Developers As Proscribed Organisations: The Government’s Amendments to the Building Safety Bill

The Government is seeking a general legislative power to shut down particular developers’ activities, with no rights of appeal, no rights to compensation and no published set of the criteria which it would apply.

Zack Simons’ concerns set out in his 17 February 2022 #Planoraks blog post are well justified.

My 21 January 2022 blog post “Planning Powers” A Pawn In Unsafe Cladding Negotiation explained the Government’s efforts to “persuade” developers to contribute a further £4bn towards remediating unsafe cladding, on top of the residential property developer tax which applies from 1 April 2022 – with the Secretary of State authorised by the Treasury to “use a high-level “threat” of tax or legal solutions in discussions with developers as a means of obtaining voluntary contributions from them” with one of the threats used being “restricting access to…the use of planning powers”.

This threat is now included within Government amendments which have been tabled to the Building Safety Bill ahead of its Committee stage in House of Lords, which starts on 21 February 2021. The amendments were accompanied by a Government press statement on 14 February 2022, Government to protect leaseholders with new laws to make industry pay for building safety.

“Tough new measures that will force industry to pay to remove cladding and protect leaseholders from exorbitant costs have been unveiled by Secretary of State for Levelling Up Michael Gove today (14 February 2022).

For those in industry not doing the right thing, the government will be able to block planning permission and building control sign-off on developments, effectively preventing them from building and selling new homes.”

“Reflecting the scale of the problem, the government will also be able to apply its new building safety levy to more developments, with scope for higher rates for those who do not participate in finding a workable solution.

The government hopes to not have to use these powers; it wants responsible developers and manufacturers to operate freely and with confidence, to help deliver the homes people need. If they do not act responsibly, they must face commercial and financial consequences.”

See also this 14 February 2022 Inside Housing piece House builders face ‘shutdown’ if they do not pay cladding costs under new government plan.

Obviously culpable developers need to pay up. But what is proposed is startling to say the least:

So the Secretary of State is seeking the power to prohibit in regulations “persons of a prescribed description from carrying out development” or specified types of development (whether or not they have the benefit of planning permission) as well as the power to “by regulations impose a building control prohibition, as regards buildings or proposed buildings, in relation to persons of a prescribed description” which would prevent them from being able to apply for or be granted building control approval. The Secretary of State would also be able to prescribe “certificates” (not sure what that description is meant to capture) which would not be able to be granted under the Town and Country Planning Act 1990 (and which if granted would be of no effect).

These prohibitions “may be imposed for any purpose connected with—

(a) securing the safety of people in or about buildings in relation to risks arising from buildings, or

(b) improving the standard of buildings.”

The provisions are drafted far too widely. What (unprecedented?) power it would give this Government (and any future Government). Of course, where prohibitions are plainly unjustified (for instance against developers who have done wrong other than not to accede to these demands for a “voluntary” payment or perhaps even if they have made a payment) the regulations could be challenged by way of judicial review (NB we need to keep an eye on ongoing judicial reform!). However, if the legislation were to give the wide discretion currently planned, this would not be easy – any grounds of challenge might need to rely on the limited protections provided by the Human Rights Act (NB we need to keep an eye on… yes, you’re there before me).

I’m concerned that these amendments have been introduced at this late stage in the passage of the Bill, with little advance notice so as to enable proper Parliamentary and more general public scrutiny.

Developers need to meet their liabilities. But this whole exercise seems to be much more of a blunderbuss – aimed at the easiest, biggest, targets and ignoring the significant role that poor regulation (and indeed de-regulation) has played in this whole scandal. Do we really want this legislation on the statute book which could well be misused in the future? Or is it all just a bluff to secure that £4bn?

If anyone would like to participate in a future Planning Law Unplanned clubhouse discussion on the topic, please let me know. 8 March 2022 is a possibility.

In the meantime:

⁃ Spencer Tewis-Allen is leading a discussion on build to rent at 6 pm on 22 February – link to clubhouse app and event here.

⁃ Hashi Mohamed is our special guest at 6 pm on 1 March, discussing his Radio 4 programme Planning, Housing and Politics – link to clubhouse app and event here.

Simon Ricketts, 18 February 2022

Personal views, et cetera