Official Report 833KB pdf
I refer members to my entry in the register of members’ interests.
The next item on our agenda is an evidence session on the Building Safety Levy (Scotland) Bill. I welcome to the meeting Jonathan Henderson, assistant chief officer and director of prevention at the Scottish Fire and Rescue Service, and Peter Drummond, trustee of the Scottish Incorporation of Architects in Scotland and chair of its practice committee. We have around 90 minutes for this evidence session.
I thank you both for your written submissions. I would like to ask Mr Drummond about his submission. The content was excellent, but the size of the typing was a wee bit small for my liking—I had to get the magnifying glass out. In it, you said:
“Whilst Scotland’s more robust regulatory framework has helped limit the extent to which we are affected, there nonetheless exist a significant number of cases where householders find themselves facing very significant remediation costs through no fault of their own.”
Can you give us some examples of that?
I must tread slightly carefully, in as much as several of those cases are the subject of legal action at the moment and therefore there is a limit to how much detail I can go into.
I can tell committee members that, with alarming regularity, cases cross my desk and those of my colleagues at the RIAS that involve perhaps 50 to 120 houses, mainly in the big cities. They are typically medium-rise houses, and some are in what I would call the lower end of the high-rise, high-risk category, in which the original developers have treated the Scottish building regulations as if they were a mere serving suggestion. In one recent case, closer to home, householders would be potentially facing remediation bills in excess of £50,000 to £70,000 per unit, were it not for the remediation scheme.
We tend to find in such cases that the mortgages cannot be extended and the properties are in essence unmortgageable—or unremortgageable, if you will excuse my bad English. Those householders are in an invidious position.
Moreover, once we remove the cladding and go beyond the most obvious problems that one might expect of a building covered in, frankly, solid petrol, we find that there are other problems. Fire barriers may be missing, fixings may be inadequate, and intumescent fire protection to steelwork may also be missing.
Those problems come up with alarming regularity, and I should note in passing that they affect not only private housing. It is not uncommon to see hotels and, unfortunately, buildings such as halls of residence with the same problems. It is an endemic problem that will take many years to resolve.
Mr Henderson, do you also find that to be the case?
Peter Drummond and I work in slightly different fields and come at this from slightly different angles, but we share his concerns. When we carry out regulatory inspections of buildings, we see many of the issues that he has outlined. I am not familiar with the level of detail or the number of buildings involved in the cases that Peter refers to, but I share his concerns.
In your submission, you say that
“the costs of remediating dangerous cladding and other defects in and on residential buildings”
should not
“fall on leaseholders, occupiers or taxpayers. This is consistent with the ‘polluter pays’ principle.”
However, the bill intends to raise only around 15 per cent of the cost of remediation, or about £30 million a year. The rest will come from the central capital programme, which obviously—and understandably—means that it cannot be spent on other things. Is the Government pitching this at the right level, or should the levy be higher, or, indeed, lower?
09:15
Thank you, convener. I think—I am trying desperately not to dodge the question, but to answer it—
The only reason that I am asking you about that is because it is in your submission.
There are elements, probably in relation to the governmental position, that are maybe beyond my remit.
You will see from our submission that we have given broad support to the levy and to the concept behind it. You will also see from our submission that we do not believe that the levy alone is enough. It is about a whole-systems approach and linking into things such as compliance plans and other elements that sit alongside that.
The levy is a starting point. There are some positives in there. As outlined in our submission, our concerns are around not passing on too much of the burden to individual homeowners or, ultimately, to the taxpayer.
Mr Drummond, will that not be very difficult? For argument’s sake, let us say that 10,000 houses have been built that would qualify under the scheme, if and when the scheme is eventually agreed. If there is a £30 million levy, that would amount to £3,000 a house. Is there any way in which the burden is not going to be passed on to house buyers?
I think that you are correct, convener. The fundamental problem is that fiscal necessity requires us to raise funding to help people who are in this invidious position. I would far prefer that we take the same approach as was taken to remediation for precast concrete houses and large panel system buildings in the 1970s and 1980s, when Westminster contributed additional funds. However, I cannot see that happening. Therefore, as I mentioned in my note, fiscal necessity requires that we calculate at an appropriate level.
Where that balance is, without affecting the market, is probably more an issue for the Royal Institution of Chartered Surveyors than for the RIAS. However, yes, I suspect that it might have to be a bit higher. The RIAS considered whether it should be more of a progressive tax regime that would be focused on higher-end buildings. Beyond that, we step outwith our professional experience.
In your submission, you say that the Treasury’s apparent reluctance to underwrite the additional funds essential for a UK-wide scheme
“leaves the Scottish Government with few options other than replicating the levy approach adopted in England and Wales.”
Your mentioned a progressive scheme. I note that, from my reading of the bill—this is our first public evidence session on it—it is already looking quite complex. In your submission, you say that
“a complex scheme could increase the risk of unintentional non-compliance”
as well as the cost of administration. How do you square that circle in relation to trying to make it somewhat more progressive while, at the same time, not making it too complex?
I would suggest that one would deal with it through a fairly straightforward banding system.
For example, one of the discussions will inevitably be about what we do with mid-market rent properties. Our view is that those properties will, unfortunately, have to come into the scheme. However, it is very easy to see how that might be at a lower banding, in order to avoid adding to the burden on owners, purchasers and renters.
We have to be careful, though, about overestimating how many high-end houses are built in Scotland that would come under this. High-end houses tend to be in small schemes of five to 10 houses, and tend to fall outwith the limits that exist in England, for example. I do not think that lumping a great proportion of the costs on high-end housing would necessarily produce the additional income that we would hope for. Bands can be used to finesse the scheme.
Mr Henderson, you said that the proposed levy
“aligns with several principles of good tax policy”
but that the
“levy’s proportionality could be challenged if costs are passed onto leaseholders through increased purchase prices for new homes, undermining affordability objectives.”
The difficulty is that you are obviously concerned about putting up prices and, at the same time, we need the money to carry out the work.
