Clause 39 - Liability of officers of body corporate etc

Building Safety Bill – in a Public Bill Committee at 12:15 pm on 23rd September 2021.

Alert me about debates like this

Question proposed, That the clause stand part of the Bill.

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

I will be more succinct in respect of this clause, because it follows on from clauses 37 and 38 and I referred briefly to it earlier.

Many of the persons with responsibilities under the Building Act 1984 are and will be corporate bodies, or “legal persons”, rather than individuals, who are known as “natural persons”. Any corporate body operates only through the actions of its employees, controlled by its managers and directors. As such, if there is an offence by a corporate body, there is likely to be some measure of personal failure by those in positions of seniority.

That liability is already provided for in a number of other pieces of legislation, including, most notably, the Health and Safety at Work etc. Act 1974. The end result is that directors, managers and other such persons are just as criminally responsible as the company at which they have either made decisions directly leading to an offence being committed, or been negligent in allowing an offence to occur.

Photo of Selaine Saxby Selaine Saxby Conservative, North Devon

Will my right hon. Friend clarify how that will apply when there is only one director of a corporate body?

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

I am not a lawyer by training, although involvement in the Bill has given me some legal background—not all of it as exciting as watching “Crown Court” on television. A corporate body and the director are separate legal entities, so normally two separate prosecutions would occur. However, in practice, both prosecutions would be conducted at the same time. If there were a conviction, it would be for the court and the judge to sentence the corporate body and the individual appropriately. Although the law says that they are two separate persons, the court action would take place in conjunction and the sentencing of both entities would be as the court decided. I hope that is helpful to my hon. Friend.

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

My hon. Friend appears to be moving to intervene. I am conscious that I have failed to give way only once—to the hon. Member for Brentford and Isleworth—and that was by accident, so in order to keep up my almost perfect track record, I will allow my hon. Friend to intervene.

Photo of Shaun Bailey Shaun Bailey Conservative, West Bromwich West

I am immensely grateful to my right hon. Friend, who is characteristically very generous. I would be interested to hear how the clause would deal with developers that dissolve, disappear or fall into difficulties as a result of this. He has been assisting me with a matter in my constituency, where a developer dissolved and left the residents in a bit of limbo, so he knows all about that.

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

My hon. Friend is stretching my legal knowledge, although not quite to breaking point.

Photo of Clive Efford Clive Efford Labour, Eltham

I am not sure that the question is entirely within the scope of the clause.

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

In the sense that we are discussing companies, if a company has dissolved by the point of prosecution, it cannot be prosecuted. However, to address my hon. Friend’s point, that does not preclude the liability of individual company directors or managers. They can be prosecuted individually, even if the corporate identity itself has passed into history and is beyond prosecution.

The potential for criminal liability of directors and managers reinforces the duty of those who direct the actions of companies to uphold and promote building safety throughout the operations of their companies. We consider that it is a key contributor to our stated purpose of embedding building safety at all levels of industry, contributing to residents both being and feeling safe in their homes.

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

I thank the Minister for giving way. It is a pleasure to serve under you again, Mr Efford. I cannot see a problem with the objectives of the clause and we will not object to it, but it gives me the opportunity to ask about the issue of personal liability insurance. We are picking up that construction trade professionals in the UK are increasingly struggling to get appropriate insurance. Have the Government done an impact assessment on the issue of liability insurance and how that impacts construction professionals?

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

I am obliged to the hon. Lady and I can ensure her that insurance, risk assurance and personal indemnity insurance, for example, are addressed in part 3, so I suspect that we will address those issues at greater length in the not-too-distant future.

In amending the Building Act 1984 through the clause, as well as increasing the maximum penalties under that Act, we are taking a significant step in ensuring that accountability for building safety lies with those responsible. I commend the clause—

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

I am grateful to the Minister for being so generous with his time. My question relates to something that my hon. Friend the Member for West Bromwich West touched on during discussion of clause 37. There is a sort of cloak of corporate responsibility that people have hidden behind for far too long. It is almost like a game of pass the parcel when it comes to taking responsibility for some defects. Does my right hon. Friend agree that rather than enabling responsibility to be avoided, the clause widens the scope and makes sure we can focus minds? We will be increasing accountability rather than taking away from it.

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

My hon. Friend is quite right. As I said earlier, corporate liability is already provided for in other pieces of legislation—the Health and Safety at Work etc. Act 1974, for example. By embedding this clause in the Bill we remind corporate players—directors, managers and other appropriate senior parties in businesses—of their responsibility, and that their businesses and they themselves can be prosecuted if the standard of work or the actions that they undertake fall below the standards required in the Bill, which then allows for criminal prosecution.

The clause will further engender and embed the culture change that we all desire, so that at some point in the not-too-distant future these sorts of court actions will become a thing of the past, because all players act in a responsible way to ensure that buildings are designed, built and managed safely. I commend the clause to the Committee.

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

I thank the Minister and other members of the Committee for their contributions. The clause responds directly to the Grenfell residents’ voices, which is most welcome. We had a situation where developers, subcontractors and the Royal Borough of Kensington and Chelsea put in inferior products and cladding, despite the recommendations for that building. We have seen that sort of thing littered throughout the industry, as people have said. The clause will act as a very effective deterrent, drive the culture change that we have spoken about, and apply the tragic lessons learned in recent years.

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

I am obliged to my hon. Friends the Members for West Bromwich West and for Bassetlaw for their contributions, and to the hon. Member for Weaver Vale for his recognition that once again the tragedy of Grenfell has opened our eyes to issues in the sector, the loopholes in compliance, and the paucity of penalties, which we are now collectively attempting to rectify. By agreeing to the clause we are taking a significant step in ensuring that accountability for building safety lies with those who are responsible for it—individuals, corporate bodies, or the individuals in senior positions who make up those corporate bodies. I commend the clause to the Committee.

Question put and agreed to.

Clause 39 accordingly ordered to stand part of the Bill.

Photo of Clive Efford Clive Efford Labour, Eltham

We now come to clause 30—[Interruption.] I am sorry; we now come to clause 40.