That concludes voting time, but our agenda goes on with the short debate. For those of you leaving before the short debate, then please do so quietly. I now call the mover of the short debate, David Melding, to speak to the topic he's chosen.

Diolch yn fawr, Llywydd. It's been a long day, I think it's fair to say, but we do end on a very important subject and I introduce this discussion on the need for a fire safety fund in Wales. I would like to give some of my time to Mike Hedges and Jenny Rathbone.

Llywydd, since the appalling tragedy of Grenfell Tower, we've become more aware of the failure of external cladding systems—aluminium composite material and other systems. Also, issues relating to the very integrity of the internal fire safety schemes in some high-rise buildings have also become starkly apparent. This has meant that those living in multistorey apartment buildings are at a much higher risk than was previously realised by many policy makers and I think this is a key point. Many policy makers and those who were scrutinising policy did not pick this up.

Before I set out the need for a fire safety fund, I want to quote the concerns of some of my constituents who are leaseholders facing the prospect of massive capital cost to make safe buildings that had recently been passed as safe by the building regulatory system. And these quotes—there are five—come from residents of the Celestia development and Victoria Wharf. We can practically see those developments—well, in fact, we can if we look carefully—from this Senedd building.

My first quote: 'As an NHS employee under substantial stress in the current climate, the long, ongoing issues with fire safety and accountability are causing a great deal of extra stress at home'.

The Deputy Presiding Officer took the Chair.

Second: 'I am curious why she'—meaning the Minister—'doesn't appear to be interested in the 450 households in the neighbourhood of the Senedd'.

I understand that. It is a little harsh, but I do understand that sentiment.

Third quote: 'It is almost certain that all leaseholders will not be able to afford to pay for the necessary repairs, especially as the apartments are unmortgageable'.

My fourth resident and constituent: 'We really need to see the Government step in and help out. The situation is dire'.

And haven't we been seeing, during the COVID crisis, the need for bigger government, when it is needed, and effectively delivered?

And my final quote: 'It is only a matter of time until someone gets seriously injured or, God forbid, something worse'.

Well, as we have just heard from some of my constituents who are leaseholders directly affected, they now face potentially massive costs, and they face those costs as people who bought their houses, or homes, rather, with due diligence, bought from long-established builders and developers, bought homes in buildings that met building regulations and passed the necessary inspections, and finally now face the likelihood of enforcement orders.

Now, it is true that some builders and developers have acted responsibly and entered into a partnership with leaseholders and Government to rectify the faults that made buildings unsafe. Others, however, are avoiding their obligations, at least their moral ones, or awaiting the outcome of legal proceedings; and some are playing the game of drawing out legal proceedings, knowing how vulnerable the leaseholders in these apartments are. And all this at a time when COVID has meant that most of us have had to spend much, much more time at home. So, leaseholders face the ongoing anxiety of living in buildings that we now realise have not been as safe as was designated.

And there are further consequences. Homes cannot be sold, so people are trapped in apartments that no longer meet their needs, especially if they are young families. They're in accommodation that is too cramped and does not give that space that young children, for instance, need. Tragically, really, certain leaseholders now cannot start families, despite yearning to do so.

Insurance costs have increased substantially, and this is something that is often overlooked, and it's an ongoing cost whilst these problems are not rectified. Redress from obdurate builders or developers, who have been responsible for poor installation—and that's a key factor in this whole question, when safe systems were not installed properly—that action requires expensive litigation.

And then, finally, on these points, the inability to access funds when all else fails. The Minister, I think yesterday or the day before, indicated a scheme to help those who have fallen into rent arrears through no fault of their own and are in social homes, and talked about the provision of a very low loan—in fact, as low as legally can be permitted, it seemed to me—available from credit unions. And that sort of intelligent offer from Government is something I welcome, but we've not seen similar innovation when it comes to leaseholders in apartments.

I now turn to the situation in England, where there has been a significant development. The building safety fund was announced for England by the Chancellor, Rishi Sunak, in his March budget. Additional funding of £1 billion has been committed, and this is additional to the fund to tackle ACM cladding in England that was earlier announced. It's intended to make sure that all unsafe combustible cladding will be removed from every private and social residential building above 18m, and I do welcome that policy.

