopher Pincher Minister of State (Department for Levelling Up, Housing and Communities) 11:00 am, 21st September 2021

I am grateful to my hon. Friend for his contribution and for the interest that the Committee has taken in this clause. The hon. Member for Weaver Vale asked about service charges, which are a well-established regime separate from the one that we are discussing here. I can reassure him on the question of costs. We recognise that the costs of the regulator will be a small fraction of the building safety charge and we will discuss that in greater detail under the appropriate clauses. To reiterate my earlier point, the Bill ensures that fees associated with breaches of the new regime can never be passed on to leaseholders. That is to ensure that the accountable person pays the costs of the wrongdoing and not the leaseholder. I hope that that is clear.

Clause 27 provides the legal basis for the charging of fees by the Building Safety Regulator, which is vital to ensuring that it has the funding required to enable it to deliver its critical work. Government amendments 7 and 8 ensure that there is no ambiguity about regulations under this clause allowing the Building Safety Regulator to make charges to identify parties as well as fees. I commend amendments 7 and 8, with clause 27, to the Committee.

Amendment 7 agreed to.

Amendment made: 8, in clause 27, page 14, line 25, leave out “to be or” and insert “or charge to be”.—(Christopher Pincher.)

Clause 27, as amended, ordered to stand part of the Bill.