Government should have equity stake in cladding freeholds covered by the fund, Hilary Benn MP tells APPG

For the first time a senior MP has called on the government to take an equity stake in cladding sites that are remediated with public money. The call was made today by Hilary Benn, Labour MP for Leeds Central, at a joint APPG meeting into fire safety and leasehold reform.

LKP has repeatedly urged the same, on the grounds that if leases are valueless over the cladding then so are the freeholds.

Pouring taxpayers’ funds into remediating cladding sites would be a gift to freehold owners – often offshore private equity punters these days – who could then use the permitted development rights of the government’s recent planning give-away to shove another two storeys on top.

Hilary Benn said:

“At first the government said that leaseholders should not have to pay. Now it is talking of financing solutions that protect leaseholders from unaffordable costs.”

Mr Benn did not have any opposition to passing on loans to freeholders, so long as the costs are not passed on to leaseholders.

At Nova House, Slough council bought the freehold off punter Robert Steinhouse for £1 in January 2018 and thereby gave itself the headache of a £4 million cladding site. Perhaps the government could the same (without threatening to pass on cladding costs to leaseholders, as seems the case with Slough).

Ground rent speculator Robert Steinhouse cuts and runs from Nova House, but who pays £4m Grenfell bill?

Greenhalgh: We are serious about reforming leasehold and sorting cladding (but we cannot say right now whether we will make leaseholders pay)

Lord Stephen Greenhalgh, housing minister for leasehold and cladding, told the APPGs of leasehold reform and fire safety that the government was determined to reform leasehold and respond to the Law Commission’s reform proposals.

But there was no detail. Nor was there any about the financial arrangements to resolve the cladding crisis, although MPs (and affected leaseholders) were alert to the changed language involved.

Whereas government once emphasised that costs should not be passed on to leaseholders, it is now talking of avoiding unaffordable burdens on leaseholders.

Daisy Cooper, LibDem MP for St Albans, urged the minister to bring some certainty to the cladding scandal. “It is the uncertainty for leaseholders in knowing when this cladding will be removed, and how much it will cost.

“Can we produce a timetable, like the end of 2021, so that they can get on with planning their lives?”

Lord Greenhalgh offered little to no detail, beyond a repetition of his sincere engagement with the issue. “We are straining every sinew to sort this out. The best minds in government are working on this.

“We do need certainty, but what we propose must also work. England has 11,000 high rise blocks compared with Scotland’s 150; Wales 50; and Victoria and New South Wales, in Australia, around 200.”

Lord Greenhalgh did not accept that the responsibility for the cladding scandal was with government.

He dismissed a suggestion by Lord Blencathra, a Conservative peer, that the scandal was comparable to that of Equitable Life, where government also had to step in and accepted responsibility.

Lord Greenhalgh replied: “It is arguable whether it was ever legal to use ACM or inflammable cladding on buildings and it is not an open or shut case.”

Ruth Cadbury, Labour MP for Brentford and Isleworth, also made the case for urgency, now that the Grenfell tragedy was three years ago.

She raised the issue of housing associations, which often have merely head leases for a part of a private development, accessing funding.

She also questioned whether the “tiny number of EWS1 qualified surveyors keeps their prices up. “Bottlenecks should be investigated,” she said.

What about permitted development sites with cladding?

Sarah Jones (above), Labour MP for Croydon Central, raised the issue of a converted office block in her constituency turned into flats with permitted development rights, at which point the combustible cladding was added.

As well as a £250,000 bill for a communal heating system, the leaseholders now face the uncertainty of a massive cladding bill.

Lord Greenhalgh asked for the details of this site to be sent to him.

Sir Bob Neill, the Conservative MP for Bromley and Chislehurst, said that developers have taken some responsibility for cladding, but highlighted the difficulty of getting any contribution from those who have “no skin in the game” meaning punters in residential freeholds.

He highlighted the ownership of the Northpoint freehold, a £4 million cladding site, where the freehold is owned by the Tchenguiz Family trust.

Nothing is as important as stopping people being burned to death, says Michael Mansfield QC

The veteran human rights barrister addressed the APPGs by saying that nothing was as important as preventing residents of flats being burned to death as happened at Grenfell.

He said that there was no real sense of urgency to resolve the cladding crisis.

There had been a number of fires beforehand “where lessons have not been learned”.

“The government has got to pick up the bill for cladding. It is doing it with Covid and it will have to do it here, too.”

He referenced the mental health issues (subject of an excellent report by UK Cladding Action Group)

23% of cladding leaseholders have considered suicide or self-harm, says compelling UKCAG report

“Imagine being the mother of three kids living in one of these flats, with national lockdown shortly before us, living there cooped up all day long.

“Government has got to take the lead on this and get things done.”