Now we turn to Wales. The Chancellor's announcement for England created a consequential for Wales of around about £58 million. However, the Welsh Government has decided, as is its right, to use this consequential funding for other purposes. Replying to my written question of 12 August, the Minister said this:

'The Welsh Government has made a clear commitment to delivering reforms to protect people living in high rise buildings. The reforms are substantial and complex. There are no quick fixes.'

Well, I have to say, Minister, when it comes to the fire safety fund for leaseholders, there is certainly no quick fix, because the problem is still massive and unresolved, and you've not made any attempts so far to emulate the system in England. Instead, leaseholders must make do with the Minister's sympathy, and I quote: I have made clear that

'leaseholders...should not be expected to pay to rectify issues that constitute a failure to build to appropriate quality standards or where matters are in breach of building regulations.'

End quote. And I agree with that, but we need to face the fact that whilst these matters are going through courts or being strung out, these leaseholders are facing enforcement orders and have to pay up or try to sell their property, which is near impossible given current market requirements and the situation in terms of getting a mortgage. So, I really do think that you need to look at this issue again.

Now, I do accept that £58 million as a consequential may be more than the problem needs in Wales to rectify. I accept that you can use that money as you see fit, and you may not want to construct or open a fund that is to the full value pro rata, as it were, to what is being introduced in England. That I could accept, if you gave evidence, and no doubt you'd be capable of getting the evidence if it is there to demonstrate that the need in Wales, though, is very significant, and as I've just referred to the residents in two developments very close to us, it may not be on the scale that it is in England. But I really do believe that you need to do something. These people have been left, really, to deal with a problem that is a matter of public policy failure, and it's a public policy failure that goes back a long time, at least 20 years, and both the party I represent and the party you represent, unfortunately, have been responsible for this policy failure.

I'll just finish on this point: these people did everything right. They applied all due diligence, they sought the advice of solicitors, they had appraisals, inspections, reports of surveys and the like done on the properties they were purchasing, and they could see that the buildings had passed all the regulations, they'd been inspected, and yet they then find out that either the regulations were inadequate or the inspections were inadequate and didn't pick up the improper installation of these systems, which basically makes them null and void and highly dangerous. I do think that we have to come up with a solution. It may be an interim solution to ease the financial pressure on the leaseholders, whilst we do investigate whether there is a legal obligation amongst the builders and developers. But, you know, it's only an organisation as big as Government that can run that course and stay around and deal with legal proceedings. These leaseholders are facing imminent enforcement orders and estimated costs that run from £10,000 to £40,000 in our own neighbourhood here in the Senedd.

So, Minister, can I say, I greatly enjoyed when I shadowed you until very recently? I respect you, I think you've been an innovative Minister, you are on top of your brief, and you've shown real leadership. But in this area, we've not been able to get a consensus, and so far I've been very disappointed with your response. I do urge you to bring that imagination, which you are famous for, to this particular, particularly acute problem.

First of all, can I thank David Melding for not only giving me a minute in this debate, but for actually raising this very important issue? I would like to raise two very quick points. Firstly, is there any reason why transaction capital cannot be used for funding the necessary work, with a claim made against the value of the property on sale? This is money going to the private sector that I believe meets the rules for the use of transaction capital. If that's not possible, can the Minister explain why it does not meet the rules? I won't go through all the rest of the rules, but if it doesn't meet them, can the Minister explain why it doesn't meet them, because it would be a good use of transaction capital and it's going into the private sector?

The second is: this wouldn't happen in most of the rest of the world because they have co-operative ownership of flats. Now, I'm highly enthusiastic about co-operative ownership as opposed to leasehold, which I think is a feudal system that we should do away with at the first possible opportunity. This co-operative ownership and co-operative payments don't just work in what we might think of as socialist, left-wing parts of the world; it works in places like New York, it works in Vancouver, it works in Scandinavia. Really, we need, one, to find the money, but secondly to change the system.

