Tag: cladding

Responsible Actors

When do the ends justify the means?

I wrote about Michael Gove’s strong arm tactic to secure contributions from developers towards cladding and other building defect issues, in my 18 February 2022 blog post Developers As Proscribed Organisations: The Government’s Amendments to the Building Safety Bill. The Bill was enacted, including section 128 (prohibition on development for prescribed persons) and section 129 (building control provisions).

By way of the responsible actors scheme (the subject of this DLUHC guide), the Secretary of State can decide to exclude particular businesses (developers) from operating (developing). The background, as to the Grenfell tragedy (albeit with multiple points of culpability) and failings across many other developments, is understood but this is quite a market intervention for a Conservative Government and more of a v-turn than u-turn from the days of “red tape challenges” and similar (literally) dangerous nonsense.

How the process is going to work is now clearer, the draft Building Safety (Responsible Actors Scheme and Prohibitions) Regulations 2023 having been laid before Parliament on 25 April 2023, together with a helpful explanatory memorandum.

I’m going to quote a large chunk of that memorandum:

“7.2 Since the Grenfell Tower Fire, it has become evident that a very significant number of residential buildings of 11 metres and above in height were clad with unsafe materials which posed a fire safety risk to residents.

7.3 In January 2022, the Government set out its position that industry actors that had profited from the events leading up to the crisis must pay to fix the problems they created, and that the wider industry must also contribute to resolving these issues. Our objective with this instrument is to ensure that developers pay an appropriate share of remediation costs.

7.4 The Government initially secured (by Summer 2022) a public pledge from 49 larger developers, committing to fix life-critical fire safety defects in residential buildings 11 metres or more in height which they developed or refurbished in England between 1992 and 2022. In July 2022, the Government published an initial draft developer remediation contract, followed by a period of sustained and intensive engagement with around fifty major developers, coordinated by the Home Builders Federation, until January 2023 on how the Pledge commitments should be codified into a binding contract. The contract terms also include requirements that signatory developers keep residents in buildings which are undergoing remediation informed of progress, and to reimburse taxpayers for money that has already been spent to fix buildings through government funds.

7.5 The developer remediation contract is at the heart of the RAS. The Government has been consistent in its public position that developers who are eligible for the scheme but who elect not to make the important commitments set out in the developer remediation contract, or who fail to comply with its terms, should expect to face significant consequences given the significance and urgency of this problem. In such circumstances, they will be prohibited from carrying out major development and gaining building control sign-off in England, subject to certain exceptions set out in the instrument. The RAS is intended to support a level playing field for major developers in the industry, so that those developers who do make commitments to remediate are not disadvantaged. As of 21 April 2023, and subject to change, 46 of the 50 developers who have been invited to sign the contract have done so. In signing the contract, they have committed to remediation works estimated by the industry to be worth over £2 billion.

7.6 The description of who is eligible for the scheme captures, in both cases by reference to meeting a profits threshold [“average adjusted operating profits of over £10m per year over three years from 2017-2019”], (i) major housebuilders who have developed 11m+ residential buildings, and (ii) other large developers who have developed or refurbished two or more residential buildings that are known to have fire safety defects by virtue of having been assessed as eligible for a relevant government cladding remediation scheme. There is also a route for other developers who developed a defective building to volunteer to join the scheme. The developer selfremediation approach, and the RAS, is to be expanded over time to cover other 4 CO/EM/2022.3 developers who developed or refurbished defective 11m+ residential buildings and should pay to fix them.

7.7 As with the developer remediation contract, the RAS aims to improve the safety of buildings by requiring that any member of the RAS must identify and remediate, or pay for the remediation of, life-critical fire safety defects in residential buildings of over 11m in height which they developed or refurbished between 1992 and 2022. To join the scheme, members of the RAS will be required to enter into the developer remediation contract with DLUHC as published by DLUHC on 16 March 2023 and available at: https://www.gov.uk/government/publications/developer-remediationcontract, and comply with its terms.

7.8 The prohibitions in this instrument relate to persons who are eligible under the instrument for the new RAS scheme and do not join, or who join but who subsequently fail to comply with the scheme conditions and have their membership revoked, and persons controlled by them. It is necessary for the effectiveness of the scheme and prohibitions to include persons under the control of the prohibited developer so that a prohibited developer cannot continue their development business through other entities which they control.

7.9 The regulations enable Secretary of State to make exceptions from the prohibitions covering five main circumstances: businesses under the control of an eligible person who are not in the building industry; exceptions for projects necessary for critical national infrastructure; allowing building control sign-off for residential buildings where people have exchanged contracts on their new home before the prohibition on their developer went into effect; permitting purchasers and owners to obtain a regularisation certificate for unauthorised building work under the Building Regulations 2010; permitting emergency repair works; and permitting building works in occupied buildings to ensure resident safety.”

“11.1 We plan to issue guidance on the operation of the scheme and to local authorities on the operation of the statutory prohibitions. The guidance will be made publicly available by Summer 2023. Because of the time limits provided for in the instrument, this guidance will be available well in advance of the prohibitions being applied to any developer.”

According to the latest DLUHC update, 48 developers have so far signed the developer remediation contract. Three developers are named as being yet to sign the contract.

It may be a brutally effective measure. But imagine if a similar approach was taken to another industry, for example the media or (hmm) water utilities or (hmm hmm) some arms of state activity?

Simon Ricketts, 3 June 2023

Personal views, et cetera

Pic courtesy of Wesley Pibaldi via Unsplash

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