If we go back to the purpose of the bill and what it is trying to achieve in the first instance, we know from the tragic events at Grenfell eight years ago that change is necessary and that it is probably not happening as quickly as it should be. From our perspective as a fire and rescue service, we know that change will have to come at a cost. As a public service, we are keen to play our part and we recognise that there is a need for us to do so.
Earlier, Mr Drummond spoke about some of the appalling defects in modern buildings. Although the Scottish Government plans for the tax to have a 15-year lifespan, your submission says that
“the levy can never be retired”,
because there will always be a need for that kind of funding.
Yes, our opinion is that, once a levy has been introduced, it will be difficult to take it away again. That being said, we think that there needs to be a fundamental cultural shift in the construction sector, and this would be part of it. Ultimately, that could lead us to a different normal in the future where a safety levy would not be required or where buildings are not being built to insufficient standards.
Your submission goes on to say:
“if implemented correctly, the levy can contribute toward a market incentive for better quality building work, reducing the need for future remediation and giving buyers greater confidence in safety standards.”
That is what we want to achieve. However, given that the levy would add, for argument’s sake, £3,000 to the price of a house, would some builders not try to cut corners further so that they do not have to pass the cost on to customers? Could a levy have the opposite effect?
That is certainly a concern of ours, which we have outlined in our response. A whole-system approach is needed, of which the proposed levy is one part.
I entirely agree with Jon Henderson—the levy is but one leg of the stool. It is essential for the compliance plan managing system to be brought in effectively, not just as a Construction (Design and Management) Regulations 2015 tick-box exercise, in order to mitigate the chances that unscrupulous developers merely deploy their corner-cutting saw. It is also essential that we continue to review our building regulatory framework regularly. Indeed, it is fortunate that we did not go down the rabbit hole that England did after 2005. However, nonetheless, you will receive submissions about regulatory costs, expediency and delay, all of which, in my experience, are euphemisms for the corner-cutting saw. With the three legs of the stool together—the proposed levy, good building regulations, and greater scrutiny through compliance plan management—we would have a realistic chance of ensuring that these problems do not occur to the same scale again.
I completely agree with you, but there is an issue with the scrutiny. Someone—the clerk of works, or whoever—has to check that the work has been implemented to the correct standard.
Two years down the line from a development in my constituency—I will not say which one—being fully occupied, we suddenly found out that the sewerage system had not been installed to the required standard, which is causing issues, as you can imagine. It is not just about having the regulations but about ensuring that they are fully implemented.
Mr Drummond, you said:
“Firstly, Scotland needs to preserve and build upon its existing public sector building control system. Secondly, procurement must be very substantially improved to ensure higher quality in construction.”
How do we do that? Do we have the people with the skills to do that? Is that quality out there? What lead time did you have in mind for implementing that?
I am pleased to report that the Scottish Government has already started that journey. Comprehensive reviews of how we deal with consultant and contractor recruitment are on-going. So far, the fundamental issue in procurement has been a race to the bottom, which has been justified on the grounds of economic value. Procurement officers write endless contracts that demand quality, notwithstanding that the contractors disappear like my hairline when trouble appears, and it is very hard to recover that money.
Mainstream European countries tend to balance quality and cost much more effectively. You will hear evidence at some point from procurement officers that they also do that. As an RIAS representative and an expert witness, I will tell you that they do not do so adequately. It is all very well to say that there is a 30 or 40 per cent quality component, but it is about how quality is scrutinised and scored. Why is it always at the bottom? Why do we not have European systems in which we mark plus or minus from the average?
Whenever those points are raised in Government committees, someone inevitably says, “It will impact on our ability to deliver houses,” yet here we are having to pick up the pieces and charge additional costs because we cut that corner. The Scottish Government needs not only to continue along the path that it has adopted for the past four and a half years but to double up on it and approach it with a degree of healthy scepticism so that we have a robust procurement system at all stages in the process.
My final point—I have an obvious conflict of interest in saying this, so do excuse me—is that the contractors who have led us to the greatest problems are those that have dispensed with clerks of works, architects and site engineers, and that tell us that building contractors, some holding a magic licence, can deliver the quality. Yet, time and again, those are the projects where problems come up. If we look at the local authorities that maintain traditional procurement and traditional roles—our housing associations have been very good at maintaining clerks of works—those are the areas where fewer problems occur. We have to walk away from the 1980s mantra of “the market knows best” and look at the outcomes and certainties that we can achieve from a robust European-type procurement system.
That is very helpful, thank you. To switch between witnesses a bit, I will address Mr Henderson. In your submission, you said that you
“do not agree that major refurbishments should be excluded from the levy”
and that
“Excluding them may create loopholes, particularly where extensive retrofit or upgrade work is carried out.”
Yes. Peter Drummond and I have been in conversation about this, because it might be an area where we differ. In a general sense, fire safety in buildings diminishes over time. The older a building is, the less fire safe it becomes as walls move and as work is conducted on it. Building conversions generally happen from a point where the buildings might not be fully fire compliant in the first instance. Our concern is that if the levy does not cover conversions, those areas could be missed.
Mr Drummond, do you agree?
Maybes aye, maybes naw. Jon Henderson is entirely correct in that some building conversions give his professional body and mine great concerns. Many of those concerns are already being addressed, as the committee is probably aware. Sprinklers are now mandatory in new flatted developments. A committee that we participate in is looking at sprinklers for future hotel and similar conversions. Such regulatory changes will already add costs to those projects.
09:30In addition, in some but not all cases, conversions and upgrades do not benefit from the very beneficial VAT regime that new dwellings do. Our concern is that, if we raise the burden too much on conversions, we might have schemes that do not work and we will lose historic buildings. It is as simple as that.
However, there is an interesting middle ground in there, in a situation in which the building is not somewhere like Stanley Mills, and instead a more modern building is being converted. In England, we see a lot of pressure for 1970s office buildings to be converted to residential properties. That would be different.
When I was a councillor in Glasgow in the 1990s, one of my churches wanted to convert the church into eight flats. The difficulty was that the cost of meeting the standards 30 years ago was so prohibitive that it would not have worked financially. That meant that the church had to close, because it could not be converted to anything valuable.
I understand that it is a difficult balance to strike, because we could lose a building altogether because of the costs of trying to meet all the regulations, and they are already high, so if we were to add a levy on top, that could be the straw that breaks the camel’s back. However, is there any evidence that this would make a decisive difference, on top of all the other costs that one would have to meet when converting an old building?
I am going to temporarily take off my RIAS hat and put on my own practice hat, because this is the line of work that I specialise in. I would say that more than 50 per cent of such projects already fail on the rocks of financial reality. It is exceptionally difficult to meet just the baseline costs of saving a complex historic building, such as a Kirkton hall, or somewhere like that—to choose one in your constituency—and those costs can sink a project.
In the current incarnation of the fire and life safety committee, there was a very big debate about whether requiring sprinklers in hotels would push us over that edge. I will say here what I said there, which is that a number of us on that committee have had to stand up at fatal accident inquiries and explain to people why their loved ones did not come home. I would rather never have to do that again, and I certainly would not want to explain that I thought that their loved ones’ lives were only worth a few thousand pounds.
We could talk about a number of other points, but all five of my colleagues around the table are keen to come in.
Good morning, panel. I will come to you first, Peter Drummond, and explore what you meant in one of the sentences in your submission. You said:
“The RIAS has concerns about proportionality and the use of retrospective quasi-hypothecation.”
I am clear on the terms “proportionality” and “retrospective”, but I wonder about the use of the term “quasi-hypothecation”. What do you mean by that?
I said to my colleague who is in the gallery behind me that he dreamed up that word and, if it came up, he could dash well defend it; it is not a word that a Kilmarnock man would tend to use.
The issue is that we might go down a rabbit hole by wondering, “What if this happens?”, “What if that happens?” and “What might be the best system and how do we justify it?” For the RIAS, the simple issue is that there are a significant number of people in Scotland and further afield in an invidious and iniquitous financial position, and we need to move quickly, if we can, to assist them.
The point is that the Government states that this will be a hypothecated tax, that is, that all the money that is brought in—whether it will be £30 million remains to be seen—will be recirculated and reused. That is why I did not understand the term “quasi-hypothecation”. In fairness, if it was your colleague who came up with that term, I would be entirely happy for you to write to the committee if you want to give a further explanation. It seems quite clear that it will genuinely be hypothecated. Often, it is not clear, but in this case, it seems to be clear, so is there anything else that you want to add?
I am more than happy to cuff my colleague’s ear once again and send you that very letter.
Okay.
You might not be able to give much commentary on this, but I have noticed that the Government’s intention to have the tax point near point of sale works to an extent, but that excludes build-to-rent properties. Obviously, that is an entirely different business model. Do you have any reflections on the fact that it will not work for build-to-rent, by its very nature?
My preference would be that we do it at the point of application for the building control completion certificate, rather than at the point of sale. I think that that is straightforward. The building cannot be inhabited before that anyway.
As per the English regs.
Yes, as per the English regs—well, subject to the caveat that our processes around completion are slightly different from theirs.
That is a very clear point that is well understood in the sector. In the case of projects where commercial funding is involved, that is very often the point of the final release of funds from the funder, and therefore one would expect the developer to be in cash at the time.
One might suggest that some unscrupulous developers would simply not get the completion certificates, but in reality there are time limits, and if necessary we could deal with that in a monitoring system. My experience in straightforward housing projects is that everything is delivered just in time, and there is very quick succession from the completion certificate through to sale. The building control completion certificate, as opposed to the contractual completion certificate, would be the RIAS’s preference.
You say in your submission that
“Compliant developers today should not be paying for poor practices by the construction industry of yesteryear”,
and you have been very critical about corner cutting in your exchanges with the convener, but my gentle challenge is, given that, why should either the UK Government or Scottish Government pay?
Through maintaining a robust set of building regulations and an independent public sector system, the Scottish Government has discharged its regulatory duties, unlike the situation in other parts of the UK, but you are correct—some of the developers that gave us these hospital passes are no longer with us. Many others were single project vehicles and therefore are legally no longer with us, even if their parent companies might still be. The challenges of recovery from the villains of the piece are probably too great.
That is why I go back to fiscal necessity. I would rather that better developers today—more scrupulous developers—did not have to pay for it, but I just cannot see a way round making everybody pay for it. Our hands are, in effect, tied. The Scottish Government may get brickbats for it, but I have yet to see a better suggestion.
On that point, Mr Henderson, you mention in your submission special purpose vehicles, which there has been quite a discussion about. You say that they are currently a concern. The Government is aware of the potential risks around the use of SPVs, but it would be useful to hear a bit more of your thinking. You only allude to it in your submission.
I will come back to a couple of points to link back to some of what Peter Drummond said. Our concern is unscrupulous developers in a general sense, people looking to avoid the levy, and, going back to the procurement conversation, putting profits above absolutely everything else.
This might be a long-winded answer, but I hope that I will cover your question. As the convener said previously, I am the director of prevention. I look after community safety engagement, building safety legislation and community preparedness. Some of the objectives that are set upon me as an individual are about driving down fire fatalities in Scotland, including supporting things such as the promise and targeting fire safety at the people who are at most at risk.
We find that the people who are at most risk are, as you can expect, people who are living in poverty. Any answers that I give today will be couched in that—I am trying to link them back to my day job. Ultimately, I am looking for the levy not to be passed on to individuals who might not be able to afford it in the first place; I am looking for individuals who are already in poverty not to be taken advantage of. That is the crux of our submission.
The poor had no lawyers, if you like.
I turn to Mr Drummond. SPVs will be used, and there could be cases where unscrupulous builders set up multiple SPVs. To allude to Mr Henderson’s point, it would become very costly to track that back at some point in the future. How realistically can that practice be stopped and tracked with the powers, given that the regulation of such business structures resides with Westminster?