Thank you, David Melding, for raising this important issue. You make a very cogent argument for the justice of doing something to help these people who did all the right things in terms of the conveyancing operations before they bought the lease on their flat, and it's indisputable that there has been a failure of policy makers, as well as a failure of building regulations. I was particularly shocked to read that, in the House of Commons on Monday last week, they defeated a proposal to force Government to implement the results of the recommendations of the first part of the Grenfell inquiry. How shocking is that, given the costs of setting up that inquiry, to then not implement its recommendations? It's really quite shocking.

So, I do hope that we will hear from the Minister that we will be able to set up a fund, which may be an interim fund whereby, in due course, we can get the money back from these errant builders and errant regulators, because there's no doubt that somebody must pay, but it shouldn't be the poor leaseholders who are trapped in their flat and need to be able to get out of this situation.

Thank you. Could I call on the Minister for Housing and Local Government to reply to the debate? Julie James.

Thank you, Deputy Presiding Officer. I'm unfortunately placed with my back to the person I'm responding to, which I always find a bit difficult, so apologies, David.

I'm very pleased that David has provided us with an opportunity to have this debate, this discussion, and me with the opportunity to update everyone on the Welsh Government's plans for building safety in Wales. As David rightly said, phase 2 of the Grenfell inquiry is resuming now, and we are all reminded of the importance of ensuring residents remain safe and secure in their homes as a result of the appalling tragedy that we're all too well aware of. I'm also well aware of the difficulties faced by residents and leaseholders due to the ongoing building safety issues at a number of high-rise buildings in Wales, and indeed I have an enormous amount of sympathy for the plight that they find themselves in, and I agree entirely with David that it's largely through no fault of their own. These things are opaque and difficult to understand even if you're an experienced conveyancing lawyer, so it's not surprising that people have found themselves in a very difficult position.

It is still worth making the point—I know that I've made it repeatedly—that obviously the building owners and developers are the people who have the actual responsibility for this having happened, and they ought to put their faults right at their own cost. I accept that they aren't, and that they don't care about the professional reputation in the way that we feel they ought, but of course it's worth saying that they ought to feel that way, and I do think that's worth reiterating.

I'm also pleased to see that the Competition and Markets Authority has now taken an interest in the sale of leaseholds inappropriately, and has started to take action against some of the worst offenders for having sold leasehold properties. I do think the two things are interlinked, although it is of course more appropriate to have a leasehold as long as leasehold exists—and I'll address Mike's point in a minute—in a high-rise than it is in a house. Nevertheless, the way the leasehold is sold and the way that the freehold is managed afterwards is an important point of that, and I'm not sure that everyone who buys leaseholds in high-rise buildings entirely understands the management structure that they're buying into, and there have been a number of problems as a result of that.

So, it's a difficult, but sadly unavoidable, reality that our role as Welsh Government is limited with regard to what we can do about forcing the people who are responsible for having produced these buildings to step up to the plate. It's also true that the UK Government has announced funding for the removal of unsafe cladding from residential buildings taller than 18m—actually, it's all unsafe cladding, not just ACM. There was an earlier ACM fund, as you rightly pointed out, David. It's also true that we got consequential funding for some of that that we have not yet targeted at that.

I also want to say at this point that, at the point in time that we received that consequential funding, we were right in the middle of the COVID pandemic, and so all consequential funding was pushed towards that immediately. But I am committed to exploring ways forward, including the scope for innovative financial support to help fund remediation in some way that allows leaseholders to at least sleep safe in their beds, even if it affects their equity.

The difficulty, Mike, with financial transaction capital and the suggestion that you made—there is probably a way that we can do that, I'm pretty sure, but only by affecting the equity of the leaseholder, and that's one of the difficulties in trying to find a scheme that takes it forward that means that the leaseholder ends up with something at the end of it. So, we can do works in default, councils can do works in default, they can do all sorts of things, they can land charge the properties of the people living there, but those people end up with no equity. That solves the immediate fire-safety problem, which is worth doing, but it doesn't solve the problem that they've often invested all of their savings and some substantial effort and they end up with nothing. So, that doesn't seem to me to be a decent way forward. So, we need to look at something that allows them also to pursue claims against insurers and building companies and our intervention doesn't intervene in that. So, I'm very interested to see, and the officials will be following closely, what happens with the UK fund, just to make sure that we don't get into those difficulties. And I haven't been absolutely satisfied that that is going to happen, actually. 

