Important Industry Headlines

NEW PRIME MINISTER & MINISTERIAL APPOINTMENTS

Earlier this month, Liz Truss MP was appointed as the new Prime Minister and has swiftly appointed her new cabinet of ministers. Most notably, Kwasi Kwarteng MP has become the new Chancellor of the Exchequer, Simon Clarke MP has been appointed the new Secretary of State for DLUHC, and Jacob Rees-Mogg MP has been appointed as the new Secretary of State for the Department for Business, Energy and Industrial Strategy (BEIS).

This week, following the recent resignation of Marcus Jones MP, Lee Rowley MP, former construction minister (Minister for Business and Industry at BEIS, with levelling up and construction part of his brief) has been named the new Housing and Planning Minister, although notably, Lee is appointed as a Parliamentary Under-Secretary of State, rather than as a Minister of State. Leasehold and freehold are part of his brief at DLUHC.

Today, it was confirmed that Paul Scully MP, the Minister of State at DLHUC, who was appointed in July, has been given the following briefs: Building Safety – remediation and regulations regimes; Grenfell public inquiry; and, Climate change, net zero and energy efficiency (building regulations).

With these key roles and briefs now confirmed, we are continuing our important work engaging with the new Ministers and their policy teams, representing the sector’s views and using our influence to help shape the raft of new policy and secondary legislation in the coming weeks and months.

Below is a short briefing note on the new DLUHC Secretary of State, and a summary of our recent letter to him, to underline our position on the need for a positive, practical and achievable course of action to solve the building safety crisis.

Simon Clarke, MP - Secretary of State for Levelling Up, Housing and Communities

Clarke is the fourth Secretary of State appointment in under a year. Before being elected as a Member of Parliament for Middlesbrough South and East Cleveland in June 2017, he was a qualified solicitor.

A Minister since July 2019, Clarke was Exchequer Secretary to the Treasury between July 2019 and February 2020 and then a Minister of State at the Ministry of Housing, Communities and Local Government, serving until September 2020. He resigned for personal reasons but returned to Government in September 2021 as Chief Secretary to the Treasury, a position he held until Liz Truss’s election as Prime Minister.

Clarke also sat on the Regulatory Reform Committee from December 2017 to November 2019. He is a former member of the All-Party Parliamentary Group (APPG) for the Built Environment, Climate Change, Carbon Capture and Storage and Housing in the North, and alongside Alex Sobel MP, he founded the Net Zero APPG.

On building safety, it emerged in January that a leaked letter from Clarke, in his role as Chief Secretary at the Treasury, to former Secretary of State Michael Gove MP, gave the go-ahead for what would become the ‘building safety pledge’ for developers to fund remediation for buildings taller than 11 metres.

During the legislative process of the Building Safety Bill, Clarke voted in favour of a Lords Amendment which sought to extend protections for leaseholders to those whose buildings are under 11 metres high. He also voted in favour of an amendment which would mean that the majority of leaseholders would pay no safety remediation costs, however if the freeholder is unable to meet the full costs themselves then in certain circumstances some costs may be passed on to the leaseholder.

Due to Clarke’s affiliation with the Net Zero, Climate Change and Housing in the North APPG, the new Housing Secretary could be positive in terms of building new homes and achieving net zero. He has publicly supported regeneration projects and has been an outspoken advocate for tackling climate change. In September 2018, he organised a letter to the government – which was signed by more than 130 cross-party MPs – in support of delivering net zero carbon emissions by 2050.

TPI Letter to the new Secretary of State, Simon Clarke MP

This week, TPI has written to the new Secretary of State this week, to highlight our key concerns and to reiterate our asks of Government in relation to the building safety crisis, accompanied by a detailed briefing document, which further explores our current concerns and potential solutions.

Our letter principally addresses the need for successful and swift resolution through the details of the secondary legislation and the financing arrangements with developers, and calls for a collaborative approach to building safety, where the key stakeholders are brought together by Government to develop solutions.

Specifically, we outlined three practical steps to deliver building remediation and restore resident confidence quickly, as follows:

1. Clarify the extent, responsibility for, and timing of, the remediation of unsafe residential buildings of all heights.

2. Remove ambiguity regarding the process of buildings being made safe and how remediation will be funded.

3. Communicate consistently with all those involved in, and impacted by, the current crisis to avoid further delays in building remediation.

In addition, Clive Betts MP, Chair of the Levelling Up, Housing and Communities Committee, has also recently written to the new Secretary of State at DLUHC, which mirrors the concerns and issues raised by TPI.  

The correspondence asks a series of questions regarding building safety and remediation, including the liability of professional freeholders where the original developer cannot be pursued, and calls for updates on the grant funding agreement for the new 2022 building safety fund, the voluntary developer pledge, and the remediation funding for buildings 11-18m in height.

A copy of the letter can be viewed here

BUILDING SAFETY FUND FOR NEW APPLICATIONS: NEW GUIDE FOR LEASEHOLDERS AND RESIDENTS

Following the re-opening of the Building Safety Fund in July this year for the remediation of fire risks associated with cladding in buildings over 18m (England only), the Department for Levelling Up, Housing & Communities (DLUHC), has published new guidance for leaseholders on how the adapted 2022 Building Safety Fund process works, here, which you may wish to share with your residents.

For more information and guidance on applications for the 2022 Building Safety Fund, please read here.

FCA PUBLISHES ITS REVIEW OF INSURANCE FOR MULTI-OCCUPANCY BUILDINGS

The review found there has been a reduction in the supply of insurance for multi-occupancy residential buildings over the last five years, with some insurers leaving the market and a reduced appetite to take on new business among others.

The package of potential remedies suggested by the FCA in its report seeks to give leaseholders greater protections and improved information about their insurance costs, as well as improve the affordability and availability of insurance.

Andrew Bulmer, Chief Executive of The Property Institute, commented:

“The findings of the FCA’s review are of concern and we welcome the overall direction towards tighter regulation, fairness and transparency. We remain firm in our position that leaseholder distress caused by an increase in insurance premiums, a lack of transparency and information, and suspicions for the potential unmanaged conflicts of interest, highlighted by the FCA, must be resolved.

The report confirms that many insurers have withdrawn from this market, and the remaining providers have increased prices dramatically, but the FCA has been unable to confirm whether the price increase in premiums is fair and appropriate. 

Member firms of The Property Institute are required to sign up to our (ARMA) Consumer Charter & Standards, which requires proportionate charges for managing building insurance work, including obtaining quotes, arranging   renewals, collecting premiums and handling claims. Where poor practices are discovered during audit, these are raised with the member firm, however, this underlines the need for the sector to be properly regulated, as recommended in Lord Best’s report.

We look forward to supporting the FCA and other stakeholders in its further work to bring transparency and fairness to millions of leaseholders.”

You can read the full FCA report here.

The FCA will provide an update on progress towards potential remedies in six months, and in the meantime, is seeking views on its proposed recommendations from stakeholders (see page 67 of the report) by 31st October 2022.

NON-DOMESTIC ENERGY PRICES TO BE CUT BY HALF THIS WINTER

Energy bills for UK businesses will be cut by around half of their expected level this winter, under the Government’s energy bill relief scheme, unveiled by Business Secretary Jacob Rees-Mogg this week, which will see energy prices for non-domestic energy customers cut, protecting them from rising energy costs for six months, from 1st October.  

The Government has set a Supported Wholesale Price – expected to be £211 per MWh for electricity and £75 per MWh for gas (less than half the wholesale prices anticipated this winter) – for all non-domestic customers (including all UK businesses, the voluntary sector, and the public sector), whose current gas and electricity prices have been significantly inflated in light of global energy prices.

It will apply to fixed contracts agreed on or after 1 April 2022, as well as to deemed, variable and flexible tariffs and contracts. It will apply to energy usage from 1 October 2022 to 31 March 2023, running for an initial 6-month period for all non-domestic energy users. The savings will be first seen in October bills, which are typically received in November.

As with the Energy Price Guarantee for households on domestic energy tariffs, customers do not need to take action or apply to the scheme to access the support. Support (in the form of a p/kWh discount) will automatically be applied to all bills for non-domestic energy customers in England, Scotland and Wales, with a parallel and comparable scheme implemented in Northern Ireland.

For more information on the scheme please click here