As many committee members will be aware, the Building Safety Act 2022 purported to extend liability in Scotland to 30 years. There is debate about whether it has done so competently, but that is another issue. Under those circumstances, any competent solicitor will be advising their property developer clients to use single project vehicles and to fold them within a relatively short period of time. Although it is a legal matter for others, our position is that that practice is almost impossible to stop. Doing so would require fundamental change at Westminster—which is unlikely, given vested interests. Therefore, I do not think that we can sensibly do that, short of upending large parts of our legal system.
Collateral warranties could be asked for, but their cost is eye-watering as well, and it is rare to get such a warranty for more than 10 years. In fact, many of the design and build projects that are now giving us cladding problems had collateral warranties that have now expired. Other projects fail where the collateral warranty introduces unfair terms around strict liabilities and so on. Unfortunately, the genie is out of the lamp, and we have to look at alternative measures, such as the levy.
In your submission, you commented that the levy could ultimately reduce supply and that hotels could take priority, although that would be in certain areas, where there would be evidence of demand. Are you still concerned that it could reduce housing supply, given squeezed margins, in rural areas in particular?
Yes, but the other option is for the burden to fall on those who already own the buildings and have no way of dealing with the issue. I hesitate to use the phrase “least bad option”, because that would suggest that I am not supportive of the bill—I am, as is my institute. I think that the levy is the most pragmatic option. Special care is required in the islands, and the same argument could be made for the west coast, parts of the Highlands and parts of the south-west. However, in all fairness, those are not the parts of Scotland that left us with the legacy of problem buildings, so an exemption for them makes sense to me.
Inevitably, there will be complaints from developers that there will be an impact on low-rise and high-volume house building. Many of those developers will tell you that they had no hand in this boorach, but some of them did, through single project vehicles, and therefore I am less sympathetic than I might have been. However, some people will get caught in the crossfire.
My last question is for Jonathan Henderson. You had quite an exchange earlier with the convener about why we are where we are, in which you mentioned a whole-system approach. You also alluded to the need for culture change in your submission. To what extent—if at all—do you think that the levy might start that process, or does the issue go much deeper than that?
09:45
I agree with what Peter Drummond said and, to use his analogy, I agree that the proposed levy is one leg of the stool. It is not a game changer in itself, but it does make a difference.
Peter and I were both on the Grenfell ministerial working group, in which we talked a lot about the culture of the building industry and the deregulation that led to Grenfell. We are keen to see that addressed. I do not think that that will change overnight, although things are improving. As I said previously, we are eight years down the line from Grenfell, so we should expect to see some improvements by now.
Do you want to make any comments, Peter?
I have seen some improvements; I am not sure that I would go much further than that.
Convener, I reference my entry in the register of members’ interests.
Good morning. Mr Drummond, in your submission, you mentioned what you might find when you remove the cladding, and you called it “known unknowns”. At this point in time, on roughly what percentage of buildings that have cladding that needs to be remediated do you anticipate that you would find that further works need to be undertaken—for safety or wind and water tightness, for example?
Very close to 100 per cent.
As we start to look at more buildings, we will find that shortcomings and deficiencies might be present in other buildings that do not have cladding. To what extent should the fund be for remediating what is effectively sloppy or, perhaps, dangerous workmanship? As it is, those who are in buildings that have the cladding might see further such remediation work, but those who do not have the cladding will effectively have to live with a dodgy build. Is that what will happen?
My view is that, in due course, we will have to widen the scope of the fund. It worries me that during my career—it is difficult for me to say this because I still like to think that I am in my 30s—about every 10 to 15 years, there has been yet another building construction quality scandal.
When I was a student, the issue was large-panel-system buildings. After that, it promptly became precast reinforced housing—known as Doran housing, which many of us are familiar with. Then, reinforced autoclaved aerated concrete raised its head, now it is cladding, and cavity wall and retrofit will be next, along with an abundance of other things.
It seems to me that the industry and, to a certain extent, the UK has been incapable of delivering high-quality homes for an extended period, so I am afraid that there is a chance that these situations will happen again, and that there will have to be a discussion about whether the building safety fund is widened in due course to cover other similar situations in which, through no fault of their own—I must stress that—owners find that systemic failure has left them in the lurch.
On how we got here, the finger has been pointed at disreputable builders, but there are other professional services that wrap around those firms, so I want to talk about your own code of conduct. You said that there are situations whereby clerks of works and architects are not present throughout the build phase, but surely, if you are commissioned to design a building, your industry’s code of conduct will say something about making sure that you go right through the cycle of the construction process. What does it say about that?
Surely, morally, architects cannot take a large fee—or perhaps a small fee, depending on the nature of the building that they are working with—and then say, “I have designed the building, and I will walk away from it now.” Do you not have a moral obligation to stay throughout?
I will break my answer down into two or three parts. The first thing that I would say is that, in design and build contracts, which make up the vast majority of the construction contracts that are giving us problems, the developer will not engage any members of their design team after the building warrant stage, and that stage is big-picture stuff. I will go one step further and say that, on mass housing developments, the developers will very often not employ qualified architects. They have to employ a chartered engineer; they need to do so to get a structural engineer’s registration certificate, which is part of the building warrant process, but again that is done on a limited service.
Clerks of works are now almost exclusively in the domain of housing associations; nobody else uses them because they are too expensive.
It sounds like I am ducking the issue, but the sad fact is that professionals do not tend to be involved at the stages where things go seriously wrong.
You also asked me about the code of conduct and I will widen that out. I am in a fortunate position in that the RIAS is not the regulator for the architectural profession; it is the London-based Architects Registration Board, and nothing in the code requires an architect to work a full project. I am also a chartered building engineer, and there is nothing in the Chartered Association of Building Engineers code, either. As the only architect in a family of structural engineers, I am confident in saying that there is nothing in the IStructE code either.
It goes back to protection of function. In any event, you must be a chartered engineer to call yourself a chartered engineer; likewise, for architects. However, anybody can do those jobs; they do not have to be trained. All those roles are now highly regulated, but the unscrupulous developer can just walk to the plan drawer around the corner and get something knocked together. That happens more often than you would think.
I have to be cautious about the final thing that I am going to say because I act for a regulator in a high-profile case. I can assure Mr Hoy that, on those occasions when architects have been responsible and their names have crossed my desk, they have been prosecuted to the utmost extent possible.
Does remedying that need legislative intervention?
We need to look at prescription of function, and not just for architects I hasten to add—there is quite a big basket of professionals such as engineers, technologists and clerks of works in there. We must also look at how those professionals engage with the process. If we continue to see a situation in which we are all thrown out of the door immediately the building warrant is granted, that will be disappointing.
I recently completed an extension on my home, and I advise anybody who is watching not to do that while you are living in the property. The building standards team is coming round today and, hopefully, I will get a completion certificate. All the way through, I have taken photographs and worked with my architect and builder.
Was there a wholesale failure of the building standards process when the buildings were being built? If you are saying that the material that is on the outside of them is just one part of a whole series of unfortunate issues with a lot of those properties, where is the onus on the building standards system to prevent buildings being built in such a deficient way?
That is really a question for Local Authority Building Standards Scotland, but I think that I can answer it. Legally, there is no duty on the verifier, or the building control authority as the rest of us would have it, to carry out full checks on a building. I also suspect that they would not have the resources to do it. The duty on building control authorities is one of reasonable inquiry, which traditionally means three or four site visits. On the other hand, if it is a safe developer who is doing the building with a full team of architects, the authorities might do fewer visits, while they will do more if it is troublesome.
In comparison, the judgment in the English case McGlinn v Waltham Contractors sets out the duty of reasonable inspection. Essentially, it requires the architect, engineer, technologist and the clerk of works to be on site every week and to be—if you will excuse the phrase—up to their oxters in the trial pits, checking that things are being built properly. No local authority can afford to devote staff time to that level of inspection. Ultimately, it comes back to the duty on the owner, who is the relevant person in the act, to deliver the quality, and that takes us back to the compliance plan regime.
As currently envisaged, the compliance plan regime requires the building owner to evidence that all stages have been done to the reasonable satisfaction of an independent compliance plan manager. I stress the word “independent” because some people do not like that word when we are talking about who the compliance plan manager should work for. That is where the third leg of the stool comes in.
It would be brilliant to think that building control authorities could be involved to the same level, but I would hate to think what the building warrant application fees would be like. Remember that a design team might be charging a 10 per cent fee on a project.
Fine. Mr Henderson, different submissions to the committee have taken different positions on the fairness, equity and proportionality of such a scheme, given that it seems to be falling on a relatively small number of shoulders. However, at the end of the day, it will probably be house buyers who will pay some of the remediation costs for prior builds.
You have said that you recognise that there are some issues with proportionality, and you mention the case of leaseholders. Given that there is a significant variation of opinion in the range of submissions that we have had, if it is to be a permanent part of the landscape, as you identify, would the best way to deal with it be through general taxation rather than a specific tax that falls only on a certain section of the construction industry?
Yes, possibly. As I have said, I do not think that the levy alone is a solution; it is part of a whole-system approach. From our point of view, somebody will have to pick up that bill. To go back to a previous point, in general when it comes to prevention, we prefer that the bill does not fall on those who are most at risk in society, because that would push them into further risk and make them more likely to need the services of the Fire and Rescue Service. Somebody needs to meet that bill.
The Scottish Government is raising more than ever through land and buildings transaction tax, and now we have the additional dwelling supplement, so some taxes in Scotland are specifically about property. Presumably, there could be hypothecation through such a mechanism—which would mean that, effectively, those who interface with the housing market in Scotland are taxed, rather than, necessarily, a first-time purchaser who has had no connection with the remediation work that was required.
Again, that is possible.
You made a point earlier about the morals of the industry and what is morally the right thing to do. Although I do not disagree with that point, I do not think that what is the right thing to do morally has necessarily got us to where we are now. There needs to be greater regulation, and our view is that we would like the private sector to pick up its fair share of the costs.
It would argue that it is doing so at present. Submissions from Homes for Scotland and others show that, when it comes to the total amounts that they are paying in, what they might be required to put into the levy is significantly less than what they might actively be paying now.
My last point is on the definition of “rural”. There is an exemption for island properties. There seems to be a case for rural properties, too. I do not know whether either of you has a view as to how we might help the Government to get to a definition of “rural” in order to be able to advocate for an exemption—which you highlight as being an issue in relation to rural properties, particularly when it comes to affordability, given that less development might happen in rural areas. I think that you identified that, Mr Henderson, because of the lower margins in developing in rural areas.
I think that there was a similar discussion two years ago in respect of the proposed heat in buildings legislation and the need for back-up power supplies in what I will broadly call the remoter areas of Scotland. If I recall the discussions at that stage, we thought that we might have to paint with a broad brush and define those areas as the Highlands and Islands. That is perhaps a little unfair on people down at the bottom end of Dumfries and Galloway, and other pockets, but, to my mind, Highlands and Islands is probably still a fair stab at it.
However, we could have a lower threshold on the number of units. Very rarely do we see large schemes in those areas that would come within the scope of the provisions anyway, which is another argument as to why perhaps some sort of bottom-end threshold makes sense.
I tend to agree with Peter. Each organisation probably uses a slightly different definition of “rural”, so perhaps they should be mashed together.
I said to Liz Smith that, under the Scottish Government’s current definition, Gilmerton, on the fringes of Edinburgh, is a rural area, although it is mostly under concrete now.
You are both very close to the industry. You said that you think that this levy, or tax, depending on how you look at it, will probably have to remain in some form and function into the future. What is potentially the next cladding scandal that we should be alert to at the moment? Is there something that the industry is already looking at and getting a bit concerned about—potentially in relation to safety, Mr Henderson?
10:00
Peter Drummond has already made reference to some future building issues that we are likely to face. I am unsure as to whether those might be on the scale of the cladding scandal. He also referenced the almost cyclical nature, as we have seen, of issues such as RAAC and others. He is probably better versed on those matters.
From our perspective, we carry out fire safety audits, risk inspections for our own purposes and operational inspections of buildings so that we are familiar with the layout. We do various different types of inspections across buildings and we attend incidents. It is fairly common for us to see substandard construction work in big and high-profile developments. During a recent incident that we attended on Princes Street, we came across construction work that we were not at all happy with, which could have had significant impacts on us as a responding crew.
Peter Drummond is probably better versed in the specifics of the industry and what might be coming next, but I can say that, although we are not seeing scandalous issues, we are still seeing substandard construction that is causing issues for us and for the people of Scotland.
I have done that terrible thing of just writing a quick list of points that have crossed my desk as an expert witness. I fear that if I were to run through the list, it would panic anyone watching, never mind committee members.
If I were a betting man—and I am not—I think that, within the next 10 to 15 years, we will see questions about structural fire protection to steel buildings, which we predominantly do with intumescent, fire-resistant paint coatings, which is tested up to only about a 15-year lifespan. By that time, the steel is in the building, so how can you get to it to renew it?
I will also mention lightweight rainscreen cladding systems. I will not give any brand names, because I cannot remember which are still solvent, but there are a number of student residences and flatted schemes in Glasgow, Edinburgh and Aberdeen that involve very lightweight aluminium honeycomb systems, which would allow you to break into the building with a craft knife and a mash hammer. I have doubts about their longevity.
I will draw a very broad brush around insulation and retrofit. Poor-quality design schemes have been going on since the 1990s under the green deal and others—although not exclusively; there are good schemes in there as well. A lot of people are suffering with damp and mould, which have already come to the surface as a result of that.
In addition, we have the issues that we have talked about already, such as RAAC and large-panel systems, although large-panel systems were largely remediated by the city councils in the 1970s and 1980s, if I remember correctly. Fortunately, there is not a lot of RAAC in housing, although my heart goes out to the many hundreds of people who face that challenge.
Having thought about it for two minutes, that is a list of what I call structural failures—being failures related to the structure of the system, as opposed to straightforward “they forgot to put the foundations in” kind of problems that happen as well. However, there are other bogeymen just around the corner.
It is no wonder, John, that you want to spend so much of your time in a tent.
I do live in a flat, as it happens, most of the year.
Mr Drummond, the RIAS submission says that using a per square metre charge will involve quite a lot of “cost and complexity”. Would it be better to use a calculation that is based on value rather than square metres?
The trouble with square metres is that you need a very clear system to calculate the charge. Is it the internal or external footprint of the building—or the flat, as the case may be? Are you including a proportion of common areas—your landings, stairs and closes? Are you going to count usable floor space? Are you counting your cupboards and things like that? Are you going to count only what our parents and grandparents would have called the apartments within a flat or a house, and miss out the other parts? People being people, they will attempt to work their design around the most expeditious route for their wallet.
If you have a very clear system for calculation that cannot be gamed—I think that “gamed” is the appropriate word here—we could live with that. My heart goes out not just to the person in each developer’s office who is trying to work it out but to whoever is trying to check it for Revenue Scotland.
You could do it by banding, but the market bounces up and down, as we know. That presents challenges that perhaps the RICS rather than we would be better to advise on. We are simply sounding a note of caution—“Careful now! Down with this sort of thing!”—on the need to be careful about how we calculate the levy to ensure that it is a robust and straightforward system.
You are highlighting a problem, but you are not advising that we should base the levy on value. It seems to me that, if an apartment flat in one place was sold for twice as much as an apartment flat in another place, the owner should pay twice as much levy. That would seem logical.
I can see that argument, but that would be beyond the expertise of our professional institute.
Do you have any views on that, Mr Henderson?
No—other than to say that, like Peter Drummond, I do not think that there is a perfect solution. I can see the logic of your point.
You have mentioned that, when the cladding is looked at, a variety of other issues will come to light underneath the cladding, such as asbestos. In practice, how do you see the system working? If someone went to do the cladding work and discovered another problem, what would happen after that?
If the defect was directly associated with the cladding—for example, if it related to the fire protection on the supporting purlins and rails—I suggest that, at the moment, that would fall within the terms of the scheme. Where I think that the Scottish Government’s officials must struggle is when they discover a structural problem behind the cladding, because I do not think that the scheme allows them to address that in any capacity.
It is much more difficult to set up a scheme that allows you to deal with incremental problems as they come to light. It is not possible to take buildings apart and find such problems on day 1. That is rarely possible. That is why, in our submission, we talk about the “known unknowns”. We know that there are going to be problems. We can make provisional allowances and educated guesses based on what we know of similar buildings, but it is very difficult to refine the approach. Funnily enough, grant funders, such as the lottery funds, deal with such matters a lot more, because they are used to creeping briefs, but the situation is not one that I have ever noticed Government being well equipped to handle.
If a problem was not covered by the scheme, it would fall on the owners and the developers to sort it out between them. If the developers were no longer involved, it would fall on the owners.
That is right, and the costs could be very serious.
Another theme that came through in your submissions was that the levy might discourage marginal developments. Mr Henderson, you made that point in your submission. For example, it might stop developments going ahead on brownfield sites. Is that a serious concern?
As we say in our submission, we have concerns about that—or, rather, we think that it is worth considering. It needs to be weighed against the potential benefits of the levy, although I do not think that it would stop the levy being beneficial. However, as I said, the levy will not be a stand-alone solution; it needs to be part of a whole-system approach.
Would the levy need to be tweaked, so that there was a higher rate for greenfield sites and a lower rate for brownfield sites? Is that the kind of solution that you have in mind?
Yes, potentially.
Mr Drummond?
The additional costs on a brownfield site are entirely to do with the remediation and decontamination of the site. If a levy-type regime made an allowance such that, in effect, there was not a levy or there was recognition of those additional costs, it seems to me that that would put brownfield sites on an equal footing with greenfield sites with regard to costs.
Another point that I think was made in RIAS’s submission concerns the UK residential property developer tax, which is already in place. That has not raised as much money as was expected. Is there a risk that the building safety levy will not raise as much as we hope that it will?
I think that there is less chance of that with the levy, although I hasten to add that I am no taxation expert. First, the initial projections for the UK-wide tax seem to me to have been high from the outset. Secondly, a threshold of £25 million profit, with more conditions than you can shake a stick at, seems capable of exploitation by developers and their accountants. Thirdly, of course, market conditions have been a wee bit up and down. A levy on property completion seems less liable to those issues. As I said, people would be less able to game it. It could still happen, but it is less likely.
Presumably, the more exemptions there are and the more tweaks there are, the more complex it becomes, and people will find ways through it.
Yes, the devil will, as ever, be in the detail.
Mr Drummond, in your opening remarks you mentioned student accommodation. For clarity, were you talking about halls of residence or individual flats and houses?
I was talking about the large modern halls of residence, which, if I think of my children’s university years, have anything upwards of 100 flats in them.
Do you have any idea of how prevalent the problem is in halls of residence across Scotland?
Sorry, I am steering around legal privilege in response to that. It is my understanding that it is an issue. I would not know in what proportions, but the cases that I am aware of would involve significant compliance issues. I do not think that I can say much more than that, because they are live cases.
Avoiding the legal issues, would I be right in thinking that a college or university estate would be responsible for payment for that?
A significant proportion of halls of residence are now built and operated by private investment companies in Scotland. As any of us who have watched the planning portals for Glasgow, Edinburgh and Dundee will know, those flats are going up with surprising speed and regularity. My understanding is that a good proportion of them are being built and operated by private providers and are not part of the university estate.
As far as I am aware, there are some that are not being built and operated by private providers.
I think that you are right.
By definition, that would mean that a university or college would have to be responsible.
Yes.
Thank you for clarifying that, because it is quite an important point.
Mr Drummond, is it your understanding, as things are, that the Scottish Government does not have a RAAC fund?
Yes.
Thank you.
As has been referenced, we are many years on from the dreadful tragedy that happened at Grenfell. Mr Henderson, has the use of the materials that Mr Drummond provocatively—and rightly—called “solid petrol” stopped in Scotland?
To a certain extent, Peter Drummond is probably better versed in talking about current construction projects. We are seeing a reduction in the use of cladding as a whole—certainly of the most dangerous levels of cladding—across the UK, as well as in Scotland. We are seeing reductions in that, as we should be, and as I keep saying, over an eight-year period. However, I worry that there are still loopholes for those materials to continue to be exploited.
What is stopping people from using them?
I am happy to take that. The Scottish Government has been criticised for it, but the ministerial working group on building and fire safety took a simple view that all combustible materials on the exterior of medium and high-risk residential projects in Scotland should be banned. Only Euroclass A1 and A2-rated cladding materials can now be used on the exterior of medium and high-risk buildings in Scotland. That precautionary approach by the minister was entirely the correct one.
10:15There was an awful lot of jumping up and down by those with vested interests in the manufacturing sector, and many claims that they had solid petrol products that were magically incombustible. That is not a risk that I, as a designer, would be willing to take.
Does anybody use those knowingly on the outside of medium and high-risk buildings now? No, and because of that, and because insurers refuse to cover it, the use of those materials has dropped off the edge of a cliff, thankfully.
Do we still use things such as Kingspan insulation? Yes, but we use it in the right place at the right time, where it is low risk. Are there other materials that present potential problems? Perhaps, but the issue is that designers—I will stand up here for building developers and contractors—rely on test data.
One of the things that we know from Grenfell is that the Building Research Establishment and other testing bodies did not discharge their duty to adequately test materials and advise us how they operated. It remains the view of my institute that the failure of the UK to have a publicly funded independent test lab is an on-going concern.
That is very useful. The mechanism by which that stopped is that the use of the materials has been banned on buildings and, at the point of completion, an inspection for a completion certificate from the local council would examine those materials and check that they are not on the banned list. Is that correct, for the layperson?
Some of the materials are very hard to determine visually. In reality, you can determine them only at the time of specification and installation. There are certain A1 and A2 cladding types that perform quite well, but one must remember to put in cavity barriers. If the cavity barriers are not in, frankly, it can go up like a chimney.
It is best to think of the materials as part of a complex system. Merely investigating or reviewing them at the end will never provide the certainty that is required, which is why the compliance plan management system would make a difference. Even if you turned up on a site and it had the name—at the risk of me getting a writ tomorrow—Kingspan all over it, you would not know whether it was one of the good or one of the bad Kingspan products, unless you knew what was there. People such as Jon Henderson and I, who have had to plough through the Grenfell evidence, know that it can sometimes be as simple as one or two extra letters at the end of the component name. It is very difficult. At the risk of breaching confidentiality, that is one of the reasons why the fire safety committee that sat from 2021 to 2023 took a view that we should just ban a whole host of materials.
I support that. I know that I probably keep making the same point, and to a certain degree I apologise for that, but it comes back to the whole-system approach. Time is relevant, in that when an event happens, people are shocked and we start to make progress. Then, as time goes on, we start to make less progress, to the point where we are in danger of forgetting why we are sat here in the first place and what is driving the issues that we are trying to solve.
I am broadly supportive of the direction of travel, but, Mr Henderson, you say in your submission that it is a polluter-pays principle. It strikes me that the people who made the pollution are not the people who are paying here. In many circumstances, it will be people who have changed practice and who are building responsibly. None of that dismisses the fact that we need money to do the retrofitting to ensure that we can do the remediation in the buildings.
Is it fair to say that there is not really a polluter-pays principle at the heart of the design of the tax? Is it really just a way of getting money to do something that needs to be done?
We likened it to a polluter-pays principle because it is something that possibly makes sense in people’s minds. I agree to a certain extent that we have moved on. Some of those developers have been held to account, and some of them no longer exist. At the risk of sounding doom and gloom and repeating myself, I do not think that this issue has gone away, and it will not go away unless we continue to work on it.
I do not mean to push back too hard, but it is too easy to say that the bad people have all gone and that it is all good people now.
I would tend to strongly agree with that. The evidence that we have had is that there is a cycle of defects. Substandard building practices that lead to safety concerns have emerged in cycles over the years. RAAC is probably the most prominent of those issues at the moment, certainly in my home city of Dundee, in Aberdeen and in other parts of Scotland.