So, it's important to understand that we're trying to do three things at once: we're trying to get the building to be fire safe, which is one thing; we're trying to sort out the difficulties of the leasehold itself and the way that the management company runs it, that's the other thing; and the third thing is we are trying to preserve some equity for the people who are in this situation through no fault of their own. That third thing is actually the most difficult of the things, though. I could fund the local authorities to do the works in default, but they would land charge the buildings and that would be the end of the equity. So, it's quite a difficult thing, and that works for the FTC as well. So, we've looked at quite a lot of these things. 

At this point, I'd just like to offer the thing I always say: I don't have all the ideas here. I'm very happy to work in conjunction with any other Member in the Chamber who's got any idea at all of what we could do. We're carefully watching the UK fund. They haven't spent very much of it yet, so it'll be interesting to see what happens. I fear that it's going to take the equity away from the leaseholders, that's the truth. So, we'll see, but I have a lot of sympathy for the people. So, we are very much looking at it. We haven't stepped over it yet because I haven't got a solution that I personally think does the thing that people want. 

The other thing to say is that we need to change the system that produced this system. As David said, shamefully, Governments of all colours have failed to step up to this plate, so now we need to do that. We need a new regime to focus on areas we know need to improve, to establish clear lines of accountability, to create new roles and responsibilities for those that own and manage the relevant buildings, meaning there can be no doubt in the future where the buck stops. I also want to say at this point that although we're looking at the building safety regime from the point of view of who enforces it—so, the whole role of the building inspector and so on, which, Deputy Presiding Officer, I just don't have time to go into now; it's an hour's conversation, and we've had some presentations in the Senedd already on that—there is a big issue as well about making sure that people don't buy housing off single-purpose-vehicle companies. David, you said in your presentation that people bought them off trusted builders, people they knew, but actually they were often off single-purpose vehicles that bore the name of a big company but were shielded away from them by a legal mechanism. So, actually, going against the holding company for action has been problematic. So, we need a regime that prevents that from happening as well, so you don't form 'Melding and James building company inc.' just to build one building, and then collapse a single purpose vehicle and leave.

So, there are other issues at play here that are really complex. And your heart goes out to the leaseholders trying to navigate their way through who exactly it is that they're trying to sue, who exactly it is that holds the responsibility. In addition, many of those companies have either gone out of business, or they've gone bankrupt, or they've gone into administration, and there's a chain of passing on of the responsibility. It's one of the most complex things I've seen in quite a long legal career, so—you know, I've a lot of sympathy for it, but we do need to navigate our way through quite complex straits in trying to sort out what happens. 

The fire regime we've talked about a lot of times. We need to drive up the standards, improve industry competence, empower residents with enhanced rights and a stronger voice so that, as soon as they notice the defects, they have a way to bring that forward and that feeds into the system correctly. It's tempting to say: 'Look, just do it: just bring it forward, just sort it out', but, actually, we absolutely have to make sure that it's a stronger, more coherent regulatory system, with enforcement bodies able to take serious action knowing that that will happen.

It's about a cultural change as well. So, we all, I think, now accept that we need to move away from a culture that prioritises getting the building up at the cheapest possible cost, to getting the building up in a way that ensures the safety and quality of the way of life that people have in those buildings. So, I think that's a real big cultural shift. The changes—we cannot bring them forward overnight; this is not a superficial quick fix, as I've said many times, but a wholesale reform that brings about meaningful change and reassures residents that their homes are safe.

Because of COVID-19, I'm sorry to say that we now have lost our legislative programme, the beginnings of the legislative programme, for building safety that we would have had and that I introduced in the Senedd approximately a year ago now, I think, in response to a debate that David brought forward at that time. So, instead, we'll be putting a White Paper out. I think that White Paper will have cross-party support across the piece, and I would very much like to see it the manifestos of all the parties here in the Senedd so we knew it would be taken forward by whoever forms the Government next time. And we will certainly, Deputy Presiding Officer, be working to ensure that that happens. Diolch. 

Thank you very much, and that brings today's proceedings to a close. Thank you.

The meeting ended at 20:07.