I am not sure how the tax would drive culture change in the industry. As much as the issue might require revenue, we might have to recognise that the tax, in the way that it is designed, is not necessarily going to make people change their behaviour as builders.
I have two points. First, those of us of a certain age will remember having to do an “An Inspector Calls” exercise in O-grade or higher English, where everyone is to blame. The problem with cladding is a bit like that. Everyone had a hand in this. Nobody stepped forward, with the possible exception—ironically—of the building control officer at Grenfell.
This is an industry-wide problem. I would love to see a scenario in which the insulation manufacturers that, frankly, fiddled their tests, and the testing houses that let that happen, were to pay. I do not think that that is going to happen.
Builders and developers did not ask themselves difficult questions. They did not apply the degree of healthy scepticism that any specifier or builder should apply when there are extraordinary claims—all of us who did O-grade, standard grade or higher chemistry know fine what polymeric insulation is made out of. Finally, architects should have asked for more information on certification.
I am going to take the SFRS position on this—that the polluters should pay—and I think that this approach picks up a large part of what the polluters did.
Your other question is what drives change. Change occurred for five to 10 years after the Summerland disaster on the Isle of Man in the 1970s, and then everyone forgot about it. Change occurred in Scotland and Ireland after the Garnock Court fire, and then it was forgotten about in the rest of the UK. RAAC will be forgotten about in due course—in 10 or 15 years—and things will go back.
Only one thing will drive change, and that is regulatory pressure. It is all very well, as Michael Heseltine did in 1981, to talk about the cold, expensive hand of regulation, but regulation is what protects the public. There is not a building regulation in this country that is not written with the blood and tears of people who lived in substandard buildings. Therefore, to prevent these disasters from happening again, I encourage members to consider the importance of a robust and independent regulatory framework that is subject to constant review and which contains a degree of institutional memory.
That is very useful, and I find myself strongly agreeing with your analysis. However, the issue that we are looking at is the design of the tax. As you have eloquently described it, it is one leg on a stool. I am trying to explore how effective that leg will be in supporting a better system.
If we were designing a tax to prevent poor practice, would it not be better for us to tie the tax in perpetuity to the people who have developed the building, rather than seeing it levied at a point of exchange?
That would seem to be an eminently sensible idea, if we could find a way to ensure that those developers would still be extant in 20 to 30 years, when the building defect was discovered, and that they would not have disposed of such assets as they had by that time.
I agree that that is very challenging. I am exploring the principle of how we can ensure that we change the behaviour, within the marketplace, of people who are developers.
I come to the issue of pace. In October 2024, Scottish Government officials told the committee that the single building assessment programme, which establishes what cladding remediation work is required, is expected to
“take around 10 years ... to complete.”—[Official Report, Finance and Public Administration Committee, 29 October 2024; c 17.]
That is just for the assessment programme to find out what is required. Is that an acceptable amount of time, given the state that we are in, eight years on from Grenfell?
The problem, as I understand it, is one of industry capacity. Prior to Grenfell, the number of practitioners in Scotland—and probably the north of England, too—who could handle that work could be counted not just on the fingers of one hand but on the fingers of one of my hands, so therefore not a full complement. It takes time to train up surveyors to do the work—architects are rarely involved in the initial step—and they often require to consult fire engineers. The number of appropriately qualified fire engineers in the UK and Ireland is very small indeed, and the number of them that are equipped to deal with cladding remediation is even lower.
Although the programme has been slower than any of us in the sector would have wanted, I can understand why. I would be one of a handful of architects who would probably be qualified to look at the issue, but the amount of time and work involved would be a nightmare, and I suspect that that goes for most of my sector.
Mr Henderson, eight years post emergency, we are looking at another 10 years before we know the extent of the problem. That cannot be acceptable, can it?
I think that you have heard my general frustration with the pace of all post-Grenfell work. Peter Drummond mentioned fire engineers. I am involved in some work evolving from the ministerial working group. I was at the Ministry of Housing, Communities and Local Government last week, speaking to the expert advisory panel about the fire engineering recommendations. The timescales that are being talked about and the time that it has taken for that to come to fruition is frustrating. Although I believe that there have been changes for the good and that we are in a better place than we were, I am frustrated by the pace of change.
As of August this year, 600 expressions of interest have been made to the cladding remediation programme, but there has been work on only two buildings in Scotland. Given the scale of the emergency that you have both described, you cannot think that that is acceptable, can you?
It is fair to say that I would like things to move faster than they are moving.
Mr Drummond?
I agree.
Valid comparisons have been made with the rest of the UK in relation to building regulations, and the culture and politics around all of that. In the rest of the UK, 5,190 buildings have been identified, remediation work has started on 2,490 and, of those, work on 1,767 has been completed. Do you have any idea why there is such a difference—between two and 1,767?
My background is that I was born and raised in Shetland. I was in the fire service in England for the past 19 or so years, predominantly across Lincolnshire and Humberside, and moved back to Scotland in the past year or so. From conversations that I have been involved in on efforts to progress the building safety regulator work, it is clear that things are far from perfect down south, too. The frustration that I am expressing on behalf of SFRS and NFCC—the National Fire Chiefs Council—would be the same south of the border as it is north of the border.
Could you explain the disparity in the figures? It is good that you have cross-border expertise, but could you explain why there is a difference in the number of projects that are being undertaken and the completion rate?
Sorry, Mr Marra. I do not have an answer at this point, but if you are happy to provide the figures, I am happy to look into the details.
It would be useful to the committee, because we have talked about hypothecation—the purpose of the tax. This is really a tax to raise money to do this work. We want that work to be done, so it is good for us to be able to understand the barriers to that work being completed.
I put on the record my involvement in the Grenfell inquiry, through the Leverhulme research centre for forensic science.
That concludes questions from the committee. Do the witnesses have any final points to make? Are there any issues that they feel we did not cover in our questioning this morning?
No.
In that case, I thank you for your evidence this morning, which is very helpful to the committee in its deliberations.
10:29 Meeting